The Premodern Chinese Economy is a comprehensive analysis of China's ROUTLEDGE EXPLORATIONS IN ECONOMIC . commented on my paper ' Structural Equilibrium and Capitalist Sterility in Exploration in Economic History . EHR.
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The data consist of the average month t futures price in the last full week of month t -2 and the average cash price in the first full week of month t. The futures price and its corresponding spot price need not be equal; futures price efficiency does not mean that the futures market is clairvoyant. But, a difference between the two series should exist only because of an unpredictable forecast error and a risk premium — futures prices may be, say, consistently below the expected future spot price if long speculators require an inducement, or premium, to enter the futures market.
Recent work finds strong evidence that these early corn and corresponding wheat futures prices are, in the long run, efficient estimates of their underlying spot prices Santos , Nineteenth century America was both fascinated and appalled by futures trading. This is apparent from the litigation and many public debates surrounding its legitimacy Baer and Saxon , 55; Buck , , ; Hoffman , 29, ; Irwin , 80; Lurie , 53, Many agricultural producers, the lay community and, at times, legislatures and the courts, believed trading in futures was tantamount to gambling. The difference between the latter and speculating, which required the purchase or sale of a futures contract but not the shipment or delivery of the commodity, was ostensibly lost on most Americans Baer and Saxon , 56; Ferris , 88; Hoffman , 5; Lurie , 53, Many Americans believed that futures traders frequently manipulated prices.
This manipulation continued throughout the century and culminated in the Three Big Corners — the Hutchinson , the Leiter , and the Patten A Story of Chicago Norris ; Rothstein , And, attacks from state legislatures were seemingly unrelenting: Two nineteenth century challenges to futures trading are particularly noteworthy.
The first was the so-called Anti-Option movement. According to Lurie , the movement was fueled by agrarians and their sympathizers in Congress who wanted to end what they perceived as wanton speculative abuses in futures trading Although options were are not futures contracts, and were nonetheless already outlawed on most exchanges by the s, the legislation did not distinguish between the two instruments and effectively sought to outlaw both Lurie , However, in the Hatch and Washburn Anti-Option bills passed both houses of Congress, and failed only on technicalities during reconciliation between the two houses.
Had either bill become law, it would have effectively ended options and futures trading in the United States Lurie , A second notable challenge was the bucket shop controversy, which challenged the legitimacy of the CBT in particular. A bucket shop was essentially an association of gamblers who met outside the CBT and wagered on the direction of futures prices. The bucket shop controversy was protracted and colorful see Lurie , The CBT believed these laws entitled them to restrict bucket shops access to CBT price quotes, without which the bucket shops could not exist.
Bucket shops argued that they were competing exchanges, and hence immune to extant anti-bucket shop laws. As such, they sued the CBT for access to these price quotes.
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After roughly twenty years of litigation, the Supreme Court of the U. Bucket shops disappeared completely by Hieronymus , First, prior to , the opposition tried unsuccessfully to outlaw rather than regulate futures trading. Second, strong agricultural commodity prices between and weakened the opposition, who blamed futures markets for low agricultural commodity prices Hieronymus , Grain prices fell significantly by the end of the First World War, and opposition to futures trading grew once again Hieronymus , In the U.
Congress enacted the Grain Futures Act, which required exchanges to be licensed, limited market manipulation and publicized trading information Leuthold , To discipline an exchange was essentially to suspend it, a punishment unfit too harsh for most exchange-related infractions. The Commodity Exchange Act of enabled the government to deal directly with traders rather than exchanges.
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Department of Agriculture, to monitor and investigate trading activities and prosecute price manipulation as a criminal offense. Although Congress amended the Commodity Exchange Act in in order to increase the regulatory powers of the Commodity Exchange Authority, the latter was ill-equipped to handle the explosive growth in futures trading in the s and s. The CFTC oversees and approves modifications to extant contracts and the creation and introduction of new contracts.
The regulatory overlap between the two organizations arose because of the explosive popularity during the s of financial futures contracts. Finally, in Congress passed the Commodity Futures Modernization Act, which reauthorized the Commodity Futures Trading Commission for five years and repealed an year old ban on trading single stock futures.
Futures trading extended beyond physical commodities in the s and s — currency futures in ; interest rate futures in ; and stock index futures in Silber , Flexible exchange rates and inflation introduced, respectively, exchange and interest rate risks, which hedgers sought to mitigate through the use of financial futures.
Finally, although futures contracts on agricultural commodities remain popular, financial futures and options dominate trading today. Trading volume in metals, minerals and energy remains relatively small. By this volume had dropped to less than one fourth all trading. In the same year the volume of futures trading in the U. Treasury bond contract alone exceeded trading volume in all agricultural commodities combined Leuthold et al.
Today exchanges in the U. These range from the traditional — e. Modern trading differs from its nineteenth century counterpart in other respects as well. First, the popularity of open outcry trading is waning. For example, today the CBT executes roughly half of all trades electronically. And, electronic trading is the rule, rather than the exception throughout Europe. Third, in the Commodity Futures Trading Commission approved cash settlement — delivery that takes the form of a cash balance — on financial index and Eurodollar futures, whose underlying assets are not deliverable, as well as on several non-financial contracts including lean hog, feeder cattle and weather Carlton , And finally, on Dec.
Commodity Exchanges and Futures Trading. A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform. University of Chicago Press, Speculation and the Chicago Board of Trade. Chicago Board of Trade Bulletin. The Development of the Chicago Board of Trade. Chicago Board of Trade, The Managerial Revolution in American Business.
Harvard University Press, The Grain Trade in the Old Northwest. University of Illinois Press, The Story of the Chicago Board of Trade. Michigan State University Press, Commodity Research Bureau, Inc. University of Pennsylvania Press, Evolution of Futures Trading. Junkus and Jean E. The Theory and Practice of Futures Markets. The Chicago Board of Trade National Agricultural Statistics Service. Department of Agriculture, Washington, D.
A History of Chicago: Eleutherian Mills-Hagley Foundation, Their Economic Role , edited by Anne E. History of the Board of Trade of the City of Chicago. Werner, Walter and Steven T. Columbia University Press, For details regarding the clearing arrangements of a specific exchange, go to www. Southern planters dominated corn output during the early to mid- s. The growth in domestic grain demand during the early to mid-nineteenth century reflected the strong growth in eastern urban populations. Between and , U. Louis Clark , On the other hand, wheat was more valuable relative to its weight, and it could be shipped to Chicago by rail or road immediately after it was harvested; so, Chicago merchants stored large quantities of wheat.
However, Williams presents evidence of such contracts between Buffalo and New York City as early as To be sure, Williams proffers an intriguing case that forward and, in effect, future trading was active and quite sophisticated throughout New York by the late s. Moreover, he argues that this trading grew not out of activity in Chicago, whose trading activities were quite primitive at this early date, but rather trading in London and ultimately Amsterdam.
Between and these contracts comprised anywhere from 0. For example, the cost of carrying a bond is comprised of the cost of acquiring and holding or storing it until delivery minus the return earned during the carry period. The marginal costs of 1 and 2 are increasing functions of the amount stored; the more the merchant stores, the greater the marginal costs of warehouse use, insurance and financing. Working used this convenience yield to explain a negative price of storage — the nearby contract is priced higher than the faraway contract; an event that is likely to occur when supplies are exceptionally low.
In this instance, there is little for inventory dealers to store. Hence, dealers face extremely low physical and financial storage costs, but extremely high convenience yields. The price of storage turns negative; essentially, inventory dealers are willing to pay to store the commodity.
Net Encyclopedia, edited by Robert Whaples. Finland in the early s is a small industrialized country with a standard of living ranked among the top twenty in the world. At the beginning of the twentieth century it was a poor agrarian country with a gross domestic product per capita less than half of that of the United Kingdom and the United States, world leaders at the time in this respect.
Finland was part of Sweden until , and a Grand Duchy of Russia from to , with relatively broad autonomy in its economic and many internal affairs. It became an independent republic in While not directly involved in the fighting in World War I, the country went through a civil war during the years of early independence in , and fought against the Soviet Union during World War II. Participation in Western trade liberalization and bilateral trade with the Soviet Union required careful balancing of foreign policy, but also enhanced the welfare of the population. Finland has been a member of the European Union since , and has belonged to the European Economic and Monetary Union since , when it adopted the euro as its currency.
Finland has large forest areas of coniferous trees, and forests have been and still are an important natural resource in its economic development. Other natural resources are scarce: Outokumpu, the biggest copper mine in Europe in its time, was depleted in the s. Even water power is scarce, despite the large number of lakes, because of the small height differences. The country is among the larger ones in Europe in area, but it is sparsely populated with 44 people per square mile, 5.
The population is very homogeneous. There are a small number of people of foreign origin, about two percent, and for historical reasons there are two official language groups, the Finnish-speaking majority and a Swedish-speaking minority. In recent years population has grown at about 0. Finland was an agrarian country in the s, despite poor climatic conditions for efficient grain growing.
Seventy percent of the population was engaged in agriculture and forestry, and half of the value of production came from these primary industries in Slash and burn cultivation finally gave way to field cultivation during the nineteenth century, even in the eastern parts of the country. Some iron works were founded in the southwestern part of the country in order to process Swedish iron ore as early as in the seventeenth century. Significant tar burning, sawmilling and fur trading brought cash with which to buy a few imported items such as salt, and some luxuries — coffee, sugar, wines and fine cloths.
The small towns in the coastal areas flourished through the shipping of these items, even if restrictive legislation in the eighteenth century required transport via Stockholm. The income from tar and timber shipping accumulated capital for the first industrial plants. The nineteenth century saw the modest beginnings of industrialization, clearly later than in Western Europe.
The first modern cotton factories started up in the s and s, as did the first machine shops. The first steam machines were introduced in the cotton factories and the first rag paper machine in the s. The first steam sawmills were allowed to start only in The first railroad shortened the traveling time from the inland towns to the coast in , and the first telegraphs came at around the same time. Some new inventions, such as electrical power and the telephone, came into use early in the s, but generally the diffusion of new technology to everyday use took a long time.
The export of various industrial and artisan products to Russia from the s on, as well as the opening up of British markets to Finnish sawmill products in the s were important triggers of industrial development. From the s on pulp and paper based on wood fiber became major export items to the Russian market, and before World War I one-third of the demand of the vast Russian empire was satisfied with Finnish paper.
Finland became a very open economy after the s and s, with an export share equaling one-fifth of GDP and an import share of one-fourth. Finland participated fully in the global economy of the first gold-standard era, importing much of its grain tariff-free and a lot of other foodstuffs.
Half of the imports consisted of food, beverages and tobacco. Agriculture turned to dairy farming, as in Denmark, but with poorer results. The Finnish currency, the markka from , was tied to gold in and the Finnish Senate borrowed money from Western banking houses in order to build railways and schools. GDP grew at a slightly accelerating average rate of 2. The population was also growing rapidly, and from two million in the s it reached three million on the eve of World War I. Only about ten percent of the population lived in towns.
The investment rate was a little over 10 percent of GDP between the s and and labor productivity was low compared to the leading nations. Accordingly, economic growth depended mostly on added labor inputs, as well as a growing cultivated area. The food situation was particularly difficult as 60 percent of grain required had been imported.
Postwar reconstruction in Europe and the consequent demand for timber soon put the economy on a swift growth path. The gap between the Finnish economy and Western economies narrowed dramatically in the interwar period, although it remained the same among the Scandinavian countries, which also experienced fast growth: GDP grew by 4. The investment rate rose to new heights, which also improved labor productivity. The s depression was milder than in many other European countries because of the continued demand for pulp and paper. On the other hand, Finnish industries went into depression at different times, which made the downturn milder than it would have been if all the industries had experienced their troughs simultaneously.
The Depression, however, had serious and long-drawn-out consequences for poor people. The land reform of secured land for tenant farmers and farm workers. A large number of new, small farms were established, which could only support families if they had extra income from forest work. The country remained largely agrarian. On the eve of World War II, almost half of the labor force and one-third of the production were still in the primary industries.
Small-scale agriculture used horses and horse-drawn machines, lumberjacks went into the forest with axes and saws, and logs were transported from the forest by horses or by floating. Tariff protection and other policy measures helped to raise the domestic grain production to 80—90 percent of consumption by Soon after the end of World War I, Finnish sawmill products, pulp and paper found old and new markets in the Western world. The structure of exports became more one-sided, however. Textiles and metal products found no markets in the West and had to compete hard with imports on the domestic market.
More than four-fifths of exports were based on wood, and one-third of industrial production was in sawmilling, other wood products, pulp and paper. Other growing industries included mining, basic metal industries and machine production, but they operated on the domestic market, protected by the customs barriers that were typical of Europe at that time. Finland came out of World War II crippled by the loss of a full tenth of its territory, and with Productive units were dilapidated and the raw material situation was poor. The huge war reparations to the Soviet Union were the priority problem of the decision makers.
The favorable development of the domestic machinery and shipbuilding industries, which was based on domestic demand during the interwar period and arms deliveries to the army during the War made war-reparations deliveries possible. They were paid on time and according to the agreements. At the same time, timber exports to the West started again. Gradually the productive capacity was modernized and the whole industry was reformed. Evacuees and soldiers were given land on which to settle, and this contributed to the decrease in farm size.
The government chose not to receive Marshall Aid because of the world political situation. Bilateral trade agreements with the Soviet Union started in and continued until Tariffs were eased and imports from market economies liberated from Exports and imports, which had stayed at internationally high levels during the interwar years, only slowly returned to the earlier relative levels. The investment rate climbed to new levels soon after War World II under a government policy favoring investments and it remained on this very high level until the end of the s.
The labor-force growth stopped in the early s, and economic growth has since depended on increases in productivity rather than increased labor inputs. GDP growth was 4. Exports and, accordingly, the structure of the manufacturing industry were diversified by Soviet and, later, on Western orders for machinery products including paper machines, cranes, elevators, and special ships such as icebreakers.
The vast Soviet Union provided good markets for clothing and footwear, while Finnish wool and cotton factories slowly disappeared because of competition from low-wage countries. The modern chemical industry started to develop in the early twentieth century, often led by foreign entrepreneurs, and the first small oil refinery was built by the government in the s. The government became actively involved in industrial activities in the early twentieth century, with investments in mining, basic industries, energy production and transmission, and the construction of infrastructure, and this continued in the postwar period.
The new agricultural policy, the aim of which was to secure reasonable incomes and favorable loans to the farmers and the availability of domestic agricultural products for the population, soon led to overproduction in several product groups, and further to government-subsidized dumping on the international markets. The first limitations on agricultural production were introduced at the end of the s.
The population reached four million in , and the postwar baby boom put extra pressure on the educational system. The educational level of the Finnish population was low in Western European terms in the s, even if everybody could read and write. The underdeveloped educational system was expanded and renewed as new universities and vocational schools were founded, and the number of years of basic, compulsory education increased. Education has been government run since the s and s, and is free at all levels.
Finland started to follow the so-called Nordic welfare model, and similar improvements in health and social care have been introduced, normally somewhat later than in the other Nordic countries. Public child-health centers, cash allowances for children, and maternity leave were established in the s, and pension plans have covered the whole population since the s. National unemployment programs had their beginnings in the s and were gradually expanded. A public health-care system was introduced in , and national health insurance also covers some of the cost of private health care.
During the s the income distribution became one of the most even in the world. The oil crises of the s put the Finnish economy under pressure. Although the oil reserves of the main supplier, the Soviet Union, showed no signs of running out, the price increased in line with world market prices. This was a source of devastating inflation in Finland.
On the other hand, it was possible to increase exports under the terms of the bilateral trade agreement with the Soviet Union. This boosted export demand and helped Finland to avoid the high and sustained unemployment that plagued Western Europe. Economic growth in the s was somewhat better than in most Western economies, and at the end of the s Finland caught up with the sluggishly-growing Swedish GDP per capita for the first time. In the early s the collapse of the Soviet trade, Western European recession and problems in adjusting to the new liberal order of international capital movement led the Finnish economy into a depression that was worse than that of the s.
GDP fell by over 10 percent in three years, and unemployment rose to 18 percent. The banking crisis triggered a profound structural change in the Finnish financial sector. The economy revived again to a brisk growth rate of 3. GDP growth was 2. Electronics started its spectacular rise in the s and it is now the largest single manufacturing industry with a 25 percent share of all manufacturing.
Connected to this development was the increase in the research-and- development outlay to three percent of GDP, one of the highest in the world. The Finnish paper companies UPM-Kymmene and M-real and the Finnish-Swedish Stora-Enso are among the largest paper producers in the world, although paper production now accounts for only 10 percent of manufacturing output. The recent discussion on the future of the industry is alarming, however. The position of the Nordic paper industry, which is based on expensive, slowly-growing timber, is threatened by new paper factories founded near the expanding consumption areas in Asia and South America, which use local, fast-growing tropical timber.
The formerly significant sawmilling operations now constitute a very small percentage of the activities, although the production volumes have been growing. The textile and clothing industries have shrunk into insignificance. What has typified the last couple of decades is the globalization that has spread to all areas. Exports and imports have increased as a result of export-favoring policies. Some 80 percent of the stocks of Finnish public companies are now in foreign hands: A quarter of the companies operating in Finland are foreign-owned, and Finnish companies have even bigger investments abroad.
Most big companies are truly international nowadays. Migration to Finland has increased, and since the collapse of the eastern bloc Russian immigrants have become the largest single foreign group. The number of foreigners is still lower than in many other countries — there are about The directions of foreign trade have been changing because trade with the rising Asian economies has been gaining in importance and Russian trade has fluctuated.
Otherwise, almost the same country distribution prevails as has been common for over a century. Western Europe has a share of three-fifths, which has been typical. Russia accounted for one-third of Finnish foreign trade in the early s, but the Soviet Union had minimal trade with the West at first, and its share of the Finnish foreign trade was just a few percentage points. After World War II Soviet-Finnish trade increased gradually until it reached 25 percent of Finnish foreign trade in the s and early s. Trade with Russia is now gradually gaining ground again from the low point of the early s, and had risen to about ten percent in The balance of payments was a continuing problem in the Finnish economy until the s.
Particularly in the post-World War II period inflation repeatedly eroded the competitive capacity of the economy and led to numerous devaluations of the currency. An economic policy favoring exports helped the country out of the depression of the s and improved the balance of payments. Agriculture continued its problematic development of overproduction and high subsidies, which finally became very unpopular. The number of farms has shrunk since the s and the average size has recently risen to average European levels. The share of agricultural production and labor are also on the Western European levels nowadays.
Finnish agriculture is incorporated into the Common Agricultural Policy of the European Union and shares its problems, even if Finnish overproduction has been virtually eliminated. The share of forestry is equally low, even if it supplies four-fifths of the wood used in Finnish sawmills and paper factories: The share of manufacturing is somewhat above Western European levels and, accordingly, that of services is high but slightly lower than in the old industrialized countries. Recent discussion on the state of the economy mainly focuses on two issues. The very open economy of Finland is very much influenced by the rather sluggish economic development of the European Union.
Accordingly, not very high growth rates are to be expected in Finland either. Since the s depression, the investment rate has remained at a lower level than was common in the postwar period, and this is cause for concern. The other issue concerns the prominent role of the public sector in the economy. The Nordic welfare model is basically approved of, but the costs create tensions. High taxation is one consequence of this and political parties discuss whether or not the high public-sector share slows down economic growth. The aging population, high unemployment and the decreasing numbers of taxpayers in the rural areas of eastern and central Finland place a burden on the local governments.
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There is also continuing discussion about tax competition inside the European Union: L van Zanden, eds. Explorations in Economic Growth. Labour and the Market: Workers, Wages and Living Standards in Finland, — Commentationes Scientiarum Socialium 51 The Finnish Economy — Growth and Structural Change. Bank of Finland Publications, Productivity in the Finnish Manufacturing Industries, The Road to Prosperity: An Economic History of Finland. Suomalaisen Kirjallisuuden Seura, The interwar period in the United States, and in the rest of the world, is a most interesting era.
The decade of the s marks the most severe depression in our history and ushered in sweeping changes in the role of government. Economists and historians have rightly given much attention to that decade. However, with all of this concern about the growing and developing role of government in economic activity in the s, the decade of the s often tends to get overlooked. This is unfortunate because the s are a period of vigorous, vital economic growth. It marks the first truly modern decade and dramatic economic developments are found in those years.
There is a rapid adoption of the automobile to the detriment of passenger rail travel. Though suburbs had been growing since the late nineteenth century their growth had been tied to rail or trolley access and this was limited to the largest cities. The flexibility of car access changed this and the growth of suburbs began to accelerate. The demands of trucks and cars led to a rapid growth in the construction of all-weather surfaced roads to facilitate their movement. The rapidly expanding electric utility networks led to new consumer appliances and new types of lighting and heating for homes and businesses.
The introduction of the radio, radio stations, and commercial radio networks began to break up rural isolation, as did the expansion of local and long-distance telephone communications. Recreational activities such as traveling, going to movies, and professional sports became major businesses. The period saw major innovations in business organization and manufacturing technology. The Federal Reserve System first tested its powers and the United States moved to a dominant position in international trade and global business.
These things make the s a period of considerable importance independent of what happened in the s. We begin the survey of the s with an examination of the overall production in the economy, GNP, the most comprehensive measure of aggregate economic activity. Real GNP growth during the s was relatively rapid, 4. By both nineteenth and twentieth century standards these were relatively rapid rates of real economic growth and they would be considered rapid even today. There were several interruptions to this growth. In mid the American economy began to contract and the depression lasted about a year, but a rapid recovery reestablished full-employment by From through growth was much smoother.
There was a very mild recession in and another mild recession in both of which may be related to oil price shocks McMillin and Parker, The Great Depression began in the summer of , possibly as early as June. The initial downturn was relatively mild but the contraction accelerated after the crash of the stock market at the end of October. Real total GNP fell Price changes during the s are shown in Figure 2. The Consumer Price Index, CPI, is a better measure of changes in the prices of commodities and services that a typical consumer would purchase, while the Wholesale Price Index, WPI, is a better measure in the changes in the cost of inputs for businesses.
As the figure shows the depression was marked by extraordinarily large price decreases. Consumer prices fell After that consumer prices were relatively constant and actually fell slightly from to and from to Wholesale prices show greater variation. The depression hit farmers very hard. Prices had been bid up with the increasing foreign demand during the First World War.
As European production began to recover after the war prices began to fall. Though the prices of agricultural products fell from to , the depression brought on dramatic declines in the prices of raw agricultural produce as well as many other inputs that firms employ. In the scramble to beat price increases during firms had built up large inventories of raw materials and purchased inputs and this temporary increase in demand led to even larger price increases. With the depression firms began to draw down those inventories. The result was that the prices of raw materials and manufactured inputs fell rapidly along with the prices of agricultural produce—the WPI dropped The price changes probably tend to overstate the severity of the depression.
Wholesale prices in the rest of the s were relatively stable though they were more likely to fall than to rise. Despite the depression and the minor interruptions in and , the American economy exhibited impressive economic growth during the s. Though some commentators in later years thought that the existence of some slow growing or declining sectors in the twenties suggested weaknesses that might have helped bring on the Great Depression, few now argue this. Economic growth never occurs in all sectors at the same time and at the same rate. Growth reallocates resources from declining or slower growing sectors to the more rapidly expanding sectors in accordance with new technologies, new products and services, and changing consumer tastes.
Economic growth in the s was impressive. Ownership of cars, new household appliances, and housing was spread widely through the population. New products and processes of producing those products drove this growth. The combination of the widening use of electricity in production and the growing adoption of the moving assembly line in manufacturing combined to bring on a continuing rise in the productivity of labor and capital. Though the average workweek in most manufacturing remained essentially constant throughout the s, in a few industries, such as railroads and coal production, it declined.
Whaples New products and services created new markets such as the markets for radios, electric iceboxes, electric irons, fans, electric lighting, vacuum cleaners, and other laborsaving household appliances. This electricity was distributed by the growing electric utilities. The stocks of those companies helped create the stock market boom of the late twenties. RCA, one of the glamour stocks of the era, paid no dividends but its value appreciated because of expectations for the new company. Like the Internet boom of the late s, the electricity boom of the s fed a rapid expansion in the stock market.
Fed by continuing productivity advances and new products and services and facilitated by an environment of stable prices that encouraged production and risk taking, the American economy embarked on a sustained expansion in the s. At the same time that overall production was growing, population growth was declining. As can be seen in Figure 3, from an annual rate of increase of 1. These changes in the overall growth rate were linked to the birth and death rates of the resident population and a decrease in foreign immigration.
Though the crude death rate changed little during the period, the crude birth rate fell sharply into the early s. Figure 4 There are several explanations for the decline in the birth rate during this period. First, there was an accelerated rural-to-urban migration. Urban families have tended to have fewer children than rural families because urban children do not augment family incomes through their work as unpaid workers as rural children do.
Immigration also fell sharply. A new act in lowered this to 2 percent of the resident population at the census and more firmly blocked entry for people from central, southern, and eastern European nations. The limits were relaxed slightly in The American population also continued to move during the interwar period. Two regions experienced the largest losses in population shares, New England and the Plains.
For New England this was a continuation of a long-term trend. The population share for the Plains region had been rising through the nineteenth century. In the interwar period its agricultural base, combined with the continuing shift from agriculture to industry, led to a sharp decline in its share. The regions gaining population were the Southwest and, particularly, the far West. During the s the labor force grew at a more rapid rate than population. This somewhat more rapid growth came from the declining share of the population less than 14 years old and therefore not in the labor force.
In contrast, the labor force participation rates, or fraction of the population aged 14 and over that was in the labor force, declined during the twenties from This was entirely due to a fall in the male labor force participation rate from The primary source of the fall in male labor force participation rates was a rising retirement rate. Employment rates for males who were 65 or older fell from With the depression of the unemployment rate rose rapidly from 5.
The recovery reduced unemployment to an average rate of 4. The unemployment rate rose to 5. Otherwise unemployment remained relatively low. The onset of the Great Depression from the summer of on brought the unemployment rate from 4. Earnings for laborers varied during the twenties. Table 1 presents average weekly earnings for 25 manufacturing industries. For these industries male skilled and semi-skilled laborers generally commanded a premium of 35 percent over the earnings of unskilled male laborers in the twenties.
Unskilled males received on average 35 percent more than females during the twenties. Real average weekly earnings for these 25 manufacturing industries rose somewhat during the s. For skilled and semi-skilled male workers real average weekly earnings rose 5. Real average weekly earnings for females rose on 1. Real weekly earnings for bituminous and lignite coal miners fell as the coal industry encountered difficult times in the late twenties and the real daily wage rate for farmworkers in the twenties, reflecting the ongoing difficulties in agriculture, fell after the recovery from the depression.
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The s were not kind to labor unions even though the First World War had solidified the dominance of the American Federation of Labor among labor unions in the United States. The rapid growth in union membership fostered by federal government policies during the war ended in A committee of AFL craft unions undertook a successful membership drive in the steel industry in that year. Steel refused to bargain, the committee called a strike, the failure of which was a sharp blow to the unionization drive.
Brody, In the same year, the United Mine Workers undertook a large strike and also lost. These two lost strikes and the depression took the impetus out of the union movement and led to severe membership losses that continued through the twenties. The AFL officially opposed any government actions that would have diminished worker attachment to unions by providing competing benefits, such as government sponsored unemployment insurance, minimum wage proposals, maximum hours proposals and social security programs.
But Irving Bernstein concludes that, on the whole, union-management cooperation in the twenties was a failure. Some firms formed company unions to thwart independent unionization and the number of company-controlled unions grew from to between and Until the late thirties the AFL was a voluntary association of independent national craft unions.
Craft unions relied upon the particular skills the workers had acquired their craft to distinguish the workers and provide barriers to the entry of other workers. Most craft unions required a period of apprenticeship before a worker was fully accepted as a journeyman worker. The skills, and often lengthy apprenticeship, constituted the entry barrier that gave the union its bargaining power.
The AFL had been created on two principles: Representation in the AFL gave dominance to the national unions, and, as a result, the AFL had little effective power over them. The craft lines, however, had never been distinct and increasingly became blurred. The AFL was constantly mediating jurisdictional disputes between member national unions. Because the AFL and its individual unions were not set up to appeal to and work for the relatively less skilled industrial workers, union organizing and growth lagged in the twenties.
As agricultural production in Europe declined, the demand for American agricultural exports rose, leading to rising farm product prices and incomes. In response to this, American farmers expanded production by moving onto marginal farmland, such as Wisconsin cutover property on the edge of the woods and hilly terrain in the Ozark and Appalachian regions. They also increased output by purchasing more machinery, such as tractors, plows, mowers, and threshers.
The price of farmland, particularly marginal farmland, rose in response to the increased demand, and the debt of American farmers increased substantially. This expansion of American agriculture continued past the end of the First World War as farm exports to Europe and farm prices initially remained high. However, agricultural production in Europe recovered much faster than most observers had anticipated. Even before the onset of the short depression in , farm exports and farm product prices had begun to fall.
During the depression, farm prices virtually collapsed. From to , the consumer price index fell Real average net income per farm fell over Figure 7 Farm mortgage foreclosures rose and stayed at historically high levels for the entire decade of the s. Figure 8 The value of farmland and buildings fell throughout the twenties and, for the first time in American history, the number of cultivated acres actually declined as farmers pulled back from the marginal farmland brought into production during the war.
Rather than indicators of a general depression in agriculture in the twenties, these were the results of the financial commitments made by overoptimistic American farmers during and directly after the war. The foreclosures were generally on second mortgages rather than on first mortgages as they were in the early s. Johnson, ; Alston, A major difficulty in analyzing the interwar agricultural sector lies in separating the effects of the and depressions from those that arose because agriculture was declining relative to the other sectors.
A relatively very slow growing demand for basic agricultural products and significant increases in the productivity of labor, land, and machinery in agricultural production combined with a much more rapid extensive economic growth in the nonagricultural sectors of the economy required a shift of resources, particularly labor, out of agriculture. Figure 9 The market induces labor to voluntarily move from one sector to another through income differentials, suggesting that even in the absence of the effects of the depressions, farm incomes would have been lower than nonfarm incomes so as to bring about this migration.
The continuous substitution of tractor power for horse and mule power released hay and oats acreage to grow crops for human consumption. Though cotton and tobacco continued as the primary crops in the south, the relative production of cotton continued to shift to the west as production in Arkansas, Missouri, Oklahoma, Texas, New Mexico, Arizona, and California increased. As quotas reduced immigration and incomes rose, the demand for cereal grains grew slowly—more slowly than the supply—and the demand for fruits, vegetables, and dairy products grew.
Refrigeration and faster freight shipments expanded the milk sheds further from metropolitan areas. Wisconsin and other North Central states began to ship cream and cheeses to the Atlantic Coast. Due to transportation improvements, specialized truck farms and the citrus industry became more important in California and Florida. Parker, ; Soule, The relative decline of the agricultural sector in this period was closely related to the highly inelastic income elasticity of demand for many farm products, particularly cereal grains, pork, and cotton.
As incomes grew, the demand for these staples grew much more slowly. At the same time, rising land and labor productivity were increasing the supplies of staples, causing real prices to fall. Table 3 presents selected agricultural productivity statistics for these years. Those data indicate that there were greater gains in labor productivity than in land productivity or per acre yields.
Per acre yields in wheat and hay actually decreased between and These productivity increases, which released resources from the agricultural sector, were the result of technological improvements in agriculture. In many ways the adoption of the tractor in the interwar period symbolizes the technological changes that occurred in the agricultural sector. The adoption of the tractor was land saving by releasing acreage previously used to produce crops for workstock and labor saving.
At the same time it increased the risks of farming because farmers were now much more exposed to the marketplace. They could not produce their own fuel for tractors as they had for the workstock. Rather, this had to be purchased from other suppliers. Repair and replacement parts also had to be purchased, and sometimes the repairs had to be undertaken by specialized mechanics. The purchase of a tractor also commonly required the purchase of new complementary machines; therefore, the decision to purchase a tractor was not an isolated one.
These changes resulted in more and more farmers purchasing and using tractors, but the rate of adoption varied sharply across the United States. Technological innovations in plants and animals also raised productivity. Hybrid seed corn increased yields from an average of 40 bushels per acre to to bushels per acre. New varieties of wheat were developed from the hardy Russian and Turkish wheat varieties which had been imported.
For example, in the Columbia River Basin new varieties raised yields from an average of Shepherd, New hog breeds produced more meat and new methods of swine sanitation sharply increased the survival rate of piglets. An effective serum for hog cholera was developed, and the federal government led the way in the testing and eradication of bovine tuberculosis and brucellosis.
Prior to the Second World War, a number of pesticides to control animal disease were developed, including cattle dips and disinfectants. The cattle tick, which carried Texas Fever, was largely controlled through inspections. Schlebecker, ; Bogue, ; Wood, The problems that arose in the agricultural sector during the twenties once again led to insistent demands by farmers for government to alleviate their distress. Though there were increasing calls for direct federal government intervention to limit production and raise farm prices, this was not used until Roosevelt took office.
In Congress passed the Capper-Volstead Act to promote agricultural cooperatives and the Fordney-McCumber Tariff to impose high duties on most agricultural imports. Hoffman and Liebcap, The revenues were to come from taxes imposed on farmers. This act committed the federal government to a policy of stabilizing farm prices through several nongovernment institutions but these failed during the depression.
Federal intervention in the agricultural sector really came of age during the New Deal era of the s. Agriculture was not the only sector experiencing difficulties in the twenties. Other industries, such as textiles, boots and shoes, and coal mining, also experienced trying times.
However, at the same time that these industries were declining, other industries, such as electrical appliances, automobiles, and construction, were growing rapidly. The simultaneous existence of growing and declining industries has been common to all eras because economic growth and technological progress never affect all sectors in the same way. In general, in manufacturing there was a rapid rate of growth of productivity during the twenties. The rise of real wages due to immigration restrictions and the slower growth of the resident population spurred this.
Transportation improvements and communications advances were also responsible. These developments brought about differential growth in the various manufacturing sectors in the United States in the s. Because of the historic pattern of economic development in the United States, the northeast was the first area to really develop a manufacturing base.
Routledge library on Southeast Asia, 4. Routledge, London, UK, Deng, Kent Miracle or mirage? Deng, Kent Zheng He - In: The Oxford Encyclopedia of Maritime History. Deng, Kent China: Deng, Kent The state and market in China's maritime sector In: Academia Sinica, Taipei, Taiwan, Deng, Kent Why did the Chinese never develop a steam engine? History of Technology , Deng, Kent Unveiling China's true population statistics for the pre-modern era with official census data Population Review , 43 2. Deng, Kent Zhitan salary land In: The Oxford Encyclopedia of Economic History. Deng, Kent Diandi mortgaging land for a loan In: Economic Development and Cultural Change , 51 2.
Deng, Kent Fact or fiction? Deng, Kent State transformation, reforms and economic performance in China, — In: Teichova, Alice and Matis, Herbert, eds. Nation, State and the Economy in History. Deng, Kent Great leaps backward: Deng, Kent The premodern Chinese economy: Deng, Kent Maritime sector, institutions, and sea power of premodern China Contributions in economics and economic history Greenwood Press, London, UK. Philip's Atlas of World History.
Deng, Kent - A. The Times Atlas of World History. Deng, Kent Autumn period B. Deng, Kent Chinese maritime activities and socioeconomic development Contributions in economics and economic history Deng, Kent The role of literati and technical books in long-term agricultural development in pre-modern times: Recent Doctoral Research in Economic History. Universita Bocconi, Milan, Italy, Deng, Kent Property rights in China's reform Policy , 9 3.
Deng, Kent Development versus stagnation:
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