Z: **Archived from Fall 2007**: American Economic History: Economics 113

American Economic History Syllabus: Fall 2007: U.C. Berkeley

MW 4-5:30 VLSB 2040

Staff: Brad Delong delong@econ.berkeley.edu, Marc Gersen mgersen@econ.berkeley.edu, Adam Jack Gomolin gomolin@berkeley.edu, Vikram Maheshri vikm@berkeley.edu

Administrivia pages | Web assignment index page | Comments-on-readings pages | Questions pages | Syllabus page | Lecture Notes Pages

Note: Additional books for Econ 113, to be available at the bookstore:

• Edward Bellamy, Looking Backward
• Barry Eichengreen, Globalizing Capital
• Dean Baker, The United States since 1980

Note: Marty Olney recommends:

For those unfamiliar with U.S. history, John Faragher et al (2005), Out of Many (New York: Prentice-Hall): volume 1 volume 2

That seems like a good idea to me.

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Schedule:

August 27: Waves of Settlement and Conquest:

Walton and Rockoff: preface, chapters 1-6.
Jared Diamond (2000), "Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?" http://www.edge.org/3rd_culture/diamond/diamond_p1.html ; (2002), "How to Get Rich" http://www.edge.org/3rd_culture/diamond_rich/rich_p1.html
Timothy Yeager (1995), “Encomienda or Slavery? The Spanish Crown's Choice of Labor Organization in Sixteenth-Century Spanish America.” Journal of Economic History 55 (December 1995): 842-59 http://links.jstor.org/sici?sici=0022-0507%28199512%2955%3A4%3C842%3AEOSTSC%3E2.0.CO%3B2-9.
Charles Mann (2002), "1491," Atlantic Monthly http://www.theatlantic.com/doc/200203/mann. Charles Mann writes in reply to comments

Assignment: Web assignment 1: Diamond, Mann, or Yeager. Due before noon on August 29.

Section Topic: Discussion: the Amerindians and the conquest.

Lecture Notes; Audio

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August 29 and September 5: The Pre-Industrial United States: Farms and Factories:

Walton and Rockoff, chapters 7-12.
Peter Temin (1966), “Labor Scarcity and the Problem of American Industrial Efficiency in the 1850's,” Journal of Economic History, Vol. 26, No. 3. (Sep., 1966), pp. 277-298 http://links.jstor.org/sici?sici=0022-0507%28196609%2926%3A3%3C277%3ALSATPO%3E2.0.CO%3B2-U.
John R. Nelson, Jr. (1979), "Alexander Hamilton and American Manufacturing: A Reexamination," Journal of American History, Vol. 65, No. 4. (Mar., 1979), pp. 971-995 http://links.jstor.org/sici?sici=0021-8723%28197903%2965%3A4%3C971%3AAHAAMA%3E2.0.CO%3B2-Z.
Joan Underhill Hannon (1984), “Poverty in the Antebellum Northeast: The View from New York State's Poor Relief Rolls.” Journal of Economic History 44 (December 1984): 1007-32 http://links.jstor.org/sici?sici=0022-0507%28198412%2944%3A4%3C1007%3APITANT%3E2.0.CO%3B2-M.

Optional Reading: "Growth Accounting, Natural Resources, and Pre-Civil War America" http://www.j-bradford-delong.net/movable_type/Econ_113/GA_Handout.pdf (for those who have taken 100b and remember it)

Assignments: Web assignment 2: Temin or Nelson. Due before noon on September 3. Web assignment 3: Questions. due before noon on September 5.

Section: Tools: understanding regressions, using Hannon on poverty in the early U.S. as an example.

Lecture Notes: August 29; August 29 Audio File; Overheads for August 29. Lecture Notes: September 5; September 5 Audio File

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September 10 and 12: Slavery and Civil War

Walton and Rockoff, chapters 13 and 14.
Alfred Conrad and John Meyer (1958), “The Economics of Slavery in the Ante Bellum South,” Journal of Political Economy, Vol. 66, No. 2. (Apr., 1958), pp. 95-130. http://links.jstor.org/sici?sici=0022-3808%28195804%2966%3A2%3C95%3ATEOSIT%3E2.0.CO%3B2-R
Richard B. Sheridan (1976), "Sweet Malefactor": The Social Costs of Slavery and Sugar in Jamaica and Cuba, 1807-54,” Economic History Review, New Series, Vol. 29, No. 2. (May, 1976), pp. 236-257 http://links.jstor.org/sici?sici=0013-0117%28197605%292%3A29%3A2%3C236%3A%22MTSCO%3E2.0.CO%3B2-9. Claudia D. Goldin and Frank D. Lewis (1975), "The Economic Cost of the American Civil War: Estimates and Implications," Journal of Economic History, Vol. 35, No. 2. (Jun., 1975), pp. 299-326 http://links.jstor.org/sici?sici=0022-0507%28197506%2935%3A2%3C299%3ATECOTA%3E2.0.CO%3B2-6

Additional Reading (necessary background for problem set 2): http://delong.typepad.com/113_F07/20070910_cuibono.pdf

Assignments: Web assignment 4: Goldin and Lewis or Sheridan. Due before noon on September 12. Problem set 1: understanding regressions: due at lecture September 12: http://delong.typepad.com/113_F07/Econ_113_ps1_2007.pdf

Section Topic: Discussion: why did slavery survive and flourish into the 1850s?

Lecture Notes: September 10; September 10 Audio File. Lecture Notes: September 12; September 12 Audio File

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September 17 and 19: The Industrialization of America:

Walton and Rockoff, chapters 15-17, 20.
Stanley Engerman and Kenneth Sokoloff (1994), "Factor Endowments: Institutions, and Differential Paths of Growth Among New World Economies" http://www.nber.org/papers/h0066
Edward Bellamy, Looking Backward ISBN 155709506X http://www.gutenberg.org/etext/624 (History 124a; English 150)
Marc Gersen, "Writing Handout" http://www.j-bradford-delong.net/movable_type/Econ_113/113-gersen-writing.pdf

Assignments: Web assignment 5: Engerman and Sokoloff. Due before noon on September 19.

Problem set 2: cotton is king! due at lecture September 24: http://delong.typepad.com/113_F07/20070910_ps2.pdf

Section Topic: Tools: growth accounting: sources of growth before and after the Civil War.

Lecture Notes: September 17.

Lecture Notes: September 19. Large Audio File. Streaming Audio

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September 24 and 26: Labor and Capital and Technology:

Walton and Rockoff, chapter 18.
Claudia Goldin and Lawrence Katz (1999). “Human Capital and Social Capital: The Rise of Secondary Schooling in America, 1910-1940.” Journal of Interdisciplinary History http://www.nber.org/papers/W6439 (optional).
J. Bradford DeLong, “Did J.P. Morgan’s Men Add Value?” http://www.j-bradford-delong.net/Teaching_Folder/Econ_210a_f99/Readings/Morgan_Temin.pdf. W. Devine (1983), “From Shafts to Wires: Historical Perspective on Electrification,” Journal of Economic History pp. 347-72 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/Devine.pdf.

Assignments: Web assignment 6: Goldin and Katz or DeLong or Devine. Due before noon on September 24.

Section Topic: Review for first midterm exam

Lecture Notes: September 24. Large Audio File. Streaming Audio File.

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October 1: FIRST MIDTERM EXAM

Assignments: Paper 1: read and respond to Bellamy, Looking Backward, in 500 words.

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October 3 and 8: The Great Depression and the New Deal:

Walton and Rockoff, chapters 21-23.
Eugene White (1990), “The Stock Market Boom and the Crash of 1929,” Journal of Economic Perspectives 4:2 (Spring), pp. 67-83 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/White_crash.pdf (optional)
Martha L. Olney (1999), “Avoiding Default: The Role of Credit in the Consumption Collapse of 1930.” Quarterly Journal of Economics CXIV (February 1999): 319-335 http://links.jstor.org/sici?sici=0033-5533%28199902%29114%3A1%3C319%3AADTROC%3E2.0.CO%3B2-R.
Christina Romer (1993) “The Nation in Depression.” Journal of Economic Perspectives 7 (Spring 1993): 19-39 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/Romer_nation_depression.pdf

Assignment: Web assignment 7: White or Romer or Olney. Due before noon on October 3.

Section Topic: Review and Tools: the midterm and macroeconomic tools for p.s. 3.

October 3 Audio; October 3 Handout

October 8 Notes and Audio

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October 10 and 15: World War II and After: Social Democracy and the American Century

Walton and Rockoff, chapters 24-26.
J. Bradford DeLong and Barry Eichengreen (1993, “The Marshall Plan: History’s Most Successful Structural Adjustment Program” http://www.j-bradford-delong.net/pdf_files/Marshall_Large.pdf (optional) Barry Eichengreen, Globalizing Capital, chapters 1-4 ISBN 0691002452

Assignment: Problem set 3: causes of Great Depression and of recovery. Due at lecture October 17: http://delong.typepad.com/aeh/2007/10/problem-set-3.html

Section Topic: Discussion: the Great Depression, World War II, and the rise of government

Lecture Notes: October 10 Audio
Lecture Notes: October 12
Lecture Notes: October 15

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October 17, 22, and 24: The American Dream: The Great Compression and the Great Widening:

Claudia Goldin and Robert A. Margo (1992), “The Great Compression,” Quarterly Journal of Economics http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/compression.pdf
Alberto Alesina, Edward Glaeser, and Bruce Sacerdote (2001), “Why Doesn’t the U.S. Have a European-Style Welfare System?” http://papers.nber.org/papers/W8524.pdf

Assignment: Paper 2: read and respond to Eichengreen, Globalizing Capital chapters 1-4 in 1000 words. Due at lecture on October 31.

Section Topic: Distribution; Globalizing Capital.

Lecture Notes: October 17
Lecture Notes: October 22 ppt movie Audio
Lecture Notes: October 24 ppt movie Audio

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October 29: Focus on Women

Gavin Wright (1991), “Understanding the Gender Gap: A Review Article,” Journal of Economic Literature : 1153-63 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/Wright_Goldin.pdf
Sue Bowden and Avner Offer (1994), “Household Appliances and the Use of Time” Economic History Review 47: 725-748 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/Offer.pdf
Claudia Goldin (2004) "The Long Road to the Fast Track" NBER WP 10331 http://papers.nber.org/papers/W10331 (optional)

Assignment: Web assignment 8: Wright or Bowden and Offer. Due before noon on October 29.

Section Topic: Discussion: gender equity.

October 29 American Economic History lecture: Focus on Women: Discrimination and Opportunity

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October 31 and November 5: Focus on African-Americans

J. Smith and Finis Welch (1989), "Black Economic Progress after Myrdal," JEL (June), pp. 519-40, 557-61 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/Welch.pdf
Werner Troesken, “Race, Disease, and the Provision of Water in American Cities, 1889-1921,” Journal of Economic History 61 (September 2001): 750-776 http://links.jstor.org/sici?sici=0022-0507%28200109%2961%3A3%3C750%3ARDATPO%3E2.0.CO%3B2-6

Section Topic: Review for Second Midterm

Lecture: http://delong.typepad.com/video/2007/10/focus-on-africa.html

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November 7: SECOND MIDTERM EXAM

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November 14: Governing the Macroeconomy

Walton and Rockoff, chapter 27.
J. Bradford DeLong (1996), “Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946,” Journal of Economic Perspectives, 1996, vol. 10, issue 3, pages 41-53 http://www.j-bradford-delong.net/pdf_files/Keynesianism_Pennsylvania.pdf (optional)
J. Bradford DeLong, "America's Only Peacetime Inflation: The 1970s," published in Reducing Inflation: Motivation and Strategy, Christina Romer and David Romer, eds., (Chicago: University of Chicago Press) 1997 (optional)
J. Bradford DeLong and Barry Eichengreen, "From Meltdown to Moral Hazard" http://www.j-bradford-delong.net/Econ_Articles/CIEP/CIEP_revision06102001.PDF (optional)

Assignment: Web assignment 9: DeLong or DeLong and Eichengreen. Due before noon on November 14.

Section Topic: Discussion: dilemmas of modern macroeconomic management

Lecture Notes: http://www.j-bradford-delong.net/2007_ppt/20071114_113_Keynesianism.htm http://delong.typepad.com/video/2007/11/managing-the-ma.html

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November 19: NO CLASS

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November 26: The Crisis[?] of Social Democracy

Walton and Rockoff, chapters 28 and 29.
Dean Baker, The United States since 1980 ISBN 0521860172

Section Topic: Discussion: critiquing Dean Baker on the U.S. since 1980

Lecture Notes: http://www.j-bradford-delong.net/2007_ppt/20071126_113_SD.htm

Audio: http://www.j-bradford-delong.net/2007_audio/20071126_162759

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November 28: The Productivity Speed-Up of the Late 1990s

Paul David (1990), “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” American Economic Review, pp. 355-60 http://www.j-bradford-delong.net/Teaching_Folder/Econ_210c_spring_2002/Readings/David_Dynamo.pdf
J.B. DeLong (2000), “Cornucopia: The Pace of Economic Growth in the 20th Century” NBER Working Paper no. 7602 (March) http://www.nber.org/papers/W7602

Assignment: Paper 3: read and respond to Baker, The United States since 1980

Section Topic: Discussion: the information age

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December 3 and 5: The Present and the Future

Ronald Lee and Jonathan Skinner (1999), “Will Aging Baby Boomers Bust the Federal Budget?” Journal of Economic Perspectives 13 (Winter 1999): 117-140 http://www.ssc.wisc.edu/~andreoni/Econ441/skinner.pdf
David Cutler (2002), “Health Care and the Public Sector” http://papers.nber.org/papers/w8802
Nicholas Stern et al., "The Stern Review on Global Climate Change" http://www.hm-treasury.gov.uk/media/4/3/Executive_Summary.pdf http://www.hm-treasury.gov.uk/media/A/6/Postscript.pdf http://www.hm-treasury.gov.uk/media/1/8/Technical_annex_to_the_postscript_P1-6.pdf

Assignment: Paper 3: read and respond to Baker, The United States since 1980. Due at lecture on December 5.

Section Topic: Tools: going through the Stern Report

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December 10: FINAL REVIEW

December 18 8-11 AM: FINAL EXAM

Tuesday Morning and I'm Still Hanging Around...

Economics 113 Final Exam

Identifications: do all; identify and explain their significance in American economic history (1/3 of exam):

1. The Cold War
2. Keynesian economics
3. Social Security
4. The productivity speedup of the 1990s
5. The Phillips Curve
6. Teachers, nurses, waitresses, secretaries…
7. National Labor Relations Act (NLRA) and National Labor Relations Board (NLRB)
8. Henry Ford
9. Hacienda
10. GATT (General Agreement on Tariffs and Trade)/WTO
11. Mississippi-Missouri-Ohio River System
12. Canal Building Boom
13. Fugitive Slave Law
14. Sharecropping
15. OPEC (Organization of Petroleum Exporting Countries)
16. Chinese exclusion act
17. The Great Compression (of the income distribution)
18. Alexander Hamilton
19. The Stock Market Crash of 1929
20. Paul Volcker

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Short Answers: do 6 of 9 (1/3 or exam):

1. The past third of a century has seen, first, a significant slowdown in productivity growth (leading to a great deal of worry about whether there are indeed rapidly-approaching “limits to growth”) and then a significant speed-up in growth (leading to a great deal of exuberance, irrational and otherwise, at the end of the 1990s). Briefly discuss the causes of both the productivity slowdown starting in the 1970s and the productivity speedup starting in the 1990s.

2. Why would an international trade economist like David Ricardo have thought that the United States would and should become a very large almost entirely agrarian civilization--a giant Canada? It was clear by 1900 that David Ricardo was wrong? Why was he wrong?

3. How was land distributed by the federal government to farmers moving westward in the nineteenth century? What impact did this system of land distribution have on the economy?

4. Was pre-Civil War American slavery profitable? Was it efficient?

5. What, in your view, were the most important causes of the Great Depression? Why haven't they--or equally destructive factors and events--been repeated?

6. Briefly summarize the role played by tariffs and quotas in American economic history.

7. What was the Marshall Plan? Was it important?

8. What were the major components of the New Deal? What were the major components of the Great Society?

9. Why is the United States less of a social democratic country than the countries of northwest Europe? Is this divergence a good thing or a bad thing?

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Essays: do one (1/3 of exam):

1. Sketch the economic role of African-Americans in the United States from colonial times to today. What were the major factors and processes that kept African-Americans relatively poor over the past three centuries? To what extent are these processes still operating today? And, in your view, how much longer is the shadow cast by past discrimination likely to last?

2. Why are business cycles these days smaller than they were in the late nineteenth century or during the Great Depression?

3. What reasons are there to think that the role of the federal government will grow further in the next half century? What reasons are there to think that the growth of the federal government in the past 80 years has carried it beyond its sustainable size, and that its size will decline in the next half century?

4. Outline the economic role played by immigration to America since 1492.

Econ 113: American Economic History: Mock Final Exam

Identifications: do all (1/3 of exam):

1. The Cold War against the Soviet Union.
2. The Federal Reserve
3. Keynesian economics
4. Medicare and Medicaid
5. Social Security
6. GATT (General Agreement on Tariffs and Trade)/WTO
7. Productivity slowdown
8. Phillips Curve
9. Gilded Age
10. Teachers, nurses, waitresses, secretaries…
11. Mass production
12. Freely-available land
13. 1492
14. National Labor Relations Act (NLRA) and National Labor Relations Board (NLRB)
15. Henry Ford
16. Gold Standard
17. Encomienda
18. Navigation Acts
19. Cotton Gin
20. Glorious Revolution (in Britain)
21. Mississippi-Missouri-Ohio River System
22. American System of Manufactures
23. Canal Building Boom
24. Middle Passage

Short Answers: do 4 of 6 (1/3 or exam):

1. The past third of a century has seen, first, a significant slowdown in productivity growth (leading to a great deal of worry about whether there are indeed rapidly-approaching “limits to growth”) and then a significant speed-up in growth (leading to a great deal of exuberance, irrational and otherwise, at the end of the 1990s). Briefly discuss the causes of both the productivity slowdown starting in the 1970s and the productivity speedup starting in the 1990s.

2. Why did the European settler population in what was to become the United States grow so fast in the two centuries after 1600? Why were there so few indigenous inhabitants to resist the occupation of the land that was to become the United States by European settlers?

3. Why would an international trade economist like David Ricardo have thought that the United States would and should become a very large almost entirely agrarian civilization--a giant Canada? It was clear by 1900 that David Ricardo was wrong? Why was he wrong?

4. The story of the United States is one of extraordinary economic growth—the United States today is still, by a substantial margin, the most productive economy in the world. Which factor would you assess as most important of all in driving U.S. economic success? Why?

5. Why did Alexander Hamilton (and others) believe that America's national debt could, under the right circumstances, be a national blessing?

6. In your view, is U.S. economic policymaking today still shaped by the memory of the Great Depression and a fear of another such, or has the memory died away so far that it is no longer a serious consideration?

Essays: do one (1/3 of exam):

1. Outline the major changes in the economic role of women in America in the twentieth century. Draw up a balance sheet: in your estimation, which changes have been broadly good? Which changes have been broadly bad?

2. Why was the Great Depression the only great depression that the U.S. has suffered? What are the chances that the U.S. will suffer another economic catastrophe like the Great Depression in the next half century?

3. Sketch the economic role of African-Americans in the United States from colonial times to today. What were the major factors and processes that kept African-Americans relatively poor over the past three centuries? To what extent are these processes still operating today? And, in your view, how much longer is the shadow cast by past discrimination likely to last?

4. The federal government today plays an enormous role in the economy. Outline what that role is, and how it has grown since independence. Assess what pieces of the federal government's role in the economy are positive and what pieces are negative.

Paper Topic 3: Baker's The United States since 1980

Dean Baker writes the economic history of the United States since 1980 from a rather strident and somewhat shrill left-wing point of view. Do you buy it? That is, decide whether you are more in agreement or disagreement with the political views that Dean Baker uses as an interpretive lens to understand U.S. economic history since 1980. Then, in 1000-2000 words, either:

1. argue--with examples and illustrations--that Dean Baker convincingly makes the case for his interpretation.
2. argue--with examples and illustrations--that Dean Baker's political interpretive lens is hopelessly flawed because it omits or misrepresents absolutely key factors and phenomena.

No hedging please! Pick a side!

Economics 113 Midterm: November 7

Economics 113 Midterm: American Economic History: November 7

(A) One-Sentence Identifications (40 points): Briefly state the importance of each of the following people/places/things/concepts for American economic history since 1890 or so. A fgood strategy is to tie each ID into one or more of the major factors of production: land, labor, capital, technology, and institutions:

Morrill land grants; George C. Marshall; NIRA (National Industrial Recovery Act); GI Bill; Gilded Age; William Jennings Bryan; Bretton Woods; Brown v. Board of Education of Topeka, Kansas; UAW (United Auto Workers); U.S. Steel; typhoid; /nurses/secretaries/teachers/house cleaners/cooks and waitresses/; NWLB (National War Labor Board); immigration; Henry Ford; Crash of 1929; Federal Reserve; Social Security; Herbert Hoover and balanced budgets; GATT.

(B) One-Paragraph Discussions (40 points): Write one paragraph (three to six sentences) answering each of the following questions:

1. Why did the distribution of income among white male Americans become so much more equal between the 1920s and the 1960s?
2. What role did the United States play in putting western Europe on the right economic track (or a right economic track) in the years after World War II?
3. Why was America so successful and efficient as a producer of manufactured goods in the first half of the twentieth century?
4. What are the arguments for the belief that the high level of stock prices in August-September 1929 reflected justified if optimistic confidence in the future of the American economy? What are the arguments against?
5. Why do Alesina, Glaeser, and Sacerdote believe that racial divisions are the most important cause of the difference in the size of the welfare state between the United States and western Europe? Do you think they are right? Why?

(C) Essay: Write an essay on one of the two following topics, or do the exercise at 3 below (40 points):

1. Outline the major changes in the economic role of women in America in the twentieth century. Draw up a balance sheet: in your estimation, which changes have been broadly good? Which changes have been broadly bad?

2. The Great Depression and the political reaction to it changed the American economy. How did these change the American economy? To what extent were the changes permanent?

3. Start with the simplest possible Keynesian model of the economy:

Y = C + I; production Y equals consumption C plus investment I

C = c_yY; consumption C is a constant fraction c_y of income Y

* Solve for Y as a function of the marginal propensity to consume c<sub>y</sub> and investment I. 
* If the marginal propensity to consume c<sub>y</sub> were to fall from 0.75 to 0.5, what would you expect to happen to the size of fluctuations in Y if fluctuations in I remained of the same magnitude? 
* Between the pre-WWII era and the recent past, the marginal propensity to consume had fallen from 0.75 to 0.5, and yet the size of fluctuations in Y had fallen by three-quarters. What would you conclude about the changing size of fluctuations in investment I? 
* Four major factors can be listed as contributing to the relative smallness of the business cycle today: increasing ability to borrow which means that consumption spending no longer tracks income as closely; the government’s progressive tax system which means that fluctuations in national income do not immediately create equal fluctuations in personal income; less of a business tendency to panic; and better monetary policy which reduces the size of fluctuations in interest rates that disturb investment spending I. Roughly, how much of the decline in the business cycle can be attributed to the first two factors, and how much to the last two?

Mock Second Midterm: Econ 113: American Economic History: Fall 2007

(A) One-Sentence Identifications: Briefly state the importance of each of the following people/places/things/concepts for American economic history (40 pts):

Henry Ford; Crash of 1929; New Deal; Bretton Woods; Gold Standard; General Motors; Jim Crow; National Industrial Recovery Act; National Labor Relations Act; Civil Rights Act of 1964; Plessy v. Ferguson; John Maynard Keynes; Milton Friedman; Mass Production; World War II; Federal Reserve; Morrill Land Grant Colleges; Gilded Age; Wage Discrimination; Sharecropping.

(B) One-Paragraph Discussions: Write one paragraph (three to six sentences) answering each of the following questions (40 pts):

1. How was America different from other more-or-less equally developed countries in sending its children to high school in the first half of the twentieth century?
2. What role did the stock market crash of 1929 play in bringing on the Great Depression of 1929-1941?
3. Why did the distribution of income among white male Americans become so much more equal between the 1920s and the 1960s?
4. Chicago-school economists tend to argue that large-scale persistent discrimination has small economic effects unless it is supported and enforced by the government. Do you think this is accurate?
5. What role did the United States play in putting western Europe on the right economic track (or a right economic track) in the years after World War II?

(C) Essay: Write an essay on one of the two following topics (40 pts):

1. What, in your view, are the similarities and differences in economic discrimination against women and against African-Americans since 1865? To what extent is it helpful and insightful to view these two phenomena as analogous? To what extent is it misleading and destructive?

2. The Great Depression and the political reaction to it changed the American economy. How did these change the American economy? To what extent were the changes permanent?

Great Depression II: Economics 113: October 8, 2007

The Great Depression II: Keynes and Friedman on the economics:

http://j-bradford-delong.net/2007_ppt/20071008_113_ppt.ppt
http://j-bradford-delong.net/2007_mov/20071008_113_ppt.mov
http://j-bradford-delong.net/2007_audio/113_8_10_07.mp3

Problem Set 3

Problem Set 3 is here: http://j-bradford-delong.net/2007_pdf/20071008_ps3_113.pdf

The Great Depression: Economics 113 (Audio)

The Great Depression: Economics 113 (Audio): American Economic History Lecture for October 3, 2007:

How did the world slide into the Great Depression anyway?

Audio: http://j-bradford-delong.net/2007_audio/113_10_03_07.mp3

Handout: http://delong.typepad.com/aeh/2007/10/the-great-depre.html

The Great Depression...

In the twentieth century measured U.S. real GDP per worker increased by nearly 300%. True real GDP per worker probably increased by about one percent per year more--for a total growth over the century of some 700%, perhaps. The fall in the work year with the spread of the eight-hour day, the paid vacation, and part-time work means that total output per workhour probably grew by 850%.

Relative to this--very strong--long- run growth, all of the business cycles of the nineteenth and twentieth centuries are small potatoes. Only the Great Depression is powerful enough to cause any substantial interruption of long-run growth.

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Audio: http://j-bradford-delong.net/2007_audio/113_10_03_07.mp3

Economics 113 Midterm: American Economic History: October 1

A. One-Sentence Identifications (40 points): Briefly state the importance of each of the following people/places/things/concepts for American economic history. A fgood strategy is to tie each ID into one or more of the major factors of production: land, labor, capital, technology, and institutions.

J.P. Morgan, Leland Stanford, International Harvester, Alexander Hamilton, Eli Whitney, smallpox, Hernan Cortez, Erie Canal, Northwest Ordinance, Louisiana Purchase, Gilded Age, 1808, Mississippi River, Bessemer steel-making process, Potato Famine, Chinese Exclusion Act, Merrill Land Grants, Tariff of Abominations, American system of manufactures, Triangle Trade.

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B. One-Paragraph Discussions (40 points): Write one paragraph (three to six sentences) answering each of the following questions:

1. Engerman and Sokoloff's discussion of the contrast between North America and Latin America divides colonies into types--three major types, in fact. What do they think the major types are? What difference does it make what type a colony is?
2. Were there important economic causes of the Civil War? If there were, what were they?
3. Why was America a relatively equal country (for white guys) until after the Civil War? Why did it then become an unequal country in the next half-century?
4. British observers before the Civil War wrote back that America was a labor-scarce economy. What difference did they think this scarcity of labor made for American economic development before the Civil War?
5. Did the roles of natural resources and of education as key factors driving American econonic growth remain the same from 1776 to 1929? If not, how did their roles change?

---

C. Essay: Write an essay on one of the two following topics (40 points):

1. As of the start of the twentieth century, the American economy was almost universally regarded as successful. What were the major aspects of this economic success? Why did they come to pass? Why did so much go so right for the American economy?

2. For those of us who have read a few too many alternate history novels: How would the U.S. economy have been different in 1860 if the U.S. government had followed a zero-tariff policy since 1787?

Industrializing America: American Economic History: Econ 113

From 1865 to 1929: Finance, Capital, Labor, Technology

September 24 Large Audio File. Streaming Audio File.

September 26 Large Audio File.

Growth, Industrialization, Wages, and Profits

Labor: Education and Immigration:

• Immigration

  • Gains to immigrants
  • Gains to native-born consumers
  • Gains to native-born capital owners
  • Losses to native-born unskilled
  • Francis Walker counterfactual...

• Education

  • Technical education
  • Elementary education
  • High-school education
  • Homesteading the information frontier after 1890...

Capital, Finance, and Technology Intermixed:

• John D. Rockefeller and company
• Standard Oil
• Capital and finance
• Winner-take-all--or winner-take-much--economies
• Technology and capital
• Dilemmas of corporate control
• J.P. Morgan and company...

From Shafts to Wires:

• Newcomen and Watt
• Edison and Tesla
• Shafts
• Wires
• Mass production
• "Fordism"
• IWW

Mock Midterm: Econ 113: American Economic History: Fall 2007

(A) One-Sentence Identifications: Briefly state the importance of each of the following people/places/things/concepts for American economic history:

Henry Hudson; Christopher Columbus; Mississippi River; cotton gin; Sutter's Mill; tobacco; corn; smallpox; Boston; Philadelphia; Alexander Hamilton; Andrew Jackson; Erie Canal; New York Central Railroad; Central Pacific Railroad; Ohio River; beaver fur; interchangable parts; tariff; New Orleans.

(B) One-Paragraph Discussions: Write one paragraph (three to six sentences) answering each of the following questions:

Why does Jared Diamond believe that inventing agricuture was a very bad thing? Why couldn't the Aztecs and the Incas repel the Spanish invasions? How would the U.S. economy have been different in 1860 if the U.S. government had followed a zero-tariff policy? How would the U.S. economy have been different in 1860 if the cotton gin had never been invented? Were there important economic reasons for the American Revolution?

(C) Essay: Write an essay on one of the two following topics:

1. What, in your view, are the main important themes of pre-1865 American economic history? What is the most important theme? And why?
2. As of the middle of the nineteenth century, the American economy was almost universally regarded as successful. What were the major aspects of this economic success? Why did they come to pass--why did so much go so right for the American economy?

The Post-Civil War United States

PLACEHOLDER

Audio: http://www.j-bradford-delong.net/2007_audio/113_9_19_07.m4a

Streaming Audio

U.S. and Canada vs. Latin America Lecture

What Has Happened in the New World?

Four areas:

• U.S.-Canada
• Mexico-Brazil
• Caribbean + slave Brazil
• southern cone

U.S.-Canada very rich: rest not so. Why?

• $80K per worker per year in the U.S. $10K-$20K more common in Latin America..
• All have (or had) favorable land-labor ratios after conquest and plagues...
• All had abundant natural resources...
• Southern cone keeping up with North America until the 1930s--I will not deal with that today...
• Two lines of explanation: problems of slavery and ex-slavery; problems of mainland Latin America

The Puzzle: We Explain United States Growth as Markets + Resources = Accumulation + Technology

• But what happens when we go to Latin America?
• From the perspective of 1700, the United States is a marginal new-world economic area
• Yet Latin America today lags far behind the United States and Canada
• To explain U.S. vs. Latin America, you need "institutions"
  • What are institutions?
  • Where do institutions come from?

Three Theories:

• "Legal origins" (Shleifer et al.)
• "Tropical diseases and grab and run" (Acemoglu et al.)
• Engerman and Sokoloff
  • A historians' story--which means, "it's complicated"
  • Legal origins is broadly wrong--or at least overemphasized
  • Grab-and-run due to tropical diseases also greatly overemphasized
  • Factor endowments
    • Indigenous population oppression
    • Resource curse--slavery
    • Key paragraph: "The British colonies in the New World evolve quite distinct societies and sets of institutions.... The majority that failed shared certain salient features with Latin America.... [These features] allowed for average standards of living that were high at that time... [but] less well suited for the realization of sustained economic growth..."

The Details

The Poverty of Riches:

• All "began" with an abundance of land relative to labor
• European migrant standards of living 2x or more those in Europe throughout the colonial period--$1000 of today's dollars per capita per year
• European standards of living 4x those in Europe in slave-staple-hacienda colonies--$2000 of today's dollars per capita per year
• Staple crops: sugar, coffee, rice, tobacco, cotton easily produced by slave labor in the Caribbean and Brazil. Haiti 3x as rich as United States in 1790?
• Extensive indigenous populations in Mexico and Peru
• Less than 20% of Mexican, Peruvian population "white" as of 1800
• Family farms on the North American mainland. Why?
  • Swann River
  • Slavery in the Connecticut River valley
  • Slavery in New York City *80% of American population "white" as of 1800
• "Non-white" a proxy for savage economic (and political!) inequality
• Economic and political equality a very good thing

Advantages of Equality:

• Land policy
• Immigration policy
• (Mercantilist) trade policy
• Commerce

• Middle-class demand for manufactures: "American system"

• Timing of industrialization

• Education
• Other human capital: familiarity with technology or markets

Paper Topic 1: Bellamy's Looking Backward

Edward Bellamy is a Boston social reformer writing at the very end of the ninteenth century. Even though the America of his day is much richer than the America in which he was born, he sees major flaws in American society. He also, however, sees a great deal of hope.

React to Edward Bellamy's Looking Backward in 500 words (i.e., papers of less than 450 words or more than 800 words will received grouchy readings). Consider some of the following:

• What are the major flaws that Bellamy sees in America of his day?
• What does Bellamy think of markets?
• What does Bellamy think of immigration?
• What does Bellamy think of technology?
• What does Bellamy hope the future will hold in the way of technology?
• What does Bellamy hope the future will hold in the way of social organization?
• What does Bellamy hope the future will hold in the way of economic institutions?
• What are Bellamy's major fears?
• Which of his hopes and fears have been realized over the course of the past century?

Due at the midterm on October 1.

General Lecture and Other Audio File Archives

For those wanting an easy download of mp3 and m4a files, general Berkeley lecture and other recorded audio archive files for this fall will be at:

http://www.j-bradford-delong.net/2007_audio/

And the [Civil] War Came...

Lecture Notes for September 12

Main Headings:

• Cleanup from last lecture

  • Abraham Lincoln
  • The march south and the radicalization of northern opinion

• Who were the real slavelords? http://delong.typepad.com/113_F07/20070910_cuibono.pdf

• Notes on problem set 2: http://delong.typepad.com/113_F07/20070910_ps2.pdf
• From the War for the Union to the War Against Slavery
• Reconstruction: the terrorists win in the end
• Effect on American politics:
  • Since Andrew Jackson, two great parties--the party of property and opportunity; the party of solidarity and safety nets.
  • Both useful (usually); tension healthy (usually)
  • After 1865, for 50 years lots of white northerners who vote Republican because Lincoln freed the slaves
  • After 1865, for 130 years lots of white southerners who vote Democratic because Lincoln freed the slaves
  • Now over, but a strange wild ride while it was going on

---

Big Quotes:

• Abraham Lincoln, 1858: I am not, nor ever have been, in favor of bringing about in any way the social and political equality of the white and black races, that I am not nor ever have been in favor of making voters or jurors of negroes, nor of qualifying them to hold office, nor to intermarry with white people ... I as much as any other man am in favor of having the superior position assigned to the white race. I say upon this occasion I do not perceive that because the white man is to have the superior position the negro should be denied every thing. I do not understand that because I do not want a negro woman for a slave I must necessarily want her for a wife. My understanding is that I can just let her alone...

• Abraham Lincoln, 1858: I agree with Judge [Stephen] Douglas [that the Negro] is not my equal in many respects-certainly not in color, perhaps not in moral or intellectual endowment. But in the right to eat the bread, without the leave of anybody else, which his own hand earns, he is my equal and the equal of Judge Douglas, and the equal of every living man... http://en.wikipedia.org/wiki/Lincoln-Douglas_debates_of_1858

• Frederick Douglass, 1876: We are here to express, as best we may, by appropriate forms and ceremonies, our grateful sense of the vast, high, and preeminent services rendered to ourselves, to our race, to our country, and to the whole world by Abraham Lincoln.... He was preeminently the white man’s President, entirely devoted to the welfare of white men. He was ready and willing at any time during the first years of his administration to deny, postpone, and sacrifice the rights of humanity in the colored people to promote the welfare of the white people of this country.... I concede to you, my white fellow-citizens, a pre-eminence in this worship at once full and supreme. First, midst, and last, you and yours were the objects of his deepest affection and his most earnest solicitude. You are the children of Abraham Lincoln. We are at best only his step-children; children by adoption, children by forces of circumstances and necessity.... His great mission was to accomplish two things: first, to save his country from dismemberment and ruin; and, second, to free his country from the great crime of slavery. To do one or the other, or both, he must have the earnest sympathy and the powerful cooperation of his loyal fellow-countrymen. Without this primary and essential condition to success his efforts must have been vain and utterly fruitless. Had he put the abolition of slavery before the salvation of the Union, he would have inevitably driven from him a powerful class of the American people and rendered resistance to rebellion impossible. Viewed from the genuine abolition ground, Mr. Lincoln seemed tardy, cold, dull, and indifferent; but measuring him by the sentiment of his country, a sentiment he was bound as a statesman to consult, he was swift, zealous, radical, and determined... http://www.teachingamericanhistory.org/library/index.asp?documentprint=39

---

Lincoln First Inaugural; Lincoln Second Inaugural

Northern Industry/Slavery Lecture Notes: Econ 113: American Economic History: Fall 2007

Industry

Alexander Hamilton: Debt, Banks, and Manufactures.

U.S. Revolutionary War hyperinflation: $241 million continental dollars worth $1 million gold dollars by the end of the war.

Value of Revolutionary War debt tripled as debt assumption was discussed and debated.

• Alexander Hamilton believed that an America which owed lots of rich merchants lots of money--an America that "assumed" the debts the states had run up during the Revolutionary War and were not likely to pay--would be a stronger and better America. Why did he believe this?

Megasthenes: the coming of cotton to the Mediterranean...

David Ricardo: Why didn't the U.S. become one big unindustralized Canada?

• Answer: the tariff

Could the tariff have been good for the country?

• Answer--yes, if the infant industry argument holds.

What is the infant industry argument?

• There has to be some benefit--external to the firm and to the worker--from production.
• Future productivity has to be positively influenced by past production in order to make it beneficial in the long run to upset the Ricardian pattern of comparative advantage.
• The infant industry argument is plausible, but not certain, for the case of U.S. textile manufacture.
• Even so, it's not good for the cotton-exporting tariff-paying south.

The history of the cotton textile business: Samuel Slater, Francis Cabot Lowell, Lowell Massachusetts, et cetera...

Peter Temin's article: the American system:

• The Crystal Palace exhibition
• What is special about American industry
• Eli Whitney
• Interchangeable parts
• The "American System"
• Resource-using technological style.

Consequences for post-Civil War industrialization...

Slavery

The Slave Trade: Guns. Slaves. Sugar/molasses/tobacco/cotton. Very profitable. Extraordinarily inhumane

Adam Smith expected slavery to come to a rapid end after 1776.

• Inefficient--slave has no incentive
• An incentive-compatible system produces a larger economic pie
• And people can decide on a system better for everyone--a system that's still unequal, but not as brutal and vicious

Adam Smith was wrong. Why?

What maintains slavery?

• Extreme cheapness of slaves--makes vicious discipline credible
• Extreme control--slaves cannot run away
• Extreme monitoring--easy to see if slaves are working hard
• Caesar; classical Roman slavery; Arabic slavery; mamelukes

The American South

• Quick end of indentured servitude
• The assumption that everyone black was a slave makes control easy
• Plantation staple crops make monitoring easy?
• Cheapness? That became a problem after 1807

Still slavery persisted; Domar's argument; free land made it impossible to strike the emancipatory bargain--hence the coming of the Civil War...

The Persistence of Southern Slavery the Result of:

• Free land (which makes emancipatory bargains unworkable) (Marx: Swann River Colony)
• Cotton gin (which gives you another staple crop you can grow for which monitoring is easy)
• Geographical distribution of slavery:
  • Plantation south--slavery
  • Mountain south--not much slavery
  • North--no slavery
  • Border state antislavery--Cassius Clay--get rid of the "Peculiar Institution"--no desire to free African Americans
  • The northern desire to see slavery set on the "course of ultimate extinction"

Ulpian: Roman jurist: Cui Bono? Who Benefits? Who benefitted from the crime of American slavery?

Do comparative statics with a counterfactual world in which cotton was grown using free labor rather than with slaves...

That is the "cotton is king" problem set that will be handed out on Wednesday, and will be due on the 19th

My Eyes Are Bigger than My Stomach

Or my mouth is smaller than my eyes. Or something.

The canonical course on American economic history spends:

• one week on the Spanish conquest
• one week on Amerindians
• one week on colonial settlement
• one week on the American Revolution
• one week on Alexander Hamilton
• one week on agriculture in the Old Northwest
• one week on New England manufactures
• one week on slavery
• one week on the Civil War
• one week on the Gilded Age
• one week on Populism
• one week on Progressivism
• one week on immigration
• one week on the Roaring Twenties
• one week on the Great Crash and the Great Depression
• one week on the New Deal

And we have overshot the end of the semester by three weeks.

I have students who have never lived under any president not named "Clinton" or "Bush," students who graduated from elementary school in 1998.

So I am going to try to greatly compress the first half of the course so as to make space for post-WWII economic history: 1865 by week four!

Northern Agriculture Lecture: Econ 113: American Economic History: Fall 2007

Notes: Northern Agriculture Lecture: Econ 113: American Economic History: Fall 2007

Trying to do something different: a very quick rush through pre-Civil War U.S. economic history to create space in the syllabus to cover post-WWII history.

This week and next week spent trying to do four things:

• Northern agrarian westward expansion
• Early industrialization as a result of the tariff
• Why did slavery--which people like Adam Smith thought was bad even for the slaveholder and was on the way out--grow and strengthen in pre-Civil War America
• The Civil War--600K dead, 600K maimed; could there have been a better way?

Smithian Growth

The United States--at least the northern United States--as Adam Smith's Utopia:

• Literate and entrepreneurial population
• Good legal infrastructure
• Market exchange
• Abundant land (means high output per worker)
• Free land (means high wages)

Constrast with Engerman and Sokoloff's picture of Latin America: populations to exploit and ways to exploit them create extreme inequality... which has poisonous consequences....

And the colonial economy prospers...

---

Population

1600	1,000
1640	24,000
1680	150,000
1700	260,000
1730	650,000
1780	2,700,000

---

Output...

How to even claim to measure output? Nevertheless, we have heroic guesses...

Year	Y/Pop in 2004$
1710	$800
1775	$1,100
1840	$1,800
1929	$8,300
2004	$40,000

---

Accumulation

Alice Hanson Jones... data from estates...

Top 20% of households have about 60% of wealth...

Median Wealth Estimates as of 1774:

Region	Land	Slaves	Other
New England	$2800	--	$1200
Middle States	$4800	--	$3200
South	$4000	$1600	$2400

Note that slaves were fully a third of southern wealth, according to AHJ... Big skew in slave ownership...

---

Politics

Year	Settlement/Event
1607	Jamestown
1608	Quebec
1620	Plymouth
1624	New Amsterdam
1630	Massachusetts Bay Company
1643	Swedesboro, Pennsylvania
1640-1660	English Revolution
1689	"Glorious Revolution" in England
1754-1763	French and Indian War

Mercantile System...

---

American Revolution...

National Population:

1790: 3.9M people, $1100 1840 17.1M people, $1800 1860 31.4M people, $2000

% urban: 5% 1790, 11% 1840, 20% 1860.

"Urban" means "2500 or more"...

City sizes: 1790: NY 33, PH 29, BO 18; 1840: NY 313, Balt 102, NO 102, PH 93; 1860 NY+Brooklyn 1081, PH 565, Balt 212.

Why this pattern? Transport: Erie Canal, C&O Canal, Mississippi-Missouri-Ohio river system. The coming of the railroad to keep NO from surpassing NY... New York Central RR, Pennsylvania RR...

SF in 1860: 15th among American cities with 57K people...

Conquest: Northwest territories, inland southeast and War of 1812, Louisiana Purchase, Florida, Texas, Mexican Cession, Oregon Territory, Alaska "Seward's Folly", Hawaii. Conquest keeps land abundant, hence keeps wages high.

Relatively fast increase in output per capita in the U.S. before 1860. A puzzle that growth was so fast. The puzzle set out for your inspection... Implication: an enormous increase in effective land and natural resources per worker from 1790 to 1860. Population grows. Accessible natural resources grow significantly faster... A handout on growth accounting, resources, and the pre-Civil War U.S.

Alexander Hamilton: Debt, Banks, and Manufactures.

U.S. Revolutionary War hyperinflation: $241 million continental dollars worth $1 million gold dollars by the end of the war.

Value of Revolutionary War debt tripled as debt assumption was discussed and debated.

• Alexander Hamilton believed that an America which owed lots of rich merchants lots of money--an America that "assumed" the debts the states had run up during the Revolutionary War and were not likely to pay--would be a stronger and better America. Why did he believe this?

Megasthenes: the coming of cotton to the Mediterranean...

Format of the first midterm exam...

David Ricardo: Why didn't the U.S. become one big unindustralized Canada?

Answer: the tariff

Could the tariff have been good for the country?

Answer--yes, if the infant industry argument holds.

What is the infant industry argument? There has to be some benefit--external to the firm and to the worker--from production. Future productivity has to be positively influenced by past production in order to make it beneficial in the long run to upset the Ricardian pattern of comparative advantage.

The infant industry argument is plausible, but not certain, for the case of U.S. textile manufacture.

Even so, it's not good for the cotton-exporting tariff-paying south.

The history of the cotton textile business: Samuel Slater, Francis Cabot Lowell, Lowell Massachusetts, et cetera...

Peter Temin's article: the American system

The Crystal Palace exhibition What is special about American industry Eli Whitney Interchangeable parts The "American System" Resource-using technological style.

Consequences for post-Civil War industrialization...

(Large) Audio File

Additional Books for 113

Additional books for Econ 113:

• Edward Bellamy, Looking Backward
• Peter Temin, Did Monetary Forces Cause the Great Depression?
• Eichengreen, Globalizing Capital
• Baker, The United States since 1980

Background in American History Needed?

Marty Olney recommends:

For those unfamiliar with U.S. history, John Faragher et al (2005), Out of Many (New York: Prentice-Hall): volume 1 volume 2

That seems like a good idea to me.

Colonization Lecture: August 29, 2007: Econ 113: American Economic History

Notes: Colonization Lecture: Econ 113: American Economic History: Fall 2007

During the pre-industrial early-modern period, 1400-1700, high Eurasian civilizations projected power across oceans...

• I. Ming China--Zheng He's prestige voyages

  • 25 K people in an armada of 100 ships
  • Compare to British navy in mid-eighteenth century: 50 K
  • Bring back oddities--giraffe--Qilin--King of Ceylon

• But...

  • Expensive
  • Does nothing to challenge the view that China is the Central Country
  • Politics leads to shutting-down of Ming Dynasty transoceanic exploration
  • Under the Qing the sea was regarded as a place from which danger came
    • Pirates
    • Ming pretenders
    • Managing the gentry elite in the Yangzi valley and the rest of the Chinese southland was hard enough
      • Peach-blossom fan

• II. Seaborne Empire

  • Portugal--Holland--Britain (with France trying to get into the game)
  • Invade the Indian ocean
  • Sink everything that moves
  • Acquire monopoly of ocean traffic
  • Build bases
  • Trade--from a highly advantageous position as a monopolist

• Holland in late seventeenth century:

  • Maybe 50 K people directly and indirectly engaged in East India trade (out of a total population of 4 million)
  • 5% of Dutch GDP
  • Healthy, but not overwhelming effect on the Portuguese, Dutch, and British economies
    • But did have first-order effects on domestic politics
    • Then in the late 1800s the British East India Company makes its bid for power in Inda ... but that carries us too far from our topic

• III. Conquest and Occupation: Spain in the New World

  • Conquest and plunder
  • Encomienda/hacienda/mining--creation of an elite ruling class
  • Largely uninterested in what we would see as economic development
    • "To serve God, to win glory, and to grow rich"
  • Nevertheless, over time things changed: no longer Spanish would-be aristocrats ruling over Amerindian serfs

• IV. Slave Raiding

  • The slave trade in historical perspective
    • Gaius Julius Caesar

  • Firearms change things

    • Europeans in West Africa, Middle Easterners in East Africa
    • Trade guns for slaves on the African coast
    • Kings to whom you have sold guns than capture slaves
    • Ship slaves to sugar islands the turn them into a labor force
    • Need (a) firearms, (b) and (c) plantation agriculture, plus (d) a middle class market
    • Similar but much less terrible things going on in eastern Europe at the same time--the "second serfdom"

  • Terrible consequences for African civilizations...

  • Extraordinary potential profitability of slavery: some rough numbers *Consider a small slave ship: 150 slaves--100 survive--surplus value: 100 x 1/4 x 10 yrs = 250 man-years of value
    • Amortized cost of ship: 25 man-years
    • Cost of crew (2 voyages a year): 10 man-years
    • Cost of trade goods (guns): 15 man-years
    • A 5-1 ratio of revenue to cost--but exceptional hazards
      • Cost to your conscience

• V. Plantation Agriculture on the Sugar Islands

  • Use slaves to grow plantation crops
    • Coffee, sugar, tobacco [chocolate, cocaine?]
    • Digression on pests and parasites
  • Extremely nasty social formations on the sugar islands
  • Extremely profitable.

• VI. Small-Farmer Settlement

  • Religious motive
  • Company profit motive (except for the Hudson's Bay Company, didn't work)
  • Get-a-farm motive

Digression on Silver and Spain
• Allows Carlos V and Felipe II-IV to fight the Wars of the Counterreformation
• Deindustrializes Spain
• In the long run, Spain's American empire a source of wealth--and a cultural and industrial curse
• Miguel de Cervantes and Don Quixote

The sixth--small farm settlement--was, to contemporaries, the least attractive--it was what you did when you couldn't do anything else.

The sixth was also, in the long run, the most productive as far as economic growth is concerned.

---

Smithian Growth

The United States--at least the northern United States--as Adam Smith's Utopia:

Y = F(A, N/L, H/L, K/L)

• Literate and entrepreneurial population
• Good legal infrastructure
• Market exchange
• Abundant land (means high output per worker)
• Free land (means high wages)

Constrast with Engerman and Sokoloff's picture of Latin America: populations to exploit and ways to exploit them create extreme inequality... which has poisonous consequences....

And the economy prospers...

---

Population

1600	1,000
1640	24,000
1680	150,000
1700	260,000
1730	650,000
1780	2,700,000

---

Output... How to even claim to measure output?

Nevertheless, we have heroic guesses...

Year	Y/Pop in 2004$
1710	$800
1775	$1,100
1840	$1,800
1929	$8,300
2004	$40,000

---

Accumulation

Alice Hanson Jones... estates...

Top 20% of households have about 60% of wealth...

Median Wealth Estimates as of 1774:

Region	Land	Slaves	Other
New England	$2800	--	$1200
Middle States	$4800	--	$3200
South	$4000	$1600	$2400

Note that slaves were fully a third of southern wealth, according to AHJ... Big skew in slave ownership...

---

Politics

Year	Settlement/Event
1607	Jamestown
1608	Quebec
1620	Plymouth
1624	New Amsterdam
1630	Massachusetts Bay Company
1643	Swedesboro, Pennsylvania
1640-1660	English Revolution
1689	"Glorious Revolution" in England
1754-1763	French and Indian War

Mercantile System...

---

Audio File

Overheads for August 29, 2007

Colonization

Source: Wikipedia.

---

Source: Martha Olney.

---

Source: Census via Walton and Rockoff and Martha Olney.

August 27, 2007: American Economic History: UC Berkeley: Lecture Notes

4:10:

Good afternoon. This is economics 113--American Economic History. I am Brad DeLong. The section leaders--GSIs--are Vikram , Marc Gersen, and Adam Jack Gomolin.

We are going to try to save trees this year. So instead of handing out a 30-sheet packet, we are handing out one sheet with web addresses:

http://delong.typepad.com/aeh/: Course Website
http://delong.typepad.com/aeh/2007/08/logistics-econ-.html: Logistics
http://delong.typepad.com/aeh/2007/08/american-econom.html: Syllabus: Readings and Assignments

Throw everything up on the web for reference. But I am not a great fan of Powerpoints. Dim lights--people fall asleep. People don't take notes. We really don't understand that much about education. Best chance is when you are engaged in processing the information.

We are also administratively inept this semester. At the start of August, we in the economics department belatedly recognized that while we had scheduled this class and you had signed up for it, we had not assigned anyone to teach it. Hence a search for somebody qualified to teach this, pliable, and free to teach 4-5:30 MW. Hence me. But the interaction of this process with August vacations means that we are behind in our organization of this course.

Sections: M 9-10A, 71 EVANS; Tu 4-5P, 85 EVANS; W 8-9A, 310 HEARST MIN; Th 4-5P, 85 EVANS; F 2-3P, 5 EVANS; F 3-4P, 5 EVANS.

Economics 113 is an upper-division economics course in the study of the history of the U.S. economy that satisfies the political economy historical context requirement. We will survey over three hundred years of history, but inevitably focus more intensely on those incidents that the instructor finds particularly interesting. This is an economics course: we will spend most of our time looking at events, factors, and explanations, using economics to understand history and history to understand economics. Economics 113 must be taken for a grade if it is to be used toward the requirements for the political economy or the economics major.

My assignments are three: to talk, and to tell you what to read, and to try to get you to think. Your assignments are six: to come to lectures and listen, to contribute to section discussions, to take the exams, to do the problem sets, to write the papers, and to do the web assignments.

GRADING...

A word on the last: the web assignments. It is an experiment. It may be a total flop. You are guinea pigs and since you are guinea pigs I owe you a brief sketch of what I am thinking.

Let us back up for a second to the origins of the university in medieval Italy. The German Emperor Federico II has a problem, as you may suspect given that he is a German emperor and his friends call him Federico. 1000 miles as the crow walks from Hamburg to Palermo...

Needs judges, clerks, administrators...

When eight centuries ago years ago the emperor Federico II establishes the University of Naples and names Roffredo of Benevento as its Rector, he wants one thing: a steady supply of literate bureaucrats to work for him who had been taught that holy scripture and secular prudence both advise that emperors boss popes and not popes emperors. To that end Federico offers low-interest student loans and lavish promises of cushy government jobs to students who come to Naples. (And threatens to confiscate the property and imprison the parents of those who go to school out of state.)

Why? Books... Hand copying... printing... University stays, and lecture stays. But not enough active, not enough interaction...

Hence we are going to dip our toes into the water and experiment a little bit...

WEB ASSIGNMENTS...

LOGISTICS...

SYLLABUS...

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Now let's get going:

• Why care about American economic history?

  • Because we are here; it is important and interesting to know how and why "here" came to be.
  • Because America is special:
    • Special relative to other countries
      • At current exchange rates, six times as well-off as the world average, and thirty-six times as well-off as the bottom quarter.
      • At purchasing power parities, three times as well-off as the world average, and roughly seven times as well off as the bottom quarter.
        • Digression on differences between CER and PPP calculations
    • Special relative to the past
      • We have medicine.
      • We're not as hungry and malnourished.
      • We have many times the number of things: ten times? more?
    • The story of American economic history is a remarkable story: the most successful economic story ever. It's worth studying.
  • And you will learn how to apply some of the economic theory you are learning, and what it is good for.
  • And historical context is important: as baseline, as yardstick, as set of comparisons
    • Marx was wrong when he said that the more advanced presents to the less advanced an image of its own future
    • But the more advanced does present to the less advanced an image of what its present might have been

• Initial settlement

  • About 15000 years ago the ancestors of today's Amerindians found their way across the Bering Strait and into the Americas...
  • About 1492 Columbus showed up...
  • Catastrophe
  • Walton and Rockoff provide a background narrative to Amerindian civilizations, cultures, and the conquest of the Americas.
  • I want to talk about bigger patterns: what it all means--and to use four articles as springboards...
    • Jared Diamond (2000), "Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?" http://www.edge.org/3rdculture/diamond/diamondp1.html) ; (2002), "How to Get Rich" http://www.edge.org/3rdculture/diamondrich/rich_p1.html. Charles Mann (2002), "1491," Atlantic Monthly http://www.theatlantic.com/doc/200203/mann. Timothy Yeager (1995), “Encomienda or Slavery? The Spanish Crown's Choice of Labor Organization in Sixteenth-Century Spanish America.” Journal of Economic History 55 (December 1995): 842-59 http://links.jstor.org/sici?sici=0022-0507%28199512%2955%3A4%3C842%3AEOSTSC%3E2.0.CO%3B2-9.

• 30-100 million people in the Americas in 1490. Compare to 100-150 million each in Europe, China, India. Tenochtitlan at 100,000+ larger than Paris at 70,000.

• Corn miraculous: 40-to-1 yield ratio, compared to 5-to-1 for contemporary wheat or rye... but corn not nutritionally complete. People get short. Farmers all get short. And farming carries you across a mammoth organizational shift. Thugs with spears. Thugs with incense. Maya, Toltec, Mound Builders, Chimu, Inca, Aztecs

• Yet: Pizarro: 168 men. Cortez: 500 men.

• The Indians in Peru, Dobyns concluded, had faced plagues from the day the conquistadors showed up--in fact, before then: smallpox arrived around 1525, seven years ahead of the Spanish. Brought to Mexico apparently by a single sick Spaniard, it swept south and eliminated more than half the population of the Incan empire. Smallpox claimed the Incan dictator Huayna Capac and much of his family, setting off a calamitous war of succession. So complete was the chaos that Francisco Pizarro was able to seize an empire the size of Spain and Italy combined with a force of 168 men. Inca Empire: Smallpox: 1525. Typhus (probably) in 1546, influenza and smallpox together in 1558, smallpox again in 1589, diphtheria in 1614, measles in 1618. We're down to 5 million or so in 1600.

• Animals and diseases that cross the species barrier...

• Technological and organizational gradient: corn, potatoes, squash, beans, stone tools, no wheels, no big animals that are domesticable besides the llama...

• Why this big technological gradient? Two heads are better than one. And writing is really important. As I understood Diamond's agricultural argument, Eurasia's agricultural advantage had multiple causes. The multiple causes were indeed that Eurasia had "better" flora (for our long-run purposes: grains with larger seeds), but more importantly that Eurasia was bigger, and that because Eurasia runs East-West rather than North-South knowledge about effective agricultural techniques diffuses much more rapidly and successfully. Add all these reasons together and you can see why Eurasia is (still) the most densely populated region of the world, and why the world's diet is based on wheat, rye, rice, and their cousins.

• I thought that one of Diamond's points was that American Indians had done rather well--with corn and potatoes--even though the original flora was not that appetizing (have you ever seen a wild corn plant?). But two heads are better than one. Add Eurasia's large size coupled with easy diffusion along the East-West axis and "better" wild grains and it would have been extraordinary if New World agriculture had been more developed than Old World. Had the American Indians been given enough time, then even with low population densities they might have selectively bred and domesticated sumpweed. But their independent history was cut short in 1500...

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5:20: Geography Quiz

• Boston
• New York City
• Philadelphia
• Washington, DC
• Charleston
• Pittsburgh
• Chicago
• St Louis
• New Orleans
• San Francisco
• Los Angeles
• Erie Canal
• Ohio River
• Mississippi River
• Missouri River
• Lake Michigan
• Rocky Mountains
• Appalachian Mountains
• Rocky Mountains
• California gold fields

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Audio: http://web.mac.com/jbdelong/Brad_DeLongs_iWeb/Coffee_and_Tea_Audio_Podcasts/Entries/2007/8/27_Opening_Lecture%3A_American_Economic_History.html