Question 1

What is a monopoly? Why did some individuals strongly believe that the railroad industrialists possessed monopoly power? Were their beliefs substantiated? What actions were taken against?the railroads? How do these actions affect us today?

Accepted Answer

A monopoly is a situation in which a single company or group controls the entire market for a particular product or service, giving them significant power to set prices and limit competition. In the late 19th century, some individuals strongly believed that the railroad industrialists possessed monopoly power because a few large companies dominated the entire railroad industry, allowing them to control prices and routes, and effectively shutting out smaller competitors.

Their beliefs were substantiated by the fact that a small number of powerful railroad companies controlled the majority of the nation's railroads, and they were able to dictate terms to both customers and smaller railroad companies. This led to unfair pricing and limited choices for consumers and businesses.

In response to the railroads' monopoly power, the government took several actions. One of the most significant was the passage of the Interstate Commerce Act in 1887, which established the Interstate Commerce Commission (ICC) to regulate the railroads and ensure fair and non-discriminatory rates. This was followed by the Sherman Antitrust Act in 1890, which aimed to prevent the formation of monopolies and promote fair competition in the marketplace.

These actions have had a lasting impact on the regulation of industries and the protection of consumer rights in the United States. Today, the principles of fair competition and regulation to prevent monopolies are still important in ensuring that consumers have choices and are not subject to unfair pricing and practices. The actions taken against the railroads in the late 19th century set a precedent for government intervention to prevent monopolistic behavior, and continue to shape the way industries are regulated and monitored in the modern era.

Question 2

The Interstate Commerce Commission (ICC)

Accepted Answer

A)   was the first permanent independent federal regulatory agency.
B)   was established because, given the interstate nature of railroads, the regulation the public demanded from the states simply passed to the federal government.
C)   initially lacked the power to set railroad rates, but its founding marked the beginning of a kind?of federal government power capable of almost infinite expansion.
D)   is best described by all of the above. D

Question 3

Which of the following illustrates the economic inefficiencies of government regulation?

Accepted Answer

A)   Railroad rate increases are set by a government agency and these increases fall below increases in repair and depreciation costs but railroad passengers are satisfied.
B)   Competitive railroad rates are determined by the buying and selling actions of those in the railroad industry.
C)   Rate increases set by government agencies are set to match the increases in repair costs and the acceleration in depreciated capital.
D)   Government protects private and individual rights to goods, service and resources. A

Question 4

Fogel's work (1964)on the economic impact of railroads is mostly written in response to

Accepted Answer

A)   Rostow's takeoff theory.
B)   Schumpeter's theory of railroads building ahead of demand.
C)   David's theory of path dependency.
D)   Engerman's theory of multiroute analysis.

Question 5

North (1974)finds evidence to suggest that the iron industry was equally dependent on the railroad and iron stove industries for sales revenue at one point in time.

Accepted Answer

A) True 
 B)False

Question 6

The "monopoly issue" is concerned with the fact that

Accepted Answer

A)   monopolies will "charge what the traffic will bear" in order to maximize their profits.
B)   monopolies will attempt to increase their profits by discriminating among their customers?and charge prices that they are willing to pay, instead of charging one price.
C)   monopolies will be able to charge higher prices and earn higher rates of return than ?competitive firms.
D)   all of the above apply.

Question 7

What influenced and supported the shift in legal opinion and tradition that changed private property from being protected from government interference early in American history to being more heavily regulated later on? Discuss both agriculture and the railroad industry,and briefly mention the effects of these changes on American economic growth.

Accepted Answer

The answer of What influenced and supported the shift in...

Question 8

Why did railroads come under government regulation?

Accepted Answer

A)   Disgruntled shippers and travelers raised an outcry about the routes of railroads.
B)   Some people effectively argued that railroads were charging "unfair" rates.
C)   The railroad industry was too competitive, thus driving rates below those necessary ?to ensure normal profits for railroad companies.
D)   All of the above are correct.

Question 9

How was the history of the railroad influenced by private ownership? Government regulation? How did (i)unfettered capitalism and (ii)government regulation influence the rise and fall of the railroad industry?

Accepted Answer

The answer of How was the history of the railroad...

Question 10

The Interstate Commerce Commission (ICC)(1887-1995)was the very first attempt by Congress and/or the federal government to regulate the railroads; regulation had previously come solely from the states.

Accepted Answer

A) True 
 B)False

Question 11

In 1906,the Hepburn Act

Accepted Answer

A)   Required the federal government to set "fair rates" for customers regardless of geographical location.
B)   Required the federal government to set rates that promised a positive rate of return to railroads.
C)   Granted the power to set maximum rates in the railroad industry to the federal government.
D)   Granted the power to set maximum rates in the railroad industry to the leading railroad tycoons.

Question 12

The U.S.federal government embraced all of the Populists' requests,including the nationalization ?of the railroad system.

Accepted Answer

A) True 
 B)False

Question 13

Some researchers argue that the railroad industry was the first industry captured by special interest groups.Identify how and why railroad industrialists as well as customers would want to do so.What are the economic consequences?

Accepted Answer

The answer of Some researchers argue that the railroad industry...

Question 14

During the era from 1880 to 1920,the U.S.economy experienced a rise in big business,an expansion in industry and increased concentration in both.

Accepted Answer

A) True 
 B)False

Question 15

Some economic historians argue that the Interstate Commerce Commission (ICC)was the first case of the "capture" of a federal regulatory commission.What does this mean?

Accepted Answer

A)   The railroads used the ICC to solve the problems of cartel management.
B)   The users of the railroads-passengers and shippers-influenced the ICC to keep railroad rates high and the quality of those services high.
C)   The railroads used the Commission to keep rates high and keep potential new railroads from entering the business.
D)   Foreign investors high jacked the ICC to protect their railroad investrments.

Question 16

Regarding the Interstate Commerce Commission (ICC),

Accepted Answer

A)   historians agree that it was primarily "captured" by the industry that it was supposed to regulate.
B)   historians agree that it was primarily "captured" by passengers and shippers to the disadvantage of the railroads.
C)   historians generally agree that it was not "captured" by any group, but rather served the ?public well.
D)   historians do not "agree" on any of the above.

Question 17

Fogel (1964)came up with two estimates of social savings (? and ?).What do they represent?

Accepted Answer

A)   The level of industrial productivity using railroads and the level not using railroads
B)   The lowered benefit of transport for agricultural goods using railroads and the lowered benefit of transport for all goods and passengers using railroads
C)   The lower output of the U.S. economy using transportation financed through domestic capital and foreign capital
D)   The cost of shipping goods by railroads and the cost of shipping by waterways and wagon transport

Question 18

Munn v Illinois (1877)was particularly important with regard to government regulation because it

Accepted Answer

A)   upheld the traditional right of businesses to act freely without interference by government.
B)   established the right of government to regulate any business that was deemed "clothed" in?the public interest.
C)   established the right of government to regulate any and all businesses wherever such regulation was deemed desirable to promote competition.
D)   established the right of government at any level to regulate any business activity if such regulation was deemed desirable for any reason.

Question 19

What were the "Anti-trust Acts"? Identify the most important factors bringing about their enactment into law.How have the anti-trust acts been used with court backing to influence behavior in the railroad industry,communications industry and labor movement?

Accepted Answer

The answer of What were the "Anti-trust Acts"? Identify the...

Question 20

Describe the impact of populist agitation and of rural anti-big business,anti-eastern establishment attitudes on government policies in agriculture,banking and industry in the period between the ?Civil War and World War I.In what areas did this public pressure make the most difference in ?U.S.economic development?

Accepted Answer

The answer of Describe the impact of populist agitation and...

Exam 14: Railroads and Economic Development

What is a monopoly? Why did some individuals strongly believe that the railroad industrialists possessed monopoly power? Were their beliefs substantiated? What actions were taken against?the railroads? How do these actions affect us today?

The Interstate Commerce Commission (ICC)

Which of the following illustrates the economic inefficiencies of government regulation?

Fogel's work (1964) on the economic impact of railroads is mostly written in response to

North (1974)finds evidence to suggest that the iron industry was equally dependent on the railroad and iron stove industries for sales revenue at one point in time.

The "monopoly issue" is concerned with the fact that

Why did railroads come under government regulation?

How was the history of the railroad influenced by private ownership? Government regulation? How did (i)unfettered capitalism and (ii)government regulation influence the rise and fall of the railroad industry?

The Interstate Commerce Commission (ICC)(1887-1995)was the very first attempt by Congress and/or the federal government to regulate the railroads; regulation had previously come solely from the states.

In 1906,the Hepburn Act

The U.S.federal government embraced all of the Populists' requests,including the nationalization ?of the railroad system.

Some researchers argue that the railroad industry was the first industry captured by special interest groups.Identify how and why railroad industrialists as well as customers would want to do so.What are the economic consequences?

During the era from 1880 to 1920,the U.S.economy experienced a rise in big business,an expansion in industry and increased concentration in both.

Some economic historians argue that the Interstate Commerce Commission (ICC) was the first case of the "capture" of a federal regulatory commission.What does this mean?

Regarding the Interstate Commerce Commission (ICC) ,

Fogel (1964) came up with two estimates of social savings (? and ?) .What do they represent?

Munn v Illinois (1877) was particularly important with regard to government regulation because it

What were the "Anti-trust Acts"? Identify the most important factors bringing about their enactment into law.How have the anti-trust acts been used with court backing to influence behavior in the railroad industry,communications industry and labor movement?