Historians remain divided over the role of banks in facilitating eco

As explained in the last sentence of the first paragraph, financial institutions (such as banks) followed conservative lending practices and shunned projects that were uncertain (i.e. risky) and capital-intensive, such as manufacturing and transportation projects. This implies that banks following conservative lending practices would prefer less risky projects.

So we know that banks tended not to fund manufacturing and transportation projects in the late eighteenth and early nineteenth centuries. Why?... because those banks, which followed conservative lending practices, preferred less risky projects. This reason is summarized in choice (B):

As for the last question,

The purpose of the second paragraph is to explain the historians' belief (or "claim") that banks were crucial in transforming the early national economy. Does this claim have any stated limitations? Yes--as explained in the last sentence of the passage, those same historians argued that, in the South, there was an exception to this general trend. So the last sentence modifies and limits ("qualifies") the historians' claim that banks were crucial in transforming the early national economy, and the answer is (D).

I hope this helps!
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(Book Question: 423)
Which of the following statements best describes the function of the last sentence of the passage?
A. It provides evidence tending to undermine the viewpoint of the scholars mentioned in line 5.
B. It resolves a conflict over the role of banks summarized in the first paragraph.
C. It clarifies some of the reasons state legislatures began granting more bank charters.
D. It qualifies a claim made earlier in the passage about the impact of banks on the American economy in the early nineteenth century.
E. It supports a claim made earlier in the passage about how the expansion of credit affected the economy.


Jut my 2 cents.

On D, "qualifies" means to add limitations or conditions.
This is true for all usage of the word "qualify" on gmat, I think.

Hope this helps.

I took 6 mins to solve this passage :

C B B A D

Earlier I marked last as B but now realized that South banks example given in the last sentence is parallel to some scholars' claim that bank has little role in the American Economy.
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Option B is supported by the line "Unlike the earliest banks, which had primarily provided short-term loans to well-connected merchants,". Paul discusses about role the expansion of current banks has played. Hence, He would agree that the earlier banks were for a selected group of merchants only.
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Can someone explain Qs419 and 422? I selected E and E.

My reply's a bit late but hope it still helps!

(Book Question: 419)
A. There was no comparison between the role of banks in the South vs the rest of the US.
B. There was no reevaluation of a conventional interpretation presented in the passage.
C. CORRECT -the passage primarily discusses the two opposing views on the role banks played in the US economy in late 18th - early 19th centuries.
D. Although the passage did touch upon the effects of the increasing number of banks, the passage is more concerned on whether banks had any significant effects on the economy in the first place.
E. There was no discussion on how scholarly opinion has changed; the passage just outright presents the two opposing views on the role of banks.


(Book Question: 422)
A. CORRECT - banks were seen as monopolistic institutions controlled by an elite group of planters.
B. Distorts what was mentioned in the passage.
C. Although it was mentioned that banks began furnishing large amounts of capital to these industries, there was no mention that banks were too closely tied to them nor that this had any effect on agrarian interests in the South.
D. It can be inferred from the passage that banks have began to issue long- term loans, therefore this can't be the reason.
E. Although it was mentioned that banks of the early 19th century issued credit widely , it is not cited as the reason why banks were opposed in the South.

This is my understanding on Q423. Hope this helps.

B. It resolves a conflict over the role of banks summarized in the first paragraph
=> As far as I'm concerned, when a statement resolves a conflict, it must explain why 2 conflicting ideas are both true (As with the case of Resolving the Paradox). The last sentence does, however, not do that function.

"The exception, such historians argue, was in the
South; here, the overwhelmingly agrarian nature
of the economy generated outright opposition
to banks, which were seen as monopolistic
institutions controlled by an elite group of"

=> Indicated by "the exception" and its meaning, the last sentence undermines the 2nd point made by "a growing number of historians" in line 16.
That's why D is correct.

The first group of historians argued that financial institutions provided aid to established commercial enterprises. This does not say that the banks themselves are "established" or "elite". Rather, it just says that the banks provided aid to established commercial enterprises. The last sentence, on the other hand, says that the banks were controlled by an elite group of planters. The last part talks about who was running the banks, not who was receiving aid from the banks.

Furthermore, the first claim you mentioned doesn't really talk about "how the expansion of credit affected the economy." It simply tells us who, according to the first group of historians, received aid from the banks.

As for choice (D), the purpose of the second paragraph is to explain the historians' belief (or "claim") that banks were crucial in transforming the early national economy. Does this claim have any stated limitations? Yup -- as explained in the last sentence of the passage, those same historians argued that, in the South, there was an exception to this general trend. So the last sentence modifies and limits ("qualifies") the historians' claim that banks were crucial in transforming the early national economy, and the answer is (D).

I hope this helps!
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Hello guys,

Below is my performance in this RC passage:
I took 2mins to read and comprehend the passage and I took
55secs - 1st Q - Right
90secs - 2nd Q - Right
130secs -3rd Q - Wrong
90secs- 4th Q- Wrong
55secs - 5th Q- Right
Overall accuracy = 60%

At this moment of my prep, I'm targeting to get my accuracy to be little over 50% and timing to be around avg 2mins per Q. I know, this is not ideal, but I'm doing worst than this.So, You get my point. Right?


The below is the strategies I followed for the Qs that I attempted right and analyzed solutions for the wrongly attempted ones.

Q1: The primary purpose of the passage is to
A. compare the economic role played by southern banks with the economic role played by banks in the rest of the United States during the late eighteenth and early nineteenth centuries
B. reevaluate a conventional interpretation of the role played by banks in the American economy during the late eighteenth and early nineteenth centuries
C. present different interpretations of the role played by banks in the American economy during the late eighteenth and early nineteenth centuries
D. analyze how the increasing number of banks in the late eighteenth and early nineteenth centuries affected the American economy
E. examine how scholarly opinion regarding the role played by banks in the American economy during the late eighteenth and early nineteenth centuries has changed over
Question Type: Primary purpose Question
Strategy:
IMO: 1st paragraph talks out against the thought that banks supported US economy and 2nd tells that it has helped US economy. So, Author tried his best to debrief those beliefs.
Hunting down the Options:
A- 1st word itself puts me down- Author is not comparing anyone or anything - Straight away hang this choice
B- "reevaluate a conventional interpretation"- firstly, NO reevaluation is happening. Secondly, there are two interpretations briefed. - Eliminated
C- present different interpretations- Hold on
D - "analyze" - I don't think so, anyone has ever analyzed in the passage- Eliminated
E- "Examine"- NO NO - moreover, it says that "role played by banks in the American economy during the late eighteenth and early nineteenth centuries has changed over "- We are dying to know the role of the bank on US economy. Now, who the heck knows the role of the banks changed OVER TIME- Kill it!!



Q2: The passage suggests that the scholars mentioned in line 4 would argue that the reason banks tended not to fund manufacturing and transportation projects in the late eighteenth and early nineteenth centuries was that
A. these projects, being well established and well capitalized, did not need substantial long-term financing from banks
B. these projects entailed a level of risk that was too great for banks’ conservative lending practices
C. banks preferred to invest in other, more speculative projects that offered the potential for higher returns
D. bank managers believed that these projects would be unlikely to contribute significantly to economic growth in the new country
E. bank managers believed funding these projects would result in credit being extended to too many borrowers
Question Type: Frankly speaking, I couldn't categorize this Q, half of it looks like an inference and another half looks like a specific Q
Context: Q gave me a clue to go to line#4. I grabbed the whole context and found that Banks did not lend loans to Manufacturing and transportation projects because these fields are SO UNCERTAIN and CAPITAL-INTENSIVE. In this pragmatic world, the uncertainty increases the risk.
Hunting down the options:
A- Nope. We really don't know from the passage whether these fields need any help or not. The discussion is why didn't these banks lend money- Eliminated
B- Yup. This option takes about risk factor in lending money to these fields - Holdon
C- This is not mentioned in the passage at all that banks choose one field over the other- eliminated
D- See who care's about what bank manager's think- out of scope- Eliminated
E - Too many borrows may be or may not be an issue. We are concerned about the uncertainty of fields. So too many borrows might be or might not be a deal - Eliminated


Q3: The passage suggests that Paul Gilje would be most likely to agree with which of the following claims about the lending practices of the “earliest banks” (see line 21)?
A. These lending practices were unlikely to generate substantial profits for banks.
B. These lending practices only benefited a narrow sector of the economy.
C. The restrictive nature of these lending practices generated significant opposition outside of the South.
D. The restrictive nature of these lending practices forced state legislatures to begin granting more bank charters by the early nineteenth century.
E. These lending practices were likely to be criticized by economic elites as being overly restrictive.
Question type: Inference Question type
Context: Line#21. reading from the context mentioned, I could see this Early banks= ShortTermsLoans to only selective people but 19th-century banks = Loans to almost everyone.
Hunting begins: Q talks about only early banks, to see for an option which talks about short-term loans to only a few selective people
A- Profits is really out of context - Eliminated
C/D/E- This is the cheap trick played by the GMAT Test makers- These 3 choices are made for those dumb test makers like me, who think they are smart and go and read two extra lines of the passage proactively to more about the context. See, we are asked about line#21, but if we read these extra lines because the Q mentions this name Paul Gilje. And moreover, even you read these extra lines, you should be aware that these line reference to the 19th-century banks, but we are discussing 'Earlier banks' right now. In a single shot- Shoot all these three dead choices.
B - is the only left and correct answer

Q4: The passage suggests that the opposition to banks in the South in the early nineteenth century stemmed in part from the perception that banks
A. did not benefit more than a small minority of the people
B. did not support the interests of elite planters
C. were too closely tied to transportation and industrial interests
D. were unwilling to issue the long-term loans required by agrarian interests
E. were too willing to lend credit widely
Q type: Inference Question
Context: The word south is mentioned only in the last sentence of the passage, go there and get the context. Frankly speaking, My dumb brain didn't comprehend those words properly. In the analysis, because of the complex wordings, it is little difficult to comprehend that though loans are widely given by the 19th-century bank, it is opposed by the south people that these loans are not beneficial to everyone, as these banks system is controlled by few people.
Strategy: If few people think this, it means that they did not benefit from the 19th-century banks.
Hunting:
A- this is what happened
B- It is contradicted, people believe that banks supported planters - Eliminated
C- This is a laid trap for people who remember these keywords in the passage i,e. 'Transportation, Industrial interest' - Eliminated
D- This is a kind of trap again to attract test takers by mentioning the words like 'long-term loans, agrarian interests', but take time and search a sentence that supports this, you will find none- Eliminated
E - Yup, this is right that 19th-century banks approved loans widely, but south people didn't feel that way - Eliminated



Q4: Which of the following statements best describes the function of the last sentence of the passage?
A. It provides evidence tending to undermine the viewpoint of the scholars mentioned in line 5.
B. It resolves a conflict over the role of banks summarized in the first paragraph.
C. It clarifies some of the reasons state legislatures began granting more bank charters.
D. It qualifies a claim made earlier in the passage about the impact of banks on the American economy in the early nineteenth century.
E. It supports a claim made earlier in the passage about how the expansion of credit affected the economy.

Question type: Paragraph or sentence purpose Question
Context: 1st passage, says that banks DID NOT help US economy, the first half of 2nd passage oppose 1st passage people and says that Banks DID help US ECONOMY. The last sentence again opposes first half of 2nd passage and claims that Banks DID NOT HELP. So in short, it is clearly seen that 1st paragraph people and second half of 2nd paragraph people compliment each other.

Hunting: So the options, which matches our comprehension are D , E. But with a slight but major differene in E, it says the claim is made on 'Expansion of credit affected economy', but we are talking about banks affected economy situation. So, D is the winner
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aviejay, to qualify a claim is not necessarily to strengthen a claim.

As explained in this post above, to qualify is to limit or modify the meaning. For example, I might say, "I love pizza." But then I might qualify that statement by saying, "I only love pizza from New York."

The last sentence of the passage modifies and limits ("qualifies") the historians' claim that banks were crucial in transforming the early national economy.

I hope that helps!
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Can anyone explain Q422
(Book Question: 422)
The passage suggests that the opposition to banks in the South in the early nineteenth century stemmed in part from the perception that banks
A. did not benefit more than a small minority of the people
B. did not support the interests of elite planters
C. were too closely tied to transportation and industrial interests
D. were unwilling to issue the long-term loans required by agrarian interests
E. were too willing to lend credit widely
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GMATNinja GMATNinjaTwo



The passage says:
Unlike the earliest banks (i.e. banks before early nineteenth century),
which had primarily provided short-term loans to
well-connected merchants, the banks of the early
nineteenth century issued credit widely (ie to more customers).

How an option A be correct?

What is issue with B/D?
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Even though "the banks of the early nineteenth century issued credit widely," this question refers to the perception of banks in the South.

In the South, banks "were seen as monopolistic institutions controlled by an elite group of planters." So southerners thought that the banks were controlled by a small minority of people ("an elite group planters"). If this perception were accurate, then the banks would likely only benefit that small minority. Thus, in the South, there existed the perception that banks only benefited a small minority of people.

Choice (B) directly contradictions the perception in the South. Also, there is nothing in the passage to support choice (D). (A) is the best answer.

I hope that helps!
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Hello abhimahna , GMATNinja and experts,

I have a small query regarding last question of the passage:
we know that qualify could either mean support or a criticism ( limiting)

Luckily option D is true for both interpretations:
It qualifies the claim by a school of Historians mentioned in 1st para that only a few sections of people benefited from banks.

It also qualifies the claim made by other historians such as PG mentioned in another paragraph.

Which interpretation is correct?

Regards,
Rishav

Interesting question! Here, "qualify" means to "add reservations to" or to "make less absolute."

Take another look at answer choice (D):

The "claim" referenced in this answer choice is that " the expansion and democratization of credit in the early nineteenth century became the driving force of the American economy."

Now take a look at the last sentence of the passage:

By introducing this fact as "the exception," the author is telling us that he/she is making the claim less absolute. So, by examining an exception, the author is "qualifying" the claim.

I hope that helps!
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Thank you!! It seems GMAT loves Qualify a claim
I have seen many question that hinges on the definition of Qualify in many of the official passages. Especially the difference of Qualify and Refute and this explanation of yours is certainly gonna help
Regards,
Rishav

Could someone please explain Question 3 and Question 4?

Hey ashu2503,

I'll try to explain how I tackled question 3 -



As it is mentioned here Line 21, lets have look at that sentence around Line 21.

Unlike the earliest banks, which had primarily provided short-term loans to well-connected merchants, the banks of the early nineteenth century issued credit widely.

So from the above highlighted part we come to know a little about the earliest banks -
That provided short - term loans that too to well-connected merchants.
Notice, we can not infer from here what other loans were received by well-connected merchants nor can we infer about "not so well-connected merchants."
Now keeping this in mind, we go to the answer options -


We are not talking about profits generated in the above excerpt. Hence this option is Incorrect


I agree in this option the term 'narrow section' is mentioned that we cannot directly infer from the above excerpt but this option is on the same line as
that of our understanding above. Hence we will keep this option as a backup to compare with other probable options, if any.


'Outside of the south' encompasses a large area. Even out of the US, I could say. Hence this option, because of its abstractness, can be eliminated.


'Forced state legislatures' ???
Leave the excerpt, nowhere in the passage such strong wording can be inferred. Hence Incorrect


'economic elites' ???
Who are these people. From the passage, we only know about one type of elites, 'elite group of planters'. And that is not even part of the excerpt.
Hence we can eliminate this option.

Hence the BEST ANSWER out of the lot is clearly B

Hoping this to be helpful.

For Question 4 also, you can go on the same lines of finding the answer using the above approach.

I would encourage you to do so, that is try to reach the answer in the above way.
Let me know, if things are still unclear on Q4. Would be glad to help
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Awesome explanation, adstudy!

If you need more on Question #4 (422), check out this post.
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