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Exam Questions Harvard

Harvard. Final Exams for International Economic Relations. Haberler and Harris, 1936-37

 

 

Reading lists for Harvard’s International Economic Relations two semester sequence for the academic year 1939-40 taught by Gottfried Haberler, Seymour Harris, and Wassily Leontief have been transcribed and posted earlier.  For the 1936-37 course I have only found the reading period assignments and the final exams for both semesters. 

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Course Enrollment

[Economics] 43a 1hf. (formerly 9a). Associate Professors Haberler and Harris, and other members of the department.—International Economic Relations, I. Theory of International Trade.

Total 70: 4 Graduates, 48 Seniors, 11 Juniors, 3 Sophomores, 4 Others.

 

[Economics] 43b2hf. (formerly 9a). Associate Professors Haberler and Harris, and other members of the department.—International Economic Relations, II. Commercial Policy.

Total 62: 5 Graduates, 45 Seniors, 5 Juniors, 3 Sophomores, 4 Others.

 

Source:  Harvard University. Report of the President of Harvard College, 1936-37, p. 92.

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Reading Period First Semester
Economics 43a

Read one from each group:

  1. Marshall, Money, Credit and Commerce, pp. 98-190.
    Ohlin, Interregional and International Trade, pp. 1-138.
  2. Graham, Exchanges, Prices and Production in Hyper-Inflation Germany, pp. 97-238.

Reading Period Second Semester
Economics 43b

Read one of the following:

  1. Rope, German Commercial Policy
  2. Iverson, International Capital Movements, pp. 1-301 and pp. 454-512.
  3. World Trade Barriers in Relation to Agriculture
  4. a. Haight, French Import Quotas and
    b. Beverage, Tariffs, the Case Examined Chs. 1 thru 10.

Source:  Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. HUC 8522.2.1) Box 2, Folder “Economics, 1936-37”.

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1936-37
HARVARD UNIVERSITY
ECONOMICS 43a

Answer one question from Group I, one question from Group II, and two questions from Group III.

Group I

  1. What use does Marshall make of the relation of demand and supply in international trade?
  2. What is the difference, if any, between Ohlin’s and the Classical approach?

Group II

  1. What is the meaning of the “comparative cost doctrine” if there are not two, but many export and import goods
    1. with constant cost in all industries
    2. with increasing cost in all industries
    3. in terms of opportunity cost?
  2. The market condition of demand, supply, price and quantity for a particular commodity in two countries A and B is given by this diagram.

    1. Suppose trade is opened between the two countries. What will be the influence on the price, quantities produced and consumed in both countries and how much will be exported from A to B, assuming that there is no transportation cost involved.
      Answer in words and show graphically.
    2. After trade has been opened, a duty is imposed in B whose height (on this diagram) is measured by a vertical distance of, say, one half inch. What will be its influence on prices and quantities produced, consumed and traded between A and B?
      Answer in words and sketch graphically.

Group III

  1. Assume you calculate the balance of international payments for a country during a particular year. The result is the following:
Net debits Net credits
Merchandise and Services 200
Tourist expenditures 100
Long-term capital 100
Short-term capital 200
Interest, Dividends 150
Gold movements 50 ….
Total 450 350

a) Enumerate a few possible explanations of the discrepancy between credits and debits.
b) In a recent book by J. E. Meade, Economic Analysis and Policy, you find the following statement: “If all the items in the Balance of Payments are properly and completely recorded, the total of all the items on the receipt side must be equal to the total of all the items on the payments side; the Balance of Payments must balance” (p. 216). Give your comments on this statement.
c) How can the above statement be reconciled with the statement frequently found that “the balance of payment is in disequilibrium?”

  1. Discuss the effects of exchange depreciation upon prices.
  2. Is the breakdown of the gold standard to be associated primarily with internal developments or with such external factors as large capital movements? Discuss.

Mid-Year.  1937.

 

Source:  Harvard University Archives. Harvard University. Examination Papers (HUC 7000.28 vol. 79). Papers Printed for Final Examinations: History, History of Religions, …, Economics, …, Military Science, Naval Science. January-June, 1937.

 

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1936-37
HARVARD UNIVERSITY
ECONOMICS 43b

Answer THREE of the first five questions, and ONE of the questions 6 to 9.

  1. When did the United States adopt the principle of the unconditional most-favored-nation treatment? Discuss the comparative advantages and disadvantages of the conditional and unconditional most-favored-nation clause.
  2. Discuss the differences and similarities between quotas and duties and the comparative merits of the two systems as methods for the restriction of imports and protection of home industries.
  3. Suppose an industry subject to decreasing cost; if production could be increased, costs per unit of output would fall. Production can, however, not be increased, because of foreign competition. Discuss whether and when in such circumstances an import duty can be justified on economic grounds.
  4. Discuss the mechanism of capital movements or reparation payments under a gold and under a paper standard. How do you account for wide difference of opinion among authorities concerning the practicability of large transfers of capital or reparations? Have recent discussions added anything new to the theory of capital movements? In answering, relate your discussion as much as possible to a concrete experience.
  5. Comment on one of the following:
    1. The international position of the United States in the thirties;
    2. The international position of Great Britain in the thirties;
    3. The international position of Great Britain at the end of the nineteenth century.In giving your answer, make some practical suggestions for attaining international equilibrium.
  6. Discuss (1) Germany’s recent commercial policies or (2) the operation and effects of clearing agreements.
  7. Can protection mitigate unemployment? (Beveridge.)
  8. Discuss briefly Iverson’s criticism of the classical approach towards capital movements, and comment on Iverson’s own contributions.
  9. What has the effect of trade barriers been upon trade in agricultural commodities and upon prices of these commodities? Relate your answers to the policies of one country.

Final. 1937.

Source:  Harvard University Archives. Harvard University. Examination Papers (HUC 7000.28 vol. 79). Papers Printed for Final Examinations: History, History of Religions, …, Economics, …, Military Science, Naval Science. January-June, 1937.

Image Source:  Harvard Class Album 1942.

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Economist Market Johns Hopkins Statistics

Johns Hopkins. H.B. Adams invites Walter Willcox to enroll as PhD student, 1890

 

The Cornell statistician Walter Willcox received his Ph.D. from Columbia University for his dissertation on the statistics of divorce. What I find interesting in the following two letters from Professor Herbert B. Adams at Johns Hopkins University were the modest formal requirements to be awarded a Ph.D. at Johns Hopkins in 1890.

Willcox’s advanced coursework elsewhere would have been given full transfer credit (in today’s terms) so that a single year residence, dissertation, and presumably a final doctoral examination would have been necessary for him to receive the degree.

Also interesting is to read that all the Hopkins’ Ph.D.’s from the Department of History and Politics (included political economy) graduated in June had “good positions before the summer was over”.

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Johns Hopkins University,
Baltimore, Md., December 4, 1890.

My dear Mr. Willcox,

I have your letter of December 2 regarding your possible residence in Baltimore during the remainder of this year. Would it not be a good plan for you to secure our degree of Doctor of Philosophy? You have studied so long and under such good conditions that I should think you might easily obtain our degree by one year’s residence. You would then be in a much better position to obtain a good academic chair. Hopkins men are in constant request, at least in my Department of History and Politics. All of our eight doctors graduated last June obtained good positions before the summer was over. One of our former students who went to Heidelberg and took his degree has now returned to Baltimore and is waiting for a job. Only day before yesterday I was able to put two wandering trustees into communication with this young candidate and I hope the interview will result in his appointment to a professorship of history in a Western college.

You ought to make a combination of history, philosophy, and political science. Our requirements for the degree of Doctor of Philosophy embrace three years of strictly university work. The last of the three must be spent in residence. Perhaps you have already taken a doctor’s degree and I am talking into the air. In any case I think residence here for a few months would very much help your academic prospects.

Very sincerely yours,
[signed]
H. B. Adams

______________

Johns Hopkins University,
Baltimore, Md., December 13, 1890.

Walter F. Willcox, Esq.,
Walden, Mass.

My dear Mr. Willcox:

I have your letter of December 10, and note what you say regarding your thesis. Probably the best place for original investigation in this line of study is in the Department of Labor in Washington, D.C. I presume Col. Wright, the Commissioner of Labor would willingly afford you facilities for your work. I do not know that our library is especially rich in materials on the divorce question. You must apply to the head centre of information on that subject, Mr. Samuel Dike, Secretary of the Divorce Reform League. I presume you know him already.

Our second term begins in February. The cost of living here is about $35 a month. If you are going to take your doctor’s degree at Columbia it would hardly be expedient to enter as a regular student in our department. You had better come as a free lance and spend a good deal of your time in Washington. Enclosed please find a programme of the next meeting of the American Historical Association in the Federal City.

We have a recess at the Hopkins from the 24thof December to the 5thof January. It would be a very good thing for you to come to Washington, if you can afford it and attend the meetings of the Economic Association as well as the Historical and settle down in this part of the country for the rest of the year. I enclose a programme of the Economic Association.

Very cordially yours,
[unsigned]

Source:  U.S. Library of Congress, Manuscript Division. The Papers of Walter Willcox, Box 3, Folder: General Correspondence A-C

Image Source:Walter F. Willcox, ca. 1900-1910  . Cornell University Library. Digital Collections.

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Harvard Suggested Reading Syllabus

Harvard. Second year graduate economic theory. Leontief, 1956-57

 

 

In an earlier post I provided the outline, reading lists and exam questions (only for Economics 202a) for the second year graduate course, “Economic Theory II”, Economics 202a and 202b, taught by Wassily Leontief in 1948-49. The following course outline with reading assignments is for the year 1956-57.  The course in both years has essentially the same readings for the first semester. The second semester of 1956-57 does add an entirely new section “Principles of Dynamics”. I have highlighted in blue boldface additions to the reading assignments in the 1956-57 course compared to the 1948-49 version.

 

Economics in the Rear-view Mirror thanks Juan C. A. Acosta who found these Leontief reading lists in the Franco Modigliani Papers (Box T6) at the Duke University Economists’ Papers Project and has graciously shared them for transcription here. 

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Wassily Leontief

HARVARD UNIVERSITY
Ec. 202a
ECONOMIC THEORY
Fall Term 1956-57

The following outline covers the first semester of the two semester course.

I.     Analysis of Production and the Theory of a Firm:

  1. Costs; total, average, marginal.
    Theory of the multiple plant firm.
    Revenue; total, average, marginal.
    Long and short run analysis
    Supply under competitive and monopolistic conditions.
  2. Production function, marginal productivity, increasing and decreasing returns.
    Stocks and flows.
    Joint products.
    Demand for factors of production.
    Discontinuous relationships and non-marginal analysis (Linear Programming).
    Internal and external economies.
  3. Production over time.

Reading assignments:

Oscar Lange, “The Scope and Method of Economics,” Review of Economic Studies, Vol. XIII, (1), 1945-46, pp. 19-32.

E. A. G. Robinson, Structure of Competitive Industry, Chs. II, VII, VIII, pp. 14-35, 107-133.

E. H. MacNiece, Production, Forecasting, Planning and Control, 292 pp. This book presents a concise description of the actual operation of a manufacturing enterprise and thus supplies the factual background for the theory of the firm.

K. E. Boulding, Economic Analysis, (revised edition, 1948) Chapters 20-26, 31, and 32; or (3rded., 1955) Chapters 23-29, 34, and 35.

E. H. Chamberlin, “Proportionality, Divisibility, and Economies of Scale,”Quarterly Journal of Economics, February, 1948, pp. 229-262.

R. Frisch, “Alfred Marshall’s Theory of Value,” Quarterly Journal of Economics, Vol. LXIV, No. 4, November 1950, pp. 495-524.

K. E. Boulding, “The Theory of the Firm in the Last Ten Years,” The American Economic Review, Vol. XXXII, No. 4, December 1942, pp. 791-802.

A. Lerner, Economics of Control, Chs. 15, 16, 17, pp. 174-211.

National Bureau of Economic Research, Cost Behavior and Price Policy, Ch. VII, pp. 142-169; Appendix C, pp. 321-329.

W. W. Cooper, “A Proposal for Extending the Theory of the Firm,” Quarterly Journal of Economics, February 1951, pp. 87-109.

Robert Dorfman, “Mathematical or ‘Linear’ Programming,” American Economic Review, December 1953, pp. 797-825.

A. G. Hart, Anticipations, Uncertainty and Dynamic Planning, reprinted 1951, 98 pp.

 

II.    Theory of the Household:

  1. Theory of utility and indifference lines analysis.
    Individual demand, prices and income.
    Dependent and independent, competing and complementary, superior and inferior goods.
  2. Measurability of utility.
    “Marginal utility of money,” Consumer surplus.
    Interpersonal interdependence in consumers’ behavior.
    Economic theory of index numbers.
    Choices involving risk.

Reading assignments:

J. Hicks, Value and Capital, Part I, Chs. I-III, pp. 1-54.

K. E. Boulding, Economic Analysis, (Revised edition, 1948) Chapters 33, 34; or (3rded., 1955), Chapter 36 and 37.

Duesenberry, Income, Saving and the Theory of Consumer Behavior, Chapters I-III, pp. 1-46.

J. R. Hicks, A Revision of Demand Theory, Parts I and II, also the summary and conclusion.

A. A. Alchian, “The Meaning of Utility Measurement,” American Economic Review, March 1953, pp. 26-50.

G. Katona, Psychological Analysis of Economic Behavior, Part II, #1-7, pp. 63-149.

 

III. Theory of Market Relationships:

  1. Pure competition; individual and market supply and demand curves.
    Stability of market equilibrium, statics and dynamics.
    Monopoly and price discrimination.
  2. Monopolistic competition.
    Duopoly, oligopoly, bilateral monopoly, etc.
    “Theory of games.”

Reading assignments:

A. Marshall, Principles of Economics, Book V, Chs. III, V.

E. H. Chamberlin, The Theory of Monopolistic Competition, Chs. II, III, IV, and V.

Joan Robinson, The Economics of Imperfect Competition, Chs. 15 and 16.

Robert Triffin, Monopolistic Competition and the General Equilibrium Theory, Chs. I and II.

William Fellner, Competition Among the Few, Chs. II-V.

W. H. Nicholls, Imperfect Competition within Agricultural Industries, Ch. 18.

Leonid Hurwicz, “The Theory of Economic Behavior,” American Economic Review, December, 1945, pp. 909-925.

 

IV.  General equilibrium theory:

  1. Basic Concepts of a General Equilibrium Theory.
    Data and variables. Price system and general interdependence. Linear model of a general equilibrium system.

Reading assignments:

O. Lange, The Economic Theory of Socialism, pp. 65-72.

Cassel, The Theory of Social Economy, Vol. I, Ch. IV, pp. 134-155.

E. H. Phelps Brown, Framework of the Pricing System, in particular chapters dealing with general equilibrium theory.

T. W. Schultz, Agriculture in an Unstable Economy, Ch. I, pp. 60-70; Ch. IV, pp. 128-137.

R. S. Eckaus, “The Factor Proportion Problem in Underdeveloped Areas,” The American Economic Review, September 1955, pp. 539-565.

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ECONOMICS 202b
ECONOMIC THEORY
Spring Term, 1956-57

V.  Economics of Welfare

  1. Individual maximum and social welfare.
  2. Efficiency and distributive justice.
  3. Efficiency of the purely competitive system.
    Monopoly and economic welfare.
    External economies.
  4. Pricing and allocation for public enterprise.

READING ASSIGNMENTS:

J. Hicks, “The Foundation of Welfare Economics,” Economic Journal, December 1939, pp. 696-712.

Meade and Hitch, An Introduction to Economic Analysis and Policy, Part II, Chs. VI-VII, pp. 159-220.

Coase, “Note on Price and Output Policy,” Economic Journal, Vol. LV, April 1945, pp. 112-113.

Samuelson, “Evaluation of Real National Income,” Oxford Economic papers, Jan. 1950.

T. Scitovsky, “The State of Welfare Economics,” The American Economic Review, Vol. XLI, June 1951, pp. 303-315.

 

VI. Capital and Interest

  1. Stock and Flow Concepts.
    Productivity of Capital.
    Period of production and “turnover” of capital.
  2. Theory of saving.
    Risk and uncertainty.
  3. Partial equilibrium theory of interest.

READING ASSIGNMENTS:

Edward F. Denison, “Theoretical Aspects of Quality Change, Capital Consumption, and Net Capital Formation,” in Problems of Capital Formation, Studies in Income and Wealth, Vol. 19, National Bureau of Economic Research 1957, pp. 215-260.

Robert Eisner, “Interview and Other Survey Techniques and the study of Investment,” in Problems of Capital Formation (same as above)

Irving Fisher, The Theory of Interest, Chs. VII, VIII, IX, X, XI, XVI, XVII, and XVIII. 1930.

Readings in the Theory of Income Distribution(Blakiston, 1946)

F. Knight, “Capital and Interest,” pp. 384-417.
Keynes, “The Theory of the Rate of Interest,” pp. 418-424.
D. H. Robertson, “Mr. Keynes and the Rate of Interest,” pp. 425-460.

John Rae, John, New Principles of Political Economy, 1834, Chs. I-V.

Irving Fisher, Nature of Capital and Income, Chs. I, IV, V, XIV, XVII, Macmillan, 1906.

Friedrich & Vera Lutz, The Theory of Investment of the Firm, 1951.

Joel Dean, Capital Budgeting,1951, Chs. VI, VII.

 

VII: Principles of Dynamics

  1. Change over time.
    Period analysis.
    Continuous change
  2. Dynamic stability and instability.

READING ASSIGNMENTS:

W. Baumol, Economic Dynamics, Chs. I-VII, pp. 1-136.

P. Samuelson, “Dynamics, Statics and Stationary State,” The Review of Economics and Statistics, February 1943, pp. 58-68 (also reprinted in Readings in Economic Analysis, Vol. 1, edited by N. V. Clemens).

K. E. Boulding, A Reconstruction of Economics, Ch. I, pp. 3-26.

Erik Lindahl, Introduction to the Study of Dynamic Theory, pp. 21-73 in Studies in the Theory of Money and Capital.

 

VIII: Economic Development and Accumulation of Capital

  1. Dynamic interrelation of income, investment and the rate of interest.
  2. Linear interrelation of income, investment and the rate of interest.
    Non-linear theory of economic development.

READING ASSIGNMENTS:

Bresciani-Turoni, “The Theory of Saving,” Economica; Part I, Feb. 1936, pp. 1-23; Part II, May 1936, pp. 162-181.

Schelling, “Capital Growth and Equilibrium,” American Economic Review, Dec. 1947, pp. 864-876.

Harrod, “An Essay in Dynamic Theory,” Economic Journal, March 1939, pp. 14-33.

Pigou, Economic Progress in a Stable Economy,” Economica, August 1947, pp. 180-188.

Stern, “Capital Requirements in Progressive Economies,” Economica, August 1945, pp. 163-171.

A. Sweezy, “Secular Stagnation?” in Harris, Postwar Economic Problems, McGraw-Hill, New York, 1943, pp. 67-82.

Hansen, “Economic Progress and Declining Population Growth,” American Economic Review, March 1939, pp. 1-15.

Also, Baumol, see above under VII.

 

IX: Keynesian Theory and Problems

  1. Over-all outlines of the General Theory.
    Wage and price “stickiness.”
    Demand for money.
  2. Saving and “oversaving.”
    Multiplier principle.

READING ASSIGNMENTS:

A. P. Lerner, The Economics of Control, Chs. 21, 22, and 25.

__________, “The Essential Properties of Interest and Money,” Quarterly Journal of Economics, May 1952, pp. 172-93.

J. M. Keynes, General Theory of Employment, Interest and Money, Chs. 1, 2, 8 &18.

G. Haberler, Prosperity and Depression, Ch. 8.

 

Source:  Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Franco Modigliani. Box T7.

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Reading assignments in the 1948-49 reading list that were not included in the 1956-57 reading list:

 

I.     Analysis of Production and the Theory of a Firm:

I. Fisher, “A Three-Dimensional Representation of the Factors of Production and Their Remuneration Marginally and Residually,”Econometrica, October, 1939.

George Stigler, “Production and Distribution in the Short Run,” Journal of Political Economy, 1939, pp. 305-327. Reprinted in Readings in the Theory of Income Distribution, pp. 119-142.

Joe S. Bain, The Economics of the Pacific Coast Petroleum Industry, Part I, Ch. V, pp. 84-114.

III. Theory of Market Relationships:

Carl Kaysen, “A Revolution in Economic Theory?” The Review of Economic Studies, Vol. XIV (I), 1946-47, p. 1-15.

Jakob Marschak, “Theory of Games,” Journal of Political Economy, April, 1946, pp. 97-115.

V.  Economics of Welfare

Meade, J. E., and Fleming, J. M.: Price and Output Policy of State Enterprise,” Economic Journal, Vol. LIV, December 1944, pp. 321-339.

VI. Capital and Interest

Kuznets: “On Measurement of National Wealth,” Studies in Income and Wealth, Vol. 2, National Bureau of Economic Research, 1936, pp. 3-61.

Kaldor: “Annual Survey of Economic Theory: The Recent Controversy on The Theory of Capital,” Econometrica, July 1937, pp. 201-233.

IX: Keynesian Theory and Problems

Domar: Expansion and Employment,” American Economic Review, March 1947, pp. 34-55.

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Image Source:  Wassily Leontief in Harvard Class Album 1964.

 

Categories
Economists Gender Germany Irwin Collier M.I.T. Yale

Farewell lecture of Irwin Collier, FU-Berlin. July 4, 2018

The ceremonial bookends to a professorship in a German university consist of an inaugural and a farewell lecture. I spoke before a public that included the six disciplines represented in the John-F.-Kennedy Institute for North American Studies (besides economics: political science, sociology, history, cultural studies and literature) as well as colleagues from the economics and business faculty of Freie Universität Berlin. Those attending included first-year undergraduates through the oldest cohorts of emeritus professors. I needed a lecture to keep the filled hall alert for 45 minutes on a particularly warm Berlin summer afternoon. I chose the fourth of July because there was no World Cup soccer on the day to compete with.

The ceremony began with an introduction by the Institute’s director, Professor Christian Lammert, who provided a comparative analysis of the twitter activity of President Donald Trump and me. It is a great way to get laughs and a gentle way to roast an honoree. Try it at your next official function, you’ll be glad you did.

Next a local American folksinger, John Shreve, warmed up the crowd for me with two songs, after which I took to the lectern and presented the following remarks. 

________________________

“Reflections on academic communities, clans, and clubs”

Abschiedsvorlesung of Prof. Irwin Collier, Ph.D.

John-F.-Kennedy Institute for North American Studies
Freie Universität Berlin
4 July 2018

One of the self-granted privileges of age, is to talk about oneself under the altruistic guise of sharing experience. And for this I beg your indulgence. On the other hand this is a farewell lecture, what else could you really expect? Now you needn’t worry that I am about to spew the cumulated bile of an underappreciated, unfortunate scholar bitter at the prospect of sealing his academic obscurity with a ceremony where others are about to celebrate his exit. While as delightful as it would be to speak long-repressed truth to the powers-that-be, this occasion lends itself to thoughtful reflection. No, instead I’ll offer from my own experience a few simply illustrative stories that most of you can relate to either through direct personal experience or have heard within your personal information bubbles.

Before getting started, let me make one thing pedantically clear: when I use the words “community”, “clan”, and “club” in what follows, but especially those latter two words, they are only to be understood as short-hand, metaphorical labels. I trust there is no need for attempting Über-precision in what is after all only offered as a series of personal reflections. My intention in speaking of communities, clans, and clubs is to offer you a simple alliterative triad that has a better chance of surviving into long-term memory than, say, “communities, tribes, and networks”, though that is what I actually mean, to be honest.

When I say academic both as adjective and noun, it is in the sense of having to do with individual membership in “the Academy” broadly understood.  I have always liked how the words “scholar and scientist” fit comfortably within the single German word “Wissenschaftler” and the Academy for me has its foundation in the Humboldtian dual mandate of research and instruction. We, the scholars and scientists of universities, have answered the call to follow that dual mandate. Of course knowledge gets produced outside the hallowed halls of the university and there are plenty of institutions that exist with the sole mission of advanced instruction. As an economist I have mostly good things to say about such division-of-labor and specialization.  But personally, I have spent about a half-century studying or working within a university setting, and half that time here at Freie Universität, so my preference is clearly revealed to serve that dual mandate.

Having a career-long interest in the history of economics, I have often had occasion to consider the life of scholars among scholars. While the filiation of ideas typically takes center stage in histories of economics (by this I mean the chronicle of how Adam Smith’s ideas begat those of David Ricardo and Thomas Robert Malthus, that in turn begat the ideas of John Stuart Mill, that begat innovations by William Stanley Jevons, on to the synthesis by Alfred Marshall and so on up to the present day), sometimes historians of economics explore the ideas of economists within particular historical contexts (e.g., the Progressive Era, the New Deal or the Thatcher-Reagan revolution) or within the specific policy debates of their times (protectionism, industrial policy, social insurance, monetary policy rules). This afternoon I will be guilty of thinking aloud about the social context of the creation and diffusion of scientific methods and knowledge generally. Since I am an economist, presumably what I have to say fits my home discipline best. Nonetheless I would wager at least one free lunch that the structures and mechanisms I have identified are present at least in some modified form elsewhere in the Academy.

Now somewhere in my unordered college papers that have followed me from New Haven to Cambridge, Massachusetts down to Princeton, then Houston and finally a transatlantic trip to Berlin in 1994, followed by three moves within the greater Berlin area there must be the original acceptance letter I received from Yale in the Spring of 1969.  One phrase in that letter has been etched into my memory, namely, that I was thereby welcomed into the “community of scholars”. I can smile now when thinking about the enthusiasm and naiveté of that boy turning man about to embark on his journey of academic life. A “community of scholars” turns out to have been what I had sought and what I was convinced I found in the undergraduate life of Yale College. When I first explored the stacks in the tower of Sterling Memorial Library and argued about philosophy and politics in beer-fueled bull-sessions into the night with my roommates and classmates, I felt at one with a much larger academic community, not merely that of the Yale microcosm but one extending to the authors of century-old books with uncut pages waiting to be discovered in the stacks. As far as the larger academic community in that thin slice of the historical present, well, I felt cosmopolitan to a fault. I saw no higher calling than that of the scholar/scientist. Excellence was not about winning a phi-beta-kappa key for display, it was about serving a higher purpose within that greater community of scholars. I believed that the true academic freely contributed and imbibed from the ever growing pool of human knowledge and was free from lesser motives. Life-work balance could not be an issue, the life and work of an academic were simply an identity.

Two modifications of my scholar’s life plan resulted from changes in scenery: an internship in Washington DC and later graduate school along the Charles River in Cambridge, Mass.

During my early undergraduate years I had little concern for applying knowledge for good, it seemed too much like engineering. Two spells in Washington, D.C. as an intern at the Council of Economic Advisers during the highpoint of the Watergate crisis taught me much about the importance of the work of policy wonks, a concept that only gained currency decades later during the Clinton Administration. My respect grew for the leaves of absence for public service or earlier work in the war effort (WWII) that I found was quite common among my professors.  Had plan A, serving the university dual mandate, not have worked, I probably would have pursued my personal happiness with a plan B, working as a government economist perhaps in the Department of the Treasury, the Bureau of Labor Statistics or Bureau of the Census and this afternoon’s ceremony would most likely be taking place in some office building in the District of Columbia. But it was still clear under either Plan A or Plan B, I would need further training.

Graduate School at M.I.T. marked a transition to a higher concentration of economics than I would have ever considered possible and looking back can hardly believe I survived with any dignity. Graduate coursework was not conceived according to the tenets of liberal arts to broaden the mind. Quite to the contrary, the graduate coursework at M.I.T. was an intellectual boot-camp, where the brain got trained without ever so much as a doubt on the part of the drill-sergeants or the recruits themselves whether this was a good way to educate a professional economist.  You want to be a Navy Seal, OK, it’s your choice…and if it turns out to be too much for you to handle, ring the bell, take your M.A. and leave honorably. Of course I am exaggerating, but I do recall a West-Point graduate in my class who declared that graduate school was the most academic freedom that he had ever enjoyed. Incidentally, that M.I.T. classmate turns up in Michael Lewis’ The Big Short as having been the chief risk officer for Morgan Stanley during the financial meltdown in 2008. I’ll add here that another classmate was a principal in Long-Term Capital Management when that famous hedge fund crashed and burned in 1998. I became an expert on the East German economy and we all know what happened there in 1989. You can see the pattern, but I digress…

Clearly I wouldn’t be standing here before you today had I not survived the rigors of graduate school. In a meantime that spans not quite a half-century I have come to the realization that a “community of scholars” is actually only a Platonic ideal, something as unreal yet appealing as the Garden of Eden, the legend of King Arthur’s court in Camelot or the utopian socialisms that fired the imaginations of radical progressives in the second half of the 19th century. And yet, my experience from dealing in an academic setting, having had contact with many permutations of human natures and across a few societies, has not at all discouraged me from the quixotic quest of building or becoming a part of a genuine community of scholars. The fundamental question we all face is how to get nearer there from here. Plot spoiler: this is my farewell lecture so that can gets kicked down the road for you young folks here.

My thesis is that real existing research and instruction take place in a world spanned by two basic types of institutional frameworks, that we can call clans and clubs for short. Just as there is a spectrum of virtuous behavior along which we, our friends, rivals, and enemies can be placed, clans and clubs differ in the degree to which they help meet the criteria of a “community of scholars”.

So what constitutes an ideal or a genuine community of scholars? (1) Inclusivity. There is no frontier between us and them with respect to the search for knowledge and understanding other than a sharp boundary separating magical thinking from those in the community for whom the collection and honest interpretation of evidence and logical thinking constitute the supporting pillars for science and scholarship.  (2) Meritocratic. There is not a fixed caste system within the community of scholars. It is not a hive with a queen, drones and worker bees. Results from the mixture of individual genius, creativity, good fortune, insight, and discovery are recognized, appropriated, and honored by the community. The demographic fact of overlapping generations results in a natural ordering of junior to senior, but the filial piety of Confucianism must yield the right-of-way to the Wunderkinder in the community of scholars. (3) Self-critical. By this I mean members of a community of scholars share a categorical imperative with respect to criticizing our own work as we criticize that of others. This is important because the accumulation of knowledge and understanding is but an imperfect ratchet. Any one of us, repeat…anyone, has the capacity to pursue dead-ends, and even to forget lessons once learned.  (4) Team spirited. Yet even with all that humility we still have a capacity to cry Eureka upon discovery and other members of the community rejoice at the sound of that cry.

Undoubtedly I have missed a few items in my proposed check list of criteria. But it is easy to see their necessity to be included in any such list by considering what a university would look like when the polar opposite cases occur, where (1´) exclusivity (2´) impermeable stratification (3´) immunity from doubt and/or criticism (4´) Schadenfreude are the rule. Sounds a bit like a sequel to A Handmaid’s Tale without the dramatic costuming doesn’t it?

The essence of club and clan is captured in the Groucho Marx quip “I wouldn’t want to be a member of any club that would have me as a member” and the familiar expression, “You can choose your friends but not your family”.  While I grant that there is a process of selection and self-selection to graduate schools that bears a resemblance to the formal admission procedure for joining a club, there is a good reason to distinguish between the two. In the case of a club you are accepted or rejected for who and what you are.  When you enter, you are a member, a peer. In contrast for a clan, the selection criteria can be quite distinct from the requirements to attain full clan membership.  The network from club membership is valuable to you as a member, but the clan becomes a part of your identity.

But before we talk about this psychological transformation of identity, allow me a brief historical word here.

My research over the past several years has focused on the evolution of graduate training in economics. Both from my own experience but also from listening to colleagues as well as reading random biographical and autobiographical accounts, I became convinced that the critical transmission of the tools of research and the ultimate values that provide the background for the selection of “interesting” questions takes place in graduate schools and there the formation of scholarly character embedded within a network of graduates becomes recognizable as a “school”.  This interest led to an inaugural grant from the Institute for New Economic Thinking for me to begin exploring university archives for documentary material that would prove useful for marking the evolution of economic theories and methods actually acquired by successive cohorts of professional economists in different universities. The research question was to identify the forces that have contributed to the convergence of economics into a contemporaneous mainstream of common scope and methods.

It was in Germany where the modern university seminary for science and scholarship emerged and it provided the ultimate model for research training at the graduate level. And that academic DNA from those seminaries was carried across the Atlantic to the emerging great universities of the United States. Johns Hopkins, Harvard, Columbia, Chicago and points west all profited from the ambitious young scholars and scientists who had been “made in Germany”. The leading role played by Germany will come again when we turn to clubs.

The clan or tribe has played an enormous role in the history of economics. Just to name a few instances, there was the grand Methodenstreit between Carl Menger of Vienna and Gustav von Schmoller of Berlin in the late 19th century on the relative merits of deduction vs. induction (sort of chicken-or-the-egg debate). The debate was ultimately won in a scientific sense by Menger but the academic street-fighter Schmoller had much greater success in occupying the professorial chairs in the German-language areas of Europe for several generations.

Other notable debates between “schools” of economics include the capital debate between the “two Cambridges” of the 1950s and 1960s, Keynesian fiscalism vs. Chicago monetarism, especially in the 1960s, fresh- vs. salt-water macroeconomics more recently, and there is the always evergreen controversy between Austrian economics (which I note in its present form is neither Austrian nor economics) and wherever the mainstream happens to find itself.   There have been cases in economics where Saul turns into Paul well along in the career. But such late breaks, such as that from the Keynes critic hired by Harvard to the man who brought Keynes to America, Alvin Hansen, or from neo-classical darling to radical economist, Stephen Marglin in the 1960s, have been rare. These are news stories much as “man bites dog” is news, because “dog bites man” is considerably less newsworthy.  The correlation between where and how you have been trained and your research style/policy positions is strong and robust. But of course you ask, is it really causation or a case of post-hoc-ergo-propter-hoc inference when there is really a background factor responsible for both?

So what leads me to assert the strong identification of scholar with the school? My pop-psychological explanation is that the intense training and focus of a graduate education brings a young scholar up to humanity’s frontier of knowledge for the first time. That frontier advances rapidly and only a few, certainly not all Ph.D.’s, will move fast enough or long enough to remain on that frontier. Nonetheless that moment of arrival at the hilltop and looking out on the vast, uncharted landscape before you for the first time is a profound life-altering experience in adulthood and there is a warm-fuzzy object that you bond with — it is not a parent, rather it is the collectivity of the professors from whom you have learned and been guided and the authors of the books and papers you have digested in the course of your studies. Sure, later we all pass through a form of intellectual puberty and develop a hypersensitivity to all our professors’ faults. I think back: God there were some really awful teachers, I have witnessed examples of narcissism unchained! Etc.  One of my dearest professors upon hearing that Herbert Simon was awarded a Nobel prize in economics actually said “He can’t be any good, I haven’t read anything he has written.” Later in our careers we might have our own Mark Twain moment: “When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.”

OK, time for a quick summary of what I have been rambling on about thus far. It appears that I had the enormous good fortune to have stumbled into what seemed a virtual academic heaven on earth.  Following that formative period when I acquired my scholarly/scientific values together with a box of analytical tools, it was time for Hänschen-klein to march off into the real world. I was an apprentice turned journeyman sorcerer, a fledgling member of a clan of economists associated with the Yale-MIT axis. Had you asked me at the time what it meant, I would have answered it was really no more than a pedigree, if anything, a signal as to the quality of the people who taught me. Gradually, I learned as I interacted in a professional context with people trained at other places and in other traditions, this Yale-MIT axis signaled belonging to a well-defined clan. Think of West Side Story, the gangs of Sharks and Jets, just without the dancing.

The first inkling I had about the influence of where you learned your economics was as an undergraduate during my Council of Economic Advisers time when a fellow intern, a graduate student from UCLA, derisively commented on the fact that I had waited hours to watch the Watergate Hearing for Nixon’s chief-of-staff H.R. Haldeman, “queues are inefficient”. Subtext: a market should have been created to let a price mechanism allocate the scarce space to the highest bidders.  Since he was my first observation, I thought it was the individual effect talking, i.e., he was just a jerk. But then later another UCLA man, a senior professor at the University of Houston when I was an assistant professor there, nonchalantly dismissed a vast swath of applied economic analysis as we interviewed young people at the annual job market, “Nobody believes welfare economics…”  I recall my first serious encounter with German ordo-liberalism at the University of Siegen. Hearing so much praise for Walter Eucken and his Freiburg school that inspired the policy architects who brought us the German social-market economy led me to read some of his work.  I felt like I was listening to folks speaking German in some remote alpine valley.

The point of these examples is that it was beginning to look to me that how and where you were trained had a major impact on the sorts of questions you asked and the style of argument and the forms of evidence you accepted. Thinking back I expected the sorts of political differences and research strategies would be more-or-less randomly distributed across departments. People, and I stress economists are people, are a heterogeneous bunch, simply put, “a mixed bag”. But even allowing for concentration of the one or other paradigm for research, couldn’t we expect serious scholars to outgrow their apprentice years as they would become exposed to inter-university variation? In a statistical sense I interpreted what I observed, namely, knowing where someone had been trained had “too much” explanatory power for what a mature university research economist would think about economics. You could see a definite family resemblance across the clan. What I still don’t really understand was why academic disputes between clans have almost invariably escalated to the intensity of a shooting feud between the Hatfields and McCoys. But then again, I’m the sort of guy who is still shocked that people are so rude to each other on twitter. The working hypothesis perhaps is best expressed in the adage, “Academic politics are so vicious because the stakes are so low.”

Time for another short historical break before reflecting on networks or clubs that academics have established.

Economics became an easily identifiable collective pursuit of truth for the first time in the middle of the 18th century at the court of Louis XV at Versailles where the French Physiocrats coalesced into a self-conscious school for the purpose of enlightened economic policy. They actually called themselves les économistes and they even had their own journal. Their time on the world stage was brief, the French Revolution scattered the school to the winds, and one member, DuPont de Nemours settled in the United States where his son founded the gunpowder business that ultimately became the DuPont corporation. Incidentally Thomas Jefferson’s idealization of the yeoman farmer and contempt for the mercantile classes was a reflection of his reading Physiocratic texts. In England in the nineteenth century political economy was passionately debated among gentlemen in clubs. Members would read their Hume, Smith, Ricardo and Malthus to join the chatter and contribute to the literary magazines of the time debating economic policy.  From about 1935 through 1950 the gradual expansion of mathematical and statistical tools had become such a critical part of the kit of the professional economist that political economy or economics was no longer “clubbable” in the literal sense.

But even before the shift to mathematical and statistical methods had become complete, substitutes for the club were found in the extra-university learned societies, professional associations, and regularly recurring conference groups. All of these networks had established admission procedures to establish whether a potential peer brought the right stuff to the table.

Just as the modern research seminar goes back to the university seminaries of Germany, the Verein für Socialpolitik was officially founded at its conference in Eisenach in October 1873 a year after an initial conference a year earlier also in Eisenach on the “soziale Frage” (social question). This association brought economists, lawyers and government statisticians together. Now some twenty-three standing field committees span the scope of economic research in the German language area. Thanks to a retired colleague, Wolfram Fischer, I received an invitation to become a member of the standing committee for the history of economics. For these standing committees one is invited to present a paper and is voted membership.  The Verein itself used to be the sort of association that members had to propose candidates whose approval then was voted upon.

The very same American students who studied in the German seminaries of economics during the last third of the 19th century, returned to become founding members of the American Economic Society, that unlike the Verein für Socialpolitik, which was long to have a sharp anti-Manchester capitalism profile, reached out to their classic liberal colleagues who initially resisted joining forces. From its early years the American Economic Association was a bigger tent than the Verein für Socialpolitik.

Two other societies worth mention are the international Econometric Society that was dedicated to the use of mathematical and formal statistical modeling in economics. It was first organized in December 1930 in Cleveland, Ohio with Joseph Schumpeter chairing a meeting of sixteen people who elected Irving Fisher of Yale as its president. The Econometric Society then met officially for the first time the following September in Lausanne. Not quite four decades later dissatisfaction with the scope of mainstream economics that focused excessively on “plenty” and with too little attention to its distribution and almost none to issues of power and politics, the Union of Radical Political Economy was founded in 1968 (This year celebrating its fiftieth anniversary at the University of Massachusetts in Amherst).

In the course of the Allied Social Sciences Meeting every year, field associations organize their panels where the networks of colleagues meet.  Of course no list of clubs would be complete without mentioning the Mt. Pelerin Society founded by economists along with historians and philosophers at the invitation of Friedrich Hayek in 1947 and which formed a bedrock of neoliberalism, long before it was fashionable.

As we say, birds of a feather, flock together and the communication among researchers working on similar topics, using similar methods, interested in the same kinds of evidence is necessary for the success of the cooperative endeavor. These networks allow sub-fields to achieve scales impossible to expect in all but the largest and richest university settings. Indeed stepping back and regarding the research output of these professional clubs whose membership spans university, disciplinary, territorial bounds, few of us would want to go back to the high days of the London Political Economy Club or even the early days of the relatively exclusive professional societies requiring formal nomination for membership.

At this point I need to insert a big fat German “Aber…” (But…). The clans and clubs of economics (and economics is hardly unique here) have a diversity problem with respect to, I’ll limit myself to the United States here, race, ethnicity, and gender. In the course of my INET funded research, I have examined archived economics departmental records of M.I.T. from the 1970s dealing with the recruitment and subsequent performance of students from traditional black colleges and of women admitted to the program. Something that struck me was the sheer experimental willingness of this overwhelmingly white, male and politically liberal department to expand the numbers of blacks and women in the economics Ph.D. program. Of course M.I.T., sitting at the apex of the economics graduate programs at that time, was able to recruit easily. But after several years, the realization set in that to avoid the creation of a Zwei-Klassensystem (twin tracks) the recruiting pools needed to be equalized and this would require a strategic switch to recruiting aggressively and exclusively from elite undergraduate programs. Having been an observer-participant from a time that I can now witness again in an archival light, I appreciate the dilemma felt by the M.I.T. economics department then between increasing the inclusivity of the clan but only at the cost of an increased risk of failure for precisely those new groups who had been previously overlooked.

Let us shift focus now from entry to the clan to the issue of gender diversity in the clubs or professional networks.  [Due to unexpected turbulence, the captain has turned on the fasten seat belt sign.] Last year a dynamite paper originally submitted as a Berkeley senior thesis was published by Alice H. Wu “Gender Stereotyping in Academia: Evidence From Economics Job Market Rumors Forum”. Ms. Wu processed more than a million posts from the anonymous online message board econjobrumors.com.  It is as close to systematic eavesdropping around a water cooler that can be done legally. It turns out that the ordered list of the thirty words most uniquely associated with women were (warning: NSFW): [read list very quickly] “hotter, lesbian, bb (internet speak for “baby”), sexism, tits, anal, marrying, feminazi, slut, hot, vagina, boobs, pregnant, pregnancy, cute, marry, levy, gorgeous, horny, crush, beautiful, secretary, dump, shopping, date, nonprofit [?!], intentions, sexy, dated and prostitute”. The analogous men-words included: [read slower] “juicy, keys, adviser, bully, prepare, fought, wharton, austrian, checkers, homo [!], genes, mathematician, advisor, burning, pricing, philly, band, nobel, amusing, greatest, textbook, goals, irate”–with the singular exception of a homophobic slur, not nearly so much to be ashamed of in guy gossip…about guys. But even before the publication of Wu’s paper, the active standing Committee on the Status of Women in the Economics Profession of the American Economic Association was addressing issues of sexual harassment and drafting of codes of conduct. Manels (i.e., panels consisting of only men) still occur quite regularly at professional meetings but the outcry cannot be overheard. Let us just say, the situation regarding the issue of gender falls seriously short of the Platonic community of scholars, but it is not hopeless. I say this as a member of Yale’s first four-year coeducational class — looking back a half-century the differences for the better are truly striking.

I see the shortfall in meeting the criterion of inclusivity less to be found either on the race or gender fronts where important corners have been turned. The greater problem seems to me to be one of a relentless trend in which we observe the homogenization of particular methods and approaches to the exclusion of others. For a five-year old with a hammer, everything looks like a nail.

Today’s heterodoxy can improve the quality of the flow in the mainstream as well as vice-versa. Loyalty to the clan is only a virtue to the extent that your clan is up to good. Besides the obligation to expose one’s future students to a wide-range of views, as good as we feel and as justly we might think that we can adequately summarize “the other side”, we Hatfields are probably a poor substitute for the real McCoy.

Calls for broadening the curriculum clash with the budgetary realities forcing faculties to choose a balance between breadth and depth in the coverage of fields and methods. But my decades in this business have led me to conclude that we have less to fear from the tragic constellation of beer budgets and champagne tastes than we have to fear from the narcissistic gene of scholars, present company excluded of course (I want to be able to eat lunch in Dahlem in the future!). That narcissistic gene leads even top scholars to attempt to clone themselves into entire faculties. My hope is that a pragmatic tolerance and taste for diversity in paradigms can trickle down from senior to junior and through all levels of instruction.

In their modern clubs scholars find kindred spirits, it is there scholars can find honest peer review.  So what could possibly go wrong?  Well here is where we need a second, a vertical dimension to understand what is happening. In a race for status, gatekeepers and judges play an important role. The old question necessarily arises, who will guard the guards? Can we be confident that the norms of the Platonic community of scholars will be able to weather the winds of rivalry for the zero-sum game of status or of self-interested competition for scarce resources?

One expects economists to talk about money. So let’s talk about it in this context. My father once wisely told me when he thought that I was getting too academically big for my real-world britches: brains don’t hire money, money hires brains.   Expressed in terms a Marxist might appreciate:  my father apparently believed that the reproduction cycle goes Money—Brains—Money rather than Brains—Money—Brains. Besides putting the horse (money) before the cart (brains), I can only mention en passant that large private concentrations of wealth can and have been used to support research programs of a particular political stripe just as an unequal distribution in wealth can and has been used for disproportionate political influence (i.e. violating the essential democratic symmetry of one citizen, one vote / one voice). I’ll just mention the documented ability of the Koch brothers to have funneled enormous funds into George Mason University that had strings attached with respect to faculty hires that no self-respecting faculty member could possibly support.

Before I start foaming at the mouth, I pause to bid my colleagues here this afternoon to reflect on the distance they perceive between the Platonic ideal of an academic community and their personal experience.

A lecture title that signals “reflections” is an open confession that no attempt has been made for rigorous argument. My somewhat random walk defies summary. Still I have been raised to think that it is prudent to leave one’s audience with a nugget to share when they leave, in the event that someone should ask what I, the speaker, had to say.

For me (and I am sure for many in this room) the happiest and most productive times were in those moments when I felt firmly embedded within an environment approaching a community of scholars. Academic life has taught me that such communities are mostly figments of some philosopher’s imagination. The work of a scholar, when not the fruit of a monastic life-style, is conducted within clans and clubs. My experiences from a career in university life and listening to the experiences of others have led me to the conclusion that “academic community” is analogous to genius, and when or if ever it really exists, it is extremely rare and probably the result of rather random dependent paths of history rather than the result of conscious human intention. My plea, especially to the undergraduate and graduate students in the room, is not to sink into cynicism once you discover for yourselves that your professors and their professors, that researchers in private or government laboratories, that senior researchers in think-tanks happen to display the shortcomings I have identified in clubs (especially, exclusivity regarding who gets admitted) and clans (especially, an allegiance where blood is thicker than water). Clubs can open themselves and clans can indeed coexist peacefully and even intermarry. Rival research programs need not have to end in blood feuds like the Hatfields and McCoys. While my pursuit of happiness is found in the pursuit of truth, due diligence demands that all of us sharing that pursuit keep a watchful eye on those serving as the gate-keepers of our clubs.

So much for my reflections. Allow me a few personal words in closing.

*  * *  *

One enters and remains in our imperfect community of scholars, in part on one’s own merits but more importantly due to those who trusted that ex post merit would justify ex ante support. These scholars, near colleagues, friends and family members are too numerous to mention outside of an extended written memoir. But without them the arc of my academic life would have ended far short of Freie Universität Berlin. Fostering the development of latent or raw talent made the difference for me and my hope is that I have played a similar role in the academic lives of others.

I have had the pleasure of working with both colleagues and staffs of the Faculties of Business and Economics and the John-F.-Kennedy Institute. Secretaries like our own Kerstin Brunke have provided that first line of defense known as the front office and they deserve medals for valor. Good cheer and a quite competency have served as a wonderful complement to my management-challenged ways of dealing with the world outside.  From the offices of administration in the Faculty of Political and Social Sciences to the bowels of the libraries, I have had a reasonably blessed time. Perhaps we only survive in a Burgfrieden, a truce in times of trouble, but I cannot say that I have suffered either severely or disproportionately. At this point of my professional life I am so happy for the continued emotional and intellectual support provided by my wife, the psychiatrist Prof. Isabella Heuser-Collier, whose own Abschiedsvorlesung at Berlin’s Charité I eagerly await some two years from now.

General Douglas MacArthur immortalized the refrain from an old barracks song in his farewell address to the U.S. Congress in April 19, 1951: “Old soldiers never die, they just fade away.” In that spirit, beginning this September at Bard College Berlin I shall fade to teaching half-time with an increased emphasis on the history of economics. This will give me significantly more time for transcribing and curating archival artifacts for my blog Economics in the Rear-view Mirror (www.irwincollier.com). I don’t really believe in the prospects of a happy hunting ground in the sky, but as a member of the greater academic community going forward, I find the prospect of my work surviving in a happy virtual cloud in the sky a spur for me to continue my work. I once toyed with the idea of slipping a $100 bill into the library copy of my M.I.T. Ph.D. dissertation to reward an anonymous anybody who has decided to fish the dissertation from the safe obscurity of the Dewey library stacks. Now the thought occurs to me that perhaps leaving a bitcoin in the cloud somewhere buried in my blog would be a legacy worthy of a scholar of the early 21st century.

I thank you for your attention this afternoon but especially for being with me now at this cusp of my academic life-cycle.

 

Categories
Chicago Exam Questions Problem Sets Suggested Reading Syllabus

Chicago. Price Theory. Reading Assignments, Problems, Exam. Friedman, 1951-52

 

According to the class roll kept by Milton Friedman, we know that Gary Becker attended his graduate price theory course Economics 300A in the Autumn quarter of 1951 (presumably Becker then took 300B during the Winter quarter of 1952, but I could not find that quarter’s roll in Friedman’s papers). This post even has Friedman’s partial answer key for the True/False/Uncertain questions for Economics 300B!

The reading assignments for the two-quarter core price theory sequence taught by Milton Friedman in 1948 , and in 1958 have been posted earlier (1946 300A only).  This post gives the reading assignments with open and gated links where available (some of the papers are only available at the gated jstor.org). These can be compared to the readings for the price theory course Friedman taught at Columbia in 1939-40. 

I have put in boldface the 1951 additions to make a comparison with the 1948 version easier. Worth noting: an asterisk designates optional and not required reading.

Only one item was dropped from the 1948 reading list:

Meyers, A. L. Elements of Modern Economics, ch 5, 7, 8, 9.

The October 1951 version of the Reading Assignments for Economics 300A and B was published as an appendix to J. Daniel Hammond’s “The development of post-war Chicago price theory” in The Elgar Companion to Chicago School Economics, edited by Ross  B. Emmett, pp. 7-24. This Hammond article offers much context and is very much worth consulting.

______________________________

October, 1951

Economics 300A and B
Reading Assignments by M. Friedman

(Notes:

  1. It is assumed students are familiar with material equivalent to that contained in George Stigler,  The Theory of Price. [Revised edition, 1952] or Kenneth Boulding, Economic Analysis [Third edition, 1955].
  2. Readings marked with asterisk (*) are recommended, not required.)

Knight, F. H., The Economic Organization, esp. pp. 1-37. HB172.K73.
Keynes, J. N., The Scope and Method of Political Economy, ch. I and II, pp. 1-83. HB171.K45.
Hayek, F. A., “The Use of Knowledge in Society,” American Economic Review, Sept., 1945; Reprinted in Individualism and Economic Order. HB1.A6.

Marshall, Alfred, Principles of Economics, Bk III, ch 2, 3, 4; Bk V, ch 1,2. HB171.M36.
Friedman, Milton, “The Marshallian Demand Curve,” Journal of Political Economy, December 1949. YF6.
Schultz, Henry, The Meaning of Statistical Demand Curves, pp. 1-10. HB201.S398.
Working, E. J. “What do Statistical ‘Demand Curves’ Show?” Quarterly Journal of Economics, XLI (1927), pp. 212-27. HB1.Q3.
Knight, F. H. Risk, Uncertainty, and Profit, ch 3. HB601.K7. 1940.
*Lange, O., “On the Determinateness of the Utility Function”, Review of Economic Studies, Vol I (1933-34), pp. 218 ff. HB1.R45.
*Allen, R.G.D.,The Nature of Indifference Curves, Ibid, pp 110 ff. HB1.R45.
Hicks, J. R., Value and Capital, Part I (pp 11-52). HB171.H64.
*Wallis, W. A., and Friedman, Milton, The Empirical Derivation of Indifference Functions, in Lange et al, Studies in Mathematical Economics and Econometrics. HB99.C5.
*Friedman, Milton and Savage, L. J., The Utility Analysis of Choices Involving Risk,Journal of Political Economy LVI (August 1948) pp. 279-304. HB1.J7.

 

Marshall, Book V, ch 3, 4, 5, 12, Appendix H. HB171.M36.
Robinson, Joan, Economics of Imperfect Competition, ch 2. HB201.R65.
Clark, J. M., The Economics of Overhead Costs, ch 9. HB195.C62.
Viner, Jacob, Cost Curves and Supply Curves, Zeitschrift fuer Nationaloekonomie, Bd III (Sept, 1931), pp 23-46. H5.Z55.
Friedman, Milton, “The Relationships Between Supply Curves and Cost Curves,” (dittoed) YF9.
Chamberlin, Edward, The Theory of Monopolistic Competition, ch 3, sec. 1, 4, 5, 6; ch 5. HB201.C44.
Harrod, R. F. Doctrines of Imperfect Competition, Quarterly Journal of Economics, May 1934, sec. 1, pp. 442-61. HB1.Q3.
Stigler, G. J., “Monopolistic Competition in Retrospect,” Lecture 2 in Five Lectures on Economic Problems. HB171.S82.
*Triffin, Robert, Monopolistic Competition and General Equilibrium Theory, esp. Part II. HD41.T8 and H31.H33, v. 67.
*Robinson, E. A. G., The Structure of Competitive Industry. H045.R732.
*___________________, Monopoly. H041.R65.
*Plant, Arnold, The Economic Theory Concerning Patents for Inventions,” Economica, Feb, 1934. HB1.E42.
*Dennison, S. R., “The Problem of Bigness,” Cambridge Journal, Nov. 1947. Y03.

 

Marshall, Book IV, ch 1, 2, 3; Bk V, ch 6. HB171.M36.
Clark, J. B., The Distribution of Wealth, Preface, ch 1, 7, 8, 11, 12, 13, 23.
Mill, John Stuart, Principles of Political Economy, Book II, ch 14. HB171.M667.
Hicks, J. R., The Theory of Wages, ch 1-6. HD4909.H63.
Smith, Adam, The Wealth of Nations, Bk I, ch 10. HB161.S652.
Marshall, Bk VI, ch 1-5. HB171.M36.
Friedman, Milton, and Kuznets, Simon, Income from Independent Professional Practice, Preface, pp. v to x; ch 3, Sec 3, pp. 81-95, ch 4, Sect 2, pp. 118-137, App, Sec 1 & 3, pp. 142-151, 155-61. HD4965.U5F8.
Knight, F. H. “Interest” in Encyclopaedia of the Social Sciences, also in Ethics of Competition. H04965.U5F8.
Keynes, J. M. The General Theory of Employment, Interest, and Money, ch 11-14. HB171.K46.
Weston, J.F., “A Generalized Uncertainty Theory of Profit,” American Economic Review, March, 1950, pp. 40-60. HB.A6.

 

Cassell, Gustav, Fundamental Thoughts in Economics, ch. 1, 2,3. Ch. 1, 2, 3. HB 179.C283.
_________________, The Theory of Social Economy, ch 4. HB179.C283.
J. R. Hicks, Mr. Keynes and the ‘Classics’; A Suggested Interpretation”, Econometrica, vol 5, April 1937, pp. 147-159. HB1.E23, v. 5.
Franco Modigliani, Liquidity Preference and the Theory of Interest and Money,” Econometrica, vol 12, No. 1 (Jan 1944) esp. Part I, sec. 1 through 9, sec 11 through 17, Part II, sec 21. HB1.E23, v.12.
A. C. Pigou,The Classical Stationary State, Economic Journal, vol 53, December, 1943, pp. 343-51. HB1.E3, v. 53.
____________, Economic Progress in a Stable Environment,” Economica, 1947, pp. 180-90.HB1.E42, v. 14.
Patinkin, Don, “Price Flexibility and Full Employment,” American Economic Review, XXXVIII, 4, Sept. 1948, pp. 543-64. YP6.

 

Source: Hoover Institution Archive, Milton Friedman Papers, Box 77, Folder 1 “University of Chicago, Economics 300 A & B”.

___________________

Economics 300A
Autumn, 1951
PROBLEMS FOR READING PERIOD

  1. In an anti-trust case against the Aluminum Company of America, Judge Learned Hand argued that the Aluminum Company could be regarded as having essentially a complete monopoly on aluminum despite the existence of a highly competitive market in secondary or reclaimed aluminum (made from scrap) accounting for about one-third of the total aluminum used for fabrication. He justified this conclusion on the grounds that all secondary aluminum derives ultimately from primary aluminum produced earlier and hence that the Aluminum Company through its control of the output of primary aluminum indirectly controlled the quantity of scrap available.

            Evaluate the economic validity of this argument. To simplify your analysis assume that a single firm, say the Aluminum Company of America, has a complete monopoly of primary aluminum; that aluminum for fabrication comes from primary aluminum and secondary aluminum; and that primary and secondary aluminum are perfect substitutes. Indicate in detail how to determine the optimum price for the Aluminum Company to charge and the optimum output for it to produce if (a) the secondary aluminum is refined and sold by a large number of firms under competitive conditions; (b) it has a complete monopoly of secondary aluminum as well.

            Hand’s conclusion presumably is that the price of aluminum would be the same in cases (a) and (b). Is he correct? If not, would it be higher in case (b) than in case (a)? Lower?

 

  1. It is widely argued that entrepreneurs engaged in a number of different activities somehow have a “competitive advantage” over entrepreneurs engaged only in one even if no technical economies are achieved by combining the activities. This general argument and the supposed advantage take many different forms: sometimes it is that one activity provides a “guaranteed” market for another activity; sometimes that one activity provides financing or capital for another; sometimes that a monopoly in one line confers an advantage in another. A recent example of this reasoning is contained in a report by The Chicago Daily news financial columnist on November 20, 1951 that Sears-Roebuck had completed an arrangement with Kaiser-Frazer to market an automobile under the name of “Allstate.” The columnist commented “also there is the Allstate Insurance Company, a wholly owned subsidiary, which would benefit heavily through liability and other policies written in connection with the sales of an Allstate automobile….Some of the gossip around Detroit has been to the effect that the Allstate would have Sears batteries and tires and certain other Sears accessories as original equipment—which would mean more business for these departments of the company.”

(a) The key question is, of course, whether the financial incentive to Sears to market an automobile is greater because it owns the subsidiary companies than it would be if it did not own them. You will find it helpful in answering this question to consider first two intermediate questions: (b) Given that Sears does own the subsidiary companies and that it is going to market an automobile under its name, is it in its own interests to require that the car be equipped with accessories produced by its companies? (c) To require that cars it sells be insured by its own insurance company?

            In answering both questions (a) and (b), consider separately two cases: (1) The subsidiary companies can be regarded as operating under highly competitive conditions; (2) the subsidiary companies can be regarded as having a monopoly of the products they produce. Do the conclusions depend on the assumption made about competitive conditions? Assume throughout that there are no “technical” economies from combining the various activities.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.9.

___________________

Economics 300A
Final Examination
December 17, 1951

  1. (15 points)
    (a) Appraise: “Recent studies of domestic consumption in low-cost municipalities demonstrate that the demand for electric current is highly elastic, expanding rapidly as the cost declines. The national average consumption of the United States was 604 kilowatt-hours in 1933. The average charge to consumers on October 1, 1934, for the whole country is reported as 5.4 cents per kilowatt-hour. In Seattle where the average cost is 2.58 cents, the average consumption is 1,098 kilowatt-hours. In Tacoma, the charge is 1.726 cents and the consumption 1,550. In 26 cities of Ontario, the average charge is 1.45 cents and the consumption 1,780. Finally, in Winnipeg, where the average net charge is only 8 mills per kilowatt-hour the average per capita consumption exceeds 4,000 kilowatt-hours.” (Report of the National Resources Board, December 1, 1934, Government Printing Office, 1934, p. 39.)

(b) Will a specific tax (a tax of a specified number of dollars per physical unit) on a commodity raise its price more or less than an equivalent ad valoremtax (a tax of a specified percentage of the price)? Assume that the commodity is produced and sold under competitive conditions.

  1. (15 points) (a) Figure 1 gives the locus of points of tangency between indifference curves and budget lines parallel to ab (and cd). ABCDEFGH is therefore and “expansion path” or curve showing the quantity of X and Y and individual would buy at different incomes and constant relative prices. Fill in the following table with as precise statements as are deducible from Fig. 1 by observation without measurement:

 

 

 

Segment

Income elasticity of

Good is Superior (S), Inferior (I), or Uncertain (U)

X

Y X

Y

AB
BC
CD
DE
EF
FG
GH

(b) ABCDEF in Figure 2 is the locus of points of tangency between indifference curves and budget lines representing different money prices for X but the same money price of Y and money income (i.e. budget lines like ab and ac rotating about a). Fill in the following table with as precise statements as are deducible from Fig. 2 by observation without measurement.

Segment

Income elasticity of Good is Superior (S), Inferior (I), or Uncertain (U)
X Y X Y
AB
BC
CD
DE
EF

 

  1. (20 points) “Monopolistic competition robs the old concept of industry (and also the Chamberlinian group) of any theoretical significance…The value of these groupings is only a concrete, empirical one…Which firms shall be included in any one group will have to be decided, not on an a prioribasis, but after an empirical survey of market realities…In the general pure theory of value, the group and the industry are useless concepts…When the study of competition is freed from the narrowing assumptions of pure competition, only two terms remain essential for the analysis: the individual firms, on the one hand; the whole collectivity of competitors on the other.” (Triffin)

(a) Explain why “monopolistic competition robs the old concept of industry…of any theoretical significance.”
(b) Explain the general position summarized in this quotation and discuss it critically.

  1. (20 points) Find the mistakes (there are at least six) in the accompanying diagram showing long and short run marginal and average cost curves, and explain the general principle corresponding to each particular mistake.

 

  1. The accompanying diagram showing a set of indifference curves between income and work is part of a diagram given by Boulding in Economic Analysis in his discussion of the effects of various types of direct taxation, and reproduced by Schwartz and Moore in the March 1951 American Economic Review. The latter write, “Given O Q2Qas a rate of pay, the equilibrium position is Pwhere the rate of pay is equal to the MRS between leisure and income. Let us assume that we are to collect a tax from this individual equal to OL. One method of collecting the tax would be to levy a poll tax, leaving the rate of pay unaltered, as LP5. Another direct tax would be a proportional income tax represented by OSPwhich would have the effect of lowering (flattening) the rate of ‘take-home’ pay. To extract the same amount of revenue as the poll tax does, this rate of pay must be tangent to an indifference curve at an intersection with LP5. Thus P2Q= OL. Since the rate of ‘take-home’ pay is flatter, Pmust lie below and to the left of P5; i.e. less effort is expended and the worker enjoys a smaller net income. More important, his welfare is diminished because he must be on a lower indifference curve…Given the premises of the conventional indifference curve pattern, this must necessarily be true.”

(a):

(1) Why do the indifference curves in the diagram slope positively?
(2) How can you justify their being drawn concave upwards?
(3) The statement that OQ2Qis “a rate of pay” is of course wrong. OQ2Qis a line. Reword the statement so it is accurate.
(4) What do the authors mean by MRS?

(b) If we suppose the diagram to stand for a “representative” individual, or one of a society of identical individuals all to be taxed alike, the last sentence in the quotation is false: the authors’ welfare conclusion does not follow from their premises and arguments. Point out the fallacy in the proof.

(c) Under what conditions is the authors’ welfare conclusion valid? Can you give a proof of your statement?

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.9.

___________________

 

Economics 300B
Winter, 1952
PROBLEM FOR READING PERIOD

Available evidence tentatively indicates that (1) average income of white families living in the same size city is roughly the same in the North and the South; (2) the wage rate of a white worker in any given occupation is higher in the North than in the South for cities of the same size; (3) property income is roughly of equal importance for white families in the North and the South.

For purposes of this question, accept these as correct statements of fact. Can you suggest any way of reconciling the apparent contradiction among them? Presumably, any reconciliation will turn on the larger fraction of negroes and greater discrimination against them in the South than in the North.

Spell out your suggestion in detail, explaining the theoretical links if any between the higher fraction of negroes and greater discrimination, on the one hand, and the indicated results on the other. Indicate how the validity of your suggestion would be tested.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.10.

___________________

ECONOMICS 300B
Final Examination
March 12, 1952

    1. (35 points) Indicate whether each of the following statements is true (T), false (F), or uncertain (U), and state briefly the reason for your answer. It is to be understood that in each question the appropriate “other things” are to be held constant.
      1. The imposition of a minimum wage for labor of type X higher than the preceding wage leads to an increase in the number of laborers of type X employed. It follows that labor of type X is hired under monopsonistic conditions. [True]
      2. Under both competition and monopoly in the product market, marginal value product of a factor to a firm is equal to marginal physical product of the firm times marginal revenue to the firm from the sale of the product. [True]
      3. Marginal productivity analysis shows that, in the absence of monopsony, a laborer gets as a wage his marginal value product. If this analysis is correct, it follows that unions can raise wages in the absence of monopsony only if they either make each worker more efficient, or increase demand for the product, or make the demand for the product more elastic. [False]
      4. The law of variable proportions (or diminishing returns) is contradicted by the fact that agricultural output of this country has increased tremendously despite a decrease in the proportion of the working population on farms. [False]
      5. The rate of interest is equal to the rate of time preference of consumers. [True]
      6. At present levels of operation, three quarters of the total cost of the XYZ railroad is overhead cost that does not vary with traffic, only one quarter is variable cost. It follows that marginal cost is much less than average cost. [False]
      7. The demand curve of an individual firm for a factor of production is identical with its marginal value productivity curve for the same factor of production. [False]
      8. The demand curve of a firm for a factor of production is a meaningless concept if the firm is a monopsonistic purchaser of that factor. [True]
      9. A declining long run supply curve is impossible in a competitive industry. [False]
      10. Marginal factor cost is equal to the price per unit of a factor whenever the product market is competitive. [False]
      11. According to the theory of joint demand, the absolute value of the elasticity of derived demand for a factor of production will be smaller the more inelastic the supply of that factor. [False]
      12. The fact that individuals do not choose occupations solely on the basis of their pecuniary attractiveness helps explain why the supply curve of labor for a particular occupation has an elasticity greater than zero. [True]
      13. If all types of services were used only in fixed proportions, a marginal-productivity theory would be neither necessary nor possible. [False]
      14. Our society is often described as a “profit” economy or “profit-maximizing” economy. The word “profit” is here used in the same sense as in the uncertainty theory of “profit.” [False]
      15. “Profit” as defined in the uncertainty theory of profit is the expected return to any factor assuming uncertainty over and above the guaranteed expected income it can obtain if it assumes no uncertainty. [False]
      16. If one income is higher than another before income tax it will also be higher after a progressive income tax, provided only that the marginal tax never exceeds 100%. It follows that if one accepts the theory that individuals act as if they sought to maximize their income, he must also accept the conclusion that such taxes do not alter individual’s actions and hence are not shifted. [False]

17 and 18. A minimum wage law is repealed. The wage rate of a class of workers hired under competitive conditions was equal to the minimum before repeal and falls after repeal. It follows that:

      1. The total wage bill for this class of labor will rise, remain constant, or fall, according as the elasticity of demand for labor of this class is greater than, equal to, or less than unity in absolute value. [True]
      2. The quantity of labor of this class employed will fall, remain constant, or rise according as the elasticity of supply of labor of this class is positive, zero, or negative. [False]
      3. The great technological improvements in the past few decades in the production of synthetic fibers (rayon, nylon, etc.) and associated decline in their relative price has, among other effects, tended to raise the price of meat in general, especially of lamb and mutton. [True]
      4. At the same time, stringent rationing of meat consumption in Great Britain, by tending to offset this effect, has improved the competitive position of the synthetic fiber industry, and so enabled it to expand more than otherwise. [True]
  1. (15 points) “The wages of every class of labour tends to be equal to the net product due to the additional labour of the marginal labourer of that class.
    “This doctrine is not a theory of wages: but is a useful part of a theory.” (Marshall)(a) What does Marshall mean by “net product”? [4] By “Marginal labourer”?[4]
    (b) Explain and evaluate the second sentence in the quotation. [7]
  2. (15 points) It is frequently argued that a tax on a product imposed at the manufacturing level involves a greater burden on consumers than a tax yielding the same revenue imposed at the retail level because the tax is “pyramided,” i.e., the “margins” of wholesalers and retailers are viewed as given percentages of purchase price and so, it is argued, price will tend to rise not only by the tax but also by the “margins” on the tax.
    Evaluate this argument.
  3. (10 points) The price of nylon thread for use in making women’s hosiery was recently lowered drastically when DuPont decided to make much larger quantities available. The resulting decline in the price of hosiery was viewed by at least some manufacturers and retailers as a misfortune and as portending smaller profits for themselves. Were they right? In the short run? In the long run? Justify your answers.
  4. (10 points) A subsidy of $X is paid per acre of land devoted to growing soy beans. Will this lead to a rise or to a decline in the yield per acre on land devoted to growing soy beans prior to the introduction of the subsidy? Justify your answer.
  5. (15 points)
    (a) What is the Pigou effect?[4] What relevance does it have to the theory of the rate of interest?[4]
    (b) List some economic decisions that would be affected by a change in the rate of interest. Indicate why they would be affected and if possible the direction of the effect. [7]

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.10.

Image Source: Milton Friedman (undated). University of Chicago Photographic Archive, apf1-06230, Special Collections Research Center, University of Chicago Library.

Categories
Columbia Exam Questions

Columbia. Exam questions for prospective PhD candidates, Jan 1949

 

An earlier post provides a transcription of questions from the corresponding May 7, 1949 exam given to prospective Ph.D. candidates in economics. That May exam was fished from the papers of Albert G. Hart and had only 29 questions. The January exam below comes from Martin Bronfenbrenner’s paper and consists of 46 questions. In both cases the examinees were to select five questions to answer. The large difference in the number of questions might be due to a missing page, but I suspect it has something to do with the number of prospective Ph.D. candidates taking the exam. 

_______________

EXAMINATION
for
PROSPECTIVE CANDIDATES FOR THE DEGREE OF PH.D. IN ECONOMICS

(January 8, 1949, 2:00 p.m. to 5:00 p.m.)

Questions on Specific Areas of Economic Study

Answer any FIVE but NOT MORE THAN FIVE questions.

  1. Write all answers legibly in ink or on a typewriter.
  2. Begin each question on a fresh sheet of paper. Write your name on all sheets used.
  3. Be as specific as the question permits.
  4. Be sure that your statements are relevant to the question.
  5. Allow yourself time to reread your answers before handing in the sheets.

__________________

  1. What characteristics of the U.S. population in 1935 and what major features of the original Social Security Act produced the controversy over full reserve vis-à-vis pay-as-you-go financing? What in your judgment is the strongest argument in support of each position?
  2. Analyze the relationship of the Keynesian aggregate consumption function to the consumption functions of individuals.
  3. “The legislation of 1933-1935 virtually put the Federal Reserve Board out of business as a policy agency.” Evaluate this assertion and state why you either accept or reject it.
  4. It is argued that any serious step to control the present inflation in this country would precipitate an even more costly depression. Do you agree? Why, or why not?
  5. Discuss the nature and causes of the “grain problem” that prevailed in the USSR on the eve of the First Five Year Plan.
  6. To what extent do prices in the USSR correspond to and to what extent deviate from “labor value”?
  7. Discuss the nature and merits of the so-called “value of the service” principle of utility and railroad rate making as distinct from the “cost of service” principle.
  8. Discuss the arguments for and against a public policy of subsidized rural electrification. Assume, for the purpose of the discussion, that without a subsidy only 60% of the farms of the country in question will be electrified.
  9. Write a commentary on the following statement appearing in a recent book on appraisal:
    “Modern writers in business finance have greatly clarified the problem of valuation by insisting that, with exceptions presently to be noted, the value of an enterprise is dependent entirely on prospective earnings.”
  10. Compare the factors influencing the relative quantities of different agricultural commodities produced in (a) Russia, (b) England, (c) New Zealand or Australia, and (d) any tropical area.
  11. Discuss, with examples, the influences affecting the speed and pattern of industrialization.
  12. Define marginal productivity and discuss the conditions necessary, if the factors of production are compensated on that basis, to the result that the sum of the shares should equal the total product.
  13. Define elasticity of demand, distinguishing price elasticity and income elasticity, and outline briefly the problems affecting the degree of success which is practicable in trying to measure such elasticities.
  14. Discuss the “just price” in relation to market price, in medieval economic thought.
  15. Write a critique of Veblen’s theory of business cycles.
  16. Trace the reasons for the balance of payment difficulties of Great Britain since 1945.
  17. Discuss Soviet legislation on collective farms (kolkhoz) enacted after the publication of the model statute of an agricultural artel in 1935.
  18. Imagine yourself a capitalist in about 1830 with money to invest in manufacture. What considerations would influence your decision whether to put your money into manufacturing in Great Britain or into manufacturing in the United States?
  19. “The businessmen alone could not overthrow them; nor could they flourish under them. Therefore the peasants had to be called in, as well as the labor groups. The movement was thus enlarged into one of the great revolutionary movements of history, uniting interests and schools of thought ranging from millionaires to Communists; but it went forward raggedly because businessmen, peasants, and labor did not want exactly the same things and did not want to move forward at the same speed.” This is from Owen Latimore’s discussion of the Chinese Revolution. What modifications would need to be made to turn the statement into a serviceable description of the American Revolution?
  20. Differentiate the various sacrifice theories of equity and point out their implications for progressive taxation.
  21. Some economists hold that “the business cycle” came to an end with 1914 and that subsequent economic fluctuations are of different character. Do you agree? Why, or why not?
  22. Do you believe that Federal Reserve policy in 1946-1948 was helped substantially in resisting inflation? Explain with reference to open-market operations, interest rates, reserve requirements, and handling of Treasury cash balances.
  23. Discuss the major changes that have occurred in the structure of prices in the United States since the outbreak of the First World War. Note important alternations in terms of exchange, and comment on the implications of these shifts. Appraise 1948 price and wage relations, with reference to earlier standards.
  24. To what extent is the theory of demand, as it applies to competitive conditions, open to testing? Discuss the chief attempts that have been made to establish demand functions empirically.
  25. What are the objectives of correlation analysis? What are the chief measurements needed to define the relationship between two variables? What is the relation between correlation and causation?
  26. Enumerate the main items, or groups of items, that make up a country’s balance of international payments. Then explain what is meant by “equilibrium” or “disequilibrium” in the balance of payments.
  27. Does the doctrine of comparative costs (in any of its various formulations) depend on the assumption of full employment? How, if at all, does unemployment affect the case for international specialization and exchange?
  28. Describe the uses of money in pre-literate society and the manner in which they may be found to be institutionalized separately.
  29. Discuss the view according to which capitalism developed in Western Europe in the course of a more comprehensive process involving the nationalization of the major fields of social activity.
  30. How would you explain the fact that short-term interest rates have been sometimes higher, sometimes lower, than long-term rates?
  31. How does the retention of income by corporations affect economic stability?
  32. Explain the factors responsible for the sharp rise in worker productivity in agriculture, 1940-1948.
  33. Discuss the problems which arise in attempting to apply the theory of the firm under conditions of pure competition to the actualities of, say, an Iowa corn-hog farm of 250 acres.
  34. State the points at issue in the treatment of the government sector in the national income accounts, and evaluate the alternative methods of computation.
  35. Give a critical appraisal of von Mering’s book on The Shifting and Incidence of Taxation.
  36. Why did industries such as steel and cement adopt the basing-point price system?
  37. What does it mean to say that utility is measurable or non-measurable? Is it measurable?
  38. Explain and comment on three of the following characterizations of money interest:
    1. Interest equals the marginal rate of time preference.
    2. Interest reflects a discount of future satisfactions.
    3. Interest reflects the marginal productivity of capital.
    4. Loss of interest is the price of liquidity.
    5. Interest reflects the rate at which aggregate capital grows.
    6. Interest is the appropriation by the banks of the profits inherent in the power to coin money.
    7. Interest on money loans is a sinful exploitation of the needs of the distressed.
  39. The assumption, frequently made in partial analysis, that the marginal utility of money is a constant
    1. implies
    2. is compatible with
    3. is inconsistent with
    4. is synonymous with

the further condition that one or more of the goods being considered is an inferior good. Explain your answer.

  1. Under static conditions, one is more likely to encounter “perversely” sloping supply curves than “perversely” sloping demand curves. Why?
  2. Explain the materials and methods available historically for comparing unemployment in the United States and England.
  3. Discuss the pros and cons of industry-wide bargaining.
  4. What specific problems of federal and state taxation are presented by insurance companies?
  5. Define income-elasticity, cross-elasticity, and “own-elasticity” (Marshallian concept) of demand. Explain their interrelations and place in economic theory. Show how each can be determined for a given consumer if we are informed about his indifference-surface.
  6. Discuss the contribution to knowledge of business cycles made by recent empirical studies.
  7. State the relation between marginal productivity and prices of productive services under perfect competition. Reformulate this statement to make it correct under assumptions (a) that the employer is a monopolist; (b) that he is a monopsonist (i.e., can influence his buying-prices by the scale of his purchases); (c) that he is both at once. Reformulate further to give a general statement applying to these cases as well as to that of perfect competition.

 

Source:  Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Martin Bronfenbrenner Papers, Box 23, Folder “Exams: comprehensives 1949-73”.

Image Source:“Library Columbia University, New York City” The Miriam and Ira D. Wallach Division of Art, Prints and Photographs: Picture Collection, The New York Public Library. New York Public Library Digital Collections. Accessed June 30, 2018.

Categories
Exam Questions Harvard

Harvard. Final exam questions for commercial crises. Persons, 1925

 

 

Warren Milton Persons (1878-1937) received his S.B. from the University of Wisconsin and Ph.D. from University of Wisconsin in 1916. His major professor was Richard T. Ely and his thesis had the title: “The Variability in the Distribution of Wealth and Income”. An obituary was written for the Journal of the American Statistical Association (Vol. 34, No. 206: June, 1939, pp. 411-415) by William Truant Foster.

Earlier posts in Economics in the Rear-view Mirror for the Harvard course Economics 37:

Reading list for Commercial Crises taught by Persons 1923,
Examination questions for Commercial Crises taught by Persons 1924.

______________

Course Description

[Economics] 37 1hf. Commercial Crises. Half-course(first half-year). Tu., Th., Sat., at 9, or by arrangement.Professor Persons.

The history, literature, and theories of economic prosperity, crises, and depression, with special reference to the problem of forecasting.
An analysis from the point of view of business cycles of the statistics of speculation, prices, production, trade, interest rates, money and banking.

 Source: Division of History, Government, and Economics 1924-25, Official Register of Harvard University, Vol. XXI, No. 22 (April 30, 1925), p. 74.

______________

Course Enrollment

[Economics] 37 1hf. Professor Persons.—Commercial Crises.

Total 16: 9 Graduates, 1 Senior, 1 Junior, 3 Radcliffe, 2 Others.

Source:Harvard University. Report of the President of Harvard College, 1924-1925, p. 76.

______________

1924-25
HARVARD UNIVERSITY
ECONOMICS 371

  1. ….a.   List, in order of severity of disturbance, the years of crisis, or beginning of marked business recession in the United States since 1837.
    1. Discuss your criteria for “severity of disturbance” and designate the years of crisis.
  2. Outline and discuss briefly the method of construction of the Harvard Index of General Business Conditions.
  3. What positions or movements of the constituent curves of the Index forecast business (a) revival from depression, (b) prosperity, (c) crisis, and (d) recession or depression? Discuss.
  4. Discuss with reference to business cycles:
    ….a.   Commodity prices and their interrelations.

    1. The volume of production of manufactures and mining.
    2. The volume of production of agriculture.
    3. Short-time interest rates.

In your discussion describe the general nature of the data available and indicate their significance.

  1. ….a.  Classify according to any scheme you please the theories of Veblen, Hobson, Aftalion, Bouniatian, Hawtrey, Robertson, Mitchell, Moore, and others.
    1. Discuss your classification.
    2. Outline, compare, and criticize the theories of any two of the writers.

Final. 1925.

 

Source:  Harvard University Archives. Examination Papers, Finals, 1925. (HUC 7000.28, vol. 67). Papers Printed for Final Examinations. History of Science, History, …, Economics, …, Anthropology, Military Science.

Image Source:  ProfessorWarren M. Persons in Harvard Class Album 1920.

Categories
Bibliography Johns Hopkins Pedagogy

Johns Hopkins. Richard T. Ely on Teaching Political Economy, 1885

 

A few posts ago we saw what J. Laurence Laughlin thought about how economics should be taught. This post follows with a chapter contributed by Richard T. Ely that was written somewhat earlier and essentially on the same topic. Laughlin quoted Ely in his book chapter. The mystery “proudest institution in the United States” mentioned by Ely in his first paragraph that used Fawcett’s Political Economy for Beginners could very well have been Harvard. The Harvard Catalogue from 1874-75 indicates that Professor Charles Franklin Dunbar indeed used that textbook.

_____________

On Methods of Teaching Political Economy.
By Richard T. Ely,
Johns Hopkins University.

[61]

IT is easy to compress into the compass of a single sentence all the information needed to qualify any man of fair native ability and liberal education to teach political economy as it was taught eight years ago in one of the proudest institutions in the United States. The information in question is this: Buy Mrs. Fawcett’s “Political Economy for Beginners” [5th edition]; see that your pupils do the same; then assign them once a week a chapter to be learned; finally, question them each week on the chapter assigned the week before, using the questions found at the end of the chapter, and not omitting the puzzles which follow the more formal questions; as it is a test of the academical learning and grasp of economic science of a senior to have a puzzling problem like this hurled at him: “Is the air in a diving-bell wealth; and, if so, why?”

Let no one suppose this description satirical or exaggerated. It is the literal truth; and the hour a week for a part of a year of such instruction was absolutely all the teaching of political economy done in any department of the rich and powerful college. It is scarcely necessary to describe the state in which the students’ minds were left. They learned by heart a few truisms, as, e.g., that it is a [62] good thing to be honest, diligent, and frugal; that products are divided between capitalists, laborers, and landlords; and that values being defined as certain relations of things to one another, there cannot be a general rise or a general fall in values; and they acquired an imperfect comprehension of certain great fundamental facts, like the Ricardian theory of rent and the Malthusian doctrine of population. This, with not a very high opinion of political economy, was the sum-total of results for the student, and prepared him for the degree of A.B. first, and afterward for that of A.M. In our national banks we have a wonderful and unique economic institution, but they were not once mentioned, nor was a single allusion made to the financial history of this great country. And yet this instruction was to fit the elite of the youth of the land for the duties of citizenship

This is a true picture of one way to teach political economy, and it is a method of instruction for which a high salary was paid. Is it a state of things entirely exceptional? It is to be feared not. A preface to Amasa Walker’s “Science of Wealth,” edited 1872, contains these words, which seem to have met with very general approbation: “Although desirable that the instructor should be familiar with the subject himself, it is by no means indispensable. With a well-arranged text-book in the hands of both teacher and pupil, with suitable effort on the part of the former and attention on the part of the latter, the study may be profitably pursued. We have known many instances where this has been done in colleges and other institutions highly to the satisfaction and advantage of all parties concerned.”

The writer holds that better things than this are possible, even in a high school; and it is certain that political economy ought to be taught in every school of advanced grade [63] in the land.The difficulties are by no means insuperable. It is, in fact, easy to interest young people in economic discussions which keep close to the concrete, and ascend only gradually from particulars to generals.

1In Belgium it has been proposed to introduce political economy even into the elementary schools; and in view of the immense importance of the economic problems which will one day be pressing for solution in the United States, it is to be hoped that such a proposal at some future time will not be Utopian in our country.

The writer has indeed found it possible to entertain a school-room full of boys, varying in age from five to sixteen, with a discourse on two definitions of capital, — one taken from a celebrated writer, and the other from an obscure pamphlet on socialism by a radical reformer. As the school was in the country, illustrations were taken from farm life, such as corn-planting and harvesting, and from the out-door sports of the boys, such as trapping for rabbits. Some common familiar fact was kept constantly in the foreground, and thus the attention of the youngest lad was held.

Perhaps money is as good a subject as any for an opening lecture to bright boys and girls, and the writer would recommend a course of procedure somewhat like this: Take into the class-room the different kinds of money in use in the United States, both paper and coin, and ask questions about them, and talk about them. Show the class a greenback and a national bank-note, and ask them to tell you the difference. After they have all failed, as they probably will, ask some one to read what is engraved on the notes, after which the difference may be further elucidated. Silver and gold certificates may be discussed, and the distinction made clear between the bullion and face value of the five-cent piece, etc. Other talks, interesting and familiar, about alloys, the extent to which pennies and small coins are legal tender, the character [64] of the trade-dollar, etc., etc., will occupy several hours, and delight the class.The origin of money is a topic which will instruct and entertain the scholars for an hour. Various kinds of money should be mentioned; and it is possible you may find examples of curious kinds of money in some hill town not very remote, e.g., eggs, and you are very likely to find several kinds of money in use among the boys and girls, e.g., pins. In one boarding-school, near Baltimore, bits of butter, served the boys at meals in quantities less than they desired, passed as money, and quite an extensive use of bills and orders, “negotiable instruments,” was established.After this, a work like Jevons’s “Money and the Mechanism of Exchange,”or at least parts of it, will interest the pupils.

2The teacher will find the necessary information in the Revised Statutes of the United States (Government Printing Office, Washington, D.C.), which should be in the school library. It is contained in more convenient shape in the “Laws of the United States relating to Loans and the Currency”  and “Instructions and Regulations in Relation to the Transaction of Business at the Mints and Assay Offices of the United States.” These pamphlets, like most other government publications, can be obtained gratis of the congressman of the district in which the school is situated. They are kept on sale by various book-dealers in Washington.
3Cf. Mr. John Johnston’s instructive paper, ”Rudimentary Society among Boys,” published in the “Johns Hopkins University Studies in Historical and Political Sciences,” second series, No. XI, edited by Dr. Herbert B. Adams.
4This is published in paper covers in the Humboldt Library for forty cents, as well as in the ” International Scientific Series ” of D. Appleton & Co.

Banking, very properly comes under the head of political economy, performing as it does most important functions in industrial life; and the most prominent banking institutions in this country are the national banks, which have also played an important role in our history. There is likely to be one in every town where there is a high school, and it is well to continue the course of instruction with the village national [65] bank. Procure for this purpose “The National Bank Act,”5 and study it with your class in connection with reports and advertisements and circulars of the village bank. You will find a certain minimum number of directors prescribed by law: ascertain the number in the bank in question, and their functions. Some members of the class will be acquainted with them, and all the class will know of them, and this will give a personal interest to the study. Then compare the amount of capital required with the actual amount, and have the class ascertain from the law the amount of bank-notes which the bank could receive from the comptroller of the currency, and the actual circulation! After the various features of the bank have been examined, it is desirable that some bright boy should write a history of the bank, to read before the class, and afterwards, perhaps, to publish in the village paper. Files of the paper, to which the editor will doubtless give access, will contain all the published reports of the bank, as well as the proceedings and the village talk about the bank at its foundation. If officers of the bank are properly approached, they will assist with hints and information. In this way the pupils will acquire a new interest in banks; and when they pass by the national bank, it will never again seem quite the same lifeless institution. From the history of one national bank it is easy to pass over to the history of national banks in this country, and to a description of the State banking systems, which preceded the national banking system.Then the student may be glad to read what General Walker says on banks, in his “Political Economy,” [66] and in his “Money, Trade, and Industry,”and a work like Bagehot’s “Lombard Street”  will not be without attractions.8

5A government publication; also published by the Homans Publishing Company, 251 Broadway. Care should be taken to secure the latest edition, as there have been various changes in the banking laws.
6For this purpose the teacher should consult the reports of the comptroller of the currency, especially for the years 1875 and 1876.
7Published by Henry Holt & Co., New York.
8Published by the Scribners, New York.

Taxes can be studied in the town or village. The pupils can learn from their fathers what the taxes are, how they are assessed and collected, and what part of the revenues is used for village purposes, what part for schools, what part for the county, and what part for the State. In any village it cannot be difficult to induce one of the assessors to explain before the class in political economy the principles upon which he does his work. All the pupils can then write essays about taxation in the said place, and perhaps one of them will be able to write a financial history of the town. In this way the pupils will be prepared for the perusal of a work like the “Report on Local Taxation,” prepared by Messrs. Wells, Dodge, and Cuyler.It may be learned from the reports of the Secretary of the Treasury10 how the expenses of the federal government are defrayed. In this way a complete view of taxation in the United States is obtained,11 and in many respects a small town or village offers better facilities for such a course than a large city, where manners are less simple, and where city officials for well- known reasons often show a manifest unwillingness to impart information. This course will teach pupils to observe economic phenomena, will impart to them an interest in financial questions, and will prepare them in later years to deal with large problems. As Carl Ritter prepared himself for his [67] great geographical work by the study of the geography of Frankfort,12 so bright pupils, beginning with the study of local finance, will learn how to deal with even the difficult problems of war finance when they arise.

9Published by Harper & Brothers, New York.
10Government publications.
11The United States Census Reports contain valuable information, and every high school should be provided with copies.
12This illustration is taken from Dr. Adams’s paper, v. p. 161 of first edition.

The two great impelling causes of economic study have ever been financial difficulties of government and social problems, or discontent with the condition of social classes, coupled with a desire to improve this unsatisfactory condition, and it is with these two kinds of topics that political economy chiefly deals. In a manner similar in principle to that described, the administration of public charity and its relation to private charity may be studied in the town and county. If poorhouses, insane asylums, hospitals, etc., are in the vicinity, and can be visited, so much the better. The manner of caring for the criminal classes may be studied locally. Reports of State boards of charities will enable the pupils to connect local with State charities.13

13Teachers and pupils will find much useful information in the large work of Dr. Wines, entitled “The State of Prisons and of Child-Saving Institutions in the Civilized World,” Cambridge (Mass.), 1880.

Then there is the ordinary laborer. Let the pupils describe his manner of living, his wages, etc. If the school is a mixed one, some young girl of sufficient tact will be found to visit the ordinary laborers in their homes, to talk with them, and obtain their ideas. In some towns a real laboring population can scarcely be said to exist; but factory towns afford favorable opportunities for studies of this character. Many a Massachusetts factory town furnishes an excellent field for such study, and the reports of the Massachusetts Bureau of Labor Statistics will be found helpful. [68] A book like “Work and Wages,” by Thorold Rogers,14will then be enjoyed by many of the class.15

14Published by G. P. Putnam’s Sons, New York.
15In his “French and German Socialism”   (Harper & Brothers), the writer has attempted to give a brief sketch of the more prominent Utopian theories in a manner adapted to school and college use. Albert Shaw has described admirably an American communistic society in his “Icaria: A Chapter in the History of Communism.” Published by G. P. Putnam’s Sons.

After part or all of this ground has been gone over, it will then be time to take up the more systematic study of political economy. The work described might be gone over in exercises once a week, extending through one year, and the second year a systematic course might follow; and this is not too much time for so all-important a study in a high school. There are few good text-books of political economy, but for the English-speaking student the writer would recommend Francis A. Walker’s “Political Economy,” or Laveleye’s “Elements of Political Economy,” with additions by Taussig.16 Here is an admirable high-school course sketched out. All the works referred to ought to be accessible to the teacher, and should be mastered before he begins to teach.17 This may seem like requiring a great deal; but preparation is as necessary in a teacher of political economy as in a teacher of mathematics; and it is as absurd to venture to teach political economy, without a knowledge of the subject, as to teach trigonometry without a knowledge of trigonometry. It is because this has been attempted that such contempt has been thrown on the study of political economy, and that the science is in such a sad condition.

16If there is sufficient time, Walker’s larger work is preferable; if less time can be devoted to the study, Laveleye’s is better. The teacher should have both. Laveleye’s “Political Economy” is published by the Putnams, New York.
17Let one who proposes to teach political economy master, first of all, F. A. Walker’s “Political Economy.”

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For a more advanced course, a preliminary training in logic is advisable, as the discussion of deductive and inductive methods, of conceptions and definitions, etc., will otherwise hardly be intelligible.18 Besides this, the training one obtains in the study of logic is excellent preparation for much of the work required in political economy. It teaches students to analyze conceptions, to combine elements, and to reason closely. The writer has often felt that a want of this training in his pupils was an obstacle in his way.

18The two little works by Thomas Fowler, “Deductive Logic”  and “Inductive Logic,” published in the Clarendon Press Series, Oxford, are recommended.

The more profound one’s knowledge of history the better for teacher in high school or college. This economic life, this working, buying, selling, this getting a living, is only one part of the historical life of a people; and the more that is known about the whole, the better will each part be understood. For the advanced investigation, a knowledge of foreign languages, especially of German, is indispensable. Roscher,19 Wagner,20 Knies,21 Schmoller,22 Schönberg,23 and Leroy-Beaulieu24 should be studied.

19System der Volkswirthschaft. [5 ed. (1864) Volume I; 3 ed. 1861, Volume II]
20Lehrbuch der politischen Oekonomie. [3d ed. (1893) Volume 1.1; 3d ed. (1894) Volume 2.1-33d ed. (1883) Volume 4.1; 2d ed. (1890) Volume 4.2; (1889) Volume 4.3; (1901) Volume 4.4]
21Die politische Oekonomie vom geschichtlichen Standpunkte”, and his “Geld und Credit.”
22Ueber einige Grundfragen des Rechts und der Volkswirthschaft.
23Handbuch der politischen Oekonomie. [3ed. (1890)]
24Traité de la science des finances. [5ed. (1891/2). Volume I; Volume II]

Colleges and universities ought also to provide periodicals like the “Jahrbücher für Nationalökonomie und Statistik,” “Jahrbuch fur Gesetzgebung, Verwaltung und Volkswirthschaft,” the “Tübinger Zeitschrift für die Gesammte Staatswissenchaft,” the “Journal des Économistes,” the English “Economist,” “Bradstreets,” and the “Banker’s Magazine.”

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The teacher of college students, who ought always himself to be an original worker, should be perfectly independent. It is doubtless owing largely to a lack of independence on the part of the teacher that political economy has not made more progress in this country. Men are too often employed to teach free trade or to teach protection, — and as usually taught, it is difficult to tell which of the two is more unscientific, — or to teach Henry C. Carey’s system, or teach monometallism or bimetallism, whereas the teacher should be encouraged in the pursuit of truth, regardless of where it strikes.

Independence is nowhere more necessary than in the study of economies. A new theory of the iota subscript does not move the mass of men profoundly, but a new theory of taxation is bound to call forth from some one the cry “heresy.” In fact, as there are always large and powerful classes interested in the present condition of things, every change proposed, no matter what it is, is certain to meet with a storm of opposition. Ignorance, prejudice, and selfishness have always combined in their attacks on every political economist who has contributed to the advance of his science.

The political economist requires likewise, if he is to do his best work, a salary which shall enable him to mingle with the world, to become, to a certain extent, a man of the world, in order that he may the better understand the world with which he deals. He ought further to be able to travel and conduct investigations in industrial regions at home and abroad. So important is travel, indeed, that one great French school, that of Le Play, has made travel the chief method of investigation.25

25The following note on Le Play may be interesting in this connection: In 1820 Le Play began a series of journeys, which continued for over fifty years, and extended themselves into all parts of Europe, and even into the regions of Asiatic semi-civilization. These travels have borne plenteous fruits, of which the most prominent are the following: the publication of numerous works, the establishment of a method of study in social science, and the foundation of a school. Le Play’s method, which he calls ” La Méthode social,” centres in what maybe called the doctrine of travel. The quintessence of his theory is, that it is as essential for the economist to observe economic phenomena as for the mineralogist to observe minerals. The economist, however, not being able to gather together and arrange in a laboratory manufactories, laborers’ quarters in cities, agricultural villages, extensive mines, and the commercial phenomena of a great port, must travel to them, observe the manifestations of social and individual life which are there to be seen, and classify the results thus obtained in such manner that instructive and useful generalization may be drawn therefrom. The most important among the works of Le Play bears the title “les Ouvriers Européens,”[2d ed. (1879), Volume I; (1877), Volume II;  (1877), Volume III; (1877), Volume IV; (1878), Volume V; (1878), Volume VI] in which the author describes from actual observation the minutest details of separate laborers’ households in every part of Europe. The third service to science, which these journeys enabled Le Play to render, consists in the foundation of a school, called “L’École de la Paix Sociale,” which manifests its activity in various ways, of which the most striking is the publication of their semi-monthly organ, “La Réforme Sociale.”

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The thoroughly equipped teacher of political economy ought, in addition to his qualifications in history and philosophy, including chiefly logic, to be a careful student of the principles of law. Evidence and practice, and the formal details of law, are not of great importance to him; but real- estate law, the law of contract and of banking, etc., are. The political economist lays the basis for legal study, he tells the reason why such and such legal institutions, e.g., private property in land, exist, and should exist; but he can manifestly lay a much better basis if he knows the superstructure which is to be erected thereon.26

26In many German universities every law-student is obliged to take a course in political economy. The study of political economy is likewise obligatory in French law-schools.

A legal friend, at the same time a political economist, recommends the following course in law for advanced students of political economy: “Blackstone’s Commentaries,”27  [72] which should be thoroughly digested; Parson on “Contracts“; Washburn on “Real Estate [4ed (1876, Volume I; 3ed (1868) Volume III],” Benjamin on “Sales of Personal Property,” and Bispham on “Equity.” I would add, at least, Morse on “Banks and Banking,” Cooley on “Taxation,” and Morawetz on “Corporations.”

27Chase’s edition is one volume.

Only one point more remains to be mentioned. The best original economic work is, for the most part, expensive. Laws, government reports, as blue-books and financial statements, and all sorts of original documents are required. Much economic work can be done only in connection with a learned institution or a government office, or by a very wealthy person. Any university which would have good work on the part of its teachers of political economy must not begrudge the expense of material as necessary to the economist as chemicals to the chemist. Of course, it cannot be expected that an American college will provide the political economist with a special library of seventy thousand volumes, like the Library of the Prussian Statistical Bureau; but it is doubtful whether a fair working university library of political economy can be produced for less than five thousand dollars.28

28It will readily be understood that a university library, designed to aid original research, is something quite different from a high-school library. One hundred dollars would purchase economic books which would answer fairly well the needs of a high school.

 

Source: Richard T. Ely, “On Methods of Teaching Political Economy,” in Vol. I. Methods of Teaching History (pp. 61-72) in the series Pedagogical Library, edited by G. Stanley Hall. Boston: D.C. Heath & Company, second edition, 1885.

Image Source: Universities and their sons; history, influence and characteristics of American universities, with biographical sketches and  of alumni and recipients of honorary degrees, Vol. IV (1900), p. 505.

Categories
Courses Curriculum Harvard

Harvard. Rich economics course descriptions, 1884-85

 

Harvard’s expansion of its course offerings in political economy starting in 1883-84 was a major milestone in university instruction in economics in the United States. A report from the Harvard Crimson and another from New York Post have been posted earlier in Economics in the Rear-view Mirror. Following up the previous post that provided J. Laurence Laughlin’s thoughts from 1885 about how to best teach economics, thick descriptions of the Harvard courses in political economy listed for 1884-85 can be found below. The chapter from which the excerpts have been transcribed is in the same volume in which Richard Ely contributed a chapter, “On Methods of Teaching Political Economy” that was cited by Laughlin.  

__________________

Excerpts from:

THE COURSES OF STUDY IN HISTORY, ROMAN LAW, AND POLITICAL ECONOMY, AT HARVARD UNIVERSITY.1
By Henry E. Scott, Harvard University.

A DESCRIPTION of the ground covered and of the methods used in the various courses in History and Political Science at Harvard must necessarily be preceded by a brief statement of the circumstances under which these studies are pursued there.

In the first place, all the courses offered in these branches — and in almost all other branches as well — are purely elective. The University requires each year a certain amount of work from every undergraduate who is a candidate for the degree of Bachelor of Arts; but, with the exception of about two-fifths of the work of the Freshman year, and certain prescribed written exercises in English in the Sophomore, Junior and Senior years, the undergraduate has full liberty to select any course in any subject which his previous training qualifies him to pursue. The courses in History and in Political Science may therefore be elected by any undergraduate, by the Freshman as well as by the Senior; and they are also, it may be added, open to the students of the various professional schools embraced in the University, to resident graduates, and to special students whether graduates or not.

1In the preparation of the following article, the writer has been greatly assisted by the instructors in the several courses described, and their statements have been incorporated in the text with but little change.

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In order to provide suitable recognition for those students who have confined their college work to one or two special fields, Honors of two grades — Honorsand Highest Honors — are awarded at graduation in almost all branches in which instruction is offered. The candidate for Honors in History or in Political Science must have taken in the department selected six full courses or their equivalent, i.e., he must have devoted to it about one-half of his last three years as an undergraduate, four full courses or their equivalent being the amount of elective work required each year of Sophomores, Juniors, and Seniors; and he must have passed with great credit the regular examinations in those courses, and also, shortly before Commencement, a special examination covering all the six courses in question. Students who do not care to specialize to the extent necessary to obtain Honors can yet, by doing creditably about one-half as much work (i.e., by taking three full courses) in any one subject, receive at graduation Honorable Mention in that subject.

To pursue with advantage studies in History or in Political Science, the student must have easy access to books; and, in order to place within his reach the principal sources, authorities, and other helps necessary for the study of a given course, the system of “reserved books” was established some years ago in the Harvard College Library. The instructors in the various departments request the Library authorities to place upon the shelves of certain alcoves, assigned for this purpose in the reading-room of the Library, the books used by their classes for collateral reading and reference. The books thus reserved can be taken from the shelves by the students themselves without the formality of oral or written orders, and can be consulted in the Library during the day. At the close of library hours, they may, if properly charged, be taken out for the ensuing night only, [169] the borrowers promising to return them at 9 a.m. the next day. The right to use the reserved books is not limited to those students who take the particular course for which certain books have been reserved, but all persons entitled to the privileges of the Library are likewise entitled to use all the reserved books, the purpose of the system being not to withdraw the works from general use for the benefit of a narrow circle, but rather so to regulate their use that the greatest possible number of students may be able to consult them. Persons engaged in special investigations can, if necessary, obtain cards of admission to the shelves where the material they wish to use is stored; but, for the ordinary student, the reserved books, together with those ordered from the Library in the usual way, are sufficient.

The courses of instruction which are now to be described are classified — as are all courses offered in the College — as courses or half-courses, according to the amount of work required of the student and the number of exercises a week, a course having either three or two exercises a week, a half-course either two or one.Some of the courses are given every year, others every two years, others twice in three years. The more advanced courses can be taken only by special permission of the instructors, to obtain which students must give evidence of their ability to do the work expected of them. There are announced this year (1884-85) in the official pamphlet sixteen courses and two half-courses in History, one course and two half-courses in Roman Law, and four courses and four half-courses in Political Economy. There are actually given this year eleven courses and two half-courses in History, one course in Roman Law, and four courses and three half-courses in Political Economy,

1In the following description the half-courses are especially designated as such.

[170] the remaining courses being omitted in accordance with the arrangements mentioned above or for special reasons. The average number of hours of instruction per week devoted this year to History is thirty; to Roman Law, three; to Political Economy, fifteen.

[…]

THE COURSES IN POLITICAL ECONOMY.

Political Economy 1 (Mill’s “Principles of Political Economy “; Lectures on Banking and the Financial Legislation of the United States; three hours a week, Professor Dunbar and Assistant-Professor Laughlin) is designed (1) to provide for those students who intend to continue their economic studies for more than one year a suitable introduction to the elementary principles of the science, and their application to questions of practical interest; and (2) to furnish students whose time is chiefly devoted to other departments of study with that general knowledge of and training in Political Economy which all men of liberal education should desire. It has, therefore, its theoretical and its practical side. In the present year (1884-85) the new edition of Mill, prepared by Professor Laughlin, serves as a text-book for the main part of the course, and the remaining time is occupied by lectures on the elements of banking and the public finance of the United States (especially in the last quarter of a century). The instructor holds that for a course in the elements of Political Economy, where it is eminently desirable that the student should assimilate principles rather than memorize explanations of each subject, neither the recitation system nor the lecture system is best fitted, but that a judicious mixture of both is necessary; for the object of the instruction is in general not merely to give men facts, but to lead them to think. The text-book is supposed to furnish to the student a clear statement of the principles that are to be taken up at a given exercise. Then in the class-room the instructor, by questions, and by drawing the men into discussion and the free expression of difficulties, endeavors as much as possible to fix the knowledge of principles in the mind of the students, and to direct their attention to the workings of these principles in concrete cases. Graphic [186] representations of facts (such, for example, as are given by the charts in the text-book referred to) are often used to make the relation between theory and practice still clearer; and statements from the newspapers in regard to economic matters are sometimes read in the class-room, in order to test the student’s ability in applying abstract principles to the affairs of every-day life. To give the students practice in making accurate statements, questions are now and then written on the blackboard and answered in writing within fifteen minutes, and at the next hour these answers are criticised and discussed.

In the lectures on the elements of banking and finance in the latter part of the year, the three functions of banking — deposit, issue, and discount — are illustrated by references to the system of National Banks, of the old United States Banks, and of the Bank of England; and the sub-treasury system, the national debt, the methods of raising revenue during the war, the issue of legal tender paper, the resumption of specie payments, etc., are some of the topics discussed, Professor Dunbar’s pamphlet entitled “Extracts from the Laws of the United States relating to Currency and Finance” serving as a basis for the lectures on finance.

 

Political Economy 2 (History of Economic Theory — Examination of Selections from Leading Writers, three hours a week, Professor Dunbar) was in former years conducted by taking up, in the earlier part of the year, Cairnes’s “Leading Principles,” and, in the later part, some book of which the discussion and criticism would bring out more clearly the meaning of the generally accepted doctrines. Carey’s “Social Science,” [three volumes: Vol. 1, Vol. 2, Vol. 3] George’s “Progress and Poverty,” Shadwell’s ”Principles” — books which put the “orthodox” student in a defensive attitude — were used for this purpose. In addition, lectures were given on the history of political economy, and on examples of the working in practice of its principles, such as the working of the principles of international trade in the payment of the Franco-German indemnity in 1871-73, the commercial crisis of 1857, etc.

For the present year (1884-85) the course is remodelled. Nothing in the nature of a text-book is used. The subject is treated by topics. Such questions as the wages-fund controversy, the theory of international trade, the method of political economy, the theory of value, are to be taken up in succession. On each topic references to leading writers will be submitted to the students for examination and discussion. On the wages-fund question, for example, Mill’s retractation in the “Fortnightly Review” of his original views, Cairnes’s restatement of the theory, F. A. Walker’s position as found in his “Wages Question” and his “Political Economy,” George’s criticism of current views in “Progress and Poverty” will be read and discussed. The history of political economy is to be taken up in a similar way, by reference to characteristic extracts from the writings of the Physiocrats, Adam Smith, Malthus, Ricardo, Senior, Say, Bastiat, and their successors and critics in England and on the Continent. These extracts, read beforehand by the students and discussed in the class-room, will be supplemented by the comments and explanations of the instructor. By this method it is hoped that some familiarity with the literature of the subject will be obtained, as well as a more exact comprehension of its doctrines than can come from an elementary study like that of Course 1.

 

In Political Economy 3 (Discussion of Practical Economic Questions — Lectures and Theses, three hours a week, Assistant-Professor Laughlin) it is expected that the student, who is supposed now to have grasped firmly the general principles of political economy by at least one year’s previous study, will apply these principles to the work of examining [188] some of the prominent questions of the day, such as the navigation laws and American shipping, bimetallism, reciprocity with Canada, government and national bank issues, etc. At the beginning of each topic a general outline of the subject and its principal divisions is given by the instructor, together with more or less particular references to the most important authorities; but a complete list of books is not always furnished, the student being rather encouraged to hunt for material himself. The exercise in the class-room takes the form rather of a discussion than a formal lecture, references to authorities being given previous to each meeting, as the following examples will show: —

Standards of Value, see Jevons, “Money and the Mechanism of Exchange,” chaps, iii, xxv; S. Dana Horton, “Gold and Silver,” chap.iv, p. 36; F. A. Walker, “Political Economy,” pp. 363-368, “Money, Trade, and Industry,” pp. 56-77; Wolowski, “L’Or et l’Argent,” pp. 7, 22, 207; Mill, “Principles of Political Economy,” book iii, chap, xv; Walras, “Journal des Économistes,” October, 1882, pp. 5-13.

The third hour of the week (and also the mid-year examination) can be omitted by men who promise to prepare one considerable thesis (due in April) on a subject connected with some practical question of the day which has not been discussed in the class-room. Examples of such subjects are: the warehousing system; a commercial treaty with Mexico; the public land system; the remedy for our surplus of revenue; municipal taxation; characteristics of socialism in the United States; co-operation in the United States (productive and distributive co-operation, industrial partnerships, and cooperative banks); advantages and disadvantages of small holdings.

 

Political Economy 4 (Economic History of Europe and America since the Seven Years’ War, three hours a week, Professor Dunbar) serves to connect Political Economy with  [189] History. It requires no previous study of Political Economy, although some historical knowledge of the period is presupposed. Among the more prominent subjects taken up are: the rise of the modern manufacturing system, more particularly in cottons, woolens, iron; the steam engine; the economic effects of American Independence and of the French Revolution; the factory system; the migration of labor; improved transportation by railroads and steamships; the application of liberal ideas to international trade; the new gold of California and Australia; the economic effects of the Civil War in the United States; American grain in Europe; the Suez Canal; the crisis of 1873, and commercial crises in general; the development of banking; and the resumption of specie payments in the United States.

The course is chiefly narrative, and is carried on by lectures, supplemented by references for collateral reading. A printed list of topics is distributed to the students, containing a summary of the lectures and references to books reserved in the Library. An extract from this list will most clearly indicate its character and purpose. It gives the topics and references for the first lecture on the new gold supply: —

Lecture XLVII. — The discovery of gold in California: “Robinson’s California” (see Larkin’s and Mason‘s Reports, pp. 17, 33); also Exec. Doc. of U. S., 1848, i, 1. — The discovery in Australia: Westgarth, “Colony of Victoria,” 122,315. — Establishment of miners’ customs: Wood,”Sixteen Months in the Gold Diggings,” 125; Lalor’s “Cyclopaedia,” ii, 851. — Increased supply of precious metals in sixteenth and seventeenth centuries small in proportion to that in nineteenth century: Soetbeer, “Edelmetall-Production” (in Petermann’s “Mittheilungen”), Plate 3; “Walker on Money,” Part I, chaps, vii, viii. — The discoveries of 1848 and 1851 needed to give effect to influences already stimulating trade and commerce.

Similar topics and references are given for each of the eighty or ninety lectures.

 

[190] In Political Economy 5 (Economic Effects of Land Tenures in England, Ireland, France, and Germany—Lectures and Theses, one hour a week, counting as a half-course, Assistant-Professor Laughlin) a branch of the science that has been but slightly considered in Course 1 is taken up, and, as in the other practical courses, an attempt is made to apply principles to facts. The following extract from the official pamphlet, describing the courses of study in Political Economy, will indicate the ground covered: —

“This course covers the questions now of political importance in England, Ireland, France, and Germany in their economic aspects, and embraces the following subjects: — In England: the land laws; relative position of landlord, tenant, and laborer in the last one hundred years; tenant-right; leases; prices and importation of grain; repeal of the corn-laws; American competition; peasant proprietorship. In Ireland: the ancient tribal customs; English conquests; relations of landlord and tenant; security of tenure; Ulster tenant-right; absenteeism; parliamentary legislation; acts of 1869, 1870, 1881, 1882; population; prices of food and labor. In France: feudal burdens on land; relation of classes, and condition of peasantry and agriculture before the Revolution; small holdings and the law of equal division; present condition of peasantry and agriculture; growth of population; statistics of production, wages, prices; peasant proprietorship. In Germany: reforms of Stein and Hardenberg; condition of agriculture; peasant proprietors; statistics of wages and prices.”

A subject taken up (for example, English land tenures) is divided into topics, some of which are treated by the instructor by means of lectures, others are assigned to the individual members of the class, who are expected to present the results of their study in writing. These short theses are criticised and discussed by the instructor and the class, authorities that have been overlooked are pointed out, and suggestions are made as to the way in which the question can be better handled. Perhaps five or six of these papers [191] are required from each student during the year, the intention being that at least one shall be handed in each week. As the natural tendency of such work is to “compile,” much more consideration is given to the quality than to the quantity of the thesis.

 

In Political Economy 6 (History of Tariff Legislation in the United States, one hour a week, counting as a half- course, Dr. Taussig) the history of tariff legislation from 1789 to the present day is studied. The method of instruction is by lectures and collateral reading, specific references being given beforehand on the subjects to be taken up; for example, the references on the tariff act of 1789 are as follows: Hamilton’s “Life of Hamilton,” iv, 2-7; Adams, “Taxation in United States,” 1-30, especially 27-30; Sumner, “History of Protection,” 21-25; Young’s “Report on Tariff Legislation,” pp. iv-xvi. Similar references are given when the economic effects of the tariff, more particularly in recent years, are discussed. The class-room work is based on the assumption that the passages referred to have been read by the students, and, though mainly carried on by lectures, includes questioning and discussion on the references. The economic principles bearing on tariff legislation are taken up in connection with the more important public utterances on the subject, such as Hamilton’s “Report on Manufactures,” Gallatin’s “Memorial of 1832,” Walker’s “Treasury Report of 1845,” and the speeches of Webster, Clay, and others. These are read by the students, and discussed in the class; and at the same time with them are considered the views of writers on the theory of economic science. In the course of the year the various arguments pro and con in the protection controversy are, in one shape or another, encountered and discussed. Towards the close of the year lectures are given on the tariff history of England, France, and Germany.

 

[192] Political Economy 7 (Comparison of the Financial Systems of France, England, Germany, and the United States, one hour a week, counting as a half-course, Professor Dunbar) deals with the principles of finance, and with the financial systems of the more important civilized countries. The budgets of France, Germany, and England are examined and compared, the financial methods of the United States are noted, and the principles of finance and the advantages and disadvantages of different taxes are discussed. The instruction is mainly by lectures. The course is not given in the present year (1884-85), and may be omitted in future years, though it will be retained on the elective list.

 

In Political Economy 8 (History of Financial Legislation in the United States, one hour a week, counting as a half- course, Professor Dunbar) the funding of the Revolutionary debt, the establishment and working of the first Bank of the United States, the financial policy of Hamilton and Gallatin, the effect of the War of 1812 on the finances and the currency, the establishment of the second Bank of the United States, the fall of the bank in Jackson’s time, and the years 1836-40, the independent treasury, the State banking system, the growth of the public debt during the Civil War, and its reduction and conversion since, the establishment and working of the National Bank system, — are the topics successively considered. The method of instruction is by lectures and by reference to the public documents and other writings bearing on the subject. It is advised by the instructors that Courses 6 and 8 in Political Economy be taken together; and this advice has been followed, most students who take one of these courses being also members of the other.

 

Source:  Henry E. Scott, “The Courses of Study in History, Roman Law, and Political Economy at Harvard University”  Vol. I. Methods of Teaching History (pp. 167-170, 185-192) in the series Pedagogical Library, edited by G. Stanley Hall. Boston: D.C. Heath & Company, second edition, 1885.

Image Source:  Charles F. Dunbar (left) and Frank W. Taussig (right) from E. H. Jackson and R. W. Hunter, Portraits of the Harvard Faculty (1892); J. Laurence Laughlin (middle) from Marion Talbot. More Than Lore: Reminiscences of Marion Talbot, Dean of Women, The University of Chicago, 1892-1925. Chicago: University of Chicago (1936).

Categories
Economists Harvard Pedagogy

Harvard. Methods of teaching political economy. J. L. Laughlin, 1885

 

This morning while trawling the Harvard Crimson, a student newspaper, for announcements of speakers and topics in Harvard’s Economics Seminary of over a century ago, I came across an 1885 review of a book published by the Harvard assistant professor, J. Laurence Laughlin, who was to later teach at Cornell and ultimately become the founding head of the department of political economy at the University of Chicago. Chasing down that book I found a chapter in which Laughlin discussed general pedagogical issues that come up when trying to inflict basic economic principles on the young. It is an interesting set of reflections with much insight. Given Laughlin’s role in building up the Chicago economics department (cf. the first 25 years of Laughlin’s department), I believe visitors to Economics in the Rear-view Mirror will be interested in hearing Laughlin’s practical advice of how to teach economics.

In an earlier posting we have Laughlin’s recommended library for instructors of economics from 1887 with nearly all items conveniently linked. You’re welcome!

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METHODS OF TEACHING POLITICAL ECONOMY.

Chapter Five of
The Study of Political Economy: Hints to Students and Teachers
by J. Laurence Laughlin, 1885

A NATION is sometimes so bitterly taught by sad experience in financial errors—as was the case with France in John Law’s time, and again in the issue of paper assignats during the Revolution—that, on the principle of the “burned child,” it afterwards finds that it unconsciously keeps to the right and avoids the wrong path. So that to-day France is a country where correct conceptions of money are almost universal, and whose public monetary experiments are, as a rule, most admirably conducted. In somewhat the same way does the individual gain his proper knowledge of political economy. Principles must be seen working in a concrete form. The key to efficient teaching of it is to connect principles with actual facts; and this process can go on in the beginner’s mind only through experience. By experience, I mean [116] the personal (subjective) effort of each one to realize the working of the principle for himself in the facts of his own knowledge. The pupil must be put in the way of assimilating for himself the principles of his subject in such a manner that he feels their truth because they are apparent in explanation of concrete things all around him. That this is the aim to be always kept in view by the teacher and student has been made clear, it is to be hoped, by the previous analysis of the character and discipline of political economy in Chapters II and III. It is now my purpose to make some suggestions as to the practical methods of teaching by which this can be carried into effect.

1. The relative advantages of lectures and recitations for political economy have never, to my knowledge, been openly discussed. An experience with both methods of teaching leads me to think that the lecture system, pure and simple, is so ineffective that it ought to be set aside at once as entirely undesirable. The disciplinary power to be gained by the study is almost wholly lost to the student by this method of teaching. Nothing is so useful as a sharp [117] struggle, an effort, a keen discussion, or possibly a failure of comprehension at the time; for nothing will so awaken one to intellectual effort, and finally result in the safe lodgment of the principle within one’s mind as an obstruction and its removal. This is not gained by listening to lectures. No matter how clear the exposition of the principles may be, no matter how fresh and striking the illustrations, it still remains that the student is relieved by the instructor from carrying on the mental processes which he ought to conduct for himself. In fact, the clearer the exposition by the instructor, the less is left to the student—the lecturer, in fact, is the chief gainer by the system. Moreover, while listening to a connected and logical unfolding of the principles, the student is lulled into a false belief that, as he understands all that has been so clearly presented to him, he knows the subject quite well enough; and the result is to send out a number of conceited men who really can not carry on a rational economic discussion. They wholly miss the discipline which gives exactitude, mental breadth, keenness, and power to express [118] themselves plainly and to the point. Then, not being forced to think over a principle in its application to various phases of concrete phenomena, they know the truth only in connection with the illustrations given by the lecturer, while they utterly fail to assimilate the principles into their own thinking. The subject then becomes to them a matter of memory. They memorize the general statements without ever realizing their practical side, and that which is memorized for the day of examination is forgotten more speedily than it is learned, and the sum total of the discipline has been simply a stretching of the memory. In fact, with the average student, in almost any subject the lecture system leads to cramming. At the best, it affords a constant temptation to put off that kind of mental struggle which ought to be carried on by the student himself—a period of doubts and questions—by which alone a clearer conception of the subject ultimately emerges. In fact, without it, it is doubtful if the student ever gets much, if any, of that mental attrition on the subject which is the most valuable part of the work. An experience of a year with [119] lecturing in an elementary course to a class of two hundred and fifty, including the best and the poorest men in the university, practically convinced me, when taken with other evidence, of the truth of the above position; for, as contrasted with the work of similar men in other years under a different system, their examination-books were the most unsatisfactory I had ever read.

The usual alternative to the lecture system is the plan of recitations from a text-book. Even the simplest form of recitations is, in my opinion, better than listening to lectures. At the very least, the student is put to it to express the sense in his own words, and that, too, under the criticism of the teacher. But this plan has its evident difficulties. If the pupil is called upon for only that which is contained in the book, he falls into the habit of memorizing, and fails to think for himself. If you give him the clew, he can tell you on what part of the page the statement is found, and he can talk in the language of the book; but he knows nothing of the power of applying it to what he sees. If the learner is very clever and [120] inquisitive, he may do something for himself, but the average pupil quite misses the real good of such a course.

2. As it is evident that neither lectures nor formal recitations in the old fashion are satisfactory, we are inevitably led to adopt a plan which possesses the advantages of both. Some text-book is essential as a basis for the instruction.* In it the pupil should find an exposition of the principles, and a provocation to apply them to practical things as he reads. Then he should come to the class-room as intelligently familiar with the principles as his reading can make him. Now comes the work of the instructor. With a class of beginners, it is [121] surprising how easy it is to show even to the best men a gap in their knowledge, or a misunderstanding of the principle. Present an illustration different from that of the book, and ask them to explain the situation, and very few will be able to respond. The necessity of seeing the essential point in the facts and the attempt to describe the operation of the principle will effectually rout the man who has merely memorized the book, and teach him to think out the matter more thoroughly for himself in the future. The teacher, also, will try to find out the accidental obstacles which in a young mind obstruct the understanding of the point in question. Let the pupil be asked to state the matter, and let the teacher note the imperfections. At the same time he can stimulate another student by questioning him as to one of these imperfections. If a correction is not obtained in a clear and connected manner from a member of the class, let the instructor apply the Socratic method. At first ask a question which the learner readily understands, and then lead him naturally and gradually by logical steps up to the point wherein he had failed of understanding. [122] He will then see his own difficulty, and at the same time he has had a little robust exercise for his mind. If this is carried on before his fellows, it will the better cultivate coolness and self-control before an audience.

* The question naturally arises in the teacher’s mind, What is the best text-book? This, of course, is a matter of individual experience and judgment, and competent persons will differ in offering advice. From my own point of view, I should strongly recommend for mature students, who can give to it fifty or sixty hours of recitation, Mill’s “Principles of Political Economy.” For those who wish a less severe course, for a shorter time, Mr. and Mrs. Marshall’s ”Economies of Industry” is an excellent book. For the same persons, a forthcoming book by Professor Simon Newcomb, to be published this summer (1885), would be admirable. I have seen the advanced sheets, and find the system of applying principles to facts at the end of each chapter admirably carried out. For books to be consulted by the teacher, he is referred to the “Library” list at the beginning of this volume.

3. Above all, the hour should not be wasted in simply rehearsing what has been read in the book. The student should go away from the class-room feeling that he has received some new idea, or some interesting fact which illustrates his subject. The work of the class-room should be cumulative in its effect as compared with the results of text-book reading. The teacher should in every way stimulate questions from members of his class, and urge the statement by them, either orally or in writing, of their doubts and difficulties. If there is some timidity in presenting a weakness in the presence of a class, ask a question of some more manly person of the number, and the timid student will soon see that others are not much better off than he. In fact, all will have difficulties in understanding, or in interpreting principles, some trivial, some serious; and the pupil will become discouraged unless these are removed. [123] When each one sees that others are also hindered by obstacles, there will be a greater freedom in asking questions. Moreover, in order to keep up a steady and regular training, which will produce the best disciplinary results, let the questions of the instructor every day run backward in review, and especially aim to bring out the connection of one part of the subject with another. It will be very effective if done just about the time that the past work is growing a little dim before the presence of newer ideas. In no subject, perhaps, more than in political economy, is it necessary to know the preliminary steps in order to understand the later work; so that the pupil must be actually in possession of principles previously expounded, for which he may be called upon at any time. It is simply impossible for a person to be absent and neglectful for a time in his study, and then come into the class-room to make a brilliant show on an intermediate fragment of the subject. He can be too easily exposed as a humbug to attempt it a second time. Moreover, thus to force him to do the work as he goes along is the greatest favor one [124] can do for the pupil; and the usual cramming before the examination becomes, in reality, a general review, which is very useful in bringing him to see the connection existing throughout the whole subject.

4. If the class is so large that it is impossible for the instructor to reach each member as often as he might wish with the above method, there is one device which is more or less useful. At the beginning of the hour let him write a question upon the blackboard, to be answered by each one in writing within the first ten or fifteen minutes. The attempt to write out an explanation clearly, without hint or clew from the instructor, will reveal to the best student the deficiencies and gaps in his knowledge. Each one will then have the keenest interest to know what is considered a satisfactory answer to the question. At the next exercise of the class, the instructor can read some good and some bad answers, point out the general mistakes, and advise his pupils for the future. No exercise can be better than this in cultivating the habit of careful expression, and in learning how to make a clear and pointed exposition of [125] a subject in a short space. This practice tends to secure the accuracy which in the oral discussions is made second to fluency and readiness. The teacher, I believe, will be forced to some such method as this, if he hopes to get a real idea of the prevailing difficulties in the minds of his class. They are in the nature of anonymous communications, in which, as no one else can know what he is writing, the student may without timidity show exactly what he can do. In fact, the written answers afford admirable means of judging how far the class have taken serious hold of the subject, and they enable the instructor to modify the nature of his questions to members, or to change the character of the exercise to suit a set of slower men. But one of the best uses of these written answers, in my experience, has been to break down the timidity which prevented questions in the classroom. The criticism of an answer before the class is certain to bring out as defender, either the writer, or one who gave a similar reply and the whole number of men will be very restive under criticism of a piece of work at which each has tried his hand. As soon as questioning [126] becomes natural and easy, the number of written exercises can be diminished, and the whole hour given to discussions with the class.

5. Since the chief work of the class-room is not to enable students to discover principles, but rather to understand and apply them, probably the most useful method of interesting a class is to present to them, in extracts from the newspapers of the day, bits of fallacious discussions* which may come under the head of the subject in hand, and then to ask for criticism and discussion. This will also suggest doubts and difficulties which had not been anticipated in the minds of some, and will aid in stimulating questions. The appositeness of a timely topic before the public is peculiarly serviceable for such purposes. In fact, the practical matters of our own country will never fail to excite a lively interest in almost any class; and through this interest the teacher can find a [127] way of leading men to study principles more carefully. A National or State campaign is very likely to furnish an instructor with a plentiful supply of extracts from speeches of an economic character for discussion by his class. The learner in political economy is not hindered by the same disagreeable obstacles, as hamper the medical student, in finding subjects on which to put his learning into practice.

* Professor W. G. Sumner has published a volume of “Problems in Political Economy” (1884), which adopts the plan above described for advanced classes. The system is also most excellently carried out in a forthcoming elementary treatise on Political Economy by Simon Newcomb, to be published during the coming summer.

6. Many minds are unable to keep hold on an abstraction, or general principle; or they may have been untrained in making nice distinctions between ideas or definitions. And these students form a very large proportion of the ordinary classes. To such persons a skillful teacher ought to offer some help. Diagrams have seemed to me most useful for this purpose, and a reason can be given for their use. Just as in beginning a strange language, when words of widely different meaning have a similarity to the untutored eye, the distinctions do not make much impression. So it is in regard to principles and definitions in political economy. Therefore, visible expression of the abstract relationships, by diagrams, or by any figures [128] which represent the abstract in a concrete form, will be of very considerable service to the average student. This matter seems to me to be of such practical importance in teaching that it will be worth while to illustrate my meaning by a few examples.

(a.) Since material wealth comprises all things that have value; since capital is only that wealth employed in reproduction, and not used by the owner himself; and since money is that part of wealth in circulation aiding in the transfer of goods — the relations between the three may be expressed to the commonest apprehension by some such device as the following, in which the area of circle A represents the total amount of wealth; B, the capital saved out of the total wealth; and C, the money by which goods are transferred—only that part of circle C being capital which, inside of circle B, is being used as a means to production.

Again, (b) it is seen that different classes of laborers, arranged according to their skill, [129] form, as it were, social strata, of which the largest and the poorest paid is composed of the unskilled laborers at the bottom. This may be shown to the eye at once by the section of a triangle, in which A represents the largest and least paid class; B, the better-educated, and relatively more skillful laborers; ending finally in the few at the top, of the most competent executive managers. Now, if A were to become as fully skilled as B, and competition should become free between all members of A and B; and if this were to go on in the same way to include C—the effects of this breaking down of the barriers which hinder competition might be illustrated by the following changes in the above triangle: the areas of A, B, and C may be thrown together into [130] one area within the whole of which movement and choice are perfectly free to the laborer, and wherein wages are in proportion to sacrifice. This can be done by striking out the lines of division between A, B, and C, and representing the change by the area included between the base and the dotted lines.

Examples might be multiplied in illustration of my method, but these must suffice. By such means there can be planted inside even the dull mind an outline of an idea which can then be modeled and shaded to the condition of a natural truth. The teacher will find, by experience, that an idea thus given is very seldom forgotten. The pupil has thus once turned the abstraction into a concrete form, and, after he has once grasped it, he can now [131] use it for himself. It does not at all imply that he will get hard and definite conceptions of human affairs by this process; for he is shown that the principle appears in other forms, and he is constantly seeing that it is so. Having found out how a principle explains one set of facts, he can be led to see its application to other conditions.

7. In close connection with this method, but having an entirely different end in view, is the use of charts and graphic representations of statistics. The method just described above aimed to help in finding concrete expressions for the general principles; but graphic methods usually serve best to assist in that part of the economic process heretofore referred to as verification. There is an abundance of economic facts in regard to which the connection between cause and effect is either unknown or grossly misunderstood. In truth, the subjects to which political economy applies are constantly changing, nay, are even multiplying. These data, after having been collected with great care (which is the duty of the statistician), are the materials for the process [132] of verification. By this “systematized method of observation,” says Cairnes,* “we can most effectually check and verify the accuracy of our reasoning from the fundamental assumptions of the science; while the same expedient offers, also, by much the most efficacious means of bringing into view the action of those minor or disturbing agencies which modify, sometimes so extensively, the actual course of events. The mode in which these latter influences affect the phenomena of wealth is, in general, unobvious, and often intricate, so that their existence does not readily discover itself to a reasoner engaged in the development of the more capital economic doctrines.” In this part of the process graphic representations of statistics are invaluable.

*”Logical Method,” p. 97.

Every one knows the common dislike of dreary statistics; to many persons columns of statistics are repellent or meaningless. Collections of facts regarding banking, finance, taxation, and wages become a tangle in which one’s direction is constantly lost. But arranged graphically the whole direction of a movement [133] is seen at once, and the mind takes in new and unexpected changes, which force an investigation into their cause. Moreover, there comes a certain breadth of treatment, when, in looking at the facts graphically expressed, one is able to see the whole field at once. There is no waste of thought on temporary and accidental movements, for the action is seen from beginning to end at one glance. There are many charts which would illustrate this meaning very distinctly; but perhaps none are simpler than the one here appended, showing the steady and continuous fall in the value of silver relatively to gold since the discovery of the New World. No one has ever claimed that there has been any “unfriendliness” displayed toward silver in the legislation of the chief countries of the world before the present century, at the farthest, and yet the white metal has been steadily on the decline ever since the Spanish galleons, in the fifteenth century, began to pour the precious metals of America into the coffers of Spain.

Another illustration of my meaning can be found in the study of the facts relating to [134]

[135] American shipping. We have heard—until the story is now worn threadbare—of the decline of our tonnage engaged in the foreign carrying trade; we have listened to explanations which attribute this decline wholly to our Civil War, or to the introduction of steam and iron (or steel) ships. But by collating the statistics for sailing-vessels alone, if we separate the question entirely from steam and iron, and compare our situation in regard to sailing-vessels with that before the use of steam— the period of our great shipping prosperity— the comparison gives some curious results. These are shown to the eye at a glance; and it would have been difficult to find them had not this graphic system been applied. The striking facts imperatively call for explanation. We see at once that, practically, to the end of the war our sailing tonnage changed only with the total; and that after 1869 it was the foreign tonnage which then rose and kept a close attendance on the total, while the American figures showed scarcely any relative change. The two lines, representing foreign and American vessels, after a short struggle with each

[136]

Chart showing the Tonnage of Sailing Vessels entered at Seaports of the United States each year, from 1844 to 1883, inclusive.

[137] other exactly changed their relative positions to the line representing the total tonnage. The graphic method lays bare the naked facts for the scalpel of the investigator. The student is then in a position to apply principles and discover explanations. No table of figures, I am convinced, would disclose vital relations in the statistics in the searching way by which it is done with the aid of a few lines on a chart.

In short, the more extended collection of economic data is now rendered possible through the better methods employed in census and statistical bureaus, and the resort to the work of verification of economic principles in the examination of these data is one of the best means by which political economy can be redeemed from the baseless and common charge of being made up of formulas which have no practical use. Into this work one can carry no instrument so effective and helpful as graphic representations. In fact, the investigator, after having collected his tables and columns of figures, will find his gain in first putting them in some graphic form, before he can intelligently see exactly with what he has to grapple; [138] then he can turn his energies directly upon the problems which are disclosed by the chart to every other eye as well as his own.

There are, however, other important gains to be derived from the use of charts by the teacher. Above all, they are interesting. They will attract the idler by something new which he can easily understand, although he can not explain the causes; they stimulate the quick by putting them at once in possession of the facts to be explained. When lecturing upon practical questions, one great difficulty presents itself to the teacher in trying to find the means of laying before his class the actual condition of the subject which is to be investigated. If it were proposed to place the statistics on the blackboard before him, the time of the lecturer would all be lost while the student was copying figures. The references to the books can be given where these figures dealt with by the lecturer are collected, but by a chart long columns of statistics are easily imported into the class-room, become the basis of discussion, and are photographed on the listener’s mind once for all in an attractive and interesting [139] way. The slow and painful work of months is in this way presented to a class in a few minutes, and the practical lessons caught at a glance. For this purpose, charts are the labor-saving machines of statistics.

A word or two as to the details of preparing charts may not be impertinent. They can be made on common glazed white cotton cloth (called sarcenet cambric), which receives ink or water-colors; but the labor of ruling the cloth in squares before the construction of the chart is very considerable. Use can be made, however, of heavy manila paper, made large enough by sticking two large sheets together. Some printers can now rule this paper in squares to suit the convenience of the worker; but these guiding-lines ought to be faint, and not so heavy as to overpower the lines of the chart. The instructor can also have a blackboard ruled with faint white lines, after the manner of co-ordinate paper, in his room, on which he can in half an hour put a simple chart, ready for the coming lecture. Different colored crayons serve the purpose admirably. Students can then use co-ordinate paper in their notes, [140] and draw off an accurate copy of the chart in a few moments, before or after the lecture. This is a necessary course, unless some more feasible method than now exists should be found by the instructor for multiplying copies from his single chart in such numbers as to supply all members of his class.

So far I have been speaking of charts for the class-room. Perhaps, in their own good time, such economic charts can be bought of educational agencies. But ordinary co-ordinate paper, on a small scale, is the best form in which first to construct the chart. It can be purchased in sheets at a small price, and is invaluable for both student and instructor. In fact, no lesson is more stimulating to a class than to give them the data of a subject and ask them to put it into graphic form with the use of such paper. For the first time they begin to realize that statistics are not dry; indeed, any one who has turned over the pages of Walker’s “Statistical Atlas” will find out for himself how the columns of census tables* can [141] talk to him in forms and colors not only without weariness, but with a sense of surprise at the interest they excite.

* Another successful attempt, on an elaborate scale, has been made with the materials of the census of 1880 by Messrs. Gannett and Hewes in Scribner’s “Statistical Atlas of the United States” (1885). [Fletcher Willis Hewes, Henry Gannett. Scribner’s Statistical Atlas of the United States: Showing by Graphic Methods Their Present Condition and Their Political, Social and Industrial DevelopmentCharles Scribner’s Sons, 1884]

8. When the instructor comes to examinations he will find some difficulties in combining an ideal plan with actual conditions. In making out a paper he ought, of course, to keep in view that the questions should be selected so as to test not the memory, but the power of the pupil to apply principles. For this reason the ideal paper should contain nothing which the student has seen in that form before. The facts he is called upon to explain ought to be fresh ones, and the fallacies he is to examine should be such as he had not previously considered. This, however, is not wholly necessary. The explanation of parts of the subject is certain to be difficult enough to warrant questions upon them even if they have been referred to in the class-room many times before. For practical purposes, however, it seems best to remember that a class is composed of all kinds of persons, and, while the majority of [142] the questions should be of the character which I have described, yet at least a few easier and more encouraging questions should be set. In the examination-room the student, moreover, should be instructed to study each question with care, and avoid haste in answering, before he is sure that he has really caught the pivotal point of the question. Fairly good students often write about the question but do not answer it. It should be definitely understood that no credit is to be given for irrelevant answers. Then, also, the examination can be used as a teaching process; since, by inserting an important subject, the attention given to it at these times will be such as to keep it from speedy oblivion. Moreover, it will be well, as soon after the examination as possible, to read a good and a poor answer to each question before the class. They will know better what is expected of them in the future—like troops after their first fight. After such an examination the instructor will find his class much more disciplined and more ready to exert themselves in the intellectual wrestling. The vigorous preparation for the examination has really given [143] them a better grasp of the subject, and the teacher can easily bring on a warm discussion now, because they really know something and feel that they know it. In all this it is understood, of course, that I have had in mind written examinations.

9. When first approaching the study, it has been found to be of service to some minds to suggest that on the first reading of the textbook they note in the margins in a few penciled words the gist of each paragraph as it is read; then, at the close of the chapter, that the reader review it by means of his marginal notes, and, finally, make a general but brief synopsis of the chapter. This will both save time and teach that essential thing—how to study rapidly but thoroughly. It will destroy aimless reading, which is so common in these days of many books.

10. Inasmuch as a vigorous contact of mind with mind on a subject which students are approaching for the first time is necessary to produce something more than a cartilaginous or veal-like quality in their knowledge, it is desirable to stimulate discussion among members of [144] the class outside of the class-room. To accomplish this purpose, I know of no better plan than to recommend students to form temporary clubs of three or four persons to meet two or three times a week for an hour’s discussion of the questions and topics which have been suggested by the text-book, by newspapers, or by facts of every-day observation. Such discussions, if the evil of irrelevancy can be frowned upon, will toughen the intellectual fiber, and give the means also of getting more from the instructor through questions upon difficulties and disagreements which have arisen in the clubs.* Congenial persons might group themselves together in this way with profit to their economic progress, and gain something also in social pleasure of a healthy kind.

* When about twenty, John Stuart Mill met twice a week in Threadneedle Street, from 8.30 to 10 A. M., with a political economy club, composed of Grote, Roebuck, Ellis, Graham, and Prescott, in which they discussed James Mill’s and Ricardo’s books. It was understood that a topic should not be passed by until each member had had full chance for a discussion of his difficulties and objections. In these meetings Mill elaborated whatever he has added to the knowledge of political economy.

11. In advanced courses, much of what has been said in regard to details in the conduct of [145] the class will be less important, because the teaching is necessarily different in kind. Such courses naturally fall either (1) into those which continue to study principles, as in the systems of various writers or schools of political economy in the past and present, or (2) into those which treat historical or practical questions. In the former, the lecture system is unsatisfactory for reasons already given; for the members of the class should themselves be constantly wrestling with the fuller discussion of subjects in which they can hitherto have had only a general knowledge. Experience seems to show that a topic, furnished with references to writers, affords the best method of procedure. This, of course, implies a good working library and a list of reserved books.

In the practical courses a large part of the training consists in teaching the student how to use books, how to familiarize himself with the principal storehouses of statistics, such as the English “Parliamentary Documents,” or our own Government publications; how to collect his materials in a useful form; how to apply graphic representations wherever possible; in [146] brief, to learn how to carry on an investigation in the economic field. Of course, the familiarity with the facts of several of the leading questions of the day will form no small part of the advantage of such work. But the greatest good comes, of course, from putting the student on his own resources at once and forcing him to find his own materials, look up his own books and authorities, and come to a conclusion on the subject assigned to him independently of all aid or suggestion. The instructor can then at the conferences take up a paper for criticism and discussion, or first assign it to another member for that purpose. This is a feasible plan; but, if carried on throughout a whole course, it requires of the student in a regular college course so much time that his other work must suffer, and, in addition, but few subjects can be taken up in this thorough and leisurely way. This plan can be properly carried out only when there are a few persons able to devote their whole time to some economic investigations. In practice it has been found best to use the lecture system partially. One subject can be taken up by the instructor at regular exercises, [147] for which he furnishes beforehand the references, and partly lectures and partly discusses the subject with his class, thus guiding them steadily over the field and directing the disposition of the time to be devoted to each subject. In this way many more subjects can be reached during the year. But the advantages of the investigating method can be partly retained by requiring a monograph from each member of the class on a practical subject of his own selection from a list prepared by the instructor, and this thesis can count for attendance on part of the lecture-work. In this thesis the student is pushed to do his best to give a really serious study to some particular topic, and he is expected to do it independently of any aid beyond general oversight and direction; and he is warned that the paper will be of greater value, provided it contains the bibliography of the subject and constant reference by page and volume to his authorities.

12. The preparation of bibliographies is part of a teacher’s duty. Moreover, he who has access to a rich and well-appointed library can do a service to the rest of his guild by leaving [148] behind him notes of his bookish experiences. He can in a few words say whether a book is good or bad for a particular use, or indicate what part of it contains a valuable discussion or useful facts in a subject within his study. For this purpose it has been a great convenience to have little blank-books of ordinary stiff manila paper, six inches by three, with each sheet perforated like postage-stamps near the butt of the book, so that it can be torn off smoothly. On each page a book can be entered under a suitable heading, with its exact title and author, and room still be left for a very generous amount of criticism or commendation, or for noting the contents of the book. The cards can be laid away alphabetically by subjects in a drawer, and will prove of invaluable aid at many times. Books of which one has heard but never seen, can also be entered with a star, to be erased when a book has been examined. This systematic habit is peculiarly desirable when one is hunting for the facts of a certain subject. By this means one will be saved the loss of time caused by failure to remember where a statement has once been seen.

[149] 13. In the foregoing remarks on methods of teaching political economy, I have kept in mind persons of the age and maturity possessed by usual college students. As a rule, these are the only persons who are given instruction in this subject. Still, knowing as we do the need of simple elementary instruction in political economy in the secondary and high schools, so that younger pupils of less maturity than the college student ought to have good effective teaching, something ought to be said as to the methods which may be serviceable for such classes.

A difficulty with which we are met at the outset is the lack of training among high-school teachers for original and suggestive object teaching in economics. Any scheme, based on such a system, implies the possession of a very considerable economic training by the teachers. What is meant may be seen by the following excellent suggestions for certain parts of the study made by Dr. Ely:*

* In Methods of Teaching and Studying History,” edited by G. Stanley Hall, p. 63.

“The writer has indeed found it possible to [150] entertain a school-room full of boys, varying in age from five to sixteen, with a discourse on two definitions of capital—one taken from a celebrated writer, and the other from an obscure pamphlet on socialism by a radical reformer. As the school was in the country, illustrations were taken from farm-life, such as corn-planting and harvesting, and from the outdoor sports of the boys, such as trapping for rabbits.”

In teaching the functions of money, the following approach to the subject, suggested by the same writer as a means of awakening an interest, is a good one: “Take into the classroom the different kinds of money in use in the United States, both paper and coin, and ask questions about them, and talk about them. Show the class a greenback and a national banknote, and ask them to tell you the difference. After they have all failed, as they probably will, ask some one to read what is engraved on the notes, after which the difference may be further elucidated.”

If the teacher is sufficiently master of the subject to proceed by such ways to acquire a [151] hold on the young pupil he will probably not— as things now go—be found in a high school. It is to be hoped that he may in the future; but, until that is the fact, some more practicable method of teaching must be adopted. Much must, therefore, depend on the text-book. But no fully satisfactory one is available for such purposes. Of existing books the following may be suggested: W. S. Jevons’s “Primer of Political Economy” (1878). This little treatise is marred by the treatment of utility and value; but yet it is a really good sketch of the subject in 134 pages. The teacher can further illustrate the principles to his class by familiar facts, as already explained. The instructor should set forth distinctly in his mind, as a general object to be kept before him, the attempt to leave in the understanding of his pupils some simple principle in each case. If he is talking of capital, the several illustrations should all lead the pupil back to the essential truth which is finally to be stated in general terms. Then, the pupil, when reviewing, should be required to reverse the process, and then called on for principles and asked to illustrate them. The aim of the [152] teacher should be, after awakening interest, not simply to teach some few facts to which economic principles apply, but to try to drive home a few fundamental truths, and exercise the pupil, as far as time and skill allow, in tracing their operation in facts. For economic facts are constantly shifting, while principles do not. A boy taught how properly to view one set of facts about paper money will go all right as long as the conditions remain exactly the same, but when they change he is very badly off for guidance. In elementary teaching, therefore, the teacher should aim at giving a clear comprehension of simple principles, and at offering materials for practice in applying these principles. Much, consequently, which has been said in regard to more mature students will be equally applicable to the teaching of young boys.

In this brief and inadequate way I have attempted to suggest from my own experience what may enable others to avoid difficulties, and possibly to aid in a more rational method of teaching political economy. It is scarcely more [153] probable that what I have said is all new than that others should agree with me throughout in what I have advanced; nor is it unlikely that other teachers may have many other suggestions to make in addition to mine. If my efforts may call them out and aid in better methods of teaching, I shall be amply repaid.

THE END.

 

Source:  J. Laurence Laughlin. The Study of Political Economy: Hints to Students and Teachers. New York: D. Appleton and Company, 1885. Chapter V (pp. 115-153).

Image Source: From the University of Chicago yearbook Cap & Gown 1907.