Today’s posting is a transcription of the “special examination” questions in money and finance given at Harvard in May 1939. Note that by finance, government finance/fiscal policy was understood.
Concentrators in Economics will have to pass in the spring their Junior year a general examination on the department of Economics, and in the spring of their Senior year an examination correlating Economics with either History or Government (this correlating exam may be abolished by 1942), and a third one on the student’s special field, which is chosen from a list of eleven, including economic theory, economic history, money and banking, industry, public utilities, public finance, labor problems, international economics, policies and agriculture.
Courses in allied fields, including Philosophy, Mathematics, History, Government, and Sociology, are suggested by the department for each of the special fields. In addition, Geography 1 is recommended in connection with international policies or agriculture.
[Source: Harvard Crimson, May 31, 1938]
A printed copy of questions for twelve A.B. examinations in economics at Harvard for the academic year 1938-39 can be found in the Lloyd A. Metzler papers at Duke’s Economists’ Papers Project.
- One Departmental Examination from the Department of Economics.
- Five Division Special Examinations.
Economic Theory,
Economic History Since 1750
Money and Finance,
Market Organization and Control,
Labor Economics and Social Reform.
- One of the Six Correlation Examinations given to Honors Candidates. (May 12, 1939; 3 hours)
Economic History of Western Europe since 1750,
American Economic History,
History of Political and Economic Thought,
Public Administration and Finance,
Government Regulation of Industry,
Mathematical Economic Theory.
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If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled. You can subscribe to Economics in the Rear-View Mirror below. There is also an opportunity for comment following each posting….
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DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS
DIVISION SPECIAL EXAMINATION
Money and Finance
(Three hours)
PART I
(About one hour)
- Write an essay on one of the following topics:
- the depression of 1937-1938,
- the Federal Reserve System since the War,
- currency depreciation,
- price levels and foreign exchange under inflation,
- the recent and current policies of Germany with respect to foreign exchange and foreign trade, and their effects on the world economy,
- international short-term balances,
- the ability-to-pay theory of taxation,
- the burden of the public debt,
- taxes and subsidies as means to increase the national income,
- financing social security,
- taxation and the business cycle,
- the Federal Reserve Board and the Treasury.
PART II
(About one hour)
Answer two questions. Candidates for honors must answer one starred question
- (*) According to a recent proposal, new money (supplementary to our present currency) would be freely issued at a fixed price against the delivery of a stated composite of storable raw materials and redeemable at any time in the same commodity composite. Discuss the possibilities of this scheme as a means of mitigating the business cycle.
- (*) Explain (a) the factors that determine the current level of total consumption and investment in a community in a given period, and (b) the possible effects of the current on the future level of consumption and investment.
- “Inflation means that artificial purchasing power, which represents no goods and services available for exchange, is enabled to bid for goods and services.”
- Discuss the importance and the principles of proper control of the quality of bank credit.
- (*) “When a country is off the gold standard, its government and central bank have the power to control the exchange rate and prevent external events from causing domestic deflation and unemployment. And in this case even if the government and the bank are not conscious of this power and have no conscious policy, their actual behavior will precisely determine the exchange rate, and the output and income of the country.” Discuss.
- (*) Can the general conclusions of the classical theory of international trade be supported if the theory of comparative labor costs is replaced by a type of analysis consistent with the ideas about costs and values now accepted in general economic theory? Explain.
- “In practical world politics, the difference between the South Manchurian Railway Company and the Japanese Government, or between the Anglo-Persian Oil Company and the British Government, is the difference between Tweedledum and Tweedledee.”
- Outline and explain the principal changes that have occurred in the balance of payments of the United States in the last two decades.
- (*) Are there any satisfactory criteria to distinguish between “productive” and “unproductive” government expenditure?
- (*) How may expenditure by government of funds obtained through taxes affect the incidence of the taxes?
- “All taxes tend to depress wages or increase prices and to lower the standard of living.”
- “Equity in taxation is an elusive mistress, whom perhaps it is only worth the while of philosophers to pursue ardently and of politicians to watch warily.”
PART III
(About one hour)
Answer two questions.
- “The budget should be balanced by issue of gold certificates. The government owns the gold and it has every right to use it to pay its debts.”
- “Keynes’s economic system is a reversion to the economic doctrines of mercantilism.”
- Compare the probably effectiveness of banking reform and tax reform as methods of preventing harmful inequalities of income.
- “The ‘abstinence’ for which investors are presumed to be rewarded under our system of private capitalism has too often become total and permanent abstinence, because our commercial bankers have departed from their proper functions and become mortgage bankers or bond salesmen, or even croupiers for the gambling games carried on in stock exchanges.”
- Do you think that the financing of a large governmental deficit by the banking system makes it difficult for private investment to expand enough to provide full employment?
- “The true meaning of laissez-faire, as the Classical economists well understood, is positive action by government in the spheres of money, public finance, and foreign trade to provide a framework within which free enterprise can function to bring desirable results.”
- “Free competition is essential to the proper functioning of capitalism and the necessity for competition in the banking business is perhaps the primary requisite in this respect.”
- Do you think that the foreign markets for this country’s surplus farm products are being seriously jeopardized by the present administration’s agricultural policies? Explain.
- “Public finance, above all, must ‘change with the times’, for the failure to adapt public finance to changing social pressures has always been a potent cause of revolution.”
May 10, 1939.
Source: David M. Rubenstein Rare Book & Manuscript Library, Duke University. Lloyd A. Metzler Papers, Box 7; [Harvard University], Division of History, Government and Economics, Division Examinations for the Degree of A.B., 1938-39.