Harvard. Principles of Economics Exam. Taussig et al., 1905-1906

Over the next couple of weeks Economics in the Rear-view Mirror will be posting the printed economics course exams from Harvard for the academic year 1905-06.  Economics in the Rear-View Mirror has already transcribed and posted nearly every economics exam at Harvard University up to this year. You will find links to them in the Catalogue of Artifacts, then use page search for, e.g.,”Exam” to be awed if not shocked by the sheer quantity of material available to you.

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Course Enrollment

Economics 1. Professor [Frank William] Taussig and Asst. Professor [Abram Piatt] Andrew, assisted by Messrs. [Silas Wilder] Howland, [Chester Whitney] Wright, [Seldon Osgood] Martin, [William Hyde] Price, [Frank Richardson] Mason, and [Stuart] Daggett. — Principles of Economics.

Total 470: 1 Graduate, 9 Seniors, 87 Juniors, 266 Sophomores, 63 Freshmen, 44 Others.

Source: Harvard University. Report of the President of Harvard College, 1905-1906, p. 72.

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ECONOMICS 1
Mid-year Examination, 1905-06

Arrange your answers strictly in the order of the questions.
Answer nine questions, five from Group I, four from Group II.

Group I

1. Which of the following would you class as capital:—
   1. stocks of goods in retailers’ hands;
   2. a theatre:
   3. the skill, acquired through training and education, of highly efficient workmen;
   4. agricultural land permanently improved by drainage, embankments and the like.
2. Explain concisely,
   1. the law of diminishing returns;
   2. intensive and extensive margin of cultivation;
   3. marginal utility.
3. Suppose all agricultural land to be equally fertile and equally distant from the market; suppose all to be under cultivation: would there be rent? If so, why and where? if not, why not?
4. Explain in what way the value of monopolized commodities is influenced on the one hand by cost of production, on the other hand by marginal utility.
5. Explain in what way the value of commodities produced at joint cost is influenced on the one hand by cost of production, on the other hand by marginal utility.
6. State two different ways in which expense of education and training affects variations of wages in different occupations.

Group II

7. “The extra gains which any producer or dealer obtains through superior talents for business, or superior business arrangements, are very much of a similar kind [to rent]. . . . All advantages, in fact, which one competitor has over another, whether natural or acquired, whether personal or the result of social arrangements, bring the commodity, so far, into the Third Class, and assimilate the possessor of the advantage to a receiver of rent.” —Mill.
   Explain what is the “third class” of commodities here referred to by Mill; wherein “personal” advantages differ from those which are “the result of social arrangements”; and how far the general doctrine set forth in this extract is found also in Walker and in Seager.
8. State concisely the residual theory of distribution, as set forth by Walker.
9. Suppose the number of laborers to increase greatly, the other factors in production (capital, land) remaining unchanged: what changes in wages would ensue, and in what manner would they be brought about, according to Mill? Walker? Seager?
10. Explain concisely,
    1. the capitalization of rent;
    2. the capitalization of monopoly profits;
    3. the statement that the rate of interest determines the value of land and securities;
    4. innocent investors and acquired rights.
11. A corporation organized to do a mercantile business buys an expensive city site, erects a building thereon, carries on the operations of buying and selling, and in due time distributes dividends among its stockholders. What is the nature of the return received by the stockholders?

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 7, Bound Volume: Examination Papers, Mid-Years 1905-06.

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ECONOMICS 1
Year-end Examination, 1905-06

Omit one question from each group.

I.

1. Define capital, and mention two articles of wealth which are always capital, two which never are, and two which sometimes are and sometimes are not.
2. Under what conditions would there be no economic rent?
3. Explain briefly the salient influences which will determine the value (1) at any given moment, (2) in the long run, of the following:
   1. an uncopyrighted book,
   2. a copyrighted book,
   3. an ounce of gold.
4. What are the limits to the price-fixing and profit-earning powers of monopolies? Are there any other conditions which will tend to check the indefinite growth of combinations?

II.

5. Is it true of all commodities that changes in supply affect their value proportionally? Is it true of the commodity money? If in your opinion there is any difference, explain it.
6. Can a commodity change its value without changing its price? Can it change its price without changing its value? Suppose the commodity were gold bullion, would your answer vary?
7. Suppose an increase in the volume of our currency, due to a new issue of silver, what would be the effect upon international trade? Would this effect be lasting? Would your answer depend at all upon the condition of our currency at the time the increase occurred?
8. If the merchandise imports from England to the United States equalled the exports from the United States to England (a) what would be the state of exchange on London? (b) Would there be any greater advantage to either of the countries engaged in trade?

III.

9. Would a tariff “for revenue only” differ from a protective tariff, the product of which is entirely devoted to revenue? Has either any advantage over the other?
10. “A man is of all sorts of luggage the most difficult to be transported.” What is the bearing of this fact upon the theory of international trade?
11. (a) How are loans affected when the reserve limit (as established either by law or custom) is reached in England, Germany, and in the United States?
    (b) Show whether a system of “combined reserves” is needed in France, England, or Germany.
12. Arrange the following items in their proper order as they would appear in the statement of a national bank. What criticisms would a bank examiner make? Would these criticisms vary if the bank were situated in New York, Boston, or the town of Lexington?

Loans,	360 thousands of dollars
Capital,	50      “                “       “
Reserve,	50      “                “       “
Real estate,	28      “                “       “
Deposits,	300    “                “       “
Undivided profits,	3        “                “       “
Notes,	115    “                “       “
Other assets,	20      “                “       “
Bonds and stocks,	40      “                “       “
Surplus,	30      “                “       “

Source: Harvard University Archives. Harvard University, Examination Papers 1873-1915. Box 8, Bound volume: Examination Papers, 1906-07;  Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1906), pp. 26-27.

Image Source: Portrait of Professor Frank W. Taussig in the Harvard Class Album 1906.