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A. Identify and explain
the causes of the farmers’ troubles during the 1890s. You should
use Irving Fisher’s quantity theory of money with your answer
Ans....... end of the 19th century, about a third of Americans
worked in agriculture, compared to only about four percent today.
After the Civil War, drought, plagues of grasshoppers, boll
weevils, rising costs, falling prices, and high interest rates made
it increasingly difficult to make a living as a farmer. In the
South, one third of all landholdings were operated by tenants.
Approximately 75 percent of African American farmers and 25 percent
of white farmers tilled land owned by someone else.
Every year, the prices farmers received for their crops seemed
to fall. Corn fell from 41 cents a bushel in 1874 to 30 cents by
1897. Farmers made less money planting 24 million acres of cotton
in 1894 than they did planting 9 million acres in 1873. Facing high
interests rates of upwards of 10 percent a year, many farmers found
it impossible to pay off their debts. Farmers who could afford to
mechanize their operations and purchase additional land could
successfully compete, but smaller, more poorly financed farmers,
working on small plots marginal land, struggled to survive.
Many farmers blamed railroad owners, grain elevator operators,
land monopolists, commodity futures dealers, mortgage companies,
merchants, bankers, and manufacturers of farm equipment for their
plight. Many attributed their problems to discriminatory railroad
rates, monopoly prices charged for farm machinery and fertilizer,
an oppressively high tariff, an unfair tax structure, an inflexible
banking system, political corruption, corporations that bought up
huge tracks of land. They considered themselves to be subservient
to the industrial Northeast, where three-quarters of the nation's
industry was located. They criticized a deflationary monetary
policy based on the gold standard that benefited bankers and other
creditors.
All of these problems were compounded by the fact that
increasing productivity in agriculture led to price declines. In
the 1870s, 190 million new acres were put under cultivation. By
1880, settlement was moving into the semi-arid plains. At the same
time, transportation improvements meant that American farmers faced
competitors from Egypt to Australia in the struggle for
markets.
The first major rural protest was the Patrons of Husbandry,
which was founded in 1867 and had 1.5 million members by 1875.
Known as the Granger Movement, these embattled farmers formed
buying and selling cooperatives and demanded state regulation of
railroad rates and grain elevator fees.
Early in the 1870s the Greenback Party agitated for the issue of
paper money, not backed by gold or silver, with the idea that a
depreciating currency would make it easier for debtors to meet
their obligations.
Another wave of protest grew out of the National Farmers'
Alliance and Industrial Union (the Southern Farmers Alliance)
formed in Lampedusa County, Texas in 1875, and the Northwestern
Farmers' Alliance, founded in Chicago in 1880. By the late 1880s,
the cooperative business enterprises set up by the Farmers'
Alliances had begun to fail due to inadequate capitalization and
mismanagement. By 1890, the Farmers Alliances had begun to enter
politics. In 1892 the Alliance formed the Peoples' or Populist
Party. Among other things, the Populists financed commodity credit
system that would have allowed farmers to store their crop in a
federal warehouse to await favorable market prices and meanwhile
borrow up to 80 percent of the current market price.
The Populist platform also sought a graduated income tax, public
ownership of utilities, the voter initiative and referendum, the
eight-hour workday, immigration restrictions, and government
control of currency.
In the presidential election of 1892, the Populist candidate,
James B. Weaver of Iowa, received more than a million popular votes
(8.5 percent of the total) and 22 electoral votes. The Populists
also elected 10 representative, 5 senators, and 4 governors, as
well as 345 state legislators.
In the words of Irving Fisher, “Other things remaining
unchanged, as the quantity of money in circulation increases, the
price level also increases in direct proportion and the value of
money decreases and vice versa.” If the quantity of money is
doubled, the price level will also double and the value of money
will be one half. On the other hand, if the quantity of money is
reduced by one half, the price level will also be reduced by one
half and the value of money will be twice.
Fisher has explained his theory in terms of his equation of
exchange:
PT=MV+ M’ V’
ADVERTISEMENTS:
Where P = price level, or 1 IP = the value of money;
M = the total quantity of legal tender money;
V = the velocity of circulation of M;
M’ – the total quantity of credit money;
b-Question) Explain how the movie’s plot and
scenery represented the farmers’ financial problems, as listed and
explained in part A. (note: Please only describe the
parts of the movie relevant to this question.)
Ans- The Wizard of Oz is a 1939
American musical fantasy film produced by Metro-Goldwyn-Mayer.
Widely regarded as one of the greatest films of all
time,[5][citation needed] it is the
most commercially successful adaptation of L. Frank Baum's 1900
children's fantasy novel The Wonderful Wizard of
Oz.[6] Directed primarily by Victor Fleming (who
left the production to take over the troubled Gone with the
Wind), the film stars Judy Garland as Dorothy Gale alongside
Ray Bolger, Jack Haley, Bert Lahr and Margaret Hamilton.
the elements in “The Wizard of Oz” powerfully fill a void that
exists inside many children. For kids of a certain age, home is
everything, the center of the world. But over the rainbow, dimly
guessed at, is the wide earth, fascinating and terrifying. There is
a deep fundamental fear that events might conspire to transport the
child from the safety of home and strand him far away in a strange
land.The Wizard of Oz” has a wonderful surface of comedy and music,
special effects and excitement, but we still watch it six decades
later because its underlying story penetrates straight to the
deepest insecurities of childhood, stirs them and then reassures
them. As adults, we love it because it reminds us of a journey we
have taken. That is why any adult in control of a child is sooner
or later going to suggest a viewing of “The Wizard of Oz.”
C) Question ---
Answer ------The Federal Reserve Bank was created in 1912, and
received full control over the supply of money. How does the
Federal Reserve Bank today address the problems in part A?
Federal Reserve Act was passed by the 63rd
United States Congress and signed in
to law by President Woodrow Wilson on December 23, 1913. The law
created the Federal Reserve System, the central banking system of
the United States
The money supply and the
monetary base are linked by
reserves, i.e., vault cash and deposit balances
held at Federal Reserve banks. While the
Fed's control over the size of the
monetary base is complete, its
control over the money supply is not.
The Federal Reserve System is the central bank of the U.S. It
conducts monetary policy to manage inflation, maximize employment,
and stabilize interest rates. The Fed supervises the nation's
largest banks and provides financial services to the U.S.
government. It also promotes the stability of the financial
system.
Although its members are appointed by Congress, its structure
makes it independent from political influences.1 That makes it
the most powerful single actor in the U.S. economy and thus the
world.
Despite being charged with running the printing press for dollar
bills, the modern Federal Reserve no longer simply runs new paper
bills off of a machine. Some real dollar printing does still occur
(with the help of the U.S. Department of the Treasury), but the
vast majority of the American money supply is digitally debited and
credited to major banks. The real money creation takes place after
the banks loan out those new balances to the broader economy.
The Federal Open Market Committee (FOMC) and associated economic
advisers meet regularly to assess the U.S. money supply and general
economic condition. If it is determined that new money needs to be
created, then the Fed targets a certain level of money injection
and institutes a corresponding policy.1
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ekkarill92 answered 1 year ago