I Study Guide for ECO 3622 Exam Chapter 15 1 What were the major capital improvements that increased farm productivity The nineteenth and twentieth centuries witnessed a stream of biological innovations that successfully modified the planting and growing environment Along with the discovery of new wheat varieties and hybrids that allowed the North American wheat belt to push hundreds of miles northward and westward researchers and farmers experimented with new varieties of seeds from Europe and elsewhere allowing corn and wheat to grow at unprecedented rates In 1848 Cyrus Hall McCormick invented a reaper that phased out the hand scythe In 1857 John Deere was pushing out a massive amount of steel plows that were far more efficient than the iron plow that faced difficulties when used in tough clay sod A great number of other attachments and gadgets for harvesting machines added 2 Who and what did farmers blame for their hard times and what were the true to the mechanization of farming reasons Farmers placed blame for their hardships on the bankers grain elevator operators industrialists and railroads In reality data collected from this time period proved that industrial goods were relatively going down in price along with freight costs and interest rates Part of the explanation for agricultural discontent in this era was the process of commercialization and globalization In other words the real reasons for their hardship were invisible from their view point The farmer s terms of trade or the price of the things the farmer sold divided by the price of things the farmer bought were worsening 3 What were the early institutions that developed from agriculture policy Some of the early institutions that were developed from agricultural policy were the four movements that supported various objectives The Grangers were the first to form cooperatives between farmers The Greenback movement attempted to bolster farm prices and were the first attempt made by farmers to act politically on a national scale The Alliances advocated reforms and favored government regulation and ownerships of railroads and communication The Populists were anti monopoly and advocated collectivism They also desired government ownership of banks railroads and communication The Department of Agriculture intended to facilitate research and experimentation distribution of information and regulation of the quality of the products The Marrill Act of 1862 provided for agricultural education at universities establishing land grant colleges Chapter 16 process 1 Were railroads built ahead of demand or were they followers in the settlement One of the leading economists at the time of the early twentieth century argued that railroads were built ahead of demand He asserted that these investments could not be expected to pay for themselves in a time investors would care to wait out and that government aid to the railroads was necessary to open the West Albert Fishlow however tested this hypothesis and failed to support Schumpeter s assertion He supported his findings with the facts that government aid to the railroads was often minimal profit rates often started relatively high and the number of people living near railroads when they began operations was typically similar to eastern rural areas Fogel and Mercer had mixed results They showed that some railroads were built ahead of demand and some weren t based off their average rate of return The answer to this question depends on what results you choose to analyze and is essentially impossible to answer with absolute certainty 2 How did railroad builders acquire capital Were the land grants inefficient Railroad builders received capital through various means including government bonds The most significant federal subsidy was the grant of lands from the public domain in lieu of money or credit They proved to be beneficial to both parties involved with an exchange of services such as transport of mail troops and government property at reduced rates provided to the government The land grants proved to be rather efficient and a better incentive than alternative subsidies because the railroad companies had an incentive to realize the value of a land grant by quickly building a good track Railroad companies led the way in developing fundraising techniques by selling securities to middle class investors The modern investment banking house appeared as an intermediary or middle man between these parties Railroad builders also did fraudulent things such as pay cash or transfer common stock to construction companies to 3 Who did regulations benefit the railroads or the customers In effect they benefited the railroads more than consumers The ICC appeased railroad consumers by satisfying the public desire for government supervision of railroads while at the same time the supervision was able to be controlled by the railroads It thus became a sort of protection against hasty and crude legislation hostile to railroad gain capital interests 4 What impact did the railroad have on the overall growth rate of the economy The railroads were extremely influential on the overall growth rate of the economy and their effect can not be understated although Fishlow and Fogel attempted to measure their actual influence on the growth of the American economy They speculated and guessed a tremendous amount of data to attempt to answer this question but were not able to produce accurate results In order to estimate their impact one has to remove their invention when analyzing the growth of the economy and replace it with other transportation substitutes and then speculate all sorts of data to estimate the growth without the railroad Chapter 17 1 What were the main manufacturing productivity advances The Flying shuttle doubled the productivity of weaving The Spinning jenny could spin eight threads at once The cotton gin quickly separates cotton fibers from their seeds Interchangeable parts product standardization mass production assembly lines Continuous flow production and scientific management were among some of the other manufacturing productivity advances 2 How and why were business organizations changed The new scale and size of businesses required them to implement scientific management organization This resulted in the type of management structures that are common to us today Horizontal mergers began to take place in which small firms with similar products would merge in order to achieve economies of