Coal Scrip Money

Currency throughout the world comes in many forms and in the early nineteenth century, firms in remote coal producing communities developed "coal scrip." These towns were remotely isolated from the extended population and as a result, the money supply became scarcely unavailable. As mentioned in the article titled "Scrip- A Coal Miner's Credit Card," coal firms soon created scrips as a means of exchange in place of hard money to employees (National Parks Service). This form of currency was used in paper as coupons or metal rounds called tokens (National Parks Service). The downfall of coal scrip is attributed to circulatory limitation, changes in federal and state laws and increased economic changes.

Similar to the function of modern society's credit card, coal scrip was an advance against unearned wages of the coal miner. However, this system in coal communities was extremely limited as the scrip was only usable by the employee who received issuance. Although employees could exchange scrip for cash, it was rarely done at apparent value (National Parks Service). Scrip became redeemable only within the confounds of that area or town where it was issued. Store owners in neighboring communities could opt to accept the scrip as currency but they seldomly provided a fair exchange which limited the variety of obtainable good and services to the consumer (National Parks Service).

The United States Supreme Court ruled in 1918 that scrip was transferable and redeemable in cash (National Parks Service). Opposition to the ruling soon arised as coal operators in a number of states lobbied to have laws passed forbidding transferability (National Parks Service). Eventually, legistlation in Kentucky passed the transferabilty law in 1932, but its effect was minimal towards preventing discounting (National Park Service). Paper scrip was replaced by metal tokens which stated their redemption in cash or merchandise, but also claimed that they were "nontransferable"(National Parks Service). As a result, the production and circulation of coal scrip slowly degressed towards extinction.

As America experienced increasing GDP economic growth, it soon allocated monetary resources towards technological investments which transformed the coal industry. As mentioned in the article titled "Coal Miners and Their Communities" by Rhonda Coleman, with advanced environmental-friendly burning fuels such as oil, gas and hydroelectric power, the demand for coal quickly declined (Coleman). New physical capital and technological knowledge enhanced the mechanization of the mines thus increasing production and cutting the coal mine work force tremendously. Unions soon utilized its authority to increase wages and miners began to make more money than they could possibly envision (Coleman). The use of automobiles, a luxury previously unknown in the coal towns became accessible and filled the remote communites (Coleman). The miner had more money and greater freedom to go beyond the bounds of coal town. This newfound accessibilty became the catalyst of the coal scrip demise.  

As one can see, the peak of the coal industry created the establishment of coal communities and essentially a "monoply" town with the firm possessing sole authority and the miners with minimal substitutes. By the end of the Great Depression, expansion of coal cities and scrip had virtually ceased as the nation changed due to new technology and advanced production (Coleman). The limitation once held by coal scrip decreased as people stepped outside of their boundaries to experience a new abundant life which excluded coal scrip currency. Accessibilty, new competitive markets, advanced production, new laws and technology became the end of the coal scrip era.

Works Cited

1. "Scrip- A Coal Miner's Credit Card." National Parks Service. National Parks Service, 29 June 2013. Web 30 June 2013. http://www.nps.gov/biso/historyculture/scrip.htm
2. Coleman, Rhonda Janney. "Coal Miners and Their Communities in Southern Appalachia." West Virginia Historical Society Quarterly. Web. 30 June 2013.  http://www.wvculture.org/history/wvhs1503.html.

Aggregate Demand & Aggregate Supply

1. Is war good or bad for the economy?

• Based on a number of factors, war could be good or bad for the economy. One primary example is the economic boom in the United States during World War II. As the United States entered the war overseas, the federal government had to designate more resources to the military. In the short-term, government purchases of goods and services increased almost five fold from 1939 to 1944. This huge expansion in aggregate demand almost doubled the economy's production of goods and services and led to a 20% increase in the price level. As a result, unemployment fell from 17% in 1939 to about 1% in 1944 which was the lowest recorded level in U.S history. On the opposite end, war could be negative on the economy in the long-term resulting in increased taxes and exhausted resources.

2. What are the opportunity cost of using resources in wars?

• The opportunity cost of using resources in wars is the decrease of government spending towards social programs, energy and environmental issues. In addition, the natual resources utilized to support the war take away from domestic consumption.

3. How would a war affect aggregate supply?

• A war would affect aggregate supply if suddenly some firms experience an increase in their costs of productions. For example, a war in the Middle East might interrupt the shipping of crude oil, thus driving up the cost of producing oil products. Crude oil is a key input into the production of many goods and services. U.S firms that produce gasoline, tires, and many other products experience rising costs, and they find it less profitable to supply their output of goods and services at any given price level. The result is a leftward shift in the aggregate-supply curve, which in turn leads to stagflation. 

4.  Graph the shift in aggregate supply. What happens to output and the price level?

 

     Adverse Shift in Aggregate Supply



Production & Growth- Group C

List the determinants of  a country's productivity and give an example of each.

• Physical Capital per Worker- the stock of equipment and structures that are used to produce goods and services.
• Example: The machines that enable a jewelry manufacturer to make their rings.
• Human Capital per Worker- the knowledge and skills that workers acquire through education, training and experience.
• Example: Investment in education,training, health insurance, teachers and libraries.
• Natural Resources per Worker- the inputs into the production of goods and services that are provided by nature, such as land, rivers and mineral deposits.
• Example: trees, sunshine, soil, water, plants, animals, oil, coal, and metals.
• Technological Knowledge- society's understanding of the best ways to produce goods and services.
• Common knowledge- Henry Ford introduced assembly lines in auto manufacturing, but other companies in other industries followed suit.
• Proprietary- Apple develops a new phone and patents it, and then has exclusive rights to produce that phone for a certain period of time.

Two hundred years ago, 80% of the U.S. labor force worked in the farming industry. Today, farming accounts for only 2% of U.S. jobs. The U.S. population certainly has not decreased over the last 200 years. Using production function concept(s) discussed in the text, explain why you think this change has occurred.

• In present America, farming only accounts for 2% of the U.S labor force instead of 80% due to technological knowledge and physical. As farming skills and tools advanced throughout the 200 year span, it required less labor and increased productivity for the population. The invention of large tractors, seeders, harvesters, and irrigation devices heavily contributed to the farming industry shift. As a result, people left the farming industry and gained the opportunity to receive higher education and specialize in other areas of the labor force. 

You and four friends become shipwrecked on the deserted island "Hav-a-lot." This island has many natural resources like fresh water, fish, edible fruit and edible wildlife. Given what you have learned so far in this class, discuss how you, as the island leader, would organize this new society to maximize production, and thus, maximize your chances of surviving. Be sure to use economic terms discussed in this course in your answer.


As the island leader under this strenuous circumstance, I would first locate the fresh water because it is the most critical natural resource for our survival. The task of gathering fish, edible fruit and wildlife will be divided and assigned to the individual with the comparative advantage. One person will gather fruit as it requires minimal skill to produce large quantities. Next, one person will hunt for wildlife and another will gather fish as well as collect water because both tasks involve connection to the water supply. Lastly, two will use trees to build a place of shelter because increased labor is required in this area. Natural resources located on the island such as trees and minerals will be used to create tools for hunting, fishing, cooking food, building shelter and containing water supply. As labor is divided, all five of us on the island will reap the benefits from each daily gathering by sharing and trading with each other. This system will produce the maximum productivity from each worker, because the division of labor increases the quantity of inputs. As all members of the island have reassurance that areas involving food, water and shelter will be provided, they will contribute at the highest level of production. 

Wages & Me- Interactive Tutorial

The Effect of Supply & Demand on Wages


1. What occupation did you choose?

• Financial Manager

2. Was the job description listed for your chosen profession?

• Plan, direct, or coordinate accounting, investing, banking, insurance, securities and other financial activities of a branch, office or department of an establishment.

3.  About how many Americans are employed in that occupation?

• 484, 910

4. What is the mean annual wage for that occupation?

• $123,260

5. What is the annual wage rate for the lowest-paid ten percent of workers in that occupation?

• $59,630

6. What is the annual wage rate for the highest-paid ten percent of workers in that occupation?

• Equal or greater than 187, 199

7. Find the mean annual income for that occupation for residents in your state.

• 135,760

8. How does your state's mean annual income for that occupation compare to the national mean income for that occupation?

• It is greater by 12,500

9. If there is a difference, what do you think is the primary reason for that difference?

• The cost of living in DC is high compared to the national level. This may explain the increase in mean annual income compared to the rest of the nation.

10. Will you stay in your state for your career, or do you think you will move away? Why?

• I believe it is best for me to stay in DC for my career because out of all states, it has the highest concentration of jobs and location quotients in this occupation. 

Supply & Demand- Group C

Consider the market for minivans. For each of the events listed below, identify which of the determinants of demand or supply are affected. Also, indicate whether demand or supply increases or decreases and the resulting effect on price and quantity demanded.


A) People decide to have more children

• As people decide to have more children there is a shift in the demand curve to the right due to a change in the number of buyers. The demand for minivans increases and the resulting effect is a rise in both price and quantity demanded.  

B) A strike by steel workers raises steel prices

• The rise of steel prices would shift the supply curve to the left due to the change in input prices. The supply for minivans decreases and as a result, the price rises and the quantity supplied decreases.

C) The price of sport utility vehicles rise

• As the price of sport utility vehicles rise, there is a shift in the demand curve to the right as SUV's are substitutes for minivans. The demand for minivans increases and as a result, both price and quantity demanded rise.

D) The stock market crash lowers people's income

• As the stock market crash lowers people's income, there is a shift in the demand curve to the left due to the change in consumer income. The demand for minivans decreases and as a result, the price falls and the quantity demanded falls.

Discussion Questions- Chapter 2

What was the decision you were faced with?

• Recently, I was faced with the decision after a 3 month promotional HBO free trial to either purchase the subscription ($6.99/month) or maintain my current option of basic cable and internet ($109/month).

What other alternative(s) did you have?

• Another alternative would have been to subscribe to the package inclusive of all Premium Channels at a discounted rate instead of just HBO ($20/month).

What was the opportunity cost of your choice?

• The opportunity cost of choosing to subscribe to HBO was the increase in monthly cable bills ($115.99/month) which will ultimately reduce money allocated for living expenses and other operational costs. 

What criteria did you use to make the choice? Did utility play a part in your decision? Explain.

• If I decided to maintain basic cable, I would not be able to enjoy the variety of recent blockbuster movies offered on HBO. Utility played a significant role in my decision to subscribe to HBO. During the three month trial period, I was extremely impressed by the high level of quality movies, series and documentaries. This ultimately influenced my decision to permanently keep the subscription.