Harvard. Corporation Finance. Description, Enrollment, Final Exam. Dewing, 1911-1912

Arthur Stone Dewing was reborn as an economics instructor in 1911 according to his own account. He went on to become a finance professor at the Harvard Business School. A busy, full and complete life, successful by any metric, and yet the sort of academic that requires a professional historian of economics to go deep into the weeds just to seek an interesting trace of a lasting contribution. His Boston Globe obit credits him with the introduction of the case method into the Harvard Business School program. Worth checking if in fact a true claim.

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From Dewing’s Entry in the 1922 Report of the Harvard Class of 1902

ARTHUR STONE DEWING

BORN at Boston, Mass., April 16, 1880.
PARENTS: Charles Hamlet, Eliza Williams Stone (Paine) Dewing.
SCHOOL: Cambridge High School, Cambridge, Mass.

DEGREES: A.Β. 1902; A.M. 1903; Ph.D. 1905.

MARRIED: Frances Hall Rousmaniere, Boston, Mass., June 3, 1910.
CHILDREN: Mary Stone, March 18, 1911; Abigail Starr, June 1, 1912; Ruth Rousmaniere, Aug. 31, 1915.

OCCUPATION: Assistant Professor of Economics.

ADDRESS: (home) 469 Broadway, Cambridge, Mass.; (business) Upper Massachusetts Hall, Harvard University, Cambridge, Mass.

THE proper preface to an account of this kind is the altogether prosaic comment that my biography is of little interest; it is quite uninteresting and adventureless. After graduation I spent a year in the Graduate School, and later a year in Germany studying philosophy. I tutored awhile and taught science in a private school to keep the pot boiling, meanwhile serving as an assistant in philosophy courses at Harvard. For a while I taught philosophy at Simmons, and then spent some time in Europe. The outstanding feature of this period was a delightful trip through Greece. In 1911 I decided to teach economics instead of philosophy, and somewhat later was appointed instructor at Harvard. I was at Yale for a couple of years, and saw the “bowl” properly baptized by the victorious Harvard eleven. Not having absorbed enough of that subtly elusive Yale spirit I was told to return whence I had come, a wiser but not a sadder man. Incompatibility of temperament, ran the decree. For three years I lived quietly in Belmont doing some writing and some private work and teaching. I had devoted quite a little study to the Sherman Act of 1890 and its judicial interpretation; and a considerable task at this time was the preparation of the appellant’s brief of the facts for a larger industrial consolidation in its appeal to the United States Supreme Court from a decree of dissolution. In 1920 I was appointed Assistant Professor of Economics at Harvard. Since that time I have also taught in the Business School. Needless to say I am especially interested in the ideals of the Business School as interpreted by the present Dean. As I understand them they are the inculcation in college graduates, likely to become business executives, of the economic and social foundations of modern industry; and with this goes the belief that the morale of business can be put on a new and lighter level by developing a professional spirit among business executives.

My hobbies are few and simple. I am as interested as ever in mountain climbing and the woods. I don’t play golf, nor belong to a country club. I’m a director of a number of public utilities. I’m cursed with the collectors’ bacillus, — at present it’s old colonial furniture, and if any of you gentlemen know of any old chairs made here in New England before 1620, please send word.

PUBLICATIONS: Chemistry laboratory note book, L. E. Knott, Boston; Biology laboratory note book, L. E. Knott, Boston; Introduction to the History of Modern Philosophy, 1903, J. B. Lippincott & Co., Philadelphia; Life as Reality, 1910, Longman’s, New York. In National Cordage Company, 1913, Harvard University Press, Cambridge; Corporate Promotions and Reorganizations, 1914, Harvard University Press, Cambridge; The Financial Policy of Corporations, 5 volumes, 1920, The Ronald Press, New York. Have also published numerous magazine articles.

MEMBER: American Economic Association; New England Historical Geneological society; Massachusetts Society of Mayflower Descendants.

Source:  Secretary’s Sixth Report, Harvard College Class of 1902 (June, 1922), pp. 134-135.

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Obituary
Arthur Stone Dewing
(b. 16 Apr 1880 in Boston;
d. 29 Jan 1971 in Cambridge)

Arthur Stone Dewing, 90, of 8 Willard st., Cambridge, noted author, philosopher, professor and businessman, died yesterday afternoon at Massachusetts General Hospital.

Mr. Dewing, once referred to as the “best loved professor at Harvard,” was still active in business and various other interests until he entered MGH in the first week of December.

He was born in Boston April 16, 1880, to Charles Hamlet and Eliza Williams Stone and spent most of his life in this area.

Mr. Dewing received an A.B. degree in 1902, an A.M. in 1903, and a Ph D in philosophy in 1905, all from Harvard University. He also did graduate work at the University of Munich in Germany.

In 1910, he married the late Frances Hall Rousmaniere, by whom he had three daughters, all of whom survive.

Mr. Dewing served in the Harvard faculty as an assistant in philosophy between 1902 and 1911, when he became an instructor in economics for a year before resigning his time solely to business.

He rejoined the Harvard faculty in 1919 as an assistant professor of economics and served as an associate professor of finance from 1922 until 1927, when he was made a full professor.

Mr. Dewing, who was considered an international authority in the field of corporation practice, was one to the professors who founded the Harvard University School of Business.

He resigned his position of professor of finance at the school in 1933 because of what he termed attempts by Dean Wallace B. Donham to direct by dictation his teaching methods and private affairs.

Dr. Dewing was considered an innovator while at Harvard and formulated the case study method, which is still in use. In 1951, Business Week magazine referred to him as “the best loved professor at Harvard.”

Among the companies he headed were: the Portland, Chatham, Hazardville and Jewett City water companies; the Illinois Gas Co.; Pinetum, Inc.; Wetmore Gas Producing Co.; and the Granite State Gas and Electric Co.

He was also on the board of directors of the Manchester (N.H.) Gas Co.; Edward Durant Investment Co.; Fall River Gas Co.; and the Keene (NH.), Sentinel Publishing Co. He was chairman of the board of the Old Colony R.R. Bondholders Protective Committee.

Dr. Dewing was a member of the Numismatic Society and Royal Numismatic Society, and his extensive collection of Greek coins is presently on loan at the Fogg Art Museum.

He was a fellow in the American Academy of Arts and Sciences and was a member of the board of visitors to the classical art department of the Boston Museum of Science.

His other memberships included the American Friends of Greece, Massachusetts Historical Society, Massachusetts Society of Mayflower Descendants, Society for Preservation of New England Antiquities (past president), and the Archeological Institution of America.

He had a life-long interest in wild animals and was vice president of the Ross Allen Reptile Institute in Florida.

Among the many books he authored were Corporate Promotions and Reorganization, published in 1914, which is considered a classic. It was reprinted in American Life and Culture in 1969.

He also wrote Life as Reality (1910) Financial Policy of Corporations (1920) The Corporation — A Study of Its Financial Structure (1934), two books on philosophy, and one each on chemistry and biology.

Mr. Dewing leaves three daughters, Mrs. Lloyd L. Morain of San Francisco; Mrs. Stuart B. Avery Jr. of Lincoln; and Mrs. James D. Ewing of Keene, N.H. He also leaves eight grandchildren and five great grandchildren.

Arrangements for a memorial service are being made.

Source: The Boston Globe, January 21, 1971, Page 47.

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Course Description
1911-12

[Economics] 30 ¹hf. The Financial Aspects of Combinations. Half-course (first half-year). Tu., Th., and (at the pleasure of the instructor) Sat., at 12. Dr. [Arthur Stone] Dewing.

The course considers the financial aspects of combinations in the United States, giving attention, however, to the economic rather than to the business or legal problems involved. Examples of financial history and policy will be considered in some detail. The psychological as well as the economic conditions that determine the market price of railroad and industrial securities will be described with the purpose of formulating general principles. Each student will select a typical episode in the history of some combination and some general subject, such as promotion, minority rights, effect on prices, and will present reports at conferences which will sometimes replace the lectures of the course. This course is open only to those who have passed in Economics 1.

Source: Division of History, Government, and Economics: 1911-12 (1st ed.). Official Register of Harvard University, Vol. VIII, No. 23 (June 15, 1911), pp. 65-66.

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Course Enrollment
1911-12

Economics 30¹ hf. Dr. [Arthur Stone] Dewing. — The Financial Aspects of Industrial Combinations.

Total 19: 1 Graduate, 8 Seniors, 9 Juniors, 1 Sophomore.

Source: Harvard University. Report of the President of Harvard College, 1911-1912, p. 64.

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ECONOMICS 30
CORPORATION FINANCE
Mid-year Final Exam
1911-12

Be concise.

THEORY. (¾ hour.)

1. Does the law of diminishing returns usually operate in the investment of capital in (a) new steam railroads in an undeveloped country; (b) four tracking of steam railroad in a thickly settled region; (c) extensions to an electric lighting system; (d) a large cotton mill; (e) the “Westinghouse Company” (see Haskins & Sells report to receivers)?
2. (a) What is pure interest? (b) Compensation for risk? (c) How do you determine what proportion of any given dividend return belongs to each? (d) Are there other factors included in the ordinary returns on capital? If so state the relation to (a) and (b).
3. State briefly the most universal circumstance that has led to the necessity of re-organization in those industrial corporations which you have studied?

FINANCE

The following questions are to be answered directly from the Corporation reports PLACED IN YOUR HANDS. (1¼ hours.)

4. See U. P. Reports for 1909–10, page 29. The capital liability on June 30, 1910 is less than on June 30, 1909. Explain.
5. See “Western Maryland Railroad Co.’s” report June 30, 1907, page 2. Note decrease of surplus for year. Show from statistics in other parts of the report, whether or not this decrease foretells impending disaster.
6. See U. S. Steel Report, 1910. Consolidated balance sheet (between pages 32 and 33). The last entry of liabilities calls for $33,704,439.32. Explain the significance of this entry. Should it be used as a basis for the declaration of dividends? Could a similar entry appear in a railroad report? Why?
7. See Massachusetts Electric Company’s Report, 1910. Explain the presence of the two balance sheets, pages 10, 12 and 13. From an examination of these balance sheets what would you consider the weakest point, from an investment point of view, of the stocks of Massachusetts Electric Companies?
8. Amalgamated Copper Company’s Report, 1911, p. 10.

Assets. Is “investment in securities” a good basis for estimating the assets of a mining corporation? Why? Suggest, if you can, a better basis?

INVESTMENTS.  (1 hour.)

9. A trust estate purchased two underlying bonds of the “Illinois Central” of approximately the same security and both maturing the same year (1951); one bears interest at 3% and is bought at 75; the other bears interest at 5% and is bought at 115. State how you would think it just to deal with the interest and principal in both cases.
10. The following securities all pay 8% on par value. They are all non-taxable in Massachusetts. Which one should you select for a trustee to invest in, provided the trust already held none of them?
    Arrange the others in the order of their intrinsic merit. Give basis for your judgment.

1. New York, New Haven, & Hartford Stock, market price 140. (For financial condition see your reports.)
2. Arlington Mills. (Lawrence, Mass.)

Dividends, 1877–1903, 6%; 1903, to date, 8%; market price, 124; 63,000 cotton spindles, 202,804 worsted spindles.

Assets

	1910	1909	1908	1907
Real Estate & Machinery	$4,750,000	$3,500,000	$3,500,000	$3,500,000
Merchandise & in Process	7,884,672	8,630,718	6,729,446	5,784,449
Cash & Debts Receivable	2,550,891	2,213,565	1,810,229	2,650,131
Miscellaneous	257,741	207,457	179,934	163,865
	$15,443,304	$14,551,740	$12,219,609	$12,098,445

Liabilities

	1910	1909	1908	1907
Capital stock	$8,000,000	$6,000,000	$6,000,000	$6,000,000
New Cap. stock pay Acc’t.		1,434,530
Debts payable	4,924,911	4,292,901	4,499,662	4,187,708
Surplus	2,518,393	2,824,309	1,719,947	1,910,737
	$15,443,304	$14,551,740	$12,219,609	$12,098,445

1. 3. American Glue Company—Preferred Stock, market price 152.

Assets

	1910	1909	1908
Real Estate & Machinery	$477,412	$508,701	$520,597
Stock in Process	1,015,578	941,247	1,361,245
Cash & Debts Receivable	1,551,164	1,394,607	830,917
Other items — (largely securities)	1,439,520	1,503,032	1,489,616
	$4,483,674	$4,347,587	$4,202,375

Liabilities

	1910	1909	1908
Capital Stock Preferred	$1,600,000	$1,600,000	$1,364,300
Capital Stock Common	800,000	800,000	800,000
Account Payable	1,120,165	1,054,290	1,257,714
Surplus	963,509	893,297	780,361
	$4,483,674	$4,347,587	$4,202,375

1. 4. American Telephone & Telegraph Company Stock, market price, 139.

Assets

Stocks & Bonds of Associates Co.’s			$393,712,837.53
Telephones, Real Estate & Lines			59,702,088.10
Cash & Short Term Notes			13,736,806.84
Special Demand Notes			16,970,229.34
Accounts Receivable			6,093,415.42
Treasury Bonds			17,300,000.00
			$507,515,377.23

Liabilities

Capital Stock			$263,335,600.00
Bonds, etc.			146,618,000.00
Dividend, Interest, and Taxes accrued but not due			8,027,025.26
Depreciation Reserve			37,425,080.08
Surplus			52,109,671.89
			$507,515,377.23

 

COMPARATIVE STATEMENT OF EARNINGS AND EXPENSES FOR 1909–1910

Earnings

	1909	1910
Dividends	$15,949,213.73	$19,205,494.35
Interest and other revenue from Ass. Co.’s	10,661,431.03	10,838,442.84
Telephone Traffic (net)	4,360,104.94	4,893,513.39
Real Estate	95,723.97	95,119.69
Other sources	1,694,867.76	325,758.44
Total	$32,761,341.43	$35,358,328.71
Expenses	2,570,575.57	3,425,114.22
Net Earnings	$30,190,765.86	$31,933,214.49
Deduct Interest	7,095,377.34	5,077,321.33
Balance	$23,095,388.52	$26,855,893.16
Dividends Paid	17,036,275.64	20,776,822.12
Balance	$6,059,112.88	$6,079,071.04
Carried to Reserves	3,000,000.00	3,000,000.00
Carried to Surplus	3,059,112.88	3,079,071.04
	$6,059,112.88	$6,079,071.04

11. Examine carefully the following investment list. The current rates of dividend for stocks can be ascertained from your reports. (a) Arrange the securities by letters (not repeating the titles), in the order of their merit, bearing in mind both security and return. (b) If the list were to be taken over by a trust, the beneficiary of which was a widow of middle age, what securities, if any, should be sold? . . . Briefly indicate the basis for your judgment. Suggest other securities which it would be desirable to purchase in place of those sold.

The principal is about evenly divided among the following:—

1. 1. Union Pacific stock at 166.
   2. Chicago & Alton 1950 Prior lien 3½’s at 67.
   3. N. Y. Westchester & Boston 1st M. 1946 4½’s at 98. (N. Y. New Haven & Hartford guarantor.)
   4. Brooklyn Rapid Transit stock at 74.
   5. Westinghouse Electric & Manuf. Co. stock at 73%.
   6. U. S. Steel Preferred stock at 111.
   7. New York Central Lines Equipment 1925 4½’s at 102.
   8. Detroit Edison Convertible 6’s 1920 at 115.
   9. Southern Pacific stock at 110.
   10. Erie Ry. (N. Y. & Erie 1st M. 4’s 1947) at 100.

Source: Harvard University Archives. Harvard University — Examination papers, 1873-1915. Box 6. Bound volume, Examination Papers, 1912. Harvard University Examinations. Papers Set For Examinations in History, History of Science, Government, Economics […], pp. 66-70.

Image Source: The Harvard Business School Yearbook 1924-25, p. 14.