Deck 7: Law and the Rise of Classical American Capitalism

Question 1

Prior to the Civil War (1861-1865)American capitalism was free from government influence and controls.The government only served as the protector of private property rights and the provider of national defense.

Answer 1

False

Question 2

The appearance of "classical American capitalism" in the middle and late 19th century includes all of the following except

A) An industrial labor force concentrated in manufacturing centers
B) The commercialization of agriculture and extractive industries
C) The rise of big-time finance and giant transportation systems
D) The strengthening of small scale family farm enterprises and hand-crafted production activities

Answer 2

The strengthening of small scale family farm enterprises and hand-crafted production activities

Question 3

The power of the U.S.government to seize private property or exercise the right of eminent domain was an English innovation.

Answer 3

False

Question 4

Traditionally,laws of incorporation have been predominantly privileges of the states.

Question 5

As an economy grows and develops,the police powers of the government with respect to controlling,regulating and inspecting businesses and their output become increasingly more costly to uphold and protect.

Question 6

With regard to the American Revolution,research suggests that

A) it was not waged against the law but against a particular alien authority.
B) all contracts, respecting property, remained basically unchanged.
C) the basic ideas established in the colonial era remained untouched by the Revolution, apart from the abolition of primogeniture and perpetual entailment.
D) all of the above are true.

Question 7

Incorporated firms first began appearing in the 1850s.

Question 8

During the antebellum period,rapid economic growth was accompanied by significant changes in public economics and policy-making.

Question 9

The rights of state and local government to regulate,license and control businesses were taken away after the American Revolution.

Question 10

Both Horwitz (1973)and Scheiber (1975)emphasize the restraining effects of judicial formalism on U.S.economic growth in the antebellum period.

Question 11

The basic nature of the real property tenure that was transferred here from England included all of the following characteristics of ownership except

A) Ownership by purchase was perpetual as long as taxes due were met.
B) Land could descend to heirs either by will or inheritance.
C) Ownership included surface resources but not subsurface resources or mineral rights, like iron ore, whose ownership was retained by the state.
D) The right to exploit owned resources (right of waste) was complete.

Question 12

The right to grant charters to incorporated firms is reserved to the federal government,according to the Constitution.

Question 13

The fee simple form of land ownership in the United States was of English origin.

Question 14

The American Revolution changed the basic structure of private property rights inherited during the colonial period.

Question 15

During the colonial period,regulation of business activities was the right of government and its duty-extensive regulation was done,such as licensing,inspection,price fixing,etc.Which statement best describes regulation in the decades after 1789?

A) Regulation continued at about the same level as during the colonial period.
B) As commerce and manufacturing became more complex, the old police-power controls by detailed inspection became increasingly difficult to maintain and many controls were abolished by the states.
C) Because the economy was becoming more complicated, the task of regulation shifted to the federal government.
D) Regulation was abandoned because it was inconsistent with property rights guaranteed by the Constitution.

Question 16

Local,state and federal government control and influence over businesses through taxes,subsidies,licensing and inspections are a firm part of U.S.history.

Question 17

The Charles River Bridge v.Warren Bridge (1837)decision established that a state could incorporate competing franchises,effectively overturning the old idea that a corporate charter implied a grant of monopoly.

Question 18

The equal wealth and income distribution in the U.S.during its antebellum period can be clearly linked to its system of private property rights over land and minerals.

Question 19

Court rulings in the 19th century

A) tended to favor business and profit-making activities.
B) tended to protect traditional amenity rights of property, such as the right to clean air, clean ?water, scenery and quiet enjoyment of property.
C) tended to favor small business activities over big business corporate activities.
D) tended to promote worker safety and ensure that employers were fully liable for ?worker injuries, should they occur.

Question 20

The American Revolution was waged against the colonial governments that had emerged and had been supported by the English.

Question 21

Which of the following is false?

A) Constitutions are the basic framework of law.
B) The day-to-day interpretation and application of constitutions are matters for legislatures and the courts.
C) The U.S. is a "common-law" (judge-made law) country, even though we operate by positive statute law and written constitution.
D) The "police power" of government to control business activity was reduced significantly by the U.S. Constitution compared to what it had been during the colonial period.

Question 22

Which of the following statement(s)is true?

A) All state legislatures acted to create corporations.
B) The federal government created the federal incorporated entities when it established the First (1791-1811) and Second (1816-1836) Banks of the United States.
C) All federal, state and local governments possessed the right to create corporations.
D) All of the above are true.

Question 23

To secure a charter,the deciding bodies required which of the following from the business enterprises?

A) A statement of business purpose and location
B) A business plan
C) A description of capital and labor requirements and expectations
D) All of the above

Question 24

Which of the following cases was most important for ensuring the United States an internal common market?

A) Charles River Bridge v. Warren Bridge (1837)
B) McCulloch v. Maryland (1819)
C) Gibbons v. Ogden (1824)
D) Dartmouth College v. Woodward (1819)

Question 25

The nature of contracts changed in the 19th century through judicial instrumentalism and had what effect?

A) Facilitating free-market determinations of wages and prices.
B) Allowing factory owners to contract with masses of employees for wages, hours and working conditions if the terms were made known and the laborers agreed to them.
C) Advancing the rule of caveat emptor in markets because if a seller unknowingly sold defective goods, the buyer's opportunity to inspect the goods before purchase would ensure the seller's innocence of overt deception.
D) All of the above were effects of the changes to the nature of contracts.

Question 26

The form of property ownership rights inherited from the colonial period was characterized by which of the following?

A) Property ownership was almost ideal as the base for a free-market economy.
B) Property ownership established property, including land, as a "commodity" that could be easily bought and sold.
C) Property ownership proved to be an excellent vehicle for economic growth.
D) All of the above.

Question 27

The police powers of the government include

A) price fixing.
B) licensing.
C) inspection.
D) all of the above.

Question 28

Unlike the person or persons who formally form a sole proprietorship or partnership,?a corporation has

A) a perpetual life.
B) unlimited liability for the debts accumulated by the firm.
C) the right to vote.
D) concentrated ownership.

Question 29

Which of the following is false?

A) The right of government to maintain settled and peaceable conditions, by force if necessary, is called police power.
B) The Constitution is the basic framework of law; the day-to-day interpretation and application of it is a matter for legislatures and the courts.
C) The property rights established in the colonial era were weakened somewhat by the U.S. Constitution.
D) The freedom of courts to interpret the law or legislation is called judicial instrumentalism.

Question 30

Government regulation in the form of subsidies,tariffs,licensing,and inspections does which of the following?

A) Creates rents for businesses
B) Offers profits to some businesses at the expense of others
C) Encourages the inefficient use of productive resources
D) All of the above

Question 31

The nature of employer liability changed in the 19th century through judicial instrumentalism and had what effect?

A) Reducing the risks and the costs of business, making business enterprise more daring and profitable than it would have been otherwise.
B) Increasing the risks and the costs of business, making business enterprise more daring and profitable than it would otherwise have been.
C) Continuing the older doctrine that employers could be found guilty of contributory negligence, thus increasing the employer's liability for worker injury.
D) None of the above were effects of the changes to the nature of employer liability.

Question 32

Which of the following cases was most important in arguing that the "public good" was best served by competition?

A) Marbury v. Madison (1803)
B) McCulloch v. Maryland (1819)
C) Gibbons v. Ogden (1824)
D) Charles River Bridge v. Warren Bridge (1837)

Question 33

Which type of business organization is the most important part of U.S.history given its "super" economic powers?

A) Sole proprietorship
B) Partnership
C) "Mom and pop" business, which is a mix of sole proprietorships and partnerships
D) Corporation

Question 34

Chief Justice John Marshall had a strong conviction that

A) slavery would only work in the South.
B) a country needs a central government with enough power to place in check state and local interests when the development and growth of the country is concerned.
C) strong state banking systems would help the nation's commerce.
D) the Constitution should be interpreted literally.

Question 35

Regarding the privilege of incorporation (the right to organize an enterprise in the corporate form),all of the following are true except

A) It gives a business firm limited liability, perpetual life and the rights of a citizen.
B) It is not provided for directly by the Constitution because, apart from state governments,the Constitution made no provisions for groups.
C) It is provided for at all levels of government-federal, state and local.
D) There is no "except"; all of the above are true.

Question 36

Which of the following statements holds true for eminent domain?

A) The costs are diverse and the benefits concentrated to those special groups who secured it.
B) It supports rent-seeking where some individuals gain and others lose.
C) The owner of the property secured through eminent domain has no legal recourse.
D) It is well-defined and has been applied throughout U.S. history with consistency and accuracy?to support economic growth and development.

Question 37

The American Revolution and Constitution resulted in

A) a dramatic change in laws and the ownership of property.
B) greatly expanded rights for wage workers and indentured servants.
C) the elimination of a land-owning aristocracy.
D) very little major change with respect to laws and ownership of property, though there was a strengthening of property rights.

Question 38

The change from prescriptive rights to priority rights meant all of the following except

A) Entrepreneurial costs of economic development, such as river and lake pollution, had to be paid by those who were responsible for the costs.
B) The courts encouraged entrepreneurial activity by judicial interpretation.
C) Amenity rights to scenery, clear air and quiet enjoyment could be reduced.
D) Judges placed social weights upon property rights that favored some more than others.

Question 39

In which case did the U.S.Supreme Court's review powers extend to actions by the other two branches of the federal government and not merely to the laws of the states?

A) Marbury v. Madison (1803)
B) McCulloch v. Maryland (1819)
C) Gibbons v. Ogden (1824)
D) Dartmouth College v. Woodward (1819)

Question 40

Which of the following accurately describes condemnation by right of eminent domain?

A) It involves the redistribution of property first owned by the government to private businesses.
B) It was never exercised for such private purposes as acquiring land for canal or railroad construction during the antebellum period.
C) The benefits can be diverse and the costs can be concentrated.
D) It was never exercised by the federal government before the 1870s.

Question 41

Hughes and Cain (2011)note that constitutional problems of national scope soon arose that required solutions by the U.S.Supreme Court.Discuss the policy and rulings of the Supreme Court.Which rulings were intended to help the new nation remain a coherent political and economic entity capable of growing and developing with changes in circumstances?

Question 42

Compare a corporation to both a sole proprietorship and partnership.Explain the role of the corporation in the development of and growth in the U.S.economy.

Question 43

What is judicial instrumentalism,and how did it contribute to the development of the U.S.economy?

Question 44

Describe how a federal,state or local requirement of an equal distribution of wealth would negatively impact the private incentive to invent,innovate and be productive.

Question 45

In the 19th century,American capitalism appeared in its classic form: giant firms,industrial labor force,complete commercialization of agriculture and extractive industries,big banking and finance and giant transportation systems.The property laws handed down from colonial times were apparently the perfect vehicle for economic growth.Nevertheless,Hughes and Cain (2011)argue ?that there were several legal developments in the 19th century which further aided or facilitated entrepreneurial activity and the rise of industrial capitalism; in fact,they argue,these developments were essential to the rise of industrial capitalism.Describe the developments they cite.

Question 46

What is rent-seeking? Who does it impact? Describe the benefits and costs associated with it.

Question 47

During the antebellum period,the federal government assumed

A) responsibility for full employment.
B) responsibility for stable prices.
C) responsibility for the overall economy through control of the money supply.
D) little responsibility for most economic matters, leaving them to private individuals in businesses and households.

Question 48

Describe two doctrines that "relieved employers of liability from the dangers of the workplace and job." Explain how,combined,these doctrines reduced business risks and encouraged daring,productive behavior on the parts of employers.

Question 49

What is the economic significance of the police power and government regulation? How did state ?and local governments in the U.S.differ from similar colonial governments under British rule? In what ways did federal,state and local governments change in the years from Independence (1789)?to the beginning of the Civil War (1860)?

Question 50

There are many examples of attempts to establish an ideal society,such as the establishment of the Georgia colony and Jefferson's idealized view of American land settlement.Explain how economic factors contributed to the failure of these attempts.

Question 51

Describe the rise of American capitalism between the American Revolution and 1860.Explain how American capitalism contributed to the growth and development of the U.S.economy.

Question 52

What is a corporation? Why is it an important entity in a growing and developing economy? ?Describe the rise of corporate America between 1789 and 1860.

Question 53

How has the American legal system generally favored economic progress over equity? Use examples of slavery,priority rights,incorporation,contract law and/or eminent domain to illustrate.Contrast this with feudal traditions that hindered economic growth.