Lecture4 - The Facts The Frontier Mechanization Supply...

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Unformatted text preview: The Facts The Frontier Mechanization Supply Shocks Challenges to American Agriculture American Economic History University of California, Berkeley Department of Economics September 7, 2010 Econ 113 (UC Berkeley) Lecture 4 9/7/2010 0 / 33 The Facts The Frontier Mechanization Supply Shocks Today's Agenda: Agriculture The potential of agriculture is discovered during colonization Antebellum Americans sought to expand through the Pacific Coast To what extent did economic opportunities affect land policies? One of the biggest boons to agriculture was the rise of technology Yet, technology was not always adapted, at least not immediately What accounts for the diffusion of technology? Profits were greatly affected by unpredictable, seasonal shocks Which shocks helped, and which were disastrous? How did farmers respond to the seasonal nature of agriculture? Econ 113 (UC Berkeley) Lecture 4 9/7/2010 1 / 33 The Facts The Frontier Mechanization Supply Shocks Nineteenth century agriculture Source: Margo. Econ 113 (UC Berkeley) Lecture 4 9/7/2010 2 / 33 The Facts The Frontier Mechanization Supply Shocks Crop mix across U.S. Note: Darker shading more land devoted to crop Source: Fishback, Fox, and Rhode (2010). Econ 113 (UC Berkeley) Lecture 4 9/7/2010 3 / 33 The Facts A similar picture emerges from the distribution of labor inputs in crop The Frontier Mechanization production on Kollock's plantation in 1860 as shown in Fig. 1: whereas the monthly labor input in total crop production varied relatively little over the year (except for June, July, and August when most crops were "laid by"), its division between cotton and other crops changed considerably, in accor- Supply Shocks Crop rotation outside of peak-harvest season lot 011 JFMAMJJASOND ' ' ' ' ' L ' ' ' Months Fig. I. Monthly distribution of mandays per working day in crop production on Ossabow Island, Kollock's Plantation, 1860. Source: George Kollock, Planfn&n Book of Ossabow Island. Vol. 19 (1860). Ms. in the Southern Historical Collection at the University of North Carolina Library, Chapel Hill, North Carolina. *`See O.W. Taylor (1958, pp. 99-100). Note: Dashed line is cotton. Solid line is other crops. Dark line is total. Source: Metzer (1975). Econ 113 (UC Berkeley) Lecture 4 9/7/2010 4 / 33 The Facts The Frontier Mechanization Supply Shocks Multiple tasks in growing crops, varied by season Source: Metzer (1975). Econ 113 (UC Berkeley) Lecture 4 9/7/2010 5 / 33 The Facts The Frontier Mechanization Supply Shocks Native American Removal Early 19th century: Americans sought to acquire Native American land Native American land in South was potentially valuable for cotton Jefferson initiated policy of them remaining on lands if they assimilated Anticipated they would not thrive without hunting and gathering As a result, Native Americans would trade their land to Americans Land acquisition: via treaty with tribes or sometimes under coercion Treaty often included exchange with comparable land in the west Econ 113 (UC Berkeley) Lecture 4 9/7/2010 6 / 33 The Facts The Frontier Mechanization Supply Shocks Cherokees were more "civilized" Cherokee tribe: persisted east of Mississippi longer than other tribes Made more effort to civilize in terms of agriculture, culture, and literacy Cognizant their fate would be like other tribes without these efforts Occupied parts of Tennessee, Alabama, North Carolina, and Georgia Indian Removal Act: passed May 1830, under Andrew Jackson Appropriated $500,000 to assist tribes in moving west of Mississippi Cherokee and last few tribes signed treaties, Seminoles fought war Cherokee tribe received land in Oklahoma Econ 113 (UC Berkeley) Lecture 4 9/7/2010 7 / 33 The Facts The Frontier Mechanization Supply Shocks Cherokees as productive in corn as white farmers 132 Wishart TABLE 6 PER CAPITA CORN OUTPUT IN SELECTED REGIONS OF THE SOUTHEAST IN 1850, 1840, AND FOR THE CHEROKEES IN 1835 (bushels per capita) Region or Group Valley of Virginia Valley of East Tennessee Middle Tennessee Kentucky Blue Grass region Virginia mountains Kentucky mountains Cumberland plateau Northwest Georgia Floyd County Georgia in 1840 Dekalb County Georgia in 1840 Tennessee Cherokees in 1835 Alabama Cherokees in 1835 North Carolina Cherokees in 1835 Georgia Cherokees in 1835 Floyd County Cherokees in 1835 Eastern Cherokees in 1835 Output 21.37 49.41 65.26 82.66 26.97 39.07 42.16 41.89 55.06 27.99 45.15 51.70 21.31 27.34 30.85 31.44 Notes: Cherokee output per capita is data in Table 1 total output Source: Wishart (1985). slavescomputed from marriage. Whiteby dividing capitacorn Dekalb by the total population including and whites by for output per County and Floyd County, Georgia, in 1840 is computed by dividing total corn output in these Econ 113 (UC Berkeley) Lecture 4 9/7/2010 8 / 33 The Facts The Frontier Mechanization Supply Shocks Reassigned Native American land through lotteries Lottery: used to reassign Native American land Territory carved into districts that were mapped into rectangular plots Georgia: typically, male household heads were favored in the draw Single, adult males required residing in state for at least 3 years Could not have won a plot in a previous lottery Veterans, widows, and orphans were given two draws Used procedure for removal of Creeks in 1820s and Cherokees in 1830s Econ 113 (UC Berkeley) Lecture 4 9/7/2010 9 / 33 The Facts The Frontier Mechanization Supply Shocks Use of lotteried land Costless: lottery easy to enter, so many did without intension to relocate Information about land and lottery was public Lottery winners often sold or rented their land Implications of lottery: secondary market for land Poorer farmers had the chance to make a fortune if they won good land Lottery revenues: state used to lower tax revenues Could have, instead, invested in public goods... Econ 113 (UC Berkeley) Lecture 4 9/7/2010 10 / 33 The Facts The Frontier Mechanization Supply Shocks 848 Weiman TABLE Land in Cotton Belt and near navigable rivers were valuable 4 REGRESSIONS EXPLAINING THE PER ACRE PRICE OF FRACTIONAL PLOTS IN THE 1827 TERRITORY Independent Variables Constant BORDER COUNTIES COTTON BELT CHATTAHOOCHEE RIVER BORDER COUNTIES * Source: Weiman (1991). CHATTAHOOCHEE RIVER Econ 113 (UC Berkeley) 1 0.26 (0.211) 0.66 (0.361) 1.14 (0.275) 2.68 (0.280) -1.22 (0.449) 2 0.61 (0.259) 0.68 (0.360) 1.06 (0.276) 2.71 (0.280) -1.26 (0.449) 3 1.13 (0.317) 0.67 (0.359) 1.08 (0.275) 2.72 (0.279) -1.26 (0.447) Lecture 4 9/7/2010 11 / 33 The Facts The Frontier Mechanization Supply Shocks The Frontier: where was it? 90o longitude Figure 1 Population Density of U.S. Counties, 1850 Source: Ferrie (1997). o Econ 113 (UC Berkeley) Lecture 4 9/7/2010 12 / 33 The Facts The Frontier Mechanization Supply Shocks Where did people migrate? East-West migration: farmers developed skills specific to their latitude Could continue growing cotton by moving east, not north Early 1800s migration: Westward through Mississippi New Englanders, New York, and Pennsylvania to Ohio North Carolina, South Carolina, and Georgia to Alabama and Mississippi California Gold Rush of 1848 established the complete westward trail Substantial continuation westward during 1850s, declining into 1860s Econ 113 (UC Berkeley) Lecture 4 9/7/2010 13 / 33 The Facts The Frontier Mechanization Supply Shocks Who chose to migrate into the frontier? Land ordinances: Northwest Territory divided into small plots of land No more than 160 acres, sold from government to public Often purchased by land speculators, looking to resell land Homestead Act of 1862 reduced cost of land to help small farmers Who migrated? Those who had much to gain Urban dwellers not faring well in the North Southern farmers who did not own as valuable land Wealth improved substantially as a result Econ 113 (UC Berkeley) Lecture 4 9/7/2010 14 / 33 The Facts The Frontier Mechanization Supply Shocks Mechanization of harvesting process 1793: Cotton gin - separates fibers from seeds 1797-1837: Improvements in plow technology - preparing soil for planting 1834: McCormick reaper - crop cutting and gathering for small grains 1837-1869: Mechanization of other stages of harvesting process for grains 1910-1940: Tractor replaces use of horses and mules 1949-1964: Cotton picker completes cotton mechanization Econ 113 (UC Berkeley) Lecture 4 9/7/2010 15 / 33 The Facts The Frontier Mechanization Supply Shocks Why didn't the reaper diffuse earlier? Reaper would substitute for labor by making it more productive Market for reaper did not take off until 1850s Why did it take 20 years for the reaper to diffuse? Mid-1850s: demand for grains increased Shifts demand outward in the labor market and reaper market How did these markets differ? Labor inelastic: high demand during peak harvest season Econ 113 (UC Berkeley) Lecture 4 9/7/2010 16 / 33 The Facts The Frontier Mechanization Supply Shocks Traditional explanation: labor supply more inelastic % in wages > than % in capital costs (reaper) Reaper more elastic because it was more readily available in the market Econ 113 (UC Berkeley) Lecture 4 9/7/2010 17 / 33 The Facts The Frontier Mechanization Supply Shocks Alternative explanation? Threshold Size Grains: produced on small, family farms in North and Midwest Could the small-scale farmer afford the reaper? Individual farmer: reaper supply might have also been inelastic Costs of labor varied little with farm size, but cost of reaper did Threshold farm size below which it did not make sense to buy a reaper Below that size, reaper is too expensive Increased demand for grains not likely explanation Farms would have had to increase in size Econ 113 (UC Berkeley) Lecture 4 9/7/2010 18 / 33 The Facts The Frontier Mechanization Supply Shocks Indivisibility of technology Threshold size argument assumes reaper was indivisible Assumes farmer could not share or rent the reaper Farmer only considered full cost of the reaper However, evidence that many small farms shared a reaper Small farms formed close networks Shared costs of reaper by purchasing and sharing as a group Threshold argument is not likely culprit... Econ 113 (UC Berkeley) Lecture 4 9/7/2010 19 / 33 The Facts The Frontier Mechanization Supply Shocks McCormick improved the reaper business Late 1840s: McCormick moved plant from Virginia to Chicago Made transporting reaper to farms easier and cheaper Other machines were sold by small blacksmith shops 1850-1860: number of firms selling reapers grew from 20 to 73 Number of reapers produced grew tenfold to 25,000 machines Score of giant enterprises, large-scale factories Followed McCormick's example of advertising and installment credit Econ 113 (UC Berkeley) Lecture 4 9/7/2010 20 / 33 The Facts The Frontier Mechanization Supply Shocks Reaper improved in quality Product quality improved substantially during 1850s McCormick had been selling basic hand-rake reaper in 1849 1850s witnessed the rise of the reaper-mower Most products that were sold were reaper-mowers Reaper became more durable, more than doubling its life span Farmers likely expected to get greater use out of new reaper Capital-labor trade-off became worthwhile Econ 113 (UC Berkeley) Lecture 4 9/7/2010 21 / 33 The Facts The Frontier Mechanization Supply Shocks Why did it take cotton so long to mechanize? Growing cotton had a wide-ranging amount of tasks each year Cotton picking was very labor-intensive and difficult to mechanize Picking required use of labor that was then used in all other tasks Availability of cheap labor mitigated need to partially mechanize Southeast used labor year-round rather than seasonally Southwest had lower supply of cheap labor mechanized earlier Inventions such as tractors did not diffuse in Cotton South until cotton picker Tractor meanwhile diffused elsewhere Adequate cotton-picker entered the market during late 1940s Immediate transition to mechanization of growing cotton Econ 113 (UC Berkeley) Lecture 4 9/7/2010 22 / 33 The Facts The Frontier Mechanization Supply Shocks The effect of weather and other natural shocks Weather: affects length of growing season Crops have specific rain and temperature requirements Weather can be favorable or harmful Natural disaster: destroys ability to grow crops in the ground Equilibrium: shocks shift supply curve Price responses less severe for crops sold internationally Corn and hay have higher transport costs so more local Cotton and wheat weigh less and are easier to transport Econ 113 (UC Berkeley) Lecture 4 9/7/2010 23 / 33 The Facts The Frontier Mechanization Supply Shocks Supply shock to growing cotton or wheat Figure 2: Low transport costs and strong local market, adverse supply shock P S2 L S1L Pbuy P b P a Ci int int Psell int DL Qc Qb Qa Q Source: Fishback, Fox, and Rhode (2010). Econ 113 (UC Berkeley) Lecture 4 9/7/2010 24 / 33 The Facts The Frontier Mechanization Supply Shocks Supply shock to growing corn or hay more disastrous Figure 1: High transport costs and weak local market, adverse supply shock P S2 L S1L int Pbuy P b Ci int int P a Psell DL Qc Qb Qa Q Source: Fishback, Fox, and Rhode (2010). Econ 113 (UC Berkeley) Lecture 4 9/7/2010 25 / 33 The Facts The Frontier Mechanization Supply Shocks Boll weevil negatively affected cotton production Econ 113 (UC Berkeley) Lecture 4 9/7/2010 26 / 33 The Facts The Frontier Mechanization Supply Shocks What is boll weevil? Boll weevil: small beetle Native to Mexico and Central America American South: boll weevil fed almost exclusively on cotton plant Weevils fed on leaves, eventually moving to the bolls Weevils continued to feed until cotton plant was destroyed Econ 113 (UC Berkeley) Lecture 4 9/7/2010 27 / 33 The Facts The Frontier Mechanization Supply Shocks 688 Lange, Olmstead, and Rhode Where and when the boll weevil spread FIGURE 1 USDA MAP OF THE SPREAD OF THE BOLL WEEVIL, 18921922 Source: Lange, Olmstead, and Rhode (2009). Source: Hunter and Coad, Boll-Weevil Problem, p. 3. Econ 113 (UC Berkeley) Lecture 4 9/7/2010 28 / 33 The Facts The Frontier Mechanization Supply Shocks 704 Lange, Olmstead, and Rhode Boll weevil negatively affected cotton output A. Bales B. Acres 50 Percent Difference Relative to Year = 0 100 50 10 5 C. 0 5 10 60 4020 0 20 40 10 0 5 D. 0 5 10 Yield Ginning 60 40 20 0 20 10 5 0 5 10 60 40 20 0 20 10 5 0 5 10 Years Relative to the Arrival of the Weevil FIGURE 5 PRODUCTION MEASURES RELATIVE TO THE ARRIVAL OF THE WEEVIL Notes: The x-axis shows years relative to the arrival of the weevil. The y-axis shows the percentage difference to the year of arrival. Dashed lines represent two standard error bounds. The thick line in ginning (panel D) shows the time pattern in ginning estimated on census years only. It allows comparison of the estimates from the ginning data with those from the census data. Source: See the text. Source: Lange, Olmstead, thanRhode or three harvested and ginned, and two (2009). Econ 113 (UC Berkeley) Lecture 4 years before contact. The magnitude of the effect is statistically significant and economically 9/7/2010 29 / 33 The Facts The Frontier Mechanization Supply Shocks Boll weevil also induced out-migration Substantial migration both before and after the boll weevil Population increaesd before the boll-weevil in less cotton-intensive counties Anticipation of boll weevil might have induced earlier migration Population then declined in these counties following the boll weevil Cotton-intensive counties experienced the greatest population declines Those who remained tried to use land instead for corn Econ 113 (UC Berkeley) Lecture 4 9/7/2010 30 / 33 The Facts The Frontier Mechanization Supply Shocks The Dust Bowl Dust Bowl swept the Great Plains through the 1930s Wind erosion: dust storms blew enormous quantities of topsoil off land Successive windstorms removed plan nutrients ground was sterile Water erosion: water failed to absorb into land Soil conservation is important for mitigating effects of drought Wind erosion could be mitigated by leaving land fallow Could convert cropland into grasslands or pasture, both less profitable Farms were not large enough to choose soil conversation during 1930s Plains were filled with many small farms due to Homestead Act Econ 113 (UC Berkeley) Lecture 4 9/7/2010 31 / 33 The Facts The Frontier Mechanization Supply Shocks Consequences of the Dust Bowl Immediate, substantial, and persistent decrease in land values Most substantial in regions with higher levels of erosion Nevertheless, land in these regions remained in farmland Substantial out-migration from high erosion regions Relocated to lower erosion regions ...or to the west (Grapes of Wrath) Econ 113 (UC Berkeley) Lecture 4 9/7/2010 32 / 33 The Facts The Frontier Mechanization Supply Shocks Conclusion Substantial interest in Westward expansion during antebellum period High value of Native American land, in part, spurred their removal Frontier was potential opportunity for those not doing as well out East Technologies increased labor productivity for particular crop-growing season Diffusion depended on quality of technology Aailability of cheap labor reduced demand for new technologies Substantial potential for weather and natural disasters to affect production Natural disasters accompanied by migration, some change in land use Econ 113 (UC Berkeley) Lecture 4 9/7/2010 33 / 33 ...
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This note was uploaded on 02/06/2012 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at University of California, Berkeley.

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