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Harvard. Final Exams in Economics. 1913-14.



This posting merges information from three sources: brief course descriptions from the annual course announcement published for the Division of History, Government and Economics for the academic year 1913-14 in the Harvard Register; final examination questions published by Harvard in June 1914; and the mid-year (i.e. February) examination questions for two courses taught by Frank Taussig and pasted in a file scrapbook containing what appears to be all of his Harvard examinations.

At there are online copies of the annual June publication of examination questions for 1912-13 through 1915-16. A transcription of the 1912-13 economics examinations has been posted earlier.

While sixteen courses have published  final examinations that are transcribed below, there were still some seven or so economics courses not included in the published June volume. Further the mid-year (i.e. February) final exams for year long courses were not included in the published collection.


Principles of Economics

Course Description
Economics A

[Economics] A. (formerly 1). Principles of Economics. Tu., Th., Sat., at 11.

Professor TAUSSIG and Asst. Professor DAY, assisted by Messrs. Burbank, J. S. Davis, R. E. Heilman, and others.

Course A gives a general introduction to economic study, and a general view of Economics for those who have not further time to give to the subject. It undertakes a consideration of the principles of production, distribution, exchange, money, banking, international trade, and taxation. The relations of labor and capital, the present organization of industry, and the recent currency legislation of the United States will be treated in outline.

The course will be conducted partly by lectures, partly by oral discussion in sections. A course of reading will be laid down, and weekly written exercises will test the work of students in following systematically and continuously the lectures and the prescribed reading. Course A may not be taken by Freshmen without the consent of the instructor.


Mid-Year Exam
Economics A

Arrange your answers strictly in in the order of the questions. Answer all the questions.

  1. State concisely the distinctions between the following (omit one): —

(a) free goods and public goods;
(b) saving, investment, the creation of capital;
(c) subsidiary coinage and limping standard;
(d) industrial crisis and financial panic;
(e) deposits in commercial banks and deposits in savings banks.

  1. Which among these distinctions is important for the understanding of the following, and wherein? (Omit one.)

(a) the influence of credit on prices;
(b) the benefits to be expected from a centralized banking system;
(c) the rates which a municipality charges for water supplied to consumers;
(d) the effects of public borrowing (government debts);
(e) silver certificates.

  1. (a) Suppose a great and lasting increase in the demand for skates: what would you expect to be the immediate, what the ultimate effects on the value of skates?
    (b) Suppose a great and lasting increase in the demand for Indian corn: what would you expect to be the immediate, what the ultimate effects on the value of Indian corn?
    (c) Suppose a great and lasting increase in the demand for wheat straw: what would you expect to be the immediate, what the ultimate effects on the value of wheat?
  2. “Here cost is supposed to be uniform but not constant, — it becomes less per unit as the number of units increases.” Explain the terms “uniform” and “constant,” and the conditions of production described in the extract. How is value determined under these conditions (illustrate either by diagram or by example)?
  3. In which direction and by what process would the following tend to affect the price to the consumer in the United States of a bushel of wheat: (1) adoption of bimetallism by the United States at the ratio of 16 to 1; (2) development of organized speculation; (3) a successful corner in wheat?
  4. Explain: —

Central Reserve City Bank;
Federal Reserve Bank;
U.S. Treasury Gold Reserve;
Bank of England Reserve.

  1. Suppose the people of one country to lend, through a long period, large sums annually to the people of another country; trace the effects in the lending country, immediate and ultimate, on

the flow of specie;
merchandise imports and exports;
the price of foreign exchange.

Would you expect such a lending country to have a “favorable” or an “unfavorable” balance of trade?

  1. Suppose the following course of prices: —


Price of silver
per oz.
Price of wheat
per bushel
Index numbers of general prices
1873 $1.30 $1.32 130
1895 0.65 0.67 80
1912 0.61 1.10 110

Would the figures indicate that the value of silver changed between 1873 and 1895? The value of gold? of wheat?

Would they indicate that the value of silver changed from 1895 to 1912? of gold? of wheat?


Final Exam
Economics A

  1. Arrange the following items in the form of a bank statement showing in parallel columns the liabilities and resources: —

Real estate, $30,000; Surplus, $30,000; Deposits, $283,000; Loans, $300,000; Reserve, $65,000; Undivided profits, $12,000; Other assets, $10,000; Capital stock, $100,000; Bonds and stocks, $80,000; Notes, $75,000; Due from banks, $15,000.

Draw up a similar statement showing condition after each of the following operations: —

(a) The bank makes a new loan of $1000 for 3 months at the discount rate of 4% per annum. Proceeds are taken 1/3 in specie, 1/3 in the bank’s own notes, and the balance in a deposit account.

(b) The bank adds $5000 to its surplus, and declares a dividend of 2%. Stockholders take half of the dividend in gold, and leave half on deposit with the bank.

  1. What would be the immediate effect, what the ultimate effect, of a large increase in the supply of money on (a) money wages, (b) real wages, (c) business profits, (d) the bank rate of discount?
  2. “The principle of protection is to build up our home industries by manufacturing our own products. This gives our people employment, keeps the money in the country, and makes this country an independent and self-reliant nation.”

Wherein are these arguments valid? Wherein invalid? Give your reasons.

  1. “The outcome of the discussion of demand and supply (with reference to capital and interest) can be stated in simple form under the theory of value. The several installments of savings can be had at various rates, some for a small reward, some for a larger reward. The case is thus one of varying supply price, coming under the principle of increasing costs.”

Explain, and illustrate by diagram.

  1. “The effect of high prices for land and high rents is apparent. Industries will be slow to locate in Pittsburgh if rents or prices of land are higher than in other cities. A higher rent or interest on higher-price of land bought for building, will be a constant added charge on cost of operation. Consequently, industries will tend to shun a city where this higher cost is incurred.” Do you think this consequence will ensue?

Suppose a tax in this city (not levied in other cities) on the future increase of land values; would industries shun the city?

  1. Explain wherein the problems would be different in fixing minimum wages (a) for common unskilled labor, (b) for various grades of skilled labor, (c) for women.
  2. How great has been the development of coöperation in production? What explanation can you give?

What is the ground for saying that “maturity” makes an industry more proper for public management?

“The inevitable attitude of the hired workman is to favor arrangements that seem to make work and to oppose those that seem to lessen work.”

Why should this attitude be thought “inevitable”?

  1. Explain, and give in each case, if possible, an illustration drawn from American or British experience in the taxation of land:

Increment tax;
Stoppage at the source;
Incidence of a tax;
Progressive tax.





Course Description
Economics 1

[Economics] 1 1hf. Statistics. Half-course (first half-year). Mon., Wed., Fri., at 11. Asst. Professor DAY.

This course will deal primarily with the elements of statistical method. The following subjects will be considered: methods of collecting and tabulating data; the construction and use of diagrams; the use and value of the various types and averages; index-numbers; dispersion; interpolation; correlation. Special attention will be given to the accuracy of statistical material.

In the course of this study of statistical method, examples of the best statistical information will be presented, and the best sources will be indicated. Population and vital statistics will be examined in some measure, but economic statistics will predominate.

Open only to those who, having passed satisfactorily in Economics A, secure the consent of the instructor.


Final Exam
Economics 1

  1. Indicate two methods of correcting death-rates for age- and sex-distribution.
  2. What are the different methods of collecting workmen’s budgets? What are the advantages and disadvantages of each of these methods?
  3. What are the chief difficulties encountered in the use of statistics of imports and exports?
  4. Compare the advantages and disadvantages of the mode and arithmetic average as statistical types.
  5. Describe and criticise the different methods of presenting wage statistics. Cite instances of the use of each.
  6. Define correlation. What is Pearson’s coefficient of correlation? Indicate its use and interpretation.
  7. Explain briefly: ogive; lag; probable error; Galton graph; standard deviation; logarithmic curve; ratio of variation; Lorenz curve.



European Industry and Commerce in the Nineteenth Century

Course Description
Economics 2a

[Economics] 2a 1hf. European Industry and Commerce in the Nineteenth Century. Half-course (first half-year). Tu., Th., Sat., at 9. Professor GAY, assisted by —.

Course 2a undertakes to present the general outlines of the economic history of western Europe since the Industrial Revolution. Such topics as the following will be discussed: the economic aspects of the French Revolution and the Napoleonic régime, the Stein-Hardenberg reforms, the Zoll-Verein, Cobden and free trade in England, labor legislation and social reform, nationalism and the recrudescence of protectionism, railways and waterways, the effects of transoceanic competition, the rise of industrial Germany.

Since attention will be directed in this course to those phases of the subject which are related to the economic history of the United States, it may be taken usefully before Economics 2b.


Final Exam
Economics 2a

  1. When did the Industrial Revolution take place in Germany? Why did it come later there than in England? In how far was it brought about by analogous causes?
  2. Compare the scale of production and specialization in the cotton, shoe, and wool manufacturing industries in England and France. Give reasons for contrasts.
  3. Discuss the part which the banks have played in the promotion of industrial concentration in the electrical, chemical, and mining industries in Germany. What other factors have encouraged the development of these industries.
  4. (a) Account for the relatively high capitalization of the railways in England.
    (b) How has the “cost of service” principle been applied in the fixing of freight rates on the Prussian railways?
  5. What have been the periods of prosperity in English agriculture in the nineteenth century? And what have been the causes? How have these periods of prosperity affected the agricultural laborer?
  6. What interests have supported the recent tariff reform movement in England? Why? Do you think that from the English standpoint such a change in policy is desirable? Why or why not?



Economic and Financial History of the United States

Course Description
Economics 2b

[Economics] 2b 2hf. Economic and Financial History of the United States. Half-course (second half-year). Tu., Th., Sat., at 9. Professor GAY, assisted by —.

The following are among the subjects considered: aspects of the Revolution and commercial relations during the Confederation and the European wars; the history of the protective tariff policy and the growth of manufacturing industries; the settlement of the West and the history of transportation, including the early canal and turnpike enterprises of the states, the various phases of railway building and the establishment of public regulation of railways; banking and currency experiences; various aspects of agrarian history, such as the public land policy, the growth of foreign demand for American produce and the subsequent competition of other sources of supply; certain social topics, such as slavery and its economic basis, and the effects of immigration.


Final Exam
Economics 2b

  1. Discuss the bearing of the mercantile theory upon American commercial history before 1860.
  2. Comment on the following statements by William McKinley:

(a) “A low tariff or no tariff has always increased the importation of foreign goods until our money ran out; multiplied our foreign obligations; produced a balance of trade against our country; supplanted the domestic producer and manufacturer; impaired the farmer’s home market without improving his foreign market; decreased the industries of the nation; diminished the value of nearly all our property and investments and robbed labor of its just rewards. This is the verdict of our history.”

(b) “Periods of low tariff synchronize with industrial depression ” [in American history].

  1. “In the twenty years [after 1816] institutions were arising and changing, and centers of social gravity shifting. It was essentially a time of realignment of interests.”

State your grounds of agreement or disagreement with this view, and compare these changes with those in the period since 1890.

  1. Illustrate with three examples the problem of localization of industry in the United States.
  2. “The Civil War was won by the McCormick reaper.” How far was this true, and why?
  3. Write briefly on the following topics: —

(a) The competition between anthracite and coke in the iron industry.
(b) Willoughby’s estimate of the future of integration in industry.



Money, Banking, and Commercial Crises

Course Description
Economics 3

[Economics] 3. Money, Banking, and Commercial Crises. Mon., Wed., Fri., at 1.30. Asst. Professor DAY, assisted by —.

This course aims to analyze the principal problems of money and credit. An examination is first made of the more important existing monetary systems. This is followed by a careful review of the more instructive chapters in the monetary history of England, Germany, France, the United States, Austria, British India, Mexico, and the Philippines.

The nature, origin, and early growth of commercial banking are considered. An investigation of present banking practice in England, France, Germany, and Canada is followed by a study of banking history and present banking problems in the United States. In this connection foreign exchange and the money markets of London, Paris, Berlin, and New York are examined.

Finally attention is turned to those problems of money and credit which appear most prominently in connection with economic crises. Though emphasis is thrown upon the financial aspects of the trade cycle, the investigation covers the more fundamental factors causing commercial and industrial fluctuations.

Short papers upon assigned topics will be required of all students.


Final Exam

  1. Suppose the United States were to permit the free coinage of our present silver dollar. How would this tend to affect the (1) monetary stock of the United States; (2) mint price of silver; (3) value of the dime; (4) price of gold jewelry; (5) value of gold certificates; (6) prices in England; (7) balance of international payments; (8) rates of foreign exchange? Give explanations throughout.
  2. How is the value of irredeemable paper money to be measured? What determines the value of such money? What are the most important questions in the resumption of specie payments after a period of irredeemable paper? If possible, illustrate your points from the experience of the United States.
  3. Define discount market. Describe the English discount market. How has the absence of such a market affected banking in the United States? What provisions of the Federal Reserve Act are designed to develop a discount market in this country?
  4. How and why have panics and crises in the United States tended to affect (1) aggregate bank loans; (2) reserves of the national banks; (3) amount of bank notes in circulation; (4) quotations of stocks and bonds on the New York Stock Exchange; (5) rates of foreign exchange in New York?
  5. Briefly describe the following phenomena in the panic of 1907; (1) currency premium; (2) hoarding; (3) the domestic exchanges; (4) substitutes for cash.
  6. By what means and to what extent, if at all, does the Federal Reserve Act provide for an effective centralized control of credit in the United States?



Economics of TransportationCourse Description
Economics 4a

[Economics] 4a 1hf. Economics of Transportation. Half-course (first half-year). Tu., Th., Sat., at 11. Professor RIPLEY, assisted by —.

A brief outline of the historical development of rail and water transportation in the United States will be followed by a description of the condition of transportation systems at the present time. The four main subdivisions of rates and rate-making, finance, traffic operation, and legislation will be considered in turn. The first deals with the relation of the railroad to shippers, comprehending an analysis of the theory and practice of rate-making. An outline will be given of the nature of railroad securities, the principles of capitalization, and the interpretation of railroad accounts. Railroad operation will deal with the practical problems of the traffic department, such as the collection and interpretation of statistics of operation, pro-rating, the apportionment of cost, depreciation and maintenance, etc. Under legislation, the course of state regulation and control in the United States and Europe will be traced.


Final Exam
Economics 4a1

  1. Railroad A. is capitalized at $50,000 per mile, — $35,000 in five per cent bonds and the rest in stock. Railroad A. earns about $2500 net per mile. Railroad B. earns about $4000 net per mile on a capitalization of $90,000 per mile, — $50,000 in four per cent bonds, the balance in stock. Which is the stronger road financially? What about the relative ability of the two roads to give service at low rates?
  2. Describe the general plan by which competition in Trunk Line territory was eliminated within the last decade. What has since happened?
  3. What has been in general the course of prices of railway securities since 1890? Briefly state the causes.
  4. What was the final plan adopted for dissolution of the Union-Southern Pacific combination?
  5. How was the question of land valuation for railroad purposes in the Minnesota Rate Case treated?
  6. What is the gist of the Fourteenth Amendment to the Constitution of the United States? Merely name a few of the most important cases applying it to railroads since 1870, and in a sentence in each case outline the point covered.
  7. Outline a typical case, real or hypothetical, showing how Federal and State authority may come in conflict in the matter of rate-making.
  8. When and why was the Commercial Court created? Outline the result of the experiment.
  9. It has been urged that railroad monopoly under adequate Government regulation may serve the public as well as competition. Do you agree with this view? State your reasons and cite instances.



Economics of Corporations

Course Description
Economics 4b

[Economics] 4b 2hf. Economics of Corporations. Half-course (second half-year). Tu., Th., Sat., at 11. Professor RIPLEY, assisted by —.

This course will treat of the fiscal and industrial organization of capital, especially in the corporate form. The principal topic considered will be industrial combination and the so-called trust problem. This will be broadly discussed, with comparative study of conditions in the United States and Europe. The development of corporate enterprise, promotion, and financing, accounting, liability of directors and underwriters, will be described, not in their legal but in their economic aspects; and the effects of industrial combination upon efficiency, profits, wages, prices, the development of export trade, and international competition will be considered in turn.


Final Exam
Economics  4b

Answer in order — omitting any one question.

  1. What are the principal advantages of a stable rate of dividends? What influences tend to cause departure therefrom?
  2. Outline two ways at least of securing temporary relief by appeal to stock-holders in case of threatened insolvency of a corporation.
  3. What is the most important economy incident to production under monopoly of the market, as distinct from mere large-scale production?
  4. Why is the financial experience of the American Mercantile Marine Company significant?
  5. Outline the course of enforcement of the Sherman Act. How largely did underlying economic causes, as distinct from purely personal ones, play a part?
  6. Outline the device, in case of corporate promotion, for making an issue of stock full-paid in order to relieve investors against further assessments.
  7. Would price regulation — as by the American Publishers Association — fixing the retail price of books and excluding cut-rate dealers from supplies, seem to be debarred by the Standard Oil decision?
  8. Are financial abuses such as an excessive issue of securities as characteristic of German industrial combinations as of those in the United States?
  9. Contrast price fixing by law for monopolized commodities with the regulation of railroad rates. How may such an issue arise in connection with amendment of the Sherman Act?


Public Finance

Course Description
Economics 5

[Economics] 5. Public Finance, including the Theory and Methods of Taxation. Mon., Wed., Fri., at 9. Professor BULLOCK.

This course covers the entire field of public finance, but emphasizes the subject of taxation. After a brief survey of the history of finance, attention is given to public expenditures, commercial revenues, administrative revenues, and taxation, with consideration both of theory and of the practice of various countries. Public credit is then studied, and financial legislation and administration are briefly treated.

Systematic reading is prescribed, and most of the exercises are conducted by the method of informal discussion. Candidates for distinction will be given an opportunity to write theses.

Graduate students are advised to elect Economics 31.


Final Exam
Economics 5

  1. Discuss the different definitions of a tax.
  2. Discuss Adam Smith’s maxims of taxation.
  3. Discuss the incidence of an exclusive tax on land.
  4. Discuss the incidence of taxes upon mortgages in the United States.
  5. Compare the working of the general property tax in the United States with its working in Switzerland.
  6. Discuss the proposition that income is the normal source of taxation.
  7. Discuss the leading arguments for and against progressive taxation.
  8. Discuss the leading arguments of Shearman and Seligman for and against the single tax.



Trade Unionism and Allied Problems

Course Description
Economics 6a

[Economics] 6a 1hf. Trade Unionism and Allied Problems. Half-course (first half-year). Tu., Th., Sat., at 10. Professor RIPLEY, assisted by —.

This course will deal mainly with the economic and social relations of employer and employed. Among the topics included will be: the history of unionism; the policies of trade unions respecting wages, machinery, output, etc.; collective bargaining; strikes; employers’ liability and workmen’s compensation; efficiency management; unemployment, etc., in the relation to unionism, will be considered.

Each student will make at least one report upon a labor union or an important strike, from the original documents. Two lectures a week, with one recitation, will be the usual practice.


Final Exam
Economics 6a

  1. Outline the principal phases of development of organized labor in the United States, with especial reference to conditions at the present time. In conclusion name five or six of the most significant events which define the present situation.
  2. What are the three most essential features of a collective bargain between workmen and employers?
  3. What is the feature in common of all minimum wage laws, as in Victoria and of compulsory arbitration statutes like those of New Zealand? Wherein does the policy differ most profoundly from ours?
  4. Name in a sentence in each of as many of the following cases as possible, the essential point at issue.

(a) The Danbury hatters.
(b) Allen v. Flood.
(c) New York Bakeshop law.
(d) Bucks Stove Co. case.
(e) Taff Vale Railway.
(f) Holden v. Hardy. (Utah.)

  1. How, other than by incorporation, is a greater measure of legal responsibility of trade unions to be attained?
  2. Discuss scientific management from the viewpoint of organized labor.
  3. What is the significant feature of the new type of state labor bureau, like the Wisconsin Industrial Commission?
  4. Compare the present legal status of the non-union man in England and the United States.



Theories of Distribution and Distributive Justice

Course Description
Economics 7

[Economics] 7. Theories of Distribution and Distributive Justice. Tu., Th., Sat., at 10. Professor CARVER and an assistant.

Course 7 undertakes an analysis of the laws of value, as applied to consumable goods and to agents of production, including labor, land, capital, and management; the laws determining wages, rent, interest, and profits; and an examination of the relation of the laws of value to the problem of social adjustment; the social utility of various forms of property; also a critical reading of various works on the distribution of wealth, on socialism, on the single tax, and other special schemes for attaining the ideals of economic justice.


Final Exam
Economics 7

  1. What have you read for this course during the year? What parts of the reading interested you most? What parts interested you least? What parts gave you most difficulty?
  2. State and criticise in detail Fisher’s theory of the value of money.
  3. State and criticise Laughlin’s theory of the value of money.
  4. A well-secured note of a good corporation for $100 has four years to run. It pays 7 per cent interest. It is taxed at 1 per cent. The prevailing rate of interest on such paper is 5 per cent. What is the note worth?
  5. What is your own theory of crises?
  6. A law requiring proprietors of saw-mills to insure their workmen against accident would lead to increased cost of production, and higher prices, for lumber. Would a law requiring all employers similarly to insure lead to higher prices all around? Why or why not?
  7. What do you think of the single-tax contention that all taxes except land-taxes are burdens on industry, and restrict production?
  8. Summarize and criticise Shearman’s arguments for the single tax.
  9. State and criticise Clark’s argument to prove that ” unearned increments ” in land values off-set depreciation on buildings, and so increase the amount of building.



Principles of Sociology

Course Description
Economics 8

[Economics] 8. Principles of Sociology. — Theories of Social Progress. Mon., Wed., Fri., at 10. Professor CARVER and an assistant.

An analytical study of social life and of the factors and forces which hold society together and give it an orderly development. The leading social institutions will also be studied with a view to finding out their relation to social well-being and progress.

The reading will be selected from various writers who have treated the problems of human progress and social adjustment.

Course 8 is open only to students who have passed in Economics 1.


Final Exam
Economics 8


  1. Make a two-page topical outline of the course as a whole.
  2. What topics in the course would you wish to have treated more fully? What topics seemed to you to have proportionately too much attention? What parts of the reading interested you most? What parts of the reading did you find most helpful? What parts of the reading gave you most difficulty? What parts of the reading would you prefer to see omitted?
  3. In what respects does the imitation theory fall short of an adequate social psychology?
  4. Discuss the economic interpretation of history.
  5. Discuss the “color line.”
  6. Summarize Spencer’s theory of the origin of religion. In what respects is it deficient?
  7. To what does Giddings attribute the rise of democracy? In what ways does he think that democracy changes the functions of government?
  8. State and illustrate Giddings’ “three stages of civilization.” Compare this conception with the rival views of Hegel, Comte and Spencer.
  9. Summarize John Dewey’s “Interpretation of Savage Mind.”
  10. Summarize the theory of progress developed in the lectures. What is your own view?



Principles of Accounting

Course Description
Economics 9

[Economics] 9. Principles of Accounting. Mon., Wed., Fri., at 11. Associate Professor Cole, assisted by Messrs. and —.

This course is designed to show the processes by which the earnings and values of business properties are computed. It is not intended primarily to afford practice in book-keeping; but since intelligent construction and interpretation of accounts is impossible without a knowledge of certain main types of book-keeping, practice sufficient to give the student familiarity with elementary technique will form an important part of the work of the course. The chief work, however, will be a study of the principles that underlie the determination of profit, cost, and valuation. These will be considered as they appear in several types of business enterprise. Published accounts of corporations will be examined, and practice in interpretation will be afforded. The instruction will be chiefly by assigned readings, discussions, and written work.

Course 9 is not open to students before their last year of undergraduate work. For men completing their work at the end of the first half-year, it may be counted, with the consent of the instructor, as a half-course. It is regularly open only to Seniors and to Graduates who have passed in Economics A. Students intending to enter the Graduate School of Business Administration are expected to take this course in preparation for the advanced courses in accounting.


Final Exam
Economics 9

Associate Professor Cole

  1. Illustrate, by imaginary entries, any book from which posting may be made in lump sum not only for many items to be debited to one account, but also for many items to be credited to each of various other accounts. [Show at least three items to be posted in lump sum for each of three accounts, and show at least two items that must be posted individually.]
  2. Two successive condensed balance sheets show the following figures: —

January 1, 1913

Real Estate $50,000 Capital Stock $100,000
Merchandise 75,000 Bills Payable 25,000
Accounts Receivable 30,000 Accounts Payable 30,000
Miscellaneous Assets 7,000 Surplus 7,000
$162,000 $162,000


January 1, 1914

Real Estate $53,000 Capital Stock $100,000
Merchandise 77,000 Bills Payable 25,000
Accounts Receivable 12,000 Accounts Payable 20,000
Miscellaneous Assets 7,000 Surplus 7,000
Reserve for Depreciation 5,000
Dividends 7,000
$149,000 $149,000

Assuming that no dividends were paid, what were the profits for the year?
Where are they?

  1. Should you charge against revenue or to capital (giving your reason in each case) the cost of the following : —

(1) An extra wheel, carried ready for emergency, for an automobile truck.
(2) Wages of an extra watchman employed because construction work has removed a part of the wall of a store.
(3) Installation of an automatic sprinkler system required because during a strike fanatics have threatened incendiarism.
(4) Repairs of a building after a slight collapse due to the disintegration of concrete frozen during construction.
(5) Directories, handbooks, encyclopedias, etc., in the office of a professional firm that must keep informed of the latest scientific and professional news.

  1. What is the probable explanation of the following entries?
Good Will $25,000
To Andrew Jackson $25,000
Subscriptions 200,000
To Stock Subscribed 175,000
Premium Surplus 25,000
Cash 50,000
Andrew Jackson 150,000
To Subscriptions 200,000
Stock Subscribed 175,000
To Capital Stock 175,000


  1. How should you distribute the following general expenses over the departments of a department store, grouping the expenses as far as feasible: —
General Administration,
Welfare Work.
  1. The estimated wear and tear on machinery in a shop is $12,000 a year. The profits are figured monthly and $1,000 is taken into the cost accounts for wear and tear on the last day of every month. The amount spent (in cash) for repairs and renewals is as follows: February 15, $500; March 15, $1,200; June 15, $2,500; August 15, $8,000; December 15, $1,500. Show the entry or entries for wear and tear for (1) each last day of the month, (2) the five dates given above, (3) closing at the end of the year. [Show either journal or ledger, with dates.]
  2. Bonds are issued to the amount of $12,000,000, payable in twenty-five years, with interest at 5 per cent annually (in semiannual payments). The credit of the issuing company is not good enough to warrant investors in lending on a basis of less than 5½ per cent. The bonds are accordingly sold for $11,190,084.90. Where will the discount appear on the issuer’s statements — income sheet, balance sheet, both, neither? If either or both, how and where?

Bond tables give the value of such bonds six months later as $11,197,812.23. When the first interest, of $300,000, is paid, what entry or entries should be made? Write the explanation portion of such entries.

  1. Suppose that the cost accounts of a manufacturing business are carried through the general ledger, and that the accounts have been closed so far as to show on the ledger all the figures for the operating statement. This statement is as follows: —

Operating statement, May 1, 1913, to April 30, 1914

Sales $297,000
Raw materials on hand, 5/1/13 $26,000
Raw materials bought 107,000
Raw materials handled 133,000
Raw materials on hand, 4/30/14 18,000
Raw materials consumed 115,000
Wages paid $54,000
Less balance due, 5/1/13 2,000
Wages due, 4/30/14 900
Wages cost 52,900
Taxes 1,500
Interest prepaid, 5/1/13 600
Interest paid in and for year 1,000 1,600
General manufacturing expenses 30,000
Manufacturing cost 201,000
Goods in process, 5/1/13 10,000
Cost of goods for year 211,000
Goods in process, 4/30/14 7,000
Cost of goods finished in year 204,000
Stock on hand, 5/1/13 60,000
Cost of finished goods handled 264,000
Stock on hand, 4/30/14 20,000
Cost of goods sold 244,000
Selling cost 10,000 254,000
Net profits 43,000

Show the trial balance of ledger totals (not balances) for the cost accounts, supposing that the net balance of all accounts not involved in the cost accounting is $1100 on the credit side.

  1. Below are four columns of a six-column statement which were drawn up for a special purpose (sometimes waiving proper classifications) with the intention of filling out the remaining columns. Fill out the other two columns, and then present a proper form of balance sheet and income sheet (so far as the facts are known to you) for the railroad whose operations are covered by the figures, assuming that dividends of 6 per cent are declared, but not paid, at the end of the year.
Capital Stock 50.0 50.0
Bonded Debt 150.4 150.4
Accounts Receivable 12.5 12.5
Accounts Payable 2.0 2.0
Road and Equipment 101.3 101.3
Investments 102.7 102.7
Cash 14.7 14.7
Supplies 5.7 5.7
Advances 12.5 12.5
Transportation 13.9 46.7 2.5
Maintenance of Way and Structures 5.5 .4 1.2
Maintenance of Equipment 6.8 1.6
Traffic 1.1
General Expense 1.2 .4
Taxes 1.5 3.0
Other Income 6.5
Interest 6.0 1.5
Miscellaneous Expense 4.4 1.9 1.8
Surplus _______ 33.4 ______ 33.4
289.8 289.8 251.3 247.4



Economic Theory

Course Description
Economics 11

[Economics] 11. Economic Theory. Mon., Wed., Fri., at 2.30. Professor TAUSSIG.

Course 11 is intended to acquaint the student with some of the later developments of economic thought, and at the same time to train him in the critical consideration of economic principles and the analysis of economic conditions. The exercises are accordingly conducted mainly by the discussion of selected passages from the leading writers; and in this discussion the students are expected to take an active part. The writings of J. S. Mill, Cairnes, F. A. Walker, Clark, Marshall, Böhm-Bawerk, and other recent authors, will be taken up. Attention will be given chiefly to the theory of exchange and distribution.


Mid-Year Exam
Economics 11

Arrange your answers in the order of the questions. One question may be omitted.

  1. “The distinction, then, between Capital and Not-capital, does not lie in the kind of commodities, but in the mind of the capitalist — in his will to employ them for one purpose rather than other; and all property, however ill adapted in itself for the use of labourers, is a part of capital, so soon as it, or the value to be received from it, is set apart for productive reinvestment. The sum of all the values so destined by their respective possessors composes the capital of the country.”

What is to be said for this doctrine, what against it? By whom was it maintained?

  1. “Prices of commodities in great measure are fixed by supply and demand, but, except temporarily, they cannot be less than all costs, including wages and taxes, entering directly or indirectly into their production and distribution, together with some profit for the use of the capital employed. Hence an increase of the wages or cost of labor usually must be paid by consumers. A general increase of the wages of all labor would cause an equivalent increase of the price of nearly every product of labor and a general increase of the cost of living. The increased wages of the laborers then would not buy more than did their former wages and they would be no better off than before the increase. For this reason the economic welfare of the masses in the aggregate cannot be materially improved by the simple expedient of raising generally the wages of labor.”

What would Ricardo say to this? J. S. Mill? Your own view?

  1. Marx’s doctrine, that value is embodied labor, has been said to be essentially the same as Ricardo’s doctrine that value rests on the labor given to producing an article. Why or why not?
  2. Suppose an increase in the demand for a commodity, in the schedule sense: —

(a) For short periods, under what conditions, if under any, would you expect supply price to rise? to fall?
(b) For long periods, under what conditions, if under any, would you expect supply price to rise? to fall?

Note whether your answer differs in any particular from that to be expected from Marshall.“The part played by the net product at the margin of production in the modern doctrine of distribution is apt to be misunderstood. In particular many able writers have supposed that it represents the marginal use of a thing as governing the value of the whole. It is not so; the doctrine says we must go to the margin to study the action of those forces which govern the value of the whole; and that is a very different affair.”


  1. “It has sometimes been argued that if all land were equally advantageous and all were occupied, the income derived from it would not be a true rent, but a monopoly rent.”

Under what conditions, if under any, would there be true rent in such a case? Under what conditions, if under any, would there be a monopoly rent?

  1. “The derived supply price [of one of a group of things having a joint supply price] is found by a rule that it must equal the excess of the supply price for the whole process of production over the sum of the demand prices of all the other joint products.”

Explain, illustrating by diagram.

State the corresponding rule for the derived demand price of one of a group of commodities for which there is a joint demand.

  1. (a) “In hundreds and thousands of suburban homes the question is asked every day, “How much milk shall we take in today, ma’am?” or “How much bread?” and the housewife knows without consideration that if she ordered one loaf of bread and one pint of milk, the marginal significance of bread and milk would be higher than their price, and if she said six loaves and five quarts of milk, the marginal loaf and pint would not be worth their price. Such orders, therefore, never enter into her head. But she deliberates, perhaps, whether she will want three loaves of bread or four, or three loaves and a twist, or three white loaves and a half-loaf of brown, and whether she shall take three quarts of milk or a pint more or less. Thus, whatever the terms on which alternatives are offered to us may be, we detect in conscious action at the margin of consideration the principles which are unconsciously at work in the whole distribution of our resources.”

Do you find anything to criticize in this?

(b) “When the supply (of a given commodity) is limited, the diminishing utility of each increment will be arrested at a point below which the consumer will prefer to abandon the use of an increment for something else. The margin here is a margin of indifference between an increment of one commodity and an increment of another commodity. Since these increments are not necessarily the same, the margin of indifference may be reached at a point where the tenth increment of one commodity balances the twentieth of another, where, in other words, the marginal utility of the first commodity is twice that of the second.”

Explain what you think is meant; and give your opinion on the conclusion stated in the last clause of the final sentence.

  1. “An English ruler who looks upon himself as the minister of the race he rules (say in India) is bound to take care that he impresses their energies in no work that is not worth the labor that is spent on it; or, to translate the sentiment into plainer language, that he engages in nothing that will not produce an income sufficient to defray the interest on its cost.”

Would Marshall question this principle? On what grounds, if at all? Would you?


Final Exam
Economics 11

Arrange your answers in the order of the questions.
Answer all the questions.

  1. “What about the ‘supply curve’ that usually figures as a determinant of price, coördinate with the demand curve? I say it boldly and baldly: there is no such thing. When we are speaking of a marketable commodity, what is usually called the supply curve is in reality the demand curve of those who possess the commodity; for it shows the exact place which every successive unit of the commodity holds in their relative scale of estimate.”

Is this criticism just if directed to (1) the temporary equilibrium of supply and demand, as analyzed by Marshall for a grain market; (2) the “price zone determined by marginal pairs,” as analyzed by Böhm-Bawerk; (3) the long period equilibrium of supply and demand, as analyzed by Marshall.

  1. “The rent of land is no unique fact, but simply the chief species of a large genus of economic phenomena; and the theory of rent is no isolated economic doctrine, but merely one of the chief applications of a particular corollary from the general theory of demand and supply.”

Explain this statement of Marshall’s; mention other species which he assigns to the large genus; and consider wherein, if at all, the general doctrine differs from that of Clark, and from that of Böhm-Bawerk.

  1. “As is true of good will and credit extensions generally, so with respect to the good will and credit strength of these greater business men: it affords a differential advantage and gives a differential gain. In the traffic of corporation finance this differential gain is thrown immediately into the form of capital and so added to the nominal capitalized wealth of the community. . . .This capitalization of the gains arising from a differential advantage results in a large ‘saving’ and increase of capital.”

Does this resemble in essentials Walker’s doctrine? If so, wherein? If not, why not?
In what sense, if in any, is it true that the differential gains lead to an increase of capital?

  1. “It may be conceded that if a certain class of people were marked out from their birth as having special gifts for some particular occupation, and for no other, so that they would be sure to seek out that occupation in any case, then the earnings which such men would get might be left out of account as exceptional, when we are considering the chances of success or failure for ordinary persons.”

Consider whether, given the premise, the conclusion here stated would follow; what the bearing of the reasoning is on Walker’s theory of business profit; what Marshall would say of premise and conclusion.

  1. In what sense, if in any, is a “productivity” theory of wages put forth by Walker? by Clark? by your instructor?
  2. “All capital goods — tools, machines, and the like — were explained [by the economists of the British School] as merely so much stored-up labor, or as the stored-up wages paid for it; the capitalist, as a laborer gone to seed; and thereby the product of capital as indirectly the product of the earlier wage-paid labor; interest being thus mere indirect wages. It was implied in this that the interest payments are for mere wear-out of the principal invested, and that the sum of all the interest payments upon a given investment can normally or regularly equal only the original capital sum invested in wages; and that sometime a given capital investment must cease its career of earning interest.”

Consider whether this was the doctrine of the British economists; whether it is the doctrine of Böhm-Bawerk; of your instructor; and give your own opinion.

  1. “In the main, the way in which the increase of savings can find escape from its difficulties is through the parallel advance in the arts, calling for more and more elaborate forms of capital. . . . Given continued improvements calling for more and more elaborate plant, —more of time-consuming and roundabout applications of labor, — than savings can heap up, and a return will be secured by the owner of capital.”

What are the ” difficulties ” here referred to? What would be said of this way of escape by Böhm-Bawerk? by your instructor? by Veblen?


History and Literature of Economics to the year 1848

Course Description
Economics 14

[Economics] 14. History and Literature of Economics to the year 1848. Mon.,

Wed., and (at the pleasure of the instructor) Fri., at 11. Professor BULLOCK.

The purpose of this course is to trace the development of economic thought from classical antiquity to the middle of the nineteenth century. Emphasis is placed upon the relation of economics to philosophical and political theories, as well as to political and industrial conditions.

A considerable amount of reading of prominent writers will be assigned, and opportunity given for the preparation of theses. Much of the instruction is necessarily given by means of lectures.


Final Exam
Economics 14

  1. What significant analyses of economic structure were made by Aristotle, the Schoolmen, John Hales, Cantillon, and Smith?
  2. What do you consider the most significant analyses of economic functions made by Aristotle, the Schoolmen, Mun, Cantillon and the Physiocrats?
  3. Trace the development, in economic theory, of the idea of a beneficent natural order.
  4. What elements contributed to the economic system of Adam Smith, and what was Smith’s own contribution?
  5. Compare Ricardo’s economic theories with those of Smith.
  6. Trace the development of theories of money in the writings of Aristotle, the Schoolmen, the Mercantilists, and Ricardo.



Topics in the Economic History of the Nineteenth Century

Course Description
Economics 24

[Economics] 24. Topics in the Economic History of the Nineteenth Century.

Two consecutive evening hours per week, to be arranged with the instructor. Professor GAY.

This course is designed to offer an opportunity for further study to graduate students who have taken or are taking Economics 2a and 2b. Reading will be assigned and reports presented for discussion on such topics as the spread of the Industrial Revolution to the Continent and the United States, the agrarian changes in England in the first half of the century, and in the second half-century the effects of American agricultural competition on the chief European countries, the history of transportation, with especial reference to problems of government ownership in Europe. Emphasis will be given to the comparative development of typical industries both in Europe and the United States, and changes in wholesale and retail organization.

Students who are taking at the same time this course and the lectures in Economics 2a and 2b may receive credit for one and a half courses.


Final Exam
Economics 24

  1. “Such has been the rage for Western immigration for the last twenty years that the soil of New England has, in the estimation of good judges, been greatly undervalued.” (From address before the Essex Agricultural Society, 1833.)

Is this statement true, and, if true, what were the chief causes?

  1. Outline the chief topics you would discuss in writing a monograph on agriculture in the United States during the period 1825 to 1845. Characterize the chief available sources of evidence.
  2. Describe briefly the canal systems of Massachusetts and New York. Compare the reasons for their construction and for their decline.
  3. Explain the Suffolk Banking System and discuss its effectiveness from 1830 to 1843.
  4. What statistical material would you use in studying the crisis of 1837-39? How does it compare in extent and value with that available for the crisis of 1907?



Public Finance

Course Description
Economics 31

[Economics] 31. Public Finance. Mon., Wed., and (at the pleasure of the instructor) Fri., at 10. Professor BULLOCK.

The course is devoted to the examination of the financial institutions of the principal modern countries, in the light of both theory and history. One or more reports calling for independent investigation will ordinarily be required. Special emphasis will be placed upon questions of American finance. Ability to read French or German is presupposed.


Final Exam
Economics 31

  1. How far, in your opinion, does the general income tax conform to Smith’s canons of taxation?
  2. Compare local taxation in Great Britain with local taxation in either France or Germany.
  3. Discuss the incidence of taxes upon real estate.
  4. What, in your opinion, are the leading principles that should govern the distribution of taxation?
  5. What opinions concerning indirect taxation are held by the following writers: Smith, Bastable, and either Leroy-Beaulieu or Eheberg?
  6. Outline what you would consider a practicable plan for the reform of state and local taxation in the United States.
  7. Discuss the theory and practical operation of sinking funds.
  8. Describe the German system of product taxes. What does Eheberg think of the system?
  9. What is Leroy-Beaulieu’s opinion of the changes effected in French taxation during the last twenty years, and what changes does he advocate?

Answer the questions in order. Omit either the eighth or ninth question.




Harvard University Examinations. Papers Set for Final Examinations in History, History of Science, Government, Economics, Philosophy, Psychology, Social Ethics, Education, Fine Arts, Music in Harvard College (June, 1914), pp. 38-54.

Mid-year exams for Economics A and Economics 11 from Harvard University Archives: Examination papers in economics, 1882-1935, Scrapbook of Prof. F. W. Taussig. (HUC 7882).

Harvard University. Division of History, Government, and Economics, 1913-14. Official Register of Harvard University, Vol. X, No. 1, Part X (May 19, 1913).



Irwin Collier

Posted by: Irwin Collier