Economic History of the United States
Economic History of the United States ECON 4524
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This 19 page Class Notes was uploaded by Bridie Batz on Friday October 30, 2015. The Class Notes belongs to ECON 4524 at University of Colorado at Boulder taught by Staff in Fall. Since its upload, it has received 8 views. For similar materials see /class/232143/econ-4524-university-of-colorado-at-boulder in Economcs at University of Colorado at Boulder.
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Date Created: 10/30/15
The West and Natural Resources US governments own around 775 million acres of land more than onethird of the total land area Alaska 359 million acres National Parks 71 million acres Forest ServiceBLM 191 million acres Native American and Tribal Trust lands 53 million The Pentagon 30 million acres Most of this land is in west of the 100th meridian Most of our minerals timber and oil come from these lands and much is leased for ranching A fundamental problem for each of these industries is the assignment of property rights Brief history of land settlement Should land policy benefit the Treasury Should land policy favor the small guy 1 Land Ordinance of 1785 auctioned land with a minimum acreage requirement of 640 acres and a price of 1 per acre paid in cash 1787 13 cash but balance in three months 1796 reservation price raised to 2 per acre 12 in 30 days and balance in a year 1800 acreage requirement dropped to 320 acres 1A in 30 days and balance in 3 years 1804 acreage requirement dropped to 160 acres 1820 reservation price dropped to 125 acreage requirement dropped to 80 and credit repealed 1832 acreage requirement dropped to 40 acres 1841 General PreEmption Act put a ceiling on maximum acreage to 160 acres and sales in cash 1854 Graduation Act lowered prices of land that had been auctioned but not sold 125 centsacre for land unsold for 30 years and 100acre on land unsold for ten years 1862 Homestead Act free maximum 160 5 year residency and improvement requirement 1877 Desert Land Act 640 acres at 125acre provided the settler irrigated 13 of it 1909 Enlarged Homestead Act 320 acres 5 year residency and improvement requirement 1916 Stock Raising Homestead Act 640 acres Post World War I US government no longer encouraged settlement with the exception of Alaska Impact of move towards low land price policy 1 Earlier western movement than would have been the case had land been sold at higher prices 2 Higher wages in the East 3 Some rent dissipation through the race for property rights The California Gold Rush Gold Discovered on January 24 1848 at Sutter s Mill Sutter had a land grant from Mexico and the rights to the minerals but 9 days later California belonged to the US No formal mineral law with respect to mining on public lands and little ability to enforce Prediction contained in a letter from Capt J L Folsom in 1848 to the War Dept All law both civil and military is at an end Among the mines and indeed most part of the country out of the villages no authority but that of the strongest exists I think the whole country will sink into anarchy and the worst possible confusion 1849 the world rushed in approximately 40000 making the estimates of the population around 107000 1852 265000 people Did anarchy ensue 1866 500 separate mining camps along the western foothills of the Sierras within an area of 300 x 150 miles The Mining Camp Codes 1 description of the boundaries 2 exclusivity to claims 3 must mark claim All and everybody this is my claim fty feet on the gulch cordin to Clear Creek District Law backed up by shotgun amendments Any person found trespassing on this claim will be persecuted to the full extent of the law This is no monkey tale but I will assert by rites at the pint of the sicks shirter if legally necessary so taik heed and good warnin 4 must work claim 5 must provide common defense Claims had value they were bought and sold Little violence and considerable investment in ditches sluice Property Rights to DeepVein Ore the Comstock Lode 1859 value of production 260000 1861 production at the Comstock mine worth 25 million 20000 miners working 3149 claims in an area 1 x 5 miles Problems Who enforced claims Who arbitrated disputes Who had rights to underground veins Miners needed security of property rights for greater investments First Legislative Assembly of the Territory of Nevada in 1862 The Representative Bokkelen from Virginia City We are called upon to make laws of a peculiar character to protect and perpetuate interests that differ essentially from those of most of the other territoriesthe principle resources of this territory exist in its marvelously rich mines which for their proper development and advancement require judicious thought and enactments by which titles to them can be secured and permanency given to that class of property by which means we may invite foreign Californian capital to seek investment among us Between 18611866 Nevada passed 47 mineral rights law which became the foundation for US mineral law Grazing on the Public Domain and the advent of Cattlemen s Associations Rise of industry began in the 1860s with increased specialization Government had established the price of land 125acre at this price it was not profitable to buy but it was profitable to use provided you could internalize the externality caused by overgrazing The Role of Cattlemen s Associations Assigned range rights based on prior use and homestead claims over landwater Need to restrict entry fewer cattle prevents overgrazing problem Solution to participate in the Association s roundup you needed to follow the rules about the number of cattle Like mining camps this was a private collective solution to an externality overgrazers and new entrants Evidence of success 1 losses from hard winters were less on ranges with cattlemen s associations eg the Disastrous winter of 18861887 losses on ranges with cattlemen s associations in the range of 625 and without cattlemen s associations 75 2 Entrants were willing to pay for range rights 3 Ranchers made sitespecific investments Ranching and Homesteading violence Little because homesteaders though having the law on their side knew that they would lose Teddy Roosevelt a rancher finally enforced rights of homesteaders Cherokee Strip Livestock Association Ranchers lost and Homesteaders Sooners won Cherokees leased a large parcel of land to the Cherokee Strip Livestock Association in now western Oklahoma Eventually the US government forced the Cherokees to sell and the US opened up much of Oklahoma for settlement Washington and Oregon Salmon Fisheries A Case of Technological Regress Salmon are easiest to catch when they return up river to spawn in the shallows Preventing overfishing by controlling gene pools do so close to where they would spawn Historical Native American Fisheries 1 Used strategic traps mouths of tributaries waterfalls allowed for escapement fishing rights were heritable individual properties socially efficient in that they caught salmon in least costly fashion JROJN The Columbia River Fishery Arose in the 1860s following advances in canning 1866 4000 cases 48 llb cans 1869 100000 cases 1871 200000 cases 1913 2583000 cases Initial Gear traps sh wheels gillnets and beach seine By 1888 1600 drift gillnets 545 miles 136 sh traps undisclosed number of beach seines seven fish wheels By 1892 2500 drift gillnets 500 fish traps undisclosed number of beach seines 75 fish wheels Result productivity declined Legislative Solution Oregon 1926 initiative banned fish wheels preserves fishery for awhile but at higher cost of fishing Quote from entrepreneur who had owned a fish wheel To build this business took 47 years The law of Oregon destroyed it in one day Washington banned fish wheels and traps in 1934 Overtime coalition of sport fishermen and small guys won we kept banning the most productive gear Results i technical regress has lead to social waste by allowing entry with inefficient gear ii Inability to prevent overflshing we continually stock fisheries Oil production in the Continental US Problem rights to oil based on extraction numerous surface rights to a given pool of oil Results 1 redundant wells the US has more oil wells than the rest of the world 2 extensive surface storage 3 reduced recovery due to dissipation of pressure 4 foreign policy 1914 Director of US Bureau of mines estimated annual losses of excessive drilling at 50 million of US production 1937 excessive wells cost 200 million Price of Oil 229barrel 1926 018 1931 010 1933 Solutions 1 Consolidation through purchase rare because of holdout problem 2 Prorationing all parties remain over field but fix total production and assign quotas based on surface rights 3 Unitization a single firm develops the field and all share in the returns generally based on surface rights Private agreements were uncommon and by the time they did occur most the dissipation had already occurred Legislative Solutions and State Enforcement TX requires unanimous agreement of surface owners holdout problem OK consolidation with 63 majority WY majority rule vote during exploration 1975 Production from unitized fields TX 20 OK 38 WY 82 Shows that the rules for establishing property rights have important efficiency implications Domestic Migration and Immigration Domestic Migration Proportion of Native Born Living in State other than the State of Birth 1850 24 1880 22 1900 21 1920 22 1960 26 Observation rate at which folks move about is quite stable Factors accounting for migration 1 Higher relative income in destination state 2 Distance the further away the less likely to move to that state 3 Job opportunity unemployment rate or total of jobs 4 Availability of Land population density 5 Latitude Changes in latitude changes in attitude From 1850 to 1960 these five factors account for 80 of variation in state to state movements eg people moving from Illinois to Colorado or the reverse Over time income became more important and distance population and latitude less important Immigration 1 Historical Patterns Before 1820 estimates are rough after 1820 the US required captains of ships to deliver manifests of passengers to customs at ports of entry Prior to 1830 immigration not a major source of population growth 17001730 17301760 17601790 17901820 18201860 110000 115000 444000 673000 57 million Composition Prior to 1845 most immigrants were from Britain 184546 Irish potato famine 18471851 100000 Irish per year 18521854 150000 Irish 18451860 Most immigrants from Britain Ireland or Germany Post Civil War Migration Large waves in 1880s and 19001914 1880s and 1900s immigrants represented 40 of population increase 1880s immigrants from Scandinavians in addition to British Irish and Germans Post 1896 New immigration Russia Central Europe and Italy 19001910 200000 Central Europeans per year 200000 Italians per year 150000 Russians per year Most immigrants went to cities by 1890 53 of urban population was foreign born and 14 of the total population From 18701920 immigrants represented 17 of population but in cities greater than 100000 immigrants represented 23 of population 85 of immigrants between the ages of 14 and 44 Types of Migration What drove the various waves of migration 1 Push Vs Pull A Push Leave bad conditions in country of origin Famine Ireland 1840s Poverty Italy War 1848 German migration WWII Religious persecution Eastern Europe and Russian Jews Lack of economic opportunity working class in England and Scotland B Pull Economic opportunity in country of destination High Wages Ethnic networks Opportunities for children Cheap land Religious freedom 2 Permanent vs Temporary Temporary is almost always economic 30 return migration from US 18901914 typically single males An Economic Model of Free Migration Assumes Migration Follows Economic Opportunities Migrate if Present Value of Benefits gt Cost B B T N OzC 11 1rl B is the income in new N amp old 0 countries r is the personal discount rate C is the cost of migration t denotes time t1 T Thus the migration probability is increasing in Wage in the destination country And decreasing in Personal discount rate Cost of migration Age of individual 18681910 8 over 40 16 under 15 Tended to be single or families w few very young children Increasing then decreasing in Wage in the country of departure Income constraint for very poor Other determinates 1 Chain Migration Social networks cost of adjustment 2 Industrialization evidence that rural people were less likely to migrate Impact on Nativeborn Americans 1 Wages Minimal real wages would have been 1 lower if immigration had been 20 greater 2 Urbanization and Industrialization increased 3 Fertility little effect 4 Contribution to economic growth large We saved the cost of raising immigrants as children Earnings of Immigrants Related to Ability to speak English Literacy and Time in the US Restrictions on Immigration Beginning in the 1880s pressure from labor Gentleman s Agreement 1908 restricted Asian immigration Quota Laws 1921 3 of the nationality in the country in 1908 1924 2 of the nationality in the country in 1890 Canadians and Mexicans exempt 1929 Total immigration 150000 per year Number from each country in the same proportion as the number of inhabitants in 1920 US population 1965 Abolished quotas based on national origins
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