With this post we add about fifty new questions to our growing stock of Harvard economics examinations. Nine of the sixty-three questions transcribed below are identical or nearly identical to those found in the 310 questions appended to Laughlin’s abridged version of John Stuart Mill’s Principles that served as the course textbook at Harvard at the end of the 19th century.
See: Principles of political economy, by John Stuart Mill. Abridged with critical, bibliographical, and explanatory notes, and a sketch of the history of political economy by, J. Laurence Laughlin. New York: D. Appleton, 1884.
The new questions come from what we would today call a “Student’s Guide” to the Mill/Laughlin textbook. He called the printed 72-pages a “Synopsis”.
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About Laughlin’s “Student’s Guide to John Stuart Mill”
This Synopsis is intended to replace the text book in preparing for the examinations, but it will also be found extremely useful during the year in answering the weekly written questions. The index at the end has been prepared especially for use in connection with the examination papers contained in the appendix to this book, and in the second appendix to the text book.
A Synopsis of the First Three Books of John Stuart Mill’s Principles of Political Economy, as revised by Prof. J. L. Laughlin with an appendix containing the recent examination papers in Political Economy I. Cambridge, Mass.: W. H. Wheeler, 1888.
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PAPERS SET FOR EXAMINATION IN POLITICAL ECONOMY I.
[# in Laughlin’s list of 310 questions (1884)]
1883-1884.
- Explain carefully the following terms: production, consumption, effectual demand, margin of cultivation, cost of production, value of money, cost of labor, wealth, and abstinence. [#2, virtually identical]
- What conclusion as to the limit to the increase of production does Mr. Mill deduce from his investigation of the laws of the various requisites of production? [#54]
- Explain clearly how it is possible for the land of a country which is all of a uniform fertility to pay rent. [#105]
- Point out distinctly the connection between the money wages of laborers in the United States and the productiveness of the soil. [#244]
- Explain the operation of the laws of value by which the relative prices of wool and mutton would be regulated. [#194]
- Why is it necessary to make any different statement of the laws of value for foreign than for domestic products? What is the cause for the existence of any international trade? [#199]
- (1) What is the true theory of one country underselling another in a foreign market? (2) What weight should be attributed to the fact of generally higher or lower wages in one of the competing countries? [#241]
- If capital continued to increase and population did not, explain the proposition that “the whole savings of each year would be exactly so much subtracted from the profits of the next and of every following year.” [#254, virtually identical]
- Give the arguments for and against the income tax. Would the tax on any kinds of income not fall upon the persons from whom it was levied? Explain.
- Define the term banking-reserve. What is the theory on which only a small part of the total resources is constantly kept as a reserve? What relation exists between the items of deposits, loans, and reserve?
- Explain the provisions of the Resumption Act, and show how the actual results were produced.
- Was the issue of greenbacks in February, 1862, an actual necessity?
1885-1886.
- Explain what is meant by the “standard of living” of the laboring class. In a densely populated country would the standard of living have any influence on the general rate of wages?
- Show clearly why there must be land in cultivation which pays no rent.
- Explain carefully the relation between Cost of Labor and Real Wages. How can an increase of population affect Cost of Labor?
- Under what conditions can it be said that normal value depends on the “expenses of production”? State the law of market and normal value for commodities affected by the law of diminishing returns.
- Explain the reason for the existence of foreign trade. Is there any different reason for the exchange of goods in domestic trade?
- What is inconvertible paper money? From the history of the United States notes state the main events showing the attitude of Congress towards their issue, while the notes were inconvertible.
- Why is a bank obliged to limit its loans when its cash reserve is seriously impaired?
- Why is it that the products of extractive industries are liable to great variations of market value?
- Upon whom would a tax on Rent fall? Would such a tax be a discriminating tax on the agricultural interests?
- What are the advantages of direct taxation? State by what kinds of taxation, direct or indirect, the United States gets its revenue.
- Is it correct to say that high wages alone prevent us from selling manufactured goods in foreign markets!
1886-1887.
- Compare the economic effects of defraying war expenditures by loans and by taxation. [#33, virtually identical]
- Does the rent of a factory building affect the value of the goods made in it? Does the rent of a farm affect the value of the grain grown on it? Does the rent paid for a lot near a great city, from which gravel is taken, affect the value of the gravel?
- It has been said that “the laws and conditions of the production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them.” State briefly the laws of the production of wealth here referred to, and whether the statement in regard to them is true.
- It has been said that the law of population and the law of diminishing returns from land point inevitably to misery and want as the destiny of the mass of mankind. What influence affecting the operation of these laws are to be taken into account; and if they are taken into account, are the laws of population and diminishing returns from land thereby shown to be invalid?
- Explain briefly the nature of the remuneration received by the following persons: a farmer tilling his own land; a merchant carrying on business with his own capital; a manufacturer carrying on business with borrowed capital; a holder of railway stocks; a holder of government bonds; a patentee.
- Wherein is the value of metallic money governed by different principles from those that regulate the value of commodities in general? And wherein is the value of inconvertible paper money governed by different principles from those that regulate the value of coin?
- Credit is said to be purchasing power. Explain what is meant by this proposition, and in what manner it bears on the theory of the value of money. Point out in what form credit, as purchasing power, is most likely to affect prices in the United States and in France.
- (a) Suppose that:
In the U. S. one day’s labor produces 2 bushels of corn;
In the U. S. one day’s labor produces 10 yards of cotton cloth;
In England one day’s labor produces 1 bushel of corn;
In England one day’s labor produces 5 yards of cotton cloth.
Would trade arise between England and the United States? If so, how?
(b) Suppose that in England one day’s labor produced 8 yards of cotton cloth, other conditions remaining the same as in (a). Would trade arise? If so, how?
(c) Suppose that in England one day’s labor produced 2 yards of cotton cloth, other conditions remaining the same as in (a). Would trade arise? If so, how? - Suppose a new article to appear among the exports of a given country. Trace the effects in that country on the course of the foreign exchanges; on the flow of specie; on the value of money; on the terms of international exchange. Would the results be the same if, instead of a new article of export, some article previously exported were to be sold abroad in larger quantity because of a lowering of its cost and price?
- (a) Arrange in proper order the following items of a bank account: Loans, $538,000; Bonds and Stocks, $40,000; Capital, $200,000; Real Estate, $26,000; other assets, $26,000; Surplus, $65,100; Deposits $440,000; Notes, $101,550; Cash, 124,000; Cash Items, $52,650.
(b) Suppose the bank to discount four months paper (at 6 per cent) to the amount of $10,000 of which it purchases one-half by promises to pay the bearer on demand, and one-half by cash. How would the account then stand?
(c) Suppose a borrower to have repaid a loan of $2000 by giving $1000 in cash, and $1000 in a cheque on the bank. How would the account then stand?
(d) Suppose the bank to be confronted, in a time of general embarassment, with demands from depositors for cash, and from borrowers for discounts. What policy would be adopted if it were the Bank of England? if it were a United States national bank?
1886-1887.
DIVISION A.
- If taxes levied on the rich cause a diminution in their unproductive expenditure, would that in any way affect the employment offered for labor? Discuss fully.
- What principle does Mr. Mill furnish by which the respective shares of labor and capital are determined? Has his Wages-Fund Theory any connection with his exposition of the dependence of “profits” on Cost of Labor?
- In discussing the distribution of the product, why is it that the relative shares of labor and capital can be discussed independently of rent? Would an increase of rent affect the share of labor or of capital?
- Why is it that city banks make a greater use of the deposit liability than of the note liability? Why is the fact just the reverse with country banks?
- State fully the difference between Cost of Labor and Cost of Production. Would a decrease in Cost of Production affect Cost of Labor in any way?
- If the returns, and consequently wages, in our extractive industries were to decline, how would the course of our foreign trade probably be affected?
- Explain carefully how, and under what conditions, Reciprocal Demand regulates Normal Value.
- How do you reconcile the doctrine of comparative cost in international trade with the fact that a merchant regulates his conduct by a comparison of prices at home with prices abroad?
- Explain how a tax on “profits” may fall either (1) on the laborer, or (2) on the landlord.
- Discuss the argument that protection raises wages.
- Is the customs-duties on sugar economically justified?
DIVISION B.
- Suppose the price of silver to rise to such a point that the ratio of silver to gold would be 15 to 1, what change would take place in the money at present in use in the United States? Is such a change probable? if so, why? if not, why not?
- State the essential differences between the coinage acts of 1792, 1834, and 1878.
- “All experience has shown that there are periods when, under any system of paper money, however carefully guarded, it is impracticable to maintain actual coin redemption. Usually contracts will be based on current paper money, and it is just that, during a sudden panic or an unreasonable demand for coin, the creditor should not be allowed to demand payment in other than the currency in which the debt was contracted. To meet this contingency, it would seem to be right to maintain the legal tender quality of United States notes. If they are not at par with coin, it is the fault of the Government and not of the debtor, or rather it is the result of an unforeseen stringency not contemplated by the contracting parties.” From the Report of the Treasury, dated December, 1887.
Under what circumstances was this passage written? Is the recommendation made by it a wise one? Has it been acted on? - Ten men club together to buy flour at wholesale, each taking a part and paying his share of the price. Ten others club together, borrow money jointly, and lend it out to themselves for aid in carrying on their trades. A third ten club together, set up a work shop on joint account and work in it, and periodically divide the net proceeds. What kinds of cooperation are typified, respectively, by these proceedings? In what countries has each kind been most widely applied? Which seems to you to be of greatest intrinsic interest for the social question?
- What is meant by the eight-hour law? Wherein does it resemble, and wherein differ from, factory legislation in England?
- Compare the regulations of the Knights of Labor in regard to strikes with those of an English Trades-Union.
- “The present doctrine is that the workman’s interests are linked to those of other workmen, and the employer’s interests to those of other employers. Eventually it will be seen that industrial divisions should be perpendicular, not horizontal.” Explain what is meant by this passage; state by what devices it is endeavored to promote the ” horizontal ” and the “perpendicular” divisions, respectively; and give an opinion as to which line of division is likely to endure.
- The declaration of principles of Knights of Labor demands “the enactment of laws providing for arbitration between employers and employed, and to enforce the decision of the arbitrators.” Is it desirable to comply with that demand in whole, in part, or not at all?
- Suppose a tax were levied of ten per cent on the house-rent paid by every person, those who occupied their own houses being assessed for the letting value of their dwellings. Would such a tax be direct or indirect? Would it conform to the principle of equality of taxation? Give your reasons.
1887-1888.
Mid-year. 1888.
- Is productive consumption necessarily consumption of capital? Can there be unproductive consumption of capital?
- Distinguish which of the following commodities are capital, and, as to those that are capital, distinguish which you would call fixed capital and which circulating.
A ton of pig iron; a plough; a package of tobacco; a loaf of bread; a dwelling-house.
Can you reconcile the statement that one or other of these commodities is or is not capital with the proposition that the intention of the owner determines whether an article shall or shall not be capital? - Suppose an inconvertible paper money to be issued, of half the amount of specie previously in circulation. Trace the effects (1) in a country carrying on trade with other countries, (2) in a country shut off from trade with other countries.
- Explain in what manner the proposition that the value of commodities is governed by their cost of production applies to wheat, to iron nails, and to gold bullion.
- Explain the proposition that rent does not enter into the cost of production. Does it hold good of the rent paid for a factory building? Of the rent paid for agricultural land?
- It has been said that wages depend (a) on the price of food, (b) on the standard of living of the laborers, (c) on the ratio between capital and population. Are these propositions consistent with each other? Are they sound?
- Suppose that
One day’s labor in the United States produces 10 pounds of copper,
One day’s labor England produces 8 pounds of copper,
One day’s labor in the United States produces 5 pounds of tin,
One day’s labor England produces 5 pounds of tin,
Would trade arise between England and the United States, and if so, how?
Suppose that, other things remaining as above, one day’s labor in England produced 12 pounds of copper, would trade arise, and if so, how? - Explain what is meant when it is said that “there are two senses in which a country obtains commodities more cheaply by foreign trade: in the sense of value, and in the sense of cost.”
- Arrange in proper order the following items of a bank account: Capital, $300,00; Bonds and Stocks, $35,000; Real estate and fixtures, $20,000; Other assets, $20,000; Surplus, $80,000; Undivided Profits, $10,500; Notes, $90,000; Cash, $110,000; Cash items, $90,000; Deposits, $850,000; Loans, $1,050,000; Expenses, $5,500. ,
Suppose loans are repaid to this bank to the amount of $100,000. One half by cancelling deposits, one quarter in its own notes, and one quarter in cash; how will the account then stand? - What is the effect of the use of credit on the value of money? Wherein does credit in the form of bank deposits exercise an effect on the value of money different from that of credit in the form of bank notes?
Source: A Synopsis of the First Three Books of John Stuart Mill’s Principles of Political Economy, as revised by Prof. J. L. Laughlin with an appendix containing the recent examination papers in Political Economy I. Cambridge, Mass.: W. H. Wheeler, 1888.
Image Source: James Laurence Laughlin. University of Chicago Photographic Archive, apf1-03687, Special Collections Research Center, University of Chicago Library.