Constitutional Issues of Government Regulation

In 1-2 sentences, explain what this political cartoon is saying.

The AmericanFrankenstein1874

ObjectivesAt the end of this lesson, you should

be able to:• List the conditions under which farmers lived

in the late 1800s and the reasons for these conditions

• Identify the Grangers • State the importance of Munn v Illinois• State why the Interstate Commerce

Commission and the Sherman Anti-Trust Act were ineffective in alleviating the plight of the farmer

Condition of Agriculture, 1880s• New technology • Cheap land• Overproduction• Plummeting prices• Agricultural products• Farmers • Heavy mortgages• Widespread poverty• Natural disasters• Discriminatory railroad

rates. • High tariffs

TariffsGet A Partner: One That Does Not Require You

To Move Your Seat

A Primer on Protective Tariffs

Definition: A tariff is a tax on imports.

Two types of tariffs:

Revenue tariffs.

Protective Tariffs

Revenue Tariffs

Revenue tariffs are designed to raise money for the country imposing them. They are calculated to be small enough so as not to curtail trade.

With your partner, create a scenario where a revenue tariff makes sense for the U.S. (Hint: Probably something we don’t make a lot of, but we consume

in large quantities).

Revenue Tariff Example: The United States imposes a five percent tariff on foreign wine.

Pre tariff price: $20.00 bottle

After tariff price: $21.00 bottle

Result: Demand will probably not drop much for the product and the imposing country will raise funds.

With your partner, create a scenario where a protective tariff makes sense for the U.S. (Hint: Probably something we do make lots of and compete with other countries over).

Protective Tariffs

Protective tariffs are intended to keep identified foreign products out of our country so that Americans will purchase domestic made products. They will “Buy American!”

Protective Tariff Example

Foreign Steel Cost $100 per ton

Domestic Steel Cost $120 per ton

With 30% Tariff $130 per ton

US Sales

Foreign Sales

An artificial increase in foreign prices

Foreign Reaction?

What might other countries do in response to a protective tariff? (Partners)

Foreign Reaction?

Foreign countries who find it more difficult to sell their products in our country because of our tariffs, often retaliate by imposing tariffs on our exports.

Who is hurt and helped by a protective tariff?

Who is hurt and helped by a protective tariff?

Hurt Helped

Consumers

Exporters

Owners of Protected Industries

Workers in Protected Industries

What could the farmers have done to express their displeasure?

Another Option:The Grangers (1867)

• Lobbied Midwestern legislatures for Granger laws regulating:– Rates charged by RR,– Grain operators– Political Issues Hand-

Out

Which side of the political spectrum are the Grangers leaning?

• Munn v. Illinois (1877)

• Wabash

• E.C. Knight

• I.C.C.

• Sherman Anti-Trust

Labor and Farmers Had TheirGovernment Regulations:

• What else did they want?

Monetary Policy William Jennings Bryan

The Election of 1896

Why does a twenty dollar bill have value?

Gold? Silver? Goods?

Confidence

Today you will be able to:

• Describe the difference between a debtor and creditor and analyze what each would have thought about the money supply.

• Explain what a “tight” and “loose” money supply is.

• Identify William Jennings Bryan and analyze his “Cross of Gold” speech.

• Explain and analyze the results of the election of 1896.

Monetary Policy Handout and Worksheet

• Silently read first two paragraphs • Gold Only Money Supply - The U.S.’s money

supply was based on Gold which was scarce. Therefore, money (actual cash) was scarce.

Silver and Gold Money Supply- If the U.S.’s supply was based on Silver and Gold, the combination would be less scarce and money (actual cash) would be more plentiful.

It’s Easy Then, More Cash is Better!Not So Fast!

What could be the Problem with more cash?

• The less there is of something, the more valuable it becomes.

• The American dollar would possibly lose value.

Creditors V. Debtors- What would they think?

Worksheet Example

Deflation

Inflation

Greenback Party

“Free Silver”

Populists

4:19Cross of Gold

William Jennings Bryan

“Cross of Gold”

Election of 1896 Presentation