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41 Cards in this Set
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Bi-Metallism 1873
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Monetary standard or system based upon the use of two metals, traditionally gold and silver, rather than one.
William Jennings Bryan, leader of populist party, demanded this type of monetary system. Wanted to implement this to fight deflation because there is not enough gold to back up money Rockoff supported bimetallism but there was an increase in gold afterwards which saved the economy in 1849 Significance: Stopped deflation |
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Gold Standard 1865
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A nation on the gold standard is one that uses gold as the standard of value for its currency.
domestic standard regulating the quantity and growth rate of a country’s money supply and also an international standard determining the value of a country’s currency in terms of other countries’ currencies. True gold standard came to realization in 1900 with the passage of the Gold Standard Act. not enough money supply so there is a delay of payment for farmers Significance: It was a period of unprecedented economic growth with relatively free trade in goods, labor, and capital.National Labor Relations Act |
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National Labor Relations Act
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1935 to protect the rights of employees and employers
Encourage collective bargaining Lessen certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy. Significance:Offered the first official recognition and support for the right to organize. By encouraging the formation of labor unions, it helped workers to seek fair compensation, improved safety standards, sensible work schedules, and other advancements that were essential to the growth of the American middle class. |
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Sharecropping 1865
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The phase after slavery
By 1900, three quarters of all black farmers were still sharecroppers. “The landowner provided laborers (usually blacks) with small plots of land, tools, seed and work animals. The worker then typically paid back 1/2 to 2/3 of the crop back.” Gave blacks some semblance of freedom. Significance: Emancipation brought the slaves freedom to be educated thanks to the freedmen’s bureau. However blacks still needed land and south lacked money so sharecropping came up. |
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Debt Peonage
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A method of debt repayment in which an individual makes his payments to a creditor by physical labor.
Significance: ties people to the land |
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William Jennings Bryan
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Populist party leader
For bimetallism and gold standard Ran for president 3 times but never won Secretary of State for Woodrow Wilson→ Bryan was against imperialism but Wilson was for it During imperialism, he thought that if the United States acted in good fate, then that would lead to return Believed that there was no need to take over the Philippines and we had no right to impose our views on other countries. Elected to U.S. House of Representatives 1890-1895, championing Populist causes such as the free coinage of silver, national income tax, and direct election of senators. Democratic candidate for the 1896, 1900, and 1908 presidential elections (lost all). President Woodrow Wilson selected Bryan as his Secretary of State following the 1912 presidential election. |
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Vertical Integration
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One big production company owns each part of the production of a given product.
For example, a brand on a bottle is the producer of the bottle but not necessarily the maker of the bottles. Instead, one company owns the company that makes the cap, the wrapper, the plastic etc. Significance:How most big businesses started, and reduced transactions cost |
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Horizontal Integration
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1880s
own everything in one aspect of the production cycle, everyone has to go through them Standard Oil owned all the refineries so everyone had to go through them significance: another way to allow big companies to have trusts |
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Transaction Costs
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During the anti-trust, the cost of selling the product at wholesale and all the transportation costs are all costs that go into the final retail price, which is the transactional cost.
Significance: taylorism was a way to make transaction cost lower era (early 1900’s) |
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James Duke
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American industrialist, processor of tobacco products (cigars).
The Civil War left the Duke family poor James and his brother, Benjamin, helped their father in building up a local tobacco-processing business, which soon prospered. Development of cigarette-making machines and extensive advertising gave the Duke company a lead in tobacco manufacturing. Through a long series of mergers with competitors, James Duke organized (1890) and led a trust that controlled 150 factories with a capitalization of 2 million. one of the first to use extensive advertisement Significance:pioneer of vertical integration |
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Swift/Armour Meatpacking Cos.
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Gustavus Swift→ MidWest meatpacker
Co-invented refrigerator cars, meat could be butchered in Cali and transported more cheaply to the Mid West/East Owned big storage houses that sold and delivered meat Had a big fight with RR because transporting live cattle was more expensive and they did not want to lose that profit, Instead, Swift used Canadian RR to transport his dead meat in the refrigerated cars. Significance: Major vertical integrator |
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Edward Conant
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1898 he believed that it was the white man’s burden to help the Philippines
He supported imperialism because of the financial benefits→ Philippines would allow for easy international trade because of overproduction in the US There is overproduction because of mass production and businesses need a larger market in order to survive since they are forced to sell at a low price due competiton. settlement in the pacific ocean allowed for a path for a trade |
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Anti-imperialism (c. 1890-1910)
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Roosevelt Corollary
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response to the Monroe Doctrine 1904
dollar diplomacy- sends army into other countries who could no pay debt take over the treasury and take 50% of revenue to pay back debt residents of the land do not want to be a colony of the United States |
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Open Door Policy 1900s
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China had sectors of influence
Rockhill’s “The Open Door (China Memorandum)” stated that trade in china should be fair so no one would have total control over china New markets= US wants |
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Chain Stores
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Great Atlantic and Pacific Tea Company 1859
Successful because... high stock turn updated accounting systems hire low cost workers standardized uniformity national distribution choose location based on wealth and high traffic places |
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Resale Price Maintenance
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Idea that manufacturers could dictate the price of goods sold to retailers
Could also set the price of the good that retailers were selling to their customers. Benefitted the manufacturers, argued that the idea was justifiable because it would “preserve the traditional system of distribution”. Bis businesses hated it (small retailers like it). If Resale Price Maintenance were to become the norm among businesses, sellers would lose the ability to price each product in their store. Unable to create competition through lowering or raising prices of certain goods. In addition to the sellers, the general public opposed price fixing because it would increase the price of many products. it was deemed as illegal price fixing in 1911 |
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Michael Cullen
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in the 1930s he wrote a letter to the head of A&P suggesting changes to chain stores that would lead to further profitability
he suggested that wholesalers should sell straight to consumers; eliminating a middle man and therefore they could sell their product for a lower price he introduced the idea of selling at cost so that it would attract consumers and while the consumers were in the store, he assumed that consumers would purchase other items for 15% above cost he also implemented accounting which would decrease the chance of theft by cashiers the location of the store would be right outside the city because it is less expensive yet is still easy to get access to. |
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Flexible Mass Production
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a single assembly line could produce different models of the same car
unlike Ford, Sloan of GM implemented so that he could produce different models ford had 14000 specialized machines for only the Model T significant: allowed each assembly line to produce different models instead of being restrictive and only single streamed belief that diverse product lines will increase profits by appealing to different preferences of consumers not every consumer is the same, therefore the same product may not be appealing to everybody |
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Henry Ford vs. Alfred Sloan
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Leadership structure
Ford: centralized system, he was in charge of everything, Eventually grew too large to work this way Sloan: multidivisional system, employees all reported to someone, Essential for organizational design and efficiency ·1920-21 Ford: bought all shares and was having a new manufacturing complex built, he needed cash & forced his dealerships to take 90k new cars and pay him cash for them—refusal led to loss of dealership Sloan: created GM Acceptance Corp, made it easier for dealers to finance bulk purchases and provided credit to customers, used car market flourished ·Product Line Ford: only built the same car in the same color over and over, built better versions and cut costs, by 1925 he had 40% of the market share which was down from 56% in 1925. In 1927: shut down all production to come up with new car (Model A). No annual model changes. 1938: realizes he made a mistake, releases Mercury |
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Mass Production
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Scientific Management
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GMAC
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· General Motors Acceptance Corporation, 1919
· Provided GM dealers w/ the financing they need to maintain vehicle inventories o helped finance bulk purchases and provide credit to customers - recognized the need for Market Segmentation. |
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Federal Reserve System
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·The Fed serves as the central bank and monetary authority of the US
·Established in 1913 to reduce bank “runs” during panics. Authorized to ensure sufficient $ and credit in the bank system Buy and sell gov’t securities, extend loans to member banks, clear checks in banking system Require that member banks hold reserves equal to at least some fraction of their deposits |
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Federal Reserve During Depression
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·During the depression, the Fed neglected to act as a lender to the banks
o Needed the money to satisfy deposit withdrawals in cases of runs—didn’t do it, many banks failed as a result and those who had their money in failed banks lost everything, people didn’t trust the banks which led to an overall lack of confidence in the Fed and US banking system § Btwn 1930-33, 10,000 banks failed |
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Income Tax
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Soldiering
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Social Structure of Accumulation
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David Gordon
analyzes a complex set of relationships and institutions that can dictate the effectiveness of economic policy. - For economic growth and prosperity, there needs to be consistency between three “milieu” 1.Workplace and Underlying Economic Activity 2.Businesses & Governments (Namely Leadership) 3.Public Opinions - During the early to mid 1920’s, there was consistency between each milieu. However, throughout the late 1920’s into the 1930’s, there were substantial discrepancies between each milieu. |
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Monetary Policy
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Definition: regulation of the money supply to influence economy-wide variables such as inflation, employment, and economic growth
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Sherman Antitrust Act 1890
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Passed in 1890 by the senate, 52-1.
Punishment is being broken up, fines up to $5,000 and up to 1 year in prison. Trusts→ The powerful tendency of business executives to cooperate with competitors in associations or mergers Roosevelt enforced this act against the Great Oil Trust. Significant impact on the 1912 election. Wilson won because he was the most antitrust and anti big business Next was Roosevelt who was somewhat anti trust→ Believed that not all big business was bad, but trusts themselves were bad Taft was pro-trust, Debs the socialist-->VERY antitrust and pulled in the most votes for a socialist ever. |
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First Great Merger Movement
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1898-1904
people wanted to decrease competition. capitalism was viewed as unstable during this time there were five times the number of mergers compared to before price fixing allowed for profitability and a decline in price cutting it was also easy to start a large corporation because there was minimal paperwork and a small fee. |
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Rule of Reason
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Justice Edward White proposed a rule of reason during the Standard Oil Case.
It was the idea that Standard Oil could restrict trade within reason John Harlan dissented, said that there was no real way to qualify something as reasonable Important to note that there was no rule of reason in the Sherman Anti-Trust law. |
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E.C. Knight Case
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owned 98% of the sugar market
was not considered a trust because it was a manufacturing company instead of a production company exemplifies how companies got around Sherman this lead to the Great Merger Movement |
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Clayton Antitrust Act 1914
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passed by U.S. congress as an amendment to clarify and supplement Sherman Antitrust Act of 1890
prohibited price discrimination, price fixing, and exclusive sales contracts. also legalized peaceful strikes and boycotts against companies encourages more socially responsible business practices promote competition and discourage monopolies |
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Federal Trade Commission
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Established under Woodrow Wilson to enforce the Clayton Act
Serves to investigate trusts and price fixing Trust Busting department |
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Management (M) System (Alfred Sloan)
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Reconstruction Finance Corporation
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Established under Herbert Hoover in 1932 to lend money to banks, RR, and large corporations for bailouts during Great Depression.
Continued by FDR under New Deal Almost all loans were paid back in the end. |
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Second Great Merger Movement
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1916-1919
economic growth leads to mergers, backed up by the FTC whom supported oligopolies. Mergers mostly done by investment bankers, ⅔ of new securities issued to fund mergers Rise of holding companies 9/10 of all mergers are done through investment banks |
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Welfare Capitalism
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Companies say that if you join a union you will be fired→ unionism drops 25% as a result
28% of all population owns stock after World War 2 it became normal to for workers to own a home mortgages are more prevalent 1929 66% of houses are bought with mortgages workers owned stock in the company which made them want to work hard safety increases because insurance would be cheaper Unions no longer needed because the company provides insurance, safety etc. 2 week vacation with pay medical and dental plans |
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Smoot-Hawley Tariff
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1930, signed by president Hoover, raised tariffs on imported goods to record heights.
The idea was to encourage the purchase of American goods in order to try and salvage the economy. The outcome was that European nations lost important revenues in America causing them to not be able to purchase American goods (especially agricultural) and pay off their war debts. Hoover tried to blame the Great Crash on other countries, refused to believe the problems were internal Economists signed petition and said it was a bad idea, but Hoover ignored them Besides that, European nations also raised their tariffs as a response and by 1932 US foreign trade was at 35% compared to 1929. Overall this tariff was negative to the American economy. |
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Multiplier effect
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The multiplier effect is the term used to describe a situation that happened during the Great Depression that was: investment spending on industries of capital goods shrank, output of capital goods industry decreased, causing workers to be laid off, resulting in high unemployment and lower incomes. These consequently meant that employees cut back on their spending on consumer goods, which in turn meant that there was a lower demand for consumer goods (clothing, food, housewares, etc). These industries in turn fired workers and lowered wages increasing unemployment even more thus concluding that the cutback in investment on the capital goods industry resulted in a multiplier effect damaging even more the economy.
1929-1933, investment spending shrank by 88% |
