· Large plantations were considerably more productive than small, slaveless farms…why?
· Exceptionally high levels of productivity levels
· Superior lands large plantations occupied
· Work speed
· Though exploitation occurred, owners did not carelessly mistreat their slaves…
1. Each male filed hand was worth $600,000
2. Standards of living for slaves was low yet self-sustaining
· The entrapment of slaves kept them from advancement by taking away their incentive for self-improvement
Economic Entrenchment & Regional Incomes
· The South was slow to industrialize – due largely to the slave system
· Plantation slavery was extremely profitable
· Laws were established to punish those assisting slaves to runaway
Political Compromises & Regional Conflict
· Most significant issue was slavery’s containment, not its eradication
· In 1819 the Senate was balanced:
· 11 slave states
· Missouri compromise of 1820
· Missouri was admitted as a slave state
· Maine was admitted as a non-
· From this point forward, states were admitted in pairs – one free, one slave
· In 1854, the Kansas- Nebraska Act replaced the Missouri compromise and provided “popular sovereignty” in the unsettled portions of the Louisiana purchase.
· The Dred Scott decision in 1857 declared congress could not prohibit slavery in the territories .
Enter Abraham Lincoln
· Lincoln was elected President in 1860
· This presented only two options for the south:
1. Submit to becoming nonslave stated
· In the mid-1860s, the democratic party split allowing the republican, Abraham Lincoln to become president with just 40% of the vote.
· By the Civil War’s end, more than 620,000 soldiers &sailors had lost their life – more than all other American conflicts com～
The economics of War
· South had to use some of its precious manpower to repress its slave labor force
· When possible, slaves & free blacks fought for the north – tipping the war in favor of the North
· Both sides relied on imported weapons, but the north was able to increase its production quickly
· South’s limited rail network was strained to capacity
· Primary shortage was horses & mules
· South’s hope was that the North would eventually tire of the enormous human costs and agree to let the South secede
Trade & Finance Polices / South & North
· South also faced financial issues:
· South had a hard time collecting taxes – hurting their war effort and
· Increasing inflation in the Southern states
· The gap between prices & money increased due to two reasons:
1. Decline in Southern production
2. Decline in confidence in the southern currency
· Astronomical inflation rates occurred once it was clear the Union was going to claim victory
· The North’s economic strain was not as bad as the South’s.
· In 1861 a sharp financial panic did start when banks suspended specie payments
· Government quickly raised taxes and sold bonds.
· The tax changes brought about the first federal taxes on income
· The north escaped hyperinflation and confounded the south
The Civil War & Northern Industrialization
· The Civil War spurred northern industrial expansion
· With the north in charge, legislators passed laws intending to unify markets & propel industrialization
· New programs included
· National Banking System
· Increase in tariffs
· Land-grant college act
· Land grants to
· The civil war was tragic
· Consider this: the war costs twice as much as the overall valor of the slaves.
· Manufacturing changed as well:
· Minute stimulus manufacturing arouse (focus on the now (small arms) v. long term (railroads).
Economics In the South
· In 1860, the South & North had nearly the same commodity output per capita.
· In 1870, the North’s per capita output exceeded the South’s by nearly 2/3
· Lincoln’s Emancipation Proclamation:
· Reduced the South’s agricultural output
Decline in the Deep South
· The greatest setbacks occurred in the 5 key cotton states in the South – 3 reasons
· The highly efficient plantation system was destroyed.
· Economies of scale from driving slave labor were lost
· Significant reductions in field labor
· Decline in per capita ag output of 30%-40%
· Cotton demand slowed due to competition from India, brazil & Egypt
· U.S. had dominated the cotton market commanding 77% of English imports
· South became a food-importing region
· South maintained a comparative advantage in cotton production
· Southern cotton farmers were as responsive to price changes as Northern farmers were to wheat price changes
Chapter 16 Railroads & Economic Change
· Gold rush of 1849 sparked a frenzy to move west, where land was vast.
· Three ways existed to get to the west:
1. Wagon trains
2. Sea route through Panama
3. A clipper ship around Cape Horn
· Government participation was viewed as essential.
· By 1853, Congress was convinced of a railroad’s feasibility
· The civil war alienated the southern state’s river towns.
· In 1862, Council Bluffs, IA, was selected and congress ordered a railway be constructed from Council Bluffs to the western boundary of Nevada.
· To build the railroad, the government assisted in 2 ways:
1. Public land grants
2. Loans for each mile of the track completed
· Loans were to be 1st mortgage bonds
· Without sufficient capital, government doubled the land grant and the railroads sold first-mortgage bonds
· Given the loans per mile:
· Construction of the railroad was quick
· The quality of the track was not that great
· Union Pacific & Central Pacific fought the final 2 years to garner as much subsidy as possible ( remember the loans per miles).
· Union Pacific relied on ex0solders & Irish immigrants laid 1086 miles of track
· Central Pacific, relying on Chinese immigrants laid 689 miles – some of which was through the mountains .
· May 10, 1869: the Union Pacific & Central Pacific joined at Promontory Summit a few miles west of Ogden Utah.
Total Construction: Pace & Patterns
· From 1864-1900, the greatest percentage of track was laid in the plains states
· Chicago was the thief terminal
· Railroad construction had a strong influence on aggregate demand and business cycles
· Railroad construction accounted for 20% U.S. gross capital formation in the 1870s
· In 1920, 5% of all Americans were employed on the railroad
Productivity Advance & Slowdown
· Total factor productivity of the railroad more than doubled between 1870 & 1910
· Sustained rapid growth of output per inputs were due to 2 productivity advancements:
1. Economics of scale in operation
2. More powerful locomotives, stronger steel rails, automatic couplers, air brakes.
· Railroads were not the sole cause of American’s rapid economic progress – railroads did symbolize a ceaseless wave of entrepreneurial energy and technological progress.
Building Ahead of Demand?
· Joseph Schumpeter argued:
· Railroad projects “meant building ahead of demand in the boldest sense of the phrase… middle western and western projects could not be expected to pay for themselves in such as most investors care to envisage”
· In other words, government aid to the railroads
· Albert Fishflow supported Joseph Schumpeter arguments:
· If railroads were built in unsettled regions, the demand for the railroad’s services must have been low initially…
· Three test:
1. Government aid should be widespread
2. Profit rates initially should be less than profit rates in alternative investments and should grow after the railroad aged
3. The number of people living near the railroad should be low compared to the number living near Eastern railroads.
· All 3 test failed to support Schumpeter’s assertion that the railroad were
· Fishlow discovered what he called “anticipatory settlement.”
· Fogal & Mercer followed up on Fishlow and determined railroads were built ahead of demand
· They had relatively low initial profit rates
· Profit rates grew over time
Railroads & Standard Time
Land Grants, Financial Assistance, & Private Capital
· Subsides for canals were common
· States & municipalities helped the railroad by buying railroad bonds.
· Financial aid came more from the federal government rather sate or municipalities – a change from the antebellum period.
· (congress did receive reduced rates for transporting troops, mail & government property)
· Land grant subsidies were discontinued after 1870 due to public opposition
Unscrupulous Financial Practices
· Fraudulent practices often involving construction companies emerged.
· Insiders were rewarded with stock below ‘par-value’ essentially taking money in a way that shareholders could not benefit from
· Certain members of Congress bought stock or were given shares – a conflict of interest
Government regulations on the Railroad
· Railroads engaged in discriminatory pricing policies. Discrimination practices included:
· Long-haul v. short-haul rates
· Separate markets had different rates on per ton loads (e.g. coal v. manufactured goods)
· Often the railroad had competition for some clients and no competition for other clients based on location
· Albert Fink took the lead in forming regional ferdations to pool either traffics or profits.
· State regulations:
· First wave of regulations came from the state level in the 1870s.
· Farmers demanded legislation to regulate rates
· In 1871 & 1874, Illinois, Iowa, Wisconsin & Minnesota passed regulatory laws.
· 1886 – Wabash, St. Louis, and Pacific Railway v Illinois:
· State found the Wabash was charging more per ton for a shorter haul from Gilman, IL to NYC than from Peoria, IL to NYC and ordered the rate adjusted
· U.S. Supreme held that IL could not regulate rates on interstate shipments.
· Federal Regulations:
· Interstate Commerce Commission (ICC)
· Commission was to examine the business of the railroad
· Commission heard complaints that arose from violations of the Act to Regulate Congress
· Commission required all railroads to submit annual reports based on a uniform system of accounts
· Commission provided Congress an account of its activities.
· ICC was the first independent regulatory agency
· Railroad manager used the ICC to stabilize profit rates and secure other advantages of cartel management
Railroads & Economic Growth
· By World War 1, railroads were decaying and had little capital.
· The U.S. nationalized the railroads in the interest of the war effort.
· After the war, railroads were returned to private ownership.
· Schumpeter argued:
· Railroads led the transition to modern economic growth
· Growth came from applying major technological advances
Chapter 17 Industrial Expansion & Concentration
Structural Change & Concentration
· Exact flip-flop of commodity distribution between agriculture & manufacturing.
· In 1869, agriculture was 53%, manufacturing was 33%
· In 1899, agriculture was 33%, manufacturing was 53%
· American gains in manufacturing were also phenomenal relative to the rest of the world.
· In the 1890s, America was the leading industrial power and
in 1910, America produced twice as much as the next nearest country, Germany
· Technological changes,
· Investments in human capital, and
· New energy sources brought economies of scale.
· Also, shifts in resources from lower to higher productivity rates led to exceptional long-term trends.
· Advances based on invention & innovation
· Invention signifies the discovery of something new (e.g. steam power or electricity)
· Innovation denotes the many ways found to use and adapt new ideas to existing products and services.
· Most growth in value added in textiles was the result of innovation and greater automaticity.
New Forms & Resource of Energy
· Before WWI, power reliance moved from wind & water generation to other sources
· Electricity appeared on the stream add was made either with the burning of fuel or water flow
· By WWI, one-third of the nation’s industrial power was provided by electricity
· Faced with unmanageable size & complexity, the railroads developed a host of new management practices and concepts
· Managers authority to make decisions should match their responsibility
· Worker efficiency could be improved by:
· 1. Analyzing the movements to perform a job
· 2. Carrying out experiments
3. Offering incentives for superior performance
Economic History of the United States Assignment: #2 Article Discussion
Learning Objectives • Read current event news articles published in the last 6 months • Choose current events as related to U.S. History in colonial times • Identify modern day innovations, changes to markets, use of money and policy • Link your modern day finding to a past event discussed in class or found in Ch 7-17 of the textbook • Answer the question – how has the past helped to shape the future we see today? • Use an economic lens to explain the progress and demonstrate with economic graphs, terms and theories
Due Date Please submit your assignment by October 18th at 11:59 PM (AZ time).
Current events are opportunities to see economics in practice. This assignment provides the chance to connect economic theory to the real world and write about your findings. Use economic history discussed in class and in the textbook to show the progress made in today’s markets. You can choose to work individually, or work in groups of two students. You (your group) are required to find a substantial article from Wall Street Journal. You must email Elaine by October 1 with your group members otherwise you will work individually.
If you need assistance, please consider contacting the Eller librarians at http://libguides.library.arizona.edu/EllerOnlineUndergrad
1. Once you find the WSJ appropriate article, you are to summarize the article in several paragraphs. 2. Please provide the article’s complete citation and URL. 3. Then look for the areas where you see the connection between economic history and how markets have
evolved. a. For example, you may have an article where you see a town in the United States taking actions to barter instead of
using U.S. dollars. Explain what you see happening and then walk through how barter was a main way of doing business. Discuss the benefits and problems such as double coincidence of wants and difficulty determining each item’s value.
4. Use graphs or tables to help illustrate the economic principles 5. Conclude by explaining why you chose this article.
The review should be 2-3 pages single spaced and use APA format (http://www.library.arizona.edu/search/reference/citation-apa.html) for the citations.
Page 2 of 2 Copyright © Arizona Board of Regents
Evaluation Criteria and Grading Rubric This assignment will be graded based on the criteria provided in the grading rubric below. Criteria Above Average Average Below Average Interesting article related to course (20%)
Clearly relates to course, good, credible source
Article lacked depth or source credibility
Article is off topic and does not relate to course material or not a credible source
Summary is complete (20%)
Two paragraphs devoted to summarize the article
One paragraph summary
Less than one paragraph summary
Strategic tools are correct analysis (20%)
Correct application of tools to assess article
Error in assessing or tool choice
Errors in two or three of the tools used for analysis
Use of graphs/tables to illustrate (20%)
Correct graphs used to illustrate 2+
Error in calculating a graph/table
Errors in calculating numerous graphs/tables
Grammar and writing style (20%)
Grammar and writing are business appropriate
Several errors in grammar or casual writing style
Multiple errors in grammar, spelling and casual writing
Assignment Submission Instructions
Save your assignment as a word (.doc or .docx) or .pdf file.
Include your own name in the title of the electronic file for identification purposes, for example “MayesDenkerKelliArticleReview1” and do NOT use any spaces, punctuation, or special characters in the file name. If you are working in groups, both of the members need to upload the same file with your own name.
When your file is ready, submit it for grading through the appropriate assignment drop box as indicated below.
• Navigate to the folder Table of Contents -> Learning Modules -> Week 9 area of D2L. • Find the item #2 Article Discussion assignment drop box. • Click on the Add a File button. • Find the file you would like to upload. If you are using the most current version of your internet browser,
you can drag and drop the file into the target area of the Add a File window. You can also use the Upload button to browse for and select the file you would like to add.
• Once you have selected your file(s), click the Add button in the bottom, left corner of the window. • Click on the Submit button to complete the file submission. • Upon successful assignment submission, you will receive a confirmation email.
For further details on submitting assignments, please refer to the http://help.d2l.arizona.edu/student/submitting-assignments web site.
Please note: If you make a mistake (such as leaving out part of the assignment, send the wrong files, etc.) and the Assignment tool won’t let you submit, then you must contact the instructor and describe what happened.
Extra credit If you want to earn extra credit, you need to prepare a minimum of 10 minute presentation with a maximum 20 minutes. A PPT is required to present to the class. Send an email to the TA to schedule a date to present.
Chapter 14 War, Recovery &
Regional Divergence Dr. Mayes-Denker
The Legacy of Slavery – 13th Amendment to the ConsEtuEon freed all slaves.
– 14th Amendment to the ConsEtuEon ensured no “state shall deprive any person of life, liberty or property without due process of law.” • Guaranteeing: “the right of ciEzens to vote shall not be abridged.”
The Legacy of Slavery – Sharecropping became popular – the tenant & owner would split the proceeds 50/50
– Sharecropping gave the owner an incenEve to remain interested in the farm throughout the growing season and to share informaEon such as changing crop prices with the tenant.
– Improved roads and the automobile also eroded the monopoly power of the local storeowners (lenders)
The Legacy of Slavery – Many believe the South remained a separate labor market. • CoUon became increasingly labor intensive as farm sizes fell • MechanizaEon was slowed and wages kept low • A striking wage gap between the north and south emerged • LiUle investment was made in Southern schools • Spending on educaEon best served the wealthy while forsaking modern economic growth due to producing ill-prepared workers
Chapter 15 Agriculture’s Western Advance
Dr. Kelli Mayes-Denker
Expansion of Land Under CulEvaEon
– Hope persisted of beUer Emes if only new soil could be broken further west.
– Total culEvated land doubled between 1870 & 1900. • PrivaEzing land helped spur this growth
Federal Land Policy – Timber Culture Act of 1863
– Gave 160 acres to anyone who planted trees on at least 40 acres of the land
– Desert Land Act of 1877 – People could buy 640 acres (a secEon) for $1.25 per acre if they agreed to irrigate the land within 3 years
Federal Land Policy – Timber & Stone Act of 1878
– Valuable Ember & stone acres cold be purchased for $2.50 per acre in Nevada, CA, Oregon, Washington
– Timber-Cugng Act of 1878 – CiEzens could cut Ember on federal lands if the lumber was used for agriculture, mining, or building purposes
Impact of Federal Land Policy – Large tracts of land went to wealthy individuals and corporaEons
– GranEng land to railroads was considered normal public policy
– Good land was ohen fraudulently obtained by mining and lumber companies or speculators
– Fraud served an economic purpose: – It helped transfer resources to large companies that could take advantage of economies of scale
Growth & Change In Agriculture – 1900 – Texas was the leading producer of coUon & caUle
– The 19th century brought along several biological innovaEons to spur growth in agriculture
– Plant varieEes expanded – IrrigaEon systems modernized – FerElizers
Growth & Change In Agriculture • New wheat varieEes allowed for the wheat belt to be pushed north and west – expanding producEon • Farmers found new ways to combat bugs & insects
Growth & Change In Agriculture – 1834 – Cyrus Hall McCormick received a patent for his reaper
– 1848 – Cyrus Hall McCormick moved his implement plant to Chicago, creaEng his own supply chain to the Midwest
– 1857 – John Deere was producing 10,000 steel plows annually
Hard Times on the Farm: 1864-1896
– All prices fell from 1875-1895 • The farmer’s terms of trade – the price of sold products / price of bought products – was worsening • Why?
– Rapid increase in the supply of agricultural products – Increased output through mechanizaEon
– On the demand side, rapid increases in the populaEon sent the demand for food soaring.
Hard Times on the Farm: 1864-1896
– Farmers traced their hard Emes down to monopolies & conspiracies
– Bankers who raised interest rates, manipulated currency and then foreclosed on farm mortgages
– Grain elevator operators who charged rates farmers could not afford
– Industrialists who charged high prices for farm machinery & consumer goods
– Railroads that charged monopoly rates on freight
– Finally, interest rates on farms began to fall
Hard Times on the Farm: 1864-1896
– Farmers were subject to globalizaEon that they could neither control nor understand
– E.g. to keep up with producEon standards, farmers needed the latest equipment – which pushed them further into debt
– With beUer equipment, producEon (supply) increased – With a greater supply, prices fell – When prices fall and farmer’s are heavily indebted, foreclosures happen
Agrarian PoliEcal OrganizaEons – The Grangers:
– Fought unfair business pracEces – 20,000 local branches w/1.5M members – Founded the co-op, where farmers essenEally sell what they make to other Grange member owners
– Montgomery Ward was the first large mail-order house and was established to sell to the Grangers
– The Alliances – Farmers could store non-perishable goods and receive loans up to 80% of the stored goods value
Agrarian PoliEcal OrganizaEons – The Populists:
– Felt that only through government control of the monetary system
– and – Government ownership of banks, railroads & means of communicaEon could the evils of monopoly be put down.
The Department of Agriculture – 1839 – Agriculture Division is set up in the Patent office
– 1862 – Congress creates Department of Agriculture to perform three main funcEons:
– 1. Research & ExperimentaEon – 2. DistribuEon of agricultural informaEon – 3. RegulaEon of product quality – Pressure was to give farmers pracEcal help – Ohen distributed free seeds
Agricultural EducaEon – 1862 – Morrill Act gave impetus to agricultural training at the university level
– Established land-grant colleges that gradually assumed statewide leadership in agricultural research
Natural Resource ConservaEon: The First Stages
– Land was abundant – Concern was with shortage of labor & capital – Uncut Ember on public lands value was zero for all pracEcal purposes
– With clear legal right to clear Ember, the incenEve existed to cut as fast and deep as possible
– Large piles of cut Ember provided fire hazards » A fire in Wisconsin burned 1.28 Million acres, killing more than 1,000 people
Land, Water & Timber ConservaEon
– Theodore Roosevelt’s sought conservaEon legislaEon:
– 1. NaEonal Forests comprised of 150M acres – 2. Land containing 75M acres of mineral wealth were reserved from sale or seUlement.
– 3. Explicit recogniEon of the future importance of waterpower sites
– 4. Principle was accepted that it was a proper funcEon of the federal government to implement a wide public works for the purpose of controlling stream flows
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