Economics history

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