ECON 2200 Lecture Notes - Lecture 27: Fiat Money, Reflation
14 May 2018
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ECON 2200
Lecture 27
o excessive freight rates
▪ railroad
▪ storage facilities (such as grain elevators)
o manufacturers' high prices on farm equipment
• Valid Complaints?
o No.. based on cliometric evidence:
▪ Interest rates were higher in the West, but were falling
more rapidly than in the East (closing the gap). However,
interest rates were higher then (and still is today) for
farms because there is more risk associated with a farm
(ie. output is affected by uncontrollable variables like
weather).
▪ Robert Higss (1970s): examined RR rates for Western
grain and found no evidence of monopoly pricing on long
hauls. He found some slight evidence of monopoly
pricing on short hauls (like taking goods to storage
facilities).
▪ Real prices of farm equipment down throughout late-19th
century.
o “Greenbacks”: paper fiat currency that were issued by the
federal government during the Civil War. After the Civil War,
Greenbacks were discontinued and gone by around 1870s.
o Goals:
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