Economic Life hist204 sp08

History 204 Sp 08 | Political Life | Cultural Life | Economic Life | Essays of 1876

Economic Life in Carlisle, Pennsylvania in 1876

Contextual Economics of the United States in 1876

The Greenback Era 1867-1879

After the Civil War there was a rapid economic expansion which led to the inflation of the issuance of greenbacks. By 1867 about 75% of the total money stock was “new” money, national bank notes and US greenback notes and other US currency. National bank notes grew to $340 million by 1874 and were backed by 111% security in government bonds. Security by the federal government allowed for the control of the issuance of bonds, therefore the control of the maximum amount of national bank notes in circulation. In 1876, US bank notes estimated 331,447 (in thousands) and greenbacks exceeded $350 million in circulation.

The rise of greenbacks in circulation from 1870-1874 and then its decline through 1878 reinforced money stock movements. After 1873, the stock of money rose then fell creating a fall in wage rates. This was connected with a severe contraction beginning in 1873. From 1873-1897 became known as the long wave depression caused by monetary disturbances and resumption.

In 1875 Congress passed the Resumption Act and by 1877 it was in effect. This act was put in place to reduce the volume of US notes to $300 million thus redeeming the greenbacks in specie. For the success of resumption, deflation was the key factor. A period of deflation of 50 percent in greenbacks occurred from the rapid expansion of the economy after the Civil War. It created a fall in real wages and decreased prices, profits and employment.

Coinage Act

The state of the economy in 1876 was shaped by several key events; one of them being the Coinage Act of 1873. What the act entailed was the demonetization of silver and the emergence of the gold standard. The act, branded the “crime of 1873,” was blamed for the five year American depression that lasted from 1873 until 1878.

With the demonetization of silver came economic hardships for silver miners, which, in turn, led to economic hardships for the U.S. government. As gold was embraced as the value in which money was based, an overabundance of silver existed having little, if any value. Farmers and peasants were equally hurt by the demonetization of silver. The values of their debts continued to rise as the value of their crop outputs declined by 3% per year. Governmental aid could not reach them fast enough and many of these farmers lost everything.

The sharp rise of the gold to silver ratio also contributed to the growing price and declining value of gold as well as the proportional increase in the costs of goods and services. In 1876, the Greenback party came into existence with the plan to issue more greenbacks to combat deflation with inflation. The establishment of the Greenback party ultimately led to the passing of the Bland-Allison bill in 1878. This bill granted permission to the Treasury to purchase, at market prices, limited amounts of silver.

Trade and Tariff Imports and Exports during the centennial year of 1876 were expanding rapidly. According to the Inter Ocean newspaper from Chicago, The percentages of imports and exports entering and leaving the United States were expanding more rapidly than the American population. Furthermore, with this substantial growth in American trade, the prices for goods became cheaper. Cotton, woolen and linen fabrics were cheaper in 1876 than they were in 1851 with the less expensive trade rates. Railroads played a key factor in providing cheaper, more direct trade routes. They connected small towns to larger cities, providing access to larger markets and raw materials.

In addition, tariff rates on cargo travelling across the country were changing as well. Cargo travelling from New York City and Philadelphia to Chicago was seventy five cents per one hundred pounds. The rates were cheaper for cargo travelling to Baltimore because of the shorter distance.

According to the Galveston Daily News in Houston, Texas, the export trade in Philadelphia increased nearly forty percent from the previous year. On the other hand, the export trade in New York City had decreased nearly fourteen percent from the previous year. The reason for New York's decline in exports was because Baltimore and Boston had expanded and improved their railway systems, and as a result, these cities took a decent amount of trade from New York. The Hudson River Railway was making some improvements in their transit system to re-take control of the export trade. New York was also preoccupied with transporting tourists to the Centennial Exhibition in Philadelphia.

Cumberland County and Carlisle Economics of 1876

The value of land, fences and buildings in Cumberland County was $19,776,980 in the census of 1880. The value of of farming implements and machinery according to the census was $727,411. Also, the estimated number of farm products sold for the year of 1879 was $2,509,572. The book did not have an exact number for 1876, but I can assume that the number of products sold was similar to that of 1879.

The value of orchard products in the 1880 census was $46,554 for Cumberland County. The number of manufacturing establishments was 308. Furthermore, the amount of capital invested in these businesses was $2,266,409. This means that $7334.6 was invested on average into each establishment. The total number of workers in the manufacturing businesses was 1,892. The total number of wages paid to these workers was $535,068. Thus, each worker made about $283 on average according to the 1980 census. The assessed value of real estate was $12,223,355. Value of personal property was $2,054,110.

Carlisle, PA 1876: The Dawn of Commercial Industrialization

Urbanization and the establishment of the railroad contributed to a shift from agriculture to industry and thus the beginnings of industrialization in Carlisle. This change created new processes, new social and economic developments, growth in manufacturing and the building up of Carlisle into a center for industry. Around 1876, there emerged small factories producing commercial goods for small time businesses. It was not until 1886 when commercial industrialization would be in full swing with major changes in manufacturing and industry.

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Transportation, Housing and the Centennial Exhibition

The New York Transit System, the Pennsylvania Railroad Company and the Reading Railroad Company are examples of railways that balanced public transportation and trade. During 1876, the Centennial Exhibition in Philadelphia required excess rail cars, trains tracks and lodging to accommodate the influx of visitors traveling to see the magnificent event. In particular, Carlisle residents used these Pennsylvania rail companies to visit the Celebration, which was, without a doubt, one of the greatest spectacles in American history. Over a dozen nations were represented at the event and this was due in a large part to the transportation and housing systems surrounding the city of Philadelphia.

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Daniel Drawbaugh's Contributions Towards Technology and the Economy

Cumberland County native and scientist/inventor, Daniel Drawbaugh created several key inventions leading up to 1876. The most notable one, the telephone, came about in 1867. Despite not having obtained a patent for his discovery and therefore losing his case with Alexander Graham Bell, Drawbaugh was able to market his own interpretation of the telephone. In addition to that, Drawbaugh's friendship with Dickinson College alum, Charles Himes led to notoriety in the worlds of science and photogrpahy as he helped Himes devise new methods for creating, editing and developing photography.

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