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O'Brien, A. American Economic History
Department of Economics Professor O'Brien Lehigh University Fall 1990 Economics 331 Office: 428 Rauch Business Center Office Hours: Tu,W,Th 1:30-2:30 and by appointment Required Texts: 1. Gary M. Walton and Hugh Rockoff, History of the American Economy, 6th edition. 2. Donald McCloskey, The Writing of Economics. Recommended Texts: *3. Susan Lee and Peter Passell, A New Economic View of American History. *4. Edwin Perkins, The Economy of Colonial America, 2nd ed. 5. Jonathan Hughes, Social Control in the Colonial Economy. *6. Robert Fogel, Without Consent or Contract. 7. Robert Fogel and Stanley Engerman, Time on the Cross. 8. Paul David, et al., Reckoning with Slavery. 9. Roger Ransom and Richard Sutch, One Kind of Freedom. *10. Robert Higgs, Competition and Coercion. 11. Jonathan Hughes, The Vital Few, expanded edition. 12. Milton Friedman and Anna Schwartz, The Great Contraction. 13. Peter Temin, Did Monetary Forces Cause the Great Depression? *14. Peter Temin, Lessons from the Great Depression. *15. Alfred Chandler, Strategy and Structure. *16. David Hounshell, From the American System to Mass Production. 17. Robert Higgs, The Transformation of the American Economy. All of the recommended texts are on one-day reserve at the F-M library. A few copies of the books preceded by an asterisk (*) are available for purchase in the bookstore. Grading: There will be three papers, of four to six pages each, due at the beginning of class on the following days: Paper 1 -- September 18 Paper 2 -- October 23 Paper 3 -- November 20 Each paper will count for 15 percent of the course grade. There will be a midterm on October 11 that will count for 20 percent and a comprehensive final that will count for 35 percent. Effort and class attendance may also be taken into account in borderline cases. Topic Readings The Colonial Economy 1. Chs. 2-6 3. Chs. 1-2 4. Chs. 1-2, 7-9 5. Chs. 1-5, 12 The Confederation and Early Constitutional Periods 1. Chs. 7;Ch. 8, pp. 146-53 3. Ch. 3 The Transportation Revolution 1. Ch. 9 3. Ch. 4 Antebellum Manufacturing 1. Ch. 10 3. Ch. 5 16. Ch. 1 Antebellum Agriculture 3. Ch. 7;Ch. 8, pp. 154-61 The Economics of Slavery 1. Ch. 13 3. Ch. 8, pp. 161-82; Ch. 9 6. 7. Chs. 2-4 The Economic Impact of the Civil War 1. Ch. 14 3. Ch. 10-12 The Transcontinental Railroads 1. Ch. 16 3. Ch. 13, pp. 274-92 15. Ch.1 Post-Civil War Agriculture and the Farm Revolt 1. Ch. 15 3. Ch. 13, pp. 292-301 9. Chs. 1-3, 9 10. Chs. 1, 5, and 6 Immigration, Urbanization, and Public Health 17. Ch. 3. The Rise of National Labor Unions 1. Ch. 18 3. Ch. 15, pp. 341-46 The Great Merger Wave and the Rise of the Modern Corporation 1. Ch. 17 11. Chs. 6-7 15. Chs. 2-3 16. Chs. 5-6 World War I and the 1920s 1. Chs. 21-22 The Great Depression and the New Deal 1. Chs. 23-24 3. Ch. 16 12. 13. 14. World War II and Thereafter 1. Chs. 25, 27-28,31 Paper Assignments Three papers, of four to six pages each, are due at the beginning of class on the dates given on the first page. The papers must take the form of answers to the following questions: Paper 1 1. Discuss the evidence concerning the economic impact of the Navigation Acts on colonial businesses. Does this evidence indicate that there is no good economic explanation for the American Revolution? Paper 2 1. Is it reasonable to analyze the operations of the pre-Civil War southern plantations in the same way as the operations of other businesses would be analyzed? (In particular your answer should discuss the controversy over how slaves were motivated to work.) Paper 3 1. What were the main reasons for the rise of the American economy to its dominant position in the world? What specific circumstances might make it difficult for the American economy to maintain its position? or 2. Choose one explanation of the Great Depression and review the evidence put forward by its supporters. Guidelines 1. Each paper must make use of at least three sources (not including the required textbook (1.) or the lectures). Lee and Passell (3.) provide many references and you may also draw on the recommended reading. 2. In order to pass the course you must complete all required revisions of each paper. 3. McCloskey's book (2.) contains many useful tips on writing clearly. 4. The Business Writing Clinic (located on the third floor of the Rauch Business Center) is available to provide help at any stage of writing or rewriting your papers. 5. Your papers should be integrated discussions of your topic. That is, you should try to write essays and not collections of loosely connected paragraphs. 6. It is very important that the paper be grammatically correct and contain no misspellings. It should be typed and legible. 7. The paper should conform to the usual guidelines for research papers. In particular: a. The source of every fact that is not common knowledge must be given either in a footnote or in parenthesis. b. Any sentences or parts of sentences reproduced from one of your sources must be in quotation marks and the source must be acknowledged (not to do this is plagiarism). c. A bibliography, giving the full citation to each source must come at the end of the paper. 8. Put the arguments you use in your own words. Avoid using jargon. Slightly rewritten passages from your sources are easy to detect and are not acceptable.Lehigh University Professor O'Brien Department of Economics Fall 1990 Economics 331 Midterm Answer all five questions. They are equally weighted. 1. Attempts to produce cotton textiles in the United States faced a number of difficulties in 1790. Choose three of these difficulties and discuss how they were overcome in the decades following 1790. 2. Briefly describe the neoclassical economic view of how the world works. How can this view be used to account for the timing of the European discovery of the New World and the differing pace of settlement of North and South America? 3. Two sections of the United States Constitution are often singled out as being of particular economic importance. One is the commerce clause and the other is the 5th Amendment. Choose one and discuss its importance in the development of the U.S. economy in the late 18th and early 19th Centuries. 4. What is meant by the phrase "American System of Manufacturing?" Discuss the difference between the traditional view of the role interchangeable parts played in the American System and the view of David Hounshell on this issue. 5. Many scholars have argued that in 19th Century European agriculture the focus was on maximizing production per acre, while in U.S. agriculture the focus was on maximizing production per worker. What caused this difference in focus? How was the difference reflected in the tools and machines used in U.S. agriculture?Lehigh University Professor O'Brien Department of Economics Fall 1990 Economics 331 Final Short essays. Answer any four. (10 points each) 1. What do the terms of trade statistics tell us about the performance of the American economy during the 1780s? 2. What role did the Ordinance of 1785 play in the growth of the American economy? 3. In the colonial period why did the population of British America grow so much faster than the populations of French America and Spanish America? 4. Were the economic complaints of American farmers in the late 19th Century justified? 5. Were the land grants to the transcontinental railroads justifiable on economic grounds? 6. Why do most economists doubt that the stock market crash of 1929 caused the Great Depression? Long essays. Answer any four. (15 points each) 1. What role did the Napoleonic Wars play in the development of American manufacturing? 2. The effect of slavery on southern economic growth before the Civil War is disputed. What light do the statistics on per capita income growth throw on this question? 3. What is the Beard-Hacker Hypothesis? What evidence against this Hypothesis has been put forth by Stanley Engerman and other economists? 4. What is "substantive due process?" What role did it play in the growth of the American economy? 5. Why did the size of American manufacturing corporations increase so markedly during the last decades of the 19th Century and the first decade of the 20th Century? 6. If the Federal Reserve had made no policy mistakes during the 1930s would there have been a Great Depression?Multiple choice. Circle the best response. (2 points each) 1. Which of the following statements are accurate? a. Most of the ten leading manufacturing industries in 1860 were either heavy industries or engaged in the production of luxuries. b. Three of the ten leading manufacturing industries in 1910 were automobiles, petroleum refining, and chemicals. c. The leading manufacturing industry in 1910 was machinery. d. a. and c. e. b. and c. f. a., b., and c. 2. In the case of U.S. v. United States Steel Corporation, the Supreme Court ruled that: a. trusts were illegal. b. size alone did not constitute a violation of the antitrust laws. c. merger of firms in the same industry were illegal. d. the Clayton Act was unconstitutional. 3. For the colonial period as a whole, which of the following was true? a. All indentured servants were white and all slaves were black. b. Some indentured servants were white and some indentured servants were black, but all slaves were black. c. There were white and black slaves and white and black indentured servants. d. There were no slaves during the colonial period. 4. Which of the following was most important to the Continental Congress in financing the Revolution? a. Taxes. b. Selling bonds. c. Printing money. d. Confiscating and selling loyalist property. e. A national lottery. 5. One of the few non-agricultural products exported by the colonies was: a. books. b. ships. c. textiles. d. furniture. e. jewelry.6. The English colonies were able to establish themselves on Indian territory in the early years because: a. the native population was largely wiped out by disease. b. the native population was decisively beaten militarily in a series of battles during the 1620s. c. the colonists initially settled on land that was not of great value to the natives and was not the property of any particular native family. 7. The Spanish finally agreed to pay for Columbus' first voyage to America because: a. he convinced them the earth was not flat. b. the low probability of his being able to reach Asia and return was compensated for by the high expected profit if he did. c. the Spanish government was very interested in exploration for its own sake, even if there was no hope of financial return. d. Spain was hoping to find territory for its excess population to move to. 8. Indentured servants declined in significance during the 18th Century as a source of labor because: a. as the price of crossing the Atlantic declined, fewer Europeans were willing to sign indentured servant contracts. b. indentured servant contracts were difficult to enforce in colonial courts because judges and juries were very sympathetic to indentured servants. c. most colonies had outlawed indentured servant contracts by 1760. d. a. and b. 9. Which of the following was not a major canal built before the Civil War? a. The Great Northern. b. The Erie. c. The Miami and Erie. d. The Philadelphia Mainline. 10. Samuel Slater is an important figure in the business history of the United States because he was: a. the inventor of the cotton gin. b. Secretary of the Treasury in the George Washington's administrat ion. c. the first person to come to the United States from England with knowledge of how to build cotton textile machinery. d. the chief engineer on the Erie Canal.11. Which of the following was not established prior to 1920? a. The Food and Drug Administration. b. The Federal Trade Commission. c. The National Labor Relations Board. d. The Interstate Commerce Commission. 12. What factor do economists consider to have been most important in explaining the decline in southern per capita income between 1860 and 1880? a. The voluntary withdrawal of labor by the ex-slaves. b. The destruction of southern property during the Civil War. c. Mismanagement by reconstruction governments. d. The inability of the South to rebuild its railroad system. 13. The Miami and Ohio canal connected the Ohio River to: a. the Atlantic Ocean. b. the Mississippi River. c. the Pacific Ocean. d. Lake Erie. e. Lake Ontario. 14. Which of the following help to explain why American cities were subject to epidemics in the late 19th Century? a. The arrival from Europe of immigrants bearing diseases previously unknown in the U.S. b. Ignorance concerning the role of poor sanitation in the spread of disease. c. The widespread American dislike of large governments, which for years kept local governments too small to deal with sanitation problems. d. a. and b. e. b. and c. 15. The case of Wabash, St. Louis, and Pacific Railroad v. Illinois is important to the study of business history because: a. it ended the federal income tax. b. it led directly to the founding of the Interstate Commerce Commis sion. c. the Supreme Court's decision established that mergers between firms in the same industry were subject to challenge under the Sherman Antitrust Act. d. the Supreme Court's decision prohibited the Congress from banning the importation of iron rails produced in England.16. In percentage terms which of the following increased the most in the United States between 1860 and 1910? a. Population. b. Labor force. c. Real national income. d. Annual hours of work. 17. In 1910, which geographical area had the largest fraction of the foreign born? a. Northeast. b. Midwest. c. South. d. West. 18. The Sherman Antitrust Act was passed in: a. 1815. b. 1865. c. 1890. d. 1920. e. 1945. 19. The main reason the Democratic Party supported passage of the 16th Amendment was to: a. protect the ex-slaves in the South. b. protect the rights of private businesses. c. obtain a new source of funds for the federal government in order to allow tariff rates to be reduced. d. obtain a new source of funds for the federal government in order to allow a program of public works to be undertaken. 20. Which of the following aided the organizing efforts of the American Federation of Labor in the period before 1914? a. The great decline in immigration. b. Their concentration on organizing only unskilled workers. c. Their refusal to become involved in radical political causes. d. a. and b. e. b. and c. 21. In 1936 the amount the federal government would have spent if the economy had been at full employment was $ .7 billion more than the amount it would have taken in in taxes and other receipts if the economy had been at full employment. From this we can conclude that: a. the federal government's budget was expansionary. b. the federal government's budget was contractionary. c. the federal government's budget may have been expansionary or contractionary, it is impossible to say from the information given. 22. The price of slaves in British North America was high because: a. slave death rates were high. b. slaves would frequently run away and tracking them down was expensive. c. transportation costs from Africa were high. d. the price of slaves was largely determined by the high profitability of Caribbean sugar plantations. 23. During the period from 1897 to 1914: a. the money stock and the price level rose, but velocity fell. b. the money stock fell, but velocity and the price level rose. c. the money stock and velocity fell, but the price level rose. d. the money stock rose, but velocity and the price level fell. e. the money stock, velocity, and the price level all fell. 24. What was William Jennings Bryan home state? a. New York. b. Pennsylvania. c. Nebraska. d. Georgia. e. Virginia. 25. The most important export of the colonies was: a. cotton textiles. b. tobacco. c. cotton. d. rice. e. indigo.