Presentation on theme: "Property Rights and US History: Jamestown. Economic Forces in American History Introduction Jamestown was one of the earliest settlements in Britain’s."— Presentation transcript:
Economic Forces in American History Introduction Jamestown was one of the earliest settlements in Britain’s North American colonies. The colony failed not once, but twice, in 1607 and later in 1609. The majority of the colonists who died in each attempt succumbed to starvation. Survivors of the failed missions document the fact that there was plenty of food available.
Economic Forces in American History Jamestown Witnesses George Percy chronicled these events at the time, most of the settlers who died succumbed to famine. Percy also describes the countryside as being full of different kinds of food. There were "turkey nests and many Egges," "Strawberries, Mulberries, Raspberries and Fruits unknown" and "great store of Deere both Red and Fallow."  Tom Bethell, The Noblest Triumph, p. 33
Economic Forces in American History Jamestown Witnesses One eyewitness, after describing an act of cannibalism among the "poorer sorte" went on to lay blame on the colonists themselves: It were too vile to say, and scarce to be beleeved, what we endured: but the occasion was our own, for want of providence, industrie and government, and not the barenness and defect of the Countrie, as is generally supposed."  Ibid p. 34
Economic Forces in American History Focus Question The story of Jamestown raises a perplexing question: how could so many have starved to death in a land full of food? Winters in Virginia can be cold, but certainly no colder than many parts of Great Britain. Could hunting and fishing in the New World have been so different from what they'd experienced in England? Were the Indian tribes that fierce?
Economic Forces in American History Jamestown - 1610 Congratulations - you’ve made it to the New World! First, you are an indentured servant. That means that you've agreed to work for seven years to pay the Virginia Company for your passage over here. It sounds like a long time, but compared to what you faced in England this is a major step up. The terms of your indenture make it very clear that whatever you create - crops, handiwork, even your ideas - belongs to the Virginia Company for the next seven years.
Economic Forces in American History Jamestown - 1610 Second, there are some company managers who came over on the boat with you. Their job is to see that you work hard enough to make the investment in your passage worth while for the company. They will tell you what work to do and when to do it. Third, you already can see that this new land is abundant with game and fish. The soil is very fertile and even the Indians (about whom you've been a little worried) aren't so numerous as you feared. Finally, the work you do is very important for the Virginia company. They expect you to do your very best for the period of your indenture.
Economic Forces in American History Roles Colonists – Your job is to do the work given to you by the managers. – The Company owns whatever you create and can reward you in any way it sees fit. Managers (3 – 5) – Your job is to see that colonists have what they need to do the work. – You must also check the quality of the work. – Finally, you reward the colonists according to the company policy
Economic Forces in American History Work Instructions Your supervisors will be bringing around your worksheets for each round of the simulation. They will give you a sheet of paper containing 15 boxes and your work will be to draw the following figure in each box. Draw as many as you want to in the time provided.
Economic Forces in American History Production Results Round 1 Round 2 Round 3
Economic Forces in American History New Production Rules From now on, everything that a worker produces is his or hers. He or she can sell the work to the Virginia Company for an agreed upon rate. 1. The rate will be one piece of candy for every completed box. 2. The colonist may decide not to sell the Virginia Company if he or she chooses. 3. Colonists who produce no work will get no candy. 4. Company managers will collect the work and record how much candy each colonist has earned. 5. Your teacher and / or the managers will distribute candy at the end of each round.
Economic Forces in American History Production Results Round 4 Round 5 Round 6
Economic Forces in American History Debriefing Part 1 Why didn't the colonists work very hard in the early rounds? Were the colonists lazy? Were they stupid? What about the company managers - why weren't they able to motivate the colonists to work in the early rounds? What does that tell you about people, about human nature?
Economic Forces in American History Debriefing Part II What changed in the later rounds of the game? For the colonists, which part of the game did you like better? Why? For the company managers, which part of the game did you like better? Why? If you had to design your own colony, would you allow colonists to own their own land? Why or why not?
Economic Forces in American History Key Concepts Property Rights – The rules that govern who owns what under what circumstances. – The right to use, exclude others from using and transfer property as the owner sees fit. Incentives – Rules or situations to which people respond in predictable ways. – Positive incentives allow individuals to maximize their profits while minimizing losses.
Economic Forces in American History Introduction Indentured Servitude was the means for providing the British colonies with labor. Ship captains and labor brokers would create contracts with emigrants, then sell those contracts in the new world to land owners who needed workers. This simulation recreates that labor market.
Economic Forces in American History At the beginning of the 18 th Century, the typical indentured servant: Was a 20 year-old male of English heritage Could not read or write Was unskilled Lived in Pennsylvania Served an indenture of 4 years, 8 months Why 4 years 8 months? Who set the length? And how?
Economic Forces in American History Roles Emigrants – Emigrant roles come on yellow cards. – Emigrants try to make a deal for the SHORTEST indenture period they can get. – Emigrants get points for short contracts Captains, Agents – Captain or Agent roles come on blue cards. – Captains or Agentstry to make a deal for the longest indenture they can get. – Captains or Agents can earn profits with longer deals.
Economic Forces in American History Rules Emigrants – Only 1 deal per round – No fibbing about your worker classification number – DO NOT TELL the captains your maximum time of indenture Captains / Agents – Only 1 deal per round – No fibbing about where your ship is going – DO NOT TELL the emigrants how much you can get for their contracts – Captains/Agents must report deals
Economic Forces in American History Round 1 You will have approximately three minutes to make a deal in this round. You may begin when your teacher says “Go.”
Economic Forces in American History Round 2 You will have approximately three minutes to make a deal in this round. You may begin when your teacher says “Go.”
Economic Forces in American History Round 3 You will have approximately three minutes to make a deal in this round. You may begin when your teacher says “Go.”
Economic Forces in American History Debriefing Questions What was being sold in this market? Who were the buyers? Sellers? How would this market function if no one obeyed contracts? What did you notice about the general characteristics of the indenture market as we played more rounds? How was 4yrs 8months established as the term of indenture? Why is there a range of indenture contract lenghts? Who made money?
Economic Forces in American History Predict… Length of indenture as cost of passage to colonies declined… Length of indenture as economic conditions for laborers improved in England and Europe… Market for indentured servants as population grew… Market for indentured servants in South…
Economic Forces in American History Key Concepts Market Clearing Price Supply & Demand Labor Markets
Property Rights in US History: The Oklahoma Land Rush
Economic Forces in American History What would it be like if we could own things just by claiming the on a first-come-first-served basis?
Economic Forces in American History Historical Background The Land Rush of 1893 was the third in a series of land races created by the actions of the US Federal Government. These began in 1885, and continued in 1889. The Land Rush of 1893 was different, however, in one important way. Prior to the Federal Government opening the "Cherokee Strip" to settlement, the Cherokee Indians had leased the land to the members of the Cherokee Strip Live Stock Association.
Economic Forces in American History More Historical Background In 1888 the federal government stopped recognizing leases between the Cherokees and the ranchers. The next year Congress authorized purchasing the land for $1.25 an acre.  Anderson & Hill, The Not So Wild Wild West, p. 172. Congress then authorized the land rush of 1893, in which thousands of people came from all over the country to claim “free” land.
Economic Forces in American History Oklahoma – 1893 Congratulations! You've made it to the Cherokee Strip Land Rush here in Oklahoma Territory, 1893. That means that you traveled across the country just to get here and in a few minutes you’ll have a chance to get the “free land” that the government is “giving away.” Your family has brought all your resources – money, horses, tools, everything of value that you own. They’re loaded up in your wagon, ready to go the minute the cannon booms. For our purposes today those resources will be poker chips – take good care of them throughout the game. Succeeding in today's simulation is simple: just be the first family to get the deed on one of the remaining lots of land (the desks in the front of the room) and get as many of your chips there as possible. Candy prizes go to the families that successfully claim land.
Economic Forces in American History Roles Migrant Families – Groups of four or five students – Objective: to get land by being the first to pick up the sticky note/deed on a desk. – To keep as many of your chips as possible. Marshalls – 3 or 4 students for a class of 35 – Objective: to make sure the rules for carrying chips are followed. – Reward – candy for a job well done.
Economic Forces in American History Rules No one may cross the starting line until the command: “On your marks! Get Set! Go!” All family members must carry chips. Chips can only be carried on the backs of hands or on the tops of forearms. Chips must be visible to the marshals and the teacher at all times. Chips that fall off are lost. Fallen chips may not be picked up. Families must travel together - all four people in close proximity to each other. To claim a desk a family must get to the plot first, retrieve the sticky note, and stand around the plot before any other family has claimed it. After claiming the deed, a family must place on the “plot” of land the chips they successfully carried with them. (The teacher or a marshal will come by to count them.) Families who jump the gun (“Sooners”) will be removed from the game by the marshals and their chips will be confiscated.
Economic Forces in American History On your marks…
Economic Forces in American History Debriefing Questions 1 1.Prior to the race, who owned the land? 2.Once the race began, who owned it? 3.After the race who owned the land? 4.How many families got land? 5.Why did so few families get land? 6.For those families who got land, how many chips were you able to get there with you?
Economic Forces in American History Debriefing Questions 2 7.Why did so few chips get to the desks? 8.So for families that didn't get land, how many chips do you have left? 9.Was the land really free after all? 10. Is there another, less wasteful way the government could have privatized the land? What are some of the costs and benefits of doing this differently?
Economic Forces in American History Focus Questions Why did so many people have to lose so much to get “free” land being given away by the government? Is there a better way for governments to allocate scarce resources such as land?
Economic Forces in American History Debrief The Oklahoma Land Rush is central to any history of the American West It is most often seen in a romantic light, with landless immigrants from all over the globe gaining property in the US From an economic point of view, however, this episode in American history shows us how wasteful we can be when we create the wrong incentives for people to follow.
Economic Forces in American History Debrief Once there is a “race” for resources people will lose track of even the things they need to survive. Markets allow for orderly and efficient transfer of property – this is one of their strongest points!
Economic Forces in American History Key Concepts Property Rights – Individual vs Governmental – Orderly transfer of property rights Incentives – Rewards and punishments to which people respond predictably Efficiency – Orderly transfer of property rights Institutions – Not buildings but customs, ways in which an economy functions
Transaction Costs and Currency: “1808 Road Trip”
Economic Forces in American History Background Colonial & Revolutionary Periods: – No common currency (commodities, Indian Wampum, foreign coins, variety of paper monies…) 1792: US adopts dollar as “official” currency… but dollars not issued by a standard source.
Economic Forces in American History Background 1791: B.U.S. established 1794: US Mint established States CAN’T issue paper currency but they CAN create corporations by special franchise… 1793 - 1811: A large number of banks established by special franchise.
Economic Forces in American History Background 1811, 86 of 88 banks are private, state-chartered banks empowered to issue their own currency…
Economic Forces in American History 1808 Road Trip You are a lawyer / planter / businessman living in Richmond, Virginia in 1808. News of an excellent business opportunity has come your way. To take advantage of the opportunity, you must journey to Boston to meet with a group of investors.
Economic Forces in American History 1808 Road Trip Carrying letters of credit from your banker and the little cash you've been able to accumulate, you leave home with a servant and two horses. To break up the long journey, you plan to stop for business and to visit relatives or renew old acquaintances in Baltimore, Philadelphia, and New York City on your way to and from Boston.
Economic Forces in American History 1808 Road Trip In each city, you must secure one night's lodging at an Inn. Prices are posted outside the inn and typically include care and food for your horses and servant in the stable. In Boston, you must stay for 2 days to complete your business discussions.
Economic Forces in American History 1808 Road Trip You are to return home by reversing the route you traveled to Boston— staying one night each in New York City, Philadelphia, and Baltimore. If you successfully complete the journey before the end of the game, you will receive a prize.
Economic Forces in American History Rules You must visit the cities in proper geographical order. (No matter what kind of money is in your purse, you start & end in Virginia.) Except in Boston, you may purchase only one night's lodging at a time. Each time you successfully purchase a night's lodging, you must submit your lodging certificate to me. I will then mark your trip log for the city that matches your lodging certificate, and you can then continue on your way.
Economic Forces in American History Rules Each round of the game will last only 3-5 minutes. Start each successive round at the inn where you finished the previous round. Don't ask me how many rounds are in the game; I won't tell you. To earn the prize, you must complete the journey to Boston and back to your Virginia home before the game ends.
Economic Forces in American History Debrief Were there advantages to the customers of using Bank of the United States notes? Were there advantages to the innkeepers of accepting dollars? Why would they accept dollars but not any of the other state currencies? Transaction costs are the costs involved in making an exchange or transaction. What were some of the transaction costs you encountered in this activity?
Economic Forces in American History Debrief Are transaction costs included in the price of a night's lodging? Who bears the burden of the transaction costs – the traveler (buyer) or the innkeeper (seller)? Who reaps the benefits of the transaction costs - the buyer or the seller? Are transaction costs desirable or should we try to reduce them?
Economic Forces in American History Debrief Does having a common currency eliminate transaction costs? What is the impact of a common currency on transaction costs? On trade? What functions were served by the Bank of the United States, under the Constitution, adopting a single currency? Was this a benefit or a burden to the states and their citizens? Why might some states have been reluctant to make this change to a common currency?
Economic Forces in American History Where does money come from?
Economic Forces in American History Your role… Bankers & Borrowers
Economic Forces in American History Rules First, borrowers can borrow only one time per round of the game. Second, no cash changes hands in this game. Borrowers get Loan Certificates rather than money. Third, successful borrowers must deposit their loan certificates into a bank other than the one which lent them the funds.
Economic Forces in American History Round 1 Debrief How many borrowers were able to get funding in round 1? For those who were turned down, why did the bank say no? How many bankers met their goal of lending 80% of their assets? When those dollars were lent, where did they go?
Economic Forces in American History Round 1 Debrief Each bank started with $10,000 - Bankers do you have more than that now? How come? What is all that extra money doing in the economy?
Economic Forces in American History Round 2 Successful Round 1 borrowers must deposit their funds in any bank other than the one where they borrowed. Bankers: Record deposits on the Bank Balance sheet, calculate how much you have in new deposits. Remember, you can only lend 80% of the new deposits. Begin Round 2!
Round 2 Debrief Did all borrowers make deposits into another bank? Borrowers how did you decide which bank to deposit in? How do people decide in real life? Did all bankers receive some new deposits? What do you think this symbolizes in the actual economy? Bankers, do you know how to figure out how much you have to lend in round 3? Borrowers, are you ready?
Economic Forces in American History Round 3 Borrowers: Deposit money Bankers: Recalculate deposits. Remember, you can lend 80% of your deposits. Ready, set, go!
Economic Forces in American History Round 3 Debrief How many borrowers were able to get funding in round 3? For those who were turned down, why did the bank say no? How many bankers met their goal of lending 80% of their assets? When those dollars were lent, where did they go? Each bank started with $10,000 - Bankers do you have more than that now? How come? What is all that extra money doing in the economy?
Debrief In this activity the incentive for banks to make loans was bonus points/candy. What incentive do banks have for making loans in the real world? What incentive do people have for keeping their money in the bank? We started with a money supply of only $50,000. We finished with a whole lot more than that. Where did the extra money come from? What would the borrowers do with all the money they borrowed? Would their activity be helpful or harmful for an economy? How can you tell?
Economic Forces in American History Debrief In our simulation all of the loans were "good" loans because the borrowers all paid them back. What would happen in an economy where people stopped paying back their loans? What would banks be forced to do? Our reserve requirement in this simulation was 20%. What would happen to the simulation if it were changed to 30%? How about if it were changed to only 10%? Most economics textbooks say that banks "create" money. After our simulation do you agree? Why or why not?
Economic Forces in American History Role: Oil Company Executive, 1875 As oil company executives, you will be making production decisions. The goal, of course, is to maximize profits for the company.
Economic Forces in American History Rules & Procedures 1 The class will divide into six equally sized groups. Each group will be come an oil company and must: – Come up with a company name – Appoint a company treasurer Each company/group will make decisions about how much oil to produce in each round of the game.
Economic Forces in American History Rules and Procedures 2 Production decisions will be written on Production Decision Cards. Profit and loss will be computed using the Demand Forecast. – Profit and loss will reflect the production of ALL 6 Companies combined. The most profitable company will receive a prize at the end of the game.
Economic Forces in American History Debriefing 1 What strategies are being used to succeed in this simulation? What strategies didn’t work? Why? How did the profit motive act as an incentive? What behaviors did this encourage? How does the creation of a cartel affect consumers? (product availabilty? Price?) What happens in markets where collusion between producers is allowed?
Economic Forces in American History Starting Over An Industry Discussion… Next Social/Business Dinner…
Economic Forces in American History Telegram To Oil Company Executives: – As you know, cut throat competition has been ruinous to us all. – If present trends continue, some of you will be forced out of the market completely. – We are asking that you: Give your production decision cards to us in exchange for a certificate of trust. Allow us to make all decisions regarding the production and sale of the output of all your firms.
Economic Forces in American History Telegram In return we will: – Guarantee to end the destructive practices that threaten all our livelihoods. – Increase the efficiency of production and sale of oil. – Thereby stabilizing the price, output and profitability of our industry, and – Guarantee to you an equal share of the profits Please discuss our offer among yourselves and let us know your decision as soon as possible. “The Family”
Economic Forces in American History Debriefing 2 Why were the gentlemens agreements unsuccessful in our simulation? How did the trust form of organization solve problems for the businesses? Once the trust was established, whose interests were no longer protected? Many people have seen trusts as a failure of capitalism. In what way can they be seen as evidence of Adam Smith’s “invisible hand” of competition?
Economic Forces in American History Key Concepts The Law of Supply Cartels and Collusion Industrial Capitalism in the US Competition in markets
Economic Forces in American History Introduction America’s Industrial Revolution gave rise to many of life’s conveniences: automobiles, factory jobs, refrigeration and the oil industry. Competition in the oil business was a constant problem for small producers, but one of the biggest producers found a way to solve the problem of competition. This simulation shows how difficult “cut- throat” competition can be and how one family in American history tried to overcome it.
Economic Forces in American History Historical Background The Industrial Revolution is a crucial chapter in any American history class. It’s normally taught as the narrative of improved production techniques, poor labor conditions, heroic reformers and villainous “robber barons”. This simulation is designed to have students experience the problem of competition between producers, and what happens when they try to solve that problem.
Economic Forces in American History Introduction The Great Depression is a topic that is often taught in a macro sense: spiraling deflation leading to unemployment leading to government action, etc. This simulation is designed to give students a micro sense of the depression as they struggle to balance family budgets.
Economic Forces in American History Historical Background The Great Depression of the 1930s was part of a larger global financial crisis. Most Americans didn’t understand what caused the Depression, but all Americans had to deal with its effects in their daily lives. With unemployment at more than 25% and currency values rising, and banks no longer secure every family had to cut costs and increase revenues.
Roles This simulation is based on six families, each with five members. Each family has a budget and a set of roles. In each role a family member brings news to the family that means the budget will have to be revised.
Economic Forces in American History Activity Directions 1. Review your family’s current income and expenditures. 2. Select a role card from those distributed to your family discussion group. 3. Beginning with the youngest family member, proceed, in round robin fashion, to report to the family the situations described on the role cards. 4. Discuss as a family the changes you will make to deal with the situations described in the role cards. 5. When you’ve reached consensus, enter the decisions on the family budget handout. Be prepared to present your changes and explain them to the class.
Economic Forces in American History Discussion Did your quality of life change? Which changes were greater… changes in income or changes in expenditure? Over which did you feel you had more control (income or expenditure)? Why? If your families are representative, what has happened to overall level of income in Butcherville? Expenditure?
Economic Forces in American History Ripple Effect Review your family background and budget sheets to find the names of specific people and businesses that are directly impacted by the income and expenditure decisions your family made in response to the changes described in your role cards. Create a ripple diagram showing the effects of YOUR family’s budget on others in your town.
Ripple Effect Place your family in the center of the diagram (as if you were a stone thrown into the water). On the 1 st wave of ripples, write the names of people directly impacted by your choices. Next to each name indicate how they were affected, using I for “income” or E for “expenditure” and for increase, or for decrease. On successive waves, indicate others affected.
Economic Forces in American History Discussion How did one families decision to reduce consumption affect others in Butcherville? Suggest a generalization that describes the relationship between income and expenditure among the members of an economy. Suppose that families in Butcherville choose to use their savings rather than reduce consumption. Does that mean that no one’s income will be affected?
Economic Forces in American History In hard economic times, people try to protect themselves from additional hardship by cutting back on consumption. Why would such prudent measures for individuals make people worse off overall during the Great Depression?
Discussion What happens when one family economizes to adapt to hard times? What happens when every family economizes to adapt to hard times? What does this activity suggest about our current financial crisis? What should people do? Why?
Economic Forces in American History Key Concepts Paradox of Thrift Budgets Choice Scarcity Opportunity Cost Circular Flow of income & expenditure
Economic Forces in American History Key Concepts Opportunity Cost Changing Roles of Women in 20 th Century US Marginal Profit Labor Markets
Economic Forces in American History Introduction The roles of women in the America’s economic history is fascinating but almost never taught to high school students. For many reasons women started to join the official labor force in ever increasing numbers as the 20 th century went on. From the economic point of view their opportunity costs changed. This simulation is designed to portray that opportunity cost calculation.
Economic Forces in American History Focus Question When you choose to do something, to pursue a goal, what is the real cost?
Economic Forces in American History Roles Spouses – A, B and C – Each spouse creates a certain number of satisfaction points – Satisfaction points have a market value: $1 = 1 sp – Goal for spouses is to maximize their Satisfaction points by either taking a job or choosing not to. Employers – Each employer needs to hire workers for each round of the game. – Employers know how much profit each additional worker will give them at the prevailing wage. – Employers bargain with spouses individually each round – Goal: maximize profits
Economic Forces in American History Satisfaction Points Satisfaction points ≠ Wealth Level of satisfaction affected by things such as: – Family size – Numbers & ages of children – Working spouse’s job qualities and income – Family values – Personalities
Economic Forces in American History Satisfaction Points Could Satisfaction points be provided for the family in another way? – Hiring a sitter or house cleaner – Accepting that house won’t be as clean – Store-purchased bread instead of homemade. Not all substitutes are perfect substitutes. Some may provide more satisfaction… some less. Doing without IS a substitute (even if not very satisfactory)
Economic Forces in American History Satisfaction Points In this activity, household spouses can earn satisfaction points in 2 ways: – Stay home and perform household tasks (cleaning, meal prep, child care, gardening, volunteer work, etc.) – Purchase “satisfaction points” with money earned by working $1 = 1 Satisfaction Point
Economic Forces in American History GOAL: Have more satisfaction points than you started with. Number of satisfaction points on your role card DOES NOT affect your ability to be successful… Extra points represent a variety of different “improvements” in your families’ lives. (better food, nicer clothes, saving for college, enjoying work, happiness from staying home…)
Economic Forces in American History GOAL: Have more satisfaction points than you started with. Extra Satisfaction points earned can be used to shop in the classroom store. Ex: Start with 20 pts each round. Need MORE than 60 pts after 3 rounds to shop in store. More pts = more stuff!
Economic Forces in American History Results RoundSpouses w/ jobs Spouse w/out jobs 1 2 3
Economic Forces in American History Debriefing 1 After this round, how many spouses took jobs? What was your opportunity cost of working? For those who didn’t take jobs, why not? What was the opportunity cost of staying home? For employers, why didn’t you hire more people? Are we ready for the next round?
Economic Forces in American History Results RoundSpouses w/ jobs Spouse w/out jobs 1 2 3
Economic Forces in American History Debriefing 2 Anyone choose to work who stayed home in round 1? Why? How did the opportunity cost of staying home change from round 1 to round 2? Are we ready for the next round?
Economic Forces in American History Round 3 New Role Cards….
Economic Forces in American History Results RoundSpouses w/ jobs Spouse w/out jobs 1 2 3
Economic Forces in American History Debriefing 3 Spouses – what had to change in order for you to take a job in the three rounds of the game? Why? Employers what had to change in order for you to hire more workers in each round? Do women’s choices become easier or harder as their alternatives increase? What eras of US history are portrayed in each round of the game?