The Harvard undergraduate economics departmental exam and the essay topics for 1942 were transcribed for the previous post. Below we have three field exams for money & finance, market organization & control, and labor economics & social reform from the same year. In the Randall Hinshaw papers at Duke I did not find field exams for statistics & accounting or economic history that I suspect would have also been offered (judging from Part II of the economics departmental exam).
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DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS
Department of Economics
May 6, 1942
DIVISION SPECIAL EXAMINATION
Money and Finance
(Three hours)
PART I
(About one hour)
- Write an essay on ONE of the following topics:
- monetary conditions of full employment equilibrium,
- the functions and importance of the Federal Reserve System in the 1920’s, the 1930’s, and today,
- investment banking by commercial banks – theory and practice in the past and future,
- international monetary problems after the last war, and after this war,
- modern improvements on the classical theory of international trade,
- ideas for post-war liberation and control of international trade – conditions of progress in respect of justice to all nations and prosperity for all,
- modern federal taxation in peace and war times – functions, and types of taxes and tax programs required,
- ways of mitigating the undesirable future consequences of our mounting national debt,
- effects of the war on financial problems of state governments,
- the background of the modern vogue of monetary management and deficit finance, in fundamental economic changes over recent decades,
- prospective war-time and immediate post-war changes in America, in demand and supply conditions for investment funds and real capital,
- post-war problems and prospects in Anglo-American economic relations.
PART II
(About one hour)
All students must answer TWO questions. If you are a candidate for honors, at least ONE of these two must be a starred question.
- (*) “The spectre of ‘secular stagnation’, which threatened the capitalist world of the 1930’s, is being exorcised by this war and will probably not return after it, at least for some decades.”
- (*) Outline succinctly, and explain and discuss as fully as your time allows, what you regard as the best analysis – either one writer’s or your own compilation – of the fundamental causes of the business cycle.
- Explain, and discuss critically, several different concepts of “velocity” and “hoarding” found in the modern literature of monetary theory.
- “Just as banking policy was unable, in the 1930’s, to play any important part in producing recovery, it is now unable, for opposite and parallel reasons, to play any important part in combating war inflation.”
- (*) Discuss the economic and other causes of the world-wide growth of new nationalistic restrictions on international trade, in the interval between the last war and the present war.
- (*) “As a stabilizer of the monetary basis of international trade, nothing short of one world currency under the management of a central, international authority, can be an effective substitute for the 19 century’s international gold standard.”
- Discuss the effects which the “lend-lease” arrangements through which this country is aiding its allies in the war, are likely to have on our foreign trade, economic relations with the outer world, and economic position in the post-war period.
- “If country A has strong labor unions which force up and hold up wage-costs in all its industries, while country B enjoys cheap labor together with industries as modern and well mechanized as those of A, progressive depreciation by A of the external value of its currency is its only means of maintaining competition with B in world markets.”
- (*) Discuss the relative merits of compulsory savings plans, a further lowering of exemptions from the personal income tax, and a general sales tax, as methods of diverting a larger share of war-time wages from consumption expenditure to investment in the war effort.
- (*) “Federal expenditures on welfare projects, or benefaction’s to the under-privileged, are a national luxury which must be sacrificed to the war effort.”
“No; on the contrary, the war increases our obligation to all we can for the well-being of our poorest citizens; for in relation to the war effort, their morale is more important than are all economies, which would benefit only the over-privileged – whose patriotism, we hope, will stand the strain.” - Discuss the merits of the view that in wartime the income tax should be supplemented by a special, progressive tax on all increases of individual incomes above the average levels of the same incomes in a group of pre-war years.
- “The chief danger in severe taxation of business profits in wartime is that of causing under maintenance of industrial plant, to the extent of making the country pay for the war to largely by consuming its capital.”
PART III
(About one hour)
(Answer TWO questions)
- “Future alternations of prosperity and depression are unlikely to occur with the nearly exact regularity or periodicity, which has made the term ‘business cycle’ appropriate in the past. The ‘cycle’ in that sense was one of the regularities peculiar to a quasi–automatic, laissez-faire capitalism.”
- “Money and finance are of no importance in modern war; only physical resources and production count. The Axis countries are already bankrupt, but it makes no difference. And we, in order to win the war, will have to give our physical production experts – not our monetary and fiscal experts – a free hand.”
- “America is sure to have, before the war ends, an inflation that will largely wipe out the real incomes and wealth of all its professional people and small savers – the backbone of the middle-class – and divide the spoils between rich speculators and skilled, industrial wage-earners. And that will make impossible the future maintenance of the country’s conservative-liberal, political tradition.”
- “The effort to knit the Latin American economies into ours, and make the Western Hemisphere a largely unified and self-sufficient, regional economy, cannot succeed in any large and lasting way. Our principal, natural economic ties are with Europe, and so are those of the Latin American countries; and these old, natural tendencies will reassert themselves after the war.”
- “By ending the imperialism of the white race in the Orient, the war is ending what have been essential factors in the prosperity of England, Holland, and America – exploitation of cheap Oriental labor and rich natural resources acquired at little cost, and a market for ‘dumping’ industrial surpluses, so as to make something near to full employment in the Western countries compatible there with excessive prices for the same industrial products.”
- “The spread of industrialism throughout the world does not merely alter the incidence everywhere of ‘comparative advantage’, and the international division of labor; it increases the diversity of productive powers and the self-sufficiency of every country, and thus radically diminishes the total importance of international trade.”
- “Financial, or monetary and fiscal manipulations cannot save capitalism. They could, if the right manipulators could work freely and not be defeated by a ‘strike’ on the part of Capital. But every attempt, in a time of depression, to redistribute money income and thus restore consumption and employment, always will be defeated by the further decline of investment due to the fears of the capitalists, who fear what immediately attacks their positions more than they fear the eventual, socialist revolution that is certain to result in time from an unrelieved, severe depression.”
- “In opposition to the nineteenth century orthodox explanation and defense of interest as a payment necessary to induce, through saving, enough creation of real capital, Keynes in effect revives the basic idea and resulting attitude of Aristotle and the medieval writers against ‘usury’. Like them, he sees in the demand for interest only the reluctance of the rich to part with their money hoards, and thus makes it the villain of the economic drama.”
- “In the economic world, the ‘real’ in contrast with the ‘monetary’ factors do indeed determine, as the older economists thought, what everyone must do in order to reach true equilibrium. Where they went wrong was in supposing that everyone always does fairly soon reach true equilibrium, that is, adjustment to realities; that deceptive, monetary changes have only very brief, transitional, or ‘short run’ consequences. Money is much more important than they thought it was, because the truth is that activities supported only by illusions, of monetary origin, prolong and aggravate those illusions and themselves in a cumulative fashion until unreality, or non-adjustment to reality, becomes so drastic that it collapses violently and then gives way, only, to a like, prolonged departure from reality in the opposite direction.”
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DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS
Department of Economics
May 6, 1942
DIVISION SPECIAL EXAMINATION
Market Organization and Control
(Three hours)
PART I
(About one hour)
- Write an essay on ONE of the following topics:
- corporate profits,
- the problem of converting plants to war production,
- some recent developments in the study of costs of production,
- the war and American agriculture,
- why farmers are poor,
- the “parity” concept in agricultural policy,
- a wartime plan for the railroads,
- the future of private and public ownership in the public utility field,
- public utility rate-making: science or art?
- the relation of price control and rationing to fiscal policy,
- bureaucracy in industry and government,
- the Supreme Court and the regulation of economic life.
PART II
(About one hour)
All students must answer TWO questions. If you are a candidate for honors, at least ONE of these two must be a starred question.
- (*) Select any two American industries and compare their respective pricing methods and policies. Which seems to you more desirable from a public standpoint? Explain.
- Suppose you were put in charge of a trust fund with the duty of investing funds in corporate stock. What factors would you take into account in deciding which stocks to buy? Why?
- (*) Explain the relation, if any, between industrial price policies and the size of the national income.
- “The recent downward trend in the stock market is an utter absurdity from an economic point of view.” What facts and theories underlie this statement? Do you agree with it? Explain.
- (*) “We are now experiencing an agricultural revolution no less profound than the industrial revolution of 150 years ago.” Do you agree? Why or why not?
- (*) Discuss the chief problems of public policy connected with the growing and marketing of cotton.
- Discuss critically the recent agricultural policy of one foreign country.
- What are the principal changes that have been introduced in the methods and living conditions of American farmers by the internal combustion engine?
- (*) “Whenever you tried to define a public utility you will always come down finally to one and only one factor: discriminating monopoly.” What is a discriminating monopoly and what conditions favor its existence? Do you agree that discriminating monopoly is the distinguishing characteristic of public utilities? Explain.
- (*) What justification, if any, can be offered for the principle of railroad rate-making which attempts to equalize the competitive position of producers over a wide area?
- What conditions in the field of public utilities led to the passage of the Public Utility Holding Company Act of 1935?
- Discuss the relative merits of water-power and steam-power in the generation of electricity. Should it be public policy to favor one against the other (a) as a war measure, (b) in the post-war period? Explain.
PART III
(About one hour)
Answer TWO questions
- “It is an odd circumstance that capital fought for the right to incorporate, while labor fights against the compulsion to incorporate.” Discuss.
- “From an economic standpoint there is little to be said for excess profits taxation. As a method of controlling inflation it is obviously quite inadequate. Hence the only important consequence is an undermining of the financial position of precisely those corporations which are most essential in war production.” Discuss.
- Discuss the methods which have been employed in financing plant expansion requirements necessitated by the defense and war efforts. Why were these methods adopted? What is their significance for the post-war period?
- “The technical and managerial classes are slated to succeed the owners in the sequence of ruling classes.” Discuss.
- Some experts believe there is likely to be a great increase in the number and importance of corporate farms in the relatively near future. What are the reasons for this belief? Explain why you agree or disagree.
- Do you think direct control over wages is necessary to effective price control? Why or why not?
- Sketch the traditional policy of our government toward participation by American businessmen in international cartels and combines. Discuss the reasons for this policy and its results.
- “From the standpoint of economic organization, the Nazi economy represents the uninterrupted continuation of trends in German society which reach back at least to the 1870’s.” Discuss.
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DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS
Department of Economics
May 6, 1942
DIVISION SPECIAL EXAMINATION
Labor Economics and Social Reform
(Three hours)
PART I
(About one hour)
- Write an essay on ONE of the following topics:
- wages and war inflation,
- the closed shop,
- should the 40-hour week be abolished during the war?
- the problem of migratory labor,
- an ideal system of unemployment insurance,
- a population policy for America,
- class struggle – reality or propaganda slogan?
- the probable effect of the war on American movements of social reform,
- can socialism be achieved by a gradual process of reform?
- labor and the anti-trust laws,
- trade unions and political action,
- labor in World War I.
PART II
(About one hour)
All students must answer TWO questions. If you are a candidate for honors, at least ONE of these two must be a starred question.
- (*) Discuss the benefits which one important C.I.O. union has won for its members, and the methods and policies by which it has won them.
- (*) Assume that a new industrial union enrolls all the workers in a particular industry, and succeeds in raising their wages. Make, and stayed clearly, your assumptions about all the main economic conditions (supply and demand conditions in the various markets) relevant to this problem; and on your assumptions, analyze the determination of the shares of the cost of paying for this wage-increase, which will be born in the end respectably by (1) the employers in the industry, (2) the consumers of the product, and (3) groups connected with other industries as workers, employers, or consumers.
- Discuss the history, methods, and achievements of union-management coöperation in one American industry where it has become established.
- What principles, as to policy and procedure, would you advise the federal war labor Board to adopt as its guiding principles in dealing with industrial disputes during the war period? Explain your reasons for each principal you propose.
- (*) Is the Malthusian theory of population wrong? If so, in what respects and why? If not, what is the evidence to support it?
- (*) Explain and evaluate the theory of non-competing groups.
- Can fascism (including Nazism) be called the “revolution of the middle class”? Explain.
- What, in your opinion, would be the chief economic effects of a cessation in population growth? Why?
- (*) Discuss critically Marx’s theory of capitalist crises.
- (*) What kind of a “new order” from an economic standpoint do the Nazis want to create?
- Discuss the main characteristics and results of economic planning in the Soviet Union.
- According to a number of economists, the price policy of a socialist society should be based on one single principle: equate price to marginal cost. Explain the meaning of this rule and argue for or against its general validity.
PART III
(About one hour)
Answer TWO questions
- Discuss the relative advantages and disadvantages, from the workingman’s standpoint, of the sales tax and a tax on wages deducted at the source as methods of closing the gap between outstanding purchasing power in the quantity of consumer goods available in the war economy.
- “Whether profit-sharing be but a slight modification of the ordinary capitalist system or contained within itself the germs of a true coöperative system need hardly be discussed in view of the fact that its history has been a record of repeated failure. The cause of failure in almost every case has been the apparent incompatibility of profit-sharing with trade unionism.” Discuss.
- What is to be said for stabilization of money wages as a goal of monetary policy?
- “Can even the most ardent free-trader doubt that in the post-war world American labor will continue to demand and deserve protection from cheap foreign labor?” Discuss.
- Discuss the economic problems of the construction industry, placing the kind of unionism which prevails there in its proper setting.
- Discuss the structure, problems and policies of the labor movement in backward or colonial countries.
- “There is no mistaking the economic foundations of race prejudice in the contemporary world.” Discuss.
- “Historically the connection between freedom of enterprise and freedom in other fields of thought and action is obvious. Must we not, then, assume that the destruction of free enterprise would likewise deprive us all our cherished liberties?” Discuss.
Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Papers of Randall Hinshaw. Box 1, Folder “Schoolwork, 1940s”.
Image Source: Harvard Square from the Tichnor Brothers Collection of postcards. Boston Public Library, Print Department.