Deck 16: Railroads and Economic Change

Question 1

Railroad construction in the late 19th century

A) added little to economic fluctuations.
B) strongly influence capital formation.
C) caused the three major financial crisis of that era.
D) All of the above are correct.
E) Only b and c are correct.

Answer 1

strongly influence capital formation.

Question 2

In the late 19^th century, the chief railroad terminus was

A) New York .
B) Chicago .
C) New Orleans .
D) St. Louis .

Answer 2

Chicago .

Question 3

Before the nation's first transcontinental railroad was completed, travelers to the West Coast used which forms of transportation?

A) clipper ship, wagon, mule
B) dugout canoe, dirigible, horse
C) clipper ship, dugout canoe, mule
D) All of the above are correct.
E) Only a and c are correct.

Answer 3

Only a and c are correct.

Question 4

Gains in railroad productivity were caused by

A) more powerful locomotives.
B) automatic couplers.
C) air brakes.
D) All of the above are correct.
E) Only a and b are correct.

Question 5

Data on miles of main line track in operation between 1860 and 1910 show that

A) total mileage first increased and then decreased, causing the growth rate to eventually become negative.
B) total mileage and the growth rate both increased steadily.
C) total mileage increased steadily, but the growth rate tapered off.
D) total mileage increased at a constant pace, resulting in a nearly constant growth rate.

Question 6

The alternate-section provision was designed to

A) allow the government to share in increased land values resulting from railroad building.
B) encourage private businesses to locate along railroad routes.
C) discourage farmers from cultivating crops near railroad routes.
D) make railroad stations more accessible to families.

Question 7

The joining of the eastern and western sections of nation's first transcontinental railroad was commemorated with the driving of the last spike on May 10, 1869

A) in Salt Lake City.
B) in Washington, D.C.
C) at Promontory Point.
D) on the rim of the Grand Canyon.

Question 8

Between 1864 and 1900, the largest portion of railroad track (as a percentage of total annual construction) was laid in which region of the U.S.?

A) the Southeast
B) the Northeast
C) the Pacific Northwest
D) the Great Plains region

Question 9

The most significant kind of federal subsidy to railroads was

A) loans from the U.S. government.
B) reduced corporate income taxes.
C) land grants.
D) direct payments based on the number of miles of tracks laid.

Question 10

Albert Fishlow argued that if the railroads were built ahead of demand we would observe initial profit rates that were very ______ and initial population densities that were very _______.

A) low; high.
B) high; low.
C) low; low.
D) high; high.

Question 11

A number of economic historians have attempted to determine whether US railroads were built ahead of demand.  Which of the following statements presents accurate information about the findings of this area of research?

A) Fogel and Mercer found that post-bellum transcontinentals had relatively low initial profit rates that grew over time.
B) According to Fishlow, antebellum railroads were built ahead of demand, but post-bellum transcontinentals were not.
C) Fishlow finds that government aid to antebellum railroads was generous and widespread.
D) Mercer finds that rates of return on all post-bellum transcontinental railroads were less than rates on alternative investments.

Question 12

During the last part of the 19th century, which factor contributed to the lag in railroad construction in the Southeast and Southwest?

A) sparseness of population
B) war-induced poverty
C) coastal shipping
D) All of the above are correct.
E) Only b and c are correct.

Question 13

The Willie and Martin Companies were

A) two groups of Mormon "handcarters" who were stranded when early winter storms interrupted their migration.
B) two work teams that were instrumental in completing the first transcontinental railroad.
C) the northern and southern branches, respectively, of the Granger organization.
D) two railroad construction companies that were found to have "insiders" on the boards of railroad companies with which they contracted.

Question 14

The sustained productivity growth of railroads occurred primarily because of:

A) increased economies of scale.
B) more powerful locomotives and more efficient freight cars.
C) stronger steel rails.
D) the advent of refrigerator cars.

Question 15

From 1860 to 1910, miles of railroad track in operation increased from roughly ____ miles to _____ miles.

A) 1,000; 75,000
B) 10,000; 50,000
C) 30,000; 250,000
D) 75,000; 500,000

Question 16

Quantitative evidence from Fishlow, Fogel and Mercer indicates that

A) antebellum railroads were built ahead of demand, but post-bellum transcontinentals were not.
B) post-bellum transcontinentals were built ahead of demand, but antebellum railroads were not.
C) both antebellum railroads and post-bellum railroads were built ahead of demand.
D) antebellum railroads were not built ahead of demand, but the evidence on post-bellum railroads is mixed.

Question 17

Which of the following was not used to subsidize railroad companies and their building of railroads?

A) Loans from the U.S. government
B) Reduced corporate income taxes
C) Land grants
D) Direct payments based on the number of miles of tracks laid

Question 18

Widespread assumptions about the first transatlantic railroad did NOT include

A) that government support was as essential.
B) that profits to the nation would be enormous.
C) that private investors would be easily compensated for any risk.
D) that transatlantic crossing via rail would take a fraction of the time of a clipper ship passage.

Question 19

According to Joseph Schumpeter, many Midwestern railroads

A) were built too late and thus faced heavy competition from trucks.
B) were built ahead of demand.
C) were unnecessary because they followed routes already adequately served by other means of transportation.
D) would have been built more quickly in the absence of government aid.

Question 20

Each of the three major waves in 19^th-century railroad construction ended due to

A) a major financial crisis in the U.S.
B) the involvement of the U.S. in a military conflict.
C) labor unrest that led to work stoppages.
D) shortages of iron.

Question 21

Types of price discrimination practiced by post-bellum railroads included all of the following except :

A) varied rates based on passenger's gender.
B) varied rates based on town of origin.
C) higher rates per mile for short-hauls than for long-hauls.
D) higher rates per ton for manufactured goods than for raw materials.

Question 22

The first independent federal regulatory agency was

A) Interstate Commerce Commission.
B) Federal Trade Commission.
C) Federal Bureau of Alcohol, Tobacco, and Fire Arms.
D) United States Fair Trade Commission.

Question 23

In the 1870s, excess capacity in the railroad industry led to

A) rates wars.
B) the formation of regional federations to pool traffic or profits.
C) price-fixing.
D) hidden rate-cutting through rebates.
E) All of the above.

Question 24

After computing the social savings from the railroads, Fogel concluded that ______.

A) the railroads were indispensable to the economic development of the United States.
B) the railroads were not indispensable in 1850 but by 1890 were dispensable.
C) the railroads could explain only a small fraction of the growth in real income in the United States.
D) economics is not sufficiently scientific to make a meaningful calculation of the social savings.

Question 25

The Grangers were:

A) an organization designed to support the interests of railroads.
B) an agrarian organization.
C) an abolitionist organization.
D) a society that petitioned for Prohibition.

Question 26

Fogel argued that railroads were more cost effective than canals because railroads were faster and were in service all year and that using rail instead of canals would ____.

A) lower freight rates on the railroads.
B) lower government subsidies for railroads.
C) lower inventories of grain in the East.
D) reduce the wheat being shipped to Europe.

Question 27

In considering the financial history of the transcontinental railroads, the text argues that

A) there was surprisingly little corruption given the corruption in other walks of life at the time.
B) there was surprisingly little corruption, mostly involving the buying off of federal regulators when rate controls became unreasonable.
C) there was a great deal of corruption, mostly in the form of high fees charged  immigrants for what was really free federal land.
D) there was a great deal of corruption, mostly because construction companies were run by insiders.

Question 28

Early efforts by states to regulate the railroads

A) resulted in "Granger laws."
B) resulted in laws that were initially supported by the railroads.
C) outlawed product discrimination.
D) allowed for higher charges on short haul freight.

Question 29

Albro Martin and the text contend that the work of the Interstate Commerce Commission was largely for the benefit of _________.

A) consumers.
B) the environment.
C) the federal government.
D) major shippers.

Question 30

A common unscrupulous financial practice of railroad promoters (and the basis of the Credit Mobilier scandal) involved

A) federal tax evasion.
B) "insider" ownership of railroad construction companies.
C) sales of worthless railroad bonds to unwitting buyers.
D) insurance fraud.

Question 31

The Grangers would most likely support which policy?

A) Price controls on grain operators
B) Price deflation
C) A strong commitment to backing currency only with gold
D) Federal government aid to railroads

Question 32

Donaldson and Hornbeck, in their work from 2016,

A) confirmed Fogel's hypothesis with international data.
B) confirmed Fogel's hypothesis with county-level data.
C) successfully challenged Fogel's hypothesis with anecdotal evidence.
D) successfully challenged Fogel's hypothesis with a counterfactual experiment.

Question 33

In the Wabash case (1886), the Supreme Court held that

A) states cannot enact laws that interfere with interstate commerce.
B) states could restrict price-discrimination based on person, but not price-discrimination based on place.
C) states could regulate railroad rates on long-hauls, but not rates on short-hauls.
D) held that railroad practices could not be regulated by any federal or state governing body.

Question 34

The Elkins Act of 1903

A) outlawed any departure from a published shipping rate.
B) authorized the courts to enjoin railroads from unlawfully discriminating.
C) made the receiver of a rebate guilty of violating the law.
D) probably reflected the wishes of a large majority of railroad companies.
E) All of the above.

Question 35

"Granger laws"

A) were severely limited in scope through litigation.
B) generally outlawed both place and person discrimination.
C) established commissions with the power to investigate complaints.
D) All of the above are correct.
E) Only a and b are correct.

Question 36

Modern investment banking houses emerged in the U.S. in the 19^th century to assist in financing

A) railroad construction.
B) mail-order houses.
C) large corporations producing iron and steel.
D) the textile industry.

Question 37

In Munn v. Illinois (1877), the Supreme Court held that

A) state laws limiting prices charged by grain elevators were a violation of the Fifth Amendment.
B) grain elevator and freight prices could only be regulated by the federal government.
C) states have a right to regulate businesses within the state that are "clothed with a public interest."
D) organizations like the Grangers violated federal conspiracy laws.

Question 38

The best description of the economic benefits of the railroads (RRs) is:

A) RRs saved about 3 percent of GNP over what it would have cost to ship goods and people by alternative methods.
B) U.S. GNP was reached about 20 years earlier with RRs than it would have been reached had RRs not been developed.
C) U.S. GNP was reached about 40 years earlier with RRs than it would have been reached had RRs not been developed.
D) Alternative forms of transport could have shipped goods and people for the same cost or less than the RRs did, and therefore, RRs generated no extra economic growth.

Question 39

The greatest advantage of the railroad over earlier forms of transportation was its speed and its ability to stay open throughout most of the winter. Robert Fogel attempted to measure the advantage of faster all-weather transport by examining

A) profits in transportation industries as a group.
B) profits in railroads compared with canals.
C) employment of labor and capital in the transportation sector before and after the railroad.
D) inventories of agricultural products held in eastern markets.

Question 40

The federal government granted 200 million acres of land to railroads.  Which of the following statements presents accurate information about these land grants?

A) The railroads were required to return 1\3 of the profits from the sale of this land to the federal government.
B) The alternate section provision allowed state governments to purchase portions of the land grants from the railroads at reduced prices.
C) The federal government incurred huge revenue losses under the land grant program.
D) Congress required railroad companies that received land grants to transport mail, troops and government property at reduced rates.

Question 41

Cartels

A) encourage competition.
B) attempt to restrict output in order to raise prices.
C) rely on legally enforceable contracts between cartel participants.
D) rely on advertising and packaging to increase profits.
E) All of the above.

Question 42

Economic theory predicts that a profit maximizing car rental agency with some market power would set its prices in what way?

A) Charge the same for both weekday and weekend rentals.
B) Charge more for weekend rentals and less for weekday rentals.
C) Charge more for rentals during the week and less for weekend rentals.

Question 43

Price discrimination results in _____________ than would be observed under a single-price monopoly.

A) higher output and lower costs
B) lower output and higher costs
C) higher output and higher costs
D) lower output and lower costs

Question 44

In defining the ____ from the railroad, economic historians measure the extra real GNP that can be attributed to this innovation.

A) profits
B) balance of trade
C) wage income
D) social savings