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Annotated Table of Contents
Economic Episodes in American History

Chapter 1
How Can Economics Illuminate History?

A rich understanding of history requires careful integration of concepts and ideas from economics. Puzzling behavior from history becomes clear when costs and choices are fully understood. A few key economic concepts provide large gains in historical understanding.

Chapter 2
Why Did the British Colonies Succeed Economically—Without Finding Gold and Silver?
In New World colonization, the British got a late start and found no gold or silver. Yet Britain’s North American colonies succeeded in becoming the largest and most prosperous economy on the planet. Institutions help explain why.
- Primary Source: Pastime and Merry Exercises
- Then and Now: Is China the New Mercantilist State? .

Chapter 3
Why Did John Harrower Sell Himself into Bondage?
John Harrower became an indentured servant to come to America. Like thousands of others, he
gave up years of freedom and made large sacrifices. By the end of their indentures, these former
servants were free people in a land of opportunity.
- Primary Source: Richard Lowther Signs an Indenture
- Then and Now: Are You Army Strong?

Chapter 4
Why Did the American Colonists Fight When They Were Safe, Prosperous, and Free?
In 1776 the colonies of British North America had a high standard of living. Politically they were the freest people on the planet. Still, they found themselves drawn into war against one of the mightiest military powers of the time.
- Primary Source: Losing Ground
- Then and Now: Party Like It’s 1773

Chapter 5
How Did the U.S. Constitution Provide a Road Map to Economic Prosperity?
The founders of the newly independent United States had an opportunity that is rare in history: to “reset” their government. The U.S. Constitution, usually thought of as a political document, is inherently an economic document as well. It provided a framework for the world’s most prosperous economy.
- Primary Source: Federalist No.15
- Then and Now: Comparing Two Constitutions

Chapter 6
Turnpikes, Canals and Railroads: What Did We Do Before Interstate Highways?
As a far-flung nation, the United States has always faced transportation challenges. Early in its history, meeting that challenge involved roads through new territory, bold river journeys, creating new canals, and establishing large new systems of railroad transportation.
- Primary Source: Clinton’s Folly Becomes Clinton’s Victory
- Then and Now: The Trains Roll On, With Warren Buffet at the Controls

Chapter 7
Was Slavery a Market Institution?
Slavery was our national tragedy, both for the enslaved and for the nation at large. Fully understanding slavery requires a close look at the economics of the institution. Slavery involved markets that operated in the absence of the most basic freedom: self-ownership.
- Primary Source: Technology and Slavery
- Then and Now: Some Consequences of Economic Freedom

Chapter 8
The Civil War and Lee’s Dilemma:
Why Fight a War When the North’s Economy Was So Much Stronger?

The Union had overwhelming economic advantages over the Confederacy. Yet, both choose to fight a war that resulted in the loss of more than 600,000 lives. Economic thinking can help us understand why the Civil War was fought when the outcome appeared certain.
- Primary Source: The Republican Platform of 1860
- Then and Now: The War in Iraq

Chapter 9
How Did the Civil War Change the U.S. Economy?
Fighting the Civil War brought eventual emancipation to enslaved people. It also brought huge opportunity costs to the North and the South. Economic thinking can help to clarify the choice
of a wrenching war over other possibilities.
- Primary Source: The Debate on the Economic Future of African Americans
- Then and Now: The Economy of the New South

Chapter 10
The Homestead Act of 1862: Was Free Land Really Free?
The Homestead Act of 1862 opened 270 million acres of publicly owned western lands for settlement. Eventually, 10 percent of U.S. land was given away under the Homestead Act. Economic analysis reveals, however, that ‘free land’ came with its own costs.
- Primary Source: How the Railroads Promoted Land Sales
- Then and Now: Cash for Clunkers

Chapter 11
Did the Comanche and Other American Indians Favor Communal Ownership?

Institutions of ownership are important to any society, including the Comanche Indians. Like other Plains Indians, they did not recognize private ownership of land. Yet they did have property customs that shaped their economic lives.
- Primary Source: Thomas Jefferson’s Confidential Letter to Congress
- Then and Now: Airports and Private Property Rights

Chapter 12
Why Did Frank H. Mayer and His Fellow Hunters Kill Buffalo, Almost to Extinction?
In the 19th century, buffalo on the Great Plains were hunted nearly to extinction. Hunters such as Frank H. Mayer were seeking profit and adventure. Economic reasoning explains why buffalo populations were hit so hard and why they have made a striking comeback.
- Primary Source: Protesting the Slaughter of a “Noble and Harmless Animal”
- Then and Now: Ocean Resources and Property Rights

Chapter 13
Did Railroads Cause the Economy of the Late 1800s to Grow?
Railroads grew rapidly after the Civil War and the U.S. economy also thrived. Railroads captured
the national imagination. As prominent as railroads were, however, economic analysis warns against overestimating their importance.
- Primary Source: “Crazy Judah’s” Railroad Plan
- Then and Now: The Quest for Growth

Chapter 14
Hard Currency: Sound Money or Cross of Gold?
Having the right quantity of money in circulation is vital to an economy’s success. In the late 1800s, some advocated big injections of money based on silver. The alternative was reliance on gold, considered so harsh that William Jennings Bryan called the policy a “cross of gold.”
- Primary Source: The “Cross of Gold” Speech
- Then and Now: Could a Little Inflation Be Good for the Economy?

Chapter 15
Were the Robber Barons Robbers or Barons?
Leaders of industrialization such as Rockefeller and Vanderbilt are often portrayed as ruthless monopolists— robber barons, to use a familiar term. Closely analyzed, the robber barons’ effects are a good deal more complex and surprisingly favorable to consumer interests.
- Primary Source: How Did Standard Oil Succeed? Two Perspectives
- Then and Now: Is Walmart a Monopoly?

Chapter 16
Why Did the 19th-Century Monopolies Disappear?
The late 19th century saw the development of large business consolidations in industries such as oil, whiskey, and steel. Only one of these—Standard Oil— was broken up by antitrust actions. The fate of the others helps explain the dynamics of a competitive market economy.
- Primary Source: “Fighting Bob” and the Railroads
- Then and Now: Is Microsoft a Monopoly?

Chapter 17
How Did Financial Panics Lead to the Establishment of an Independent Central Bank?
To rich and poor alike, the financial panics of the 1800s were life-changing. Even those with minimal ties to the financial system could be ruined. The Federal Reserve System was a natural reaction to the banking practices of the time.
- Primary Source: Report on the Panic of 1907
- Then and Now: The Modern Equivalent of 1800s Financial Panics

Chapter 18
Who Was the Titanic Baby and Where Was He Going?
When the steamship Titanic sank on April 15, 1912, many passengers in the lower part of the ship didn’t make it out alive. One who did survive was the “Titanic baby,” 10-month-old Frank Aks. His family’s story, one among millions, illustrates the economics of immigration.
- Primary Source: Was There Discrimination by Age, Gender, and Class When the Titanic Sank?
- Then and Now: The Changing Face of Immigration

Chapter 19
What Made the Roaring Twenties Roar, Economically: Real Growth or a Stock Market Bubble?
Looking back, the heights of the economy in the 1920s were clearly unsustainable. Yet that period of growth also was based in part on strength in the real economy. New technology and institutions were part of the era that included strikingly different music, new fashions and the motor car.
- Primary Source: Stock Experts Everywhere
- Then and Now: “Let ‘em Fail” vs. “Too Big to Fail”

Chapter 20
Why Did a Mild Recession in 1929 Become the Great Depression of the 1930s?
No recent downturn has been anything like the Great Depression in the degree of hardship. It began as a mild recession in 1929. Economic analysis shows how circumstances and policy mistakes combined to make it the most severe economic downturn in our history.
- Primary Source: Bank Runs
- Then and Now: “Let ‘em Fail” vs. “Too Big to Fail”

Chapter 21
Was the New Deal Good for the U.S. Economy?
President Franklin D. Roosevelt’s New Deal substantially reshaped the operation of the American economy. Economic analysis shows how the change in institutions had effects on the market economy, on the environment facing employers and on the length of downturns.
- Primary Source: A Cartoonist Looks at the AAA
- Then and Now: Two Famous Economists Debate the 2009 Stimulus Plan

Chapter 22
The Economics of Union Membership?
Folk singers have written hundreds of tunes protesting working conditions and extolling the virtues of membership in labor unions, and yet unions have struggled to maintain membership. The incentives to join unions, coupled with the changing legal environment, explain why.
- Primary Source: Folk Songs Helped Organize Labor Unions
- Then and Now: The Rise of Public Sector Unions

Chapter 23
Did Rosie the Riveter Win the Battle for Working Women?
World War II changed the workforce. There was a huge increase in the participation of women, symbolized by wartime posters of Rosie the Riveter. Rosie was part of a wave reflecting changes in the relative attractiveness of work inside and outside the home.
- Primary Source: Rosie the Riveter Magazine Cover
- Then and Now: Rosie and Oprah

Chapter 24
Why Did the U.S. Economy Grow after World War II?
At the end of World War II there were credible worries that the economy would sink back into depression. Instead, there was a period of unprecedented prosperity, widely spread across the population. It was an economic success story that many would hope to repeat.
- Primary Source: The Way You Live at Levittown
- Then and Now: The Boomers Grow Up

Chapter 25
Who Desegregated Major League Baseball: Adam Smith or Jackie Robinson?
For years, the owners of major league baseball clubs refused to hire African-American players. Things changed on April 15, 1947, when Branch Rickey signed Jackie Robinson to play for Brooklyn. Economic analysis shows how new incentives promoted social change.
- Primary Source: Branch Rickey Speaks Out
- Then and Now: The Gender Gap

Chapter 26
How Did the Marshall Plan Become a Model for Foreign Aid Programs?
After World War II, the United States was the only economy left on its feet. It provided assistance to European economies that became a model for foreign aid programs to come later. Understanding foreign aid requires a close analysis of incentives and outcomes.
- Primary Source: The Marshall Plan as a Bike Lesson
- Then and Now: A “Marshall Plan” for Africa?

Chapter 27
What Were the Origins of the African-American Middle Class?
George E. Johnson, Sr. left the South of his childhood and became a pioneer African-American business owner in Chicago. His story illustrates how internal migration and increased human capital both preceded and strengthened the civil rights movement.
- Primary Source: A President Takes Notice of the Great Migration and Its Importance
- Then and Now: Continuing Musical Influences from a Migration Long Past

Chapter 28
Why Did Communism Collapse?
Ulrike Reichenbach and Conny Holzbrecher were born identical twins in Germany, but Ulrike was raised in prosperous West Germany while Conny grew up under communism in East Germany. Their story illustrates the dramatic effects of economic institutions on people’s lives.
- Primary Source: The Trabant, and the Fall of the Wall
- Then and Now: East and West Germany Today

Chapter 29
How Did the Economic Influence Presidential Elections in the Stagnant Seventies ?
When economic times are bad, the Misery Index measures how bad they are. It is calculated as the sum of the unemployment rate and the inflation rate. Presidential candidate Jimmy Carter campaigned on the Misery Index, but later as President found the index used against him.
- Primary Source: President Carter Addresses the Energy Crisis of 1979
- Then and Now: The Economy and the Mid-Term Elections of 2010

Chapter 30
Is the Information Revolution as Big as the Industrial Revolution ?
Computers had been in use for decades as the twenty-first century approached, yet the information revolution did not occur until computers started talking to each other over the Internet. Proponents hail a new equivalent of the Industrial Revolution but skeptics abound.
- Primary Source: A Prediction That Was Not So Stupid
- Then and Now: Speculative Bubbles, “This Time Is Different,” and a 2009 Breakup

Chapter 31
Is Free Trade Out of Date?
Since the end of World War II, the United States has championed increasing international trade. Critics are many, and they have become more vocal in recent years. Economic analysis of recent history illuminates the key tradeoffs.
- Primary Source: Tariffs between the United States and Europe
- Then and Now: A Trade War with Mexico?

Chapter 32
Is the Growth of the Federal Government Good for the Economy?
The Founders had in mind a limited role for the federal government in the economy. However, life in 2010 is much different from what it was in 1789. An examination of entitlement spending on Social Security and Medicare suggest tough choices in the near future.
- Primary Source: Three Presidents Comment on the Economic Role of Government
- Then and Now: What Should We Do Now?

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