Download Study Guide for Exam HIST 155

Penn State Harrisburg
History 155
American Business History
Professor Shelley Morrisette
Study Guide
What Will the Exam Cover?
1. Economic Systems. An economic system is a system of production and exchange
of goods and services as well as allocation of resources in a society. It includes the
combination of the various institutions, agencies, entities (or even sectors as described
by some authors) and consumers that comprise the economic structure of a given
community. A related concept is the mode of production. Systems include --colonialism, mercantilism, physiocracy, and classical capitalism. Know what each of
these systems is and how they are different.
2. Commerce in the Colonial Era. Here is a list of colonial business topics: 1. City
(Boston, New York and Philadelphia) merchants. 2. Plantation businessmen. 3.
Artisans and manufacturers. 4. Peddlers. 5. American work ethic. 5. The Navigation
Acts. The colonists' first regular work was raising food for themselves, and throughout
the colonial period this was the main occupation of many families. A European company
that sent colonists to America, however, expected a return on its investment. There
were those among the settlers, also, who hoped to win a fortune in the New World.
Consequently, commercial activities were an important part of colonial life.
3. Adam Smith and Wealth of Nations. An Inquiry into the Nature and Causes of
the Wealth of Nations, generally referred to by its shortened title The Wealth of
Nations, is the magnum opus of the Scottish economist and moral philosopher Adam
Smith. First published in 1776, the book offers one of the world's first collected
descriptions of what builds nations' wealth and is today a fundamental work in classical
economics. By reflecting upon the economics at the beginning of the Industrial
Revolution, the book touches upon such broad topics as the division of labor,
productivity, and free markets.
4. Slavery in the United States was the legal institution of human chattel slavery that
existed in the United States of America in the 18th and 19th centuries after it gained
independence and before the end of the American Civil War. Slavery had been
practiced in British North America from early colonial days, and was recognized in all
the Thirteen Colonies at the time of the Declaration of Independence in 1776.
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By the time of the American Revolution (1775-1783), the status of slave had already
become a caste associated with African ancestry, contributing to a system and legacy in
which race played an influential role. At the time the United States Constitution was
ratified (1789), a relatively small number of free persons of color were among its voting
citizens. After the Revolutionary War, abolitionist laws and sentiment gradually spread
in the Northern states; in addition, as most of these states had a higher proportion of
free labor, they abolished slavery by the end of the 18th century, some with gradual
systems that did not free the last slave until the late 1820s. But the rapid expansion of
the cotton industry from 1800 in the Deep South after invention of the cotton gin led to
the Southern states to depend on slavery as integral to their economy. They attempted
to extend it as an institution into the new Western territories, believing that slavery had
to expand, or it would die; they dreamed of annexing Cuba as a slave, plantation-based
territory. The United States was polarized over the issue of slavery, represented by the
slave and free states divided by the Mason–Dixon line, which separated free
Pennsylvania from slave Maryland and Delaware. By the 1860s slavery in the Deep
South had become “industrialized.” Be able to explain what this means.
5. The revolutions in transportation, communication and industrial production.
The growth of the Industrial Revolution depended on the ability to transport raw
materials and finished goods over long distances. There were three main types of
transportation that increased during the Industrial Revolution: waterways, roads, and
railroads. Transportation was important because people were starting to live in the
West. During this time period, transportation via water was the cheapest way to move
heavy products (such as coal and iron). As a result, canals were widened and
deepened to allow more boats to pass. Robert Fulton made the first steam-powered
engine to power a steamboat, and in 1807 he demonstrated its use by going from New
York City to Albany via the Hudson River. His steamboat was able to carry raw
materials across the Atlantic Ocean by the mid 1800's. The roads also improved
immensely during this time period. Previously, people traveled using animals or by foot,
but there were many problems with the conditions of the roads. In 1751, turnpikes were
created for easier transportation, especially for the horse-drawn wagons. John Loudon
McAdam made "macadam" road surfaces which consisted of crushed rock in thin
layers. Thomas Telford made new foundations in roads with large flat stones. Soon
after, roads across America were improved based on these techniques. The closest to
trains were horses, commonly used to pull freight cars along rails. In 1801, Richard
Trevithick made the first steam locomotive. These improvements on waterways, roads,
and railroads all made traveling safer, and it allowed goods to be moved more
efficiently. In 1837 commercial telegraphs began to appear. They quickly spread
throughout most Northern cities bringing almost instant communication.
6. North and South industrial policies prior to 1860. In 1860, the South was still
predominantly agricultural, highly dependent upon the sale of staples to a world market.
By 1815, cotton was the most valuable export in the United States; by 1840, it was
worth more than all other exports combined. But while the southern states produced
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two-thirds of the world's supply of cotton, the South had little manufacturing capability,
about 29 percent of the railroad tracks, and only 13 percent of the nation's banks. The
South did experiment with using slave labor in manufacturing, but for the most part it
was well satisfied with its agricultural economy.
The North, by contrast, was well on its way toward a commercial and manufacturing
economy, which would have a direct impact on its war making ability. By 1860, 90
percent of the nation's manufacturing output came from northern states. The North
produced 17 times more cotton and woolen textiles than the South, 30 times more
leather goods, 20 times more pig iron, and 32 times more firearms. The North produced
3,200 firearms to every 100 produced in the South. Only about 40 percent of the
Northern population was still engaged in agriculture by 1860, as compared to 84
percent of the South.
Even in the agricultural sector, Northern farmers were out-producing their southern
counterparts in several important areas, as Southern agriculture remained labor
intensive while northern agriculture became increasingly mechanized. By 1860, the free
states had nearly twice the value of farm machinery per acre and per farm worker as did
the slave states, leading to increased productivity. As a result, in 1860, the Northern
states produced half of the nation's corn, four-fifths of its wheat, and seven-eighths of its
oats.
The industrialization of the northern states had an impact upon urbanization and
immigration. By 1860, 26 percent of the Northern population lived in urban areas, led by
the remarkable growth of cities such as Chicago, Cincinnati, Cleveland, and Detroit,
with their farm-machinery, food-processing, machine-tool, and railroad equipment
factories. Only about a tenth of the southern population lived in urban areas.
7. Politics, Business and Law in the Colonies. From its earliest settlement in the
early 1600s by small groups of British individuals to the conclusion of the American
Revolution, when some five million people were poised to sprawl across a continent,
British America had a dual economy. On the one hand, it was a colonial economy that
depended on its ability to export commodities to the home country of England, the other
colonies of the Western Hemisphere, and the eager buyers from foreign empires.
Exporting, in turn, fostered deepening networks of credit, ability to import necessary and
desirable goods from other sources, and systems of payment throughout the Atlantic
world. On the other hand, British Americans developed a thriving internal economy in
which they cleared land, grew much of their own food, provided their own housing and
most of their tools, and expanded interdependent markets between regions and among
myriad local places within the colonies. Although officials at the hub of the British
Empire in London established navigation laws to regulate the markets of British
American colonial commerce and to restrict British American manufacturing, the
economies of farms, plantations, and towns grew steadily. Collectively known as the
Acts of Trade, the laws embodied policies founded on the goal of bringing colonies
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securely under the economic wing of England, but also of curtailing the potential for
British Americans to develop parallel economies. By the early 1700s some sectors of
the British American economy were growing by leaps and bounds, aided by the Acts of
Trade somewhat, but increasingly prospering outside the acts. During the next decades,
British American per capita incomes would steadily rise, and the accumulation of
household goods by middling people as well as the maturity of their markets for colonial
and imported goods would provide visible evidence of colonial economic growth.
Nevertheless, a paradox of economic development persisted for British Americans.
Throughout the colonial era they lived in distinctive regions marked by the agricultural
and commercial systems that evolved in each of them over the colonial era, and marked
as well by the dominant labor systems and economic cultures that suited these different
regional economies. Yet, they were also actively engaged in Atlantic, occasionally
global, connections that brought goods and people together in mutually dependent
relationships that stretched far beyond the settled areas of British America.
What is the Format and Purpose of the Exam?
The exam will have 3 essay questions. Each question will be worth 33 points (and you
have an extra point for free)! Each question should be answered with at least 3 well
written paragraphs. You will have 1 hour and 15 minutes to complete the exam. We
will begin promptly at 2:30. At 3:45 you will receive a 5 minute wrap-up the exam call.
The purpose of the examination is to measure your understanding of the material
gained in class and assigned readings. Prior quiz questions have provided practice for
this exam. Utilizing that format is a good way of thinking about these questions.
How Will it Be Graded?
I score the exam on a 100 point scale. I follow Penn State’s recommendations for letter
grade equivalents. The range for a letter grade is 90 to 100 for an A, 80 to 89 for a B, 70
to 79 for a C, 60 to 69 for a D. A score below 60 is considered failing. I personally read
and grade all the exams.
Here is an Example of an Exam Question and Answer?
What factors contributed to the rise and fall of the American whaling industry in the 19 th
century?
One hundred and fifty years ago, whaling was a booming worldwide business and the
United States was the global leader. In 1846, we owned 640 whaling ships, more than
the rest of the world put together and tripled. At its height, the whaling industry
contributed $10 million (in 1880 dollars) to GDP, enough to make it the fifth largest
sector of the economy. Whales contributed oil for illuminants, ambergris for perfumes,
and baleen, a bonelike substance extracted from the jaw, for umbrellas. Fifty years
later the fleet had decreased by 92% and output declined to pre-1816 levels.
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America dominated the industry for four reasons. First and most broadly, Americans
sailed bigger and better ships guided by smarter ocean cartography and more precise
charts. Second, a series of tinkerings with harpoon technology led to the invention of the
iron toggle harpoon. Third, innovations in winch technology made it easier to pull in or
let out large sails, reducing the number of skilled workers needed to man a vessel.
Fourth, whale captains were innovators in employee compensation. In the lay terms,
every member of the ship's company from captain to cabin boy signed on for a
predetermined percentage of the value of the product returned.
The standard explanation for the decline of whaling in the second half of the century is a
pat two-parter consisting of falling demand (from alternative sources for energy) and
falling supply (from over-hunting). To be sure, energy preferences had been flowing to
another source of oil --- petroleum. In 1859, the US produced no more than 2,000
barrels of the stuff a year. Forty years later, we were producing 2,000 barrels every 17
minutes. But demand doesn't tell the whole story. In the middle of the 19th century,
whale oil prices increased, which should have led to more production. But output never
recovered after the 1850s even as whaling continued to grow around the world.
Thanks to the industrial revolution, higher wages, higher opportunity costs of capital,
and a plethora of entrepreneurial alternatives turned Americans toward the domestic
economy. Between the 1860s and the 1880s the wages of average US workers grew by
a third, making us three times more expensive than your typical Norwegian seaman.
Whales aren't national resources. They're supranational resources. They belong to
whomever can hunt them most efficiently. With all the benefits of modern whaling
technology and workers at a third the price, Norway and other countries snagged a
greater share of the world's whales. This is an example about how technology replaces
workers and enriches workers, how rising wages benefit us and challenge companies,
and how opportunity costs influence investors and change economies.
REMEMBER: This is a good answer to the proposed question. It directly answers the
question. It offers good general points and specific examples. It is well written and is
free of grammar and spelling error. This practice question and answer is presented to
let you know what to expect and how to respond on the exam. We have had several inclass quizzes that prepared you for this type of exam question. Please remember to
consult the rubrics provided for exam grading. It will explain the importance of each
factor in the grading process.
Still Have Questions?
Contact me at [email protected] or 717-477-1722, or see me at the office in E311
Olmsted.
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