FOR NJOSH ONLY

ECON 321 SPRING 2017:
INDIVIDUAL ASSIGNMENT 5

1. [Reading] Read ONE of the following papers. You have a choice between a shorter, more technical paper or a longer, easier-to-read one.

• ‘The supply of gold under the pre-1914 gold standard,’ (Technical, 12 pages): SKIP section II on pages 294 – 298, section V on page 305, and the Appendix.

• ‘“INTO THAT COUNTRY TO WORK”: Aboriginal Economic Activities During Barkerville’s Gold Rush,’ (Easier to read, 28 pages)

1. 1. Write a 3-2-1 report on one of the two papers above. Remember that you CAN’T just copy-and-paste text from the paper. You need to either cite quotes properly, and explain why you chose them, or use your own words. (12 marks)

1. 1. There are two versions of this question, one for each paper. Answer only the one related to the paper you chose. (2 marks):

1. 1. 1. ‘Supply of Gold’: This paper uses the “daily wage rate of miners” (p. 300) as a measure of the cost of producing gold. Using what you read in the article and learned in lectures, explain why this may NOT be a completely accurate measure of the cost of producing gold during a gold rush.

1. 1. 1. ‘Aboriginal Economic Activities’: On page 131, Mica Jorgenson writes, “One can speculate that Aboriginal mining took place when opportunity and season allowed.” Based on what you read in the paper and learned in class, at what times of the year (Winter, Spring, Summer, Fall) do you think Aboriginal mining was more likely to take place? Briefly explain your reasoning.

1. [Graphing] According to ‘The supply of gold under the pre-1914 gold standard,’ “Under the gold standard … a fall in the economy wide price level implied … an increase in gold mining … The increase in supply would moderate … the decline in the price level … The virtues of this stabilizing mechanism have been much praised by the advocates of the gold standard” (p. 288).

In this question, we are going to test this statement using real US data for 1900 – 2014. If the statement is correct, under the gold standard, a lower price level (which we’ll measure via the CPI) should lead to higher gold production. If this ‘virtue’ is specific to the gold standard, we should see the relationship between gold production and the CPI change if the gold standard goes away.

According to a “Brief History of the Gold Standard in the United States,” for our time period there are 3 main eras in US gold standard history: the True Gold Standard (1900 – 1933), the Quasi-Gold Standard (1934 – 1973) and Fiat Currency (1974 – Present).

If the quotes are accurate, the inverse relationship between should be strongest for the True Gold Standard data and weakest for the Fiat Currency data, where the gold standard is completely gone.

All necessary data has been provided for you, and is also available as an Excel file in the Assignment 5 folder. For your convenience, I have also attached plots of gold production vs CPI and the real price of gold. You may or may not find these plots useful.

1. We’ll start our investigation by creating three scatter plot (x-y) diagrams, with US CPI on the horizontal axis, and US Gold Production on the vertical axis. Create one scatter plot for each of the three eras (Gold Standard, Quasi-Gold Standard, Fiat Currency). These have been labeled for you in the data. (6 marks)

   1. 1. If you are using Excel, plot US CPI vs the next year’s US Gold Production. This is because the theory we are testing suggests that gold production is a response to the price level.

      2. If you are creating the graphs by hand, create standard scatter plots from the 8-year averages provided.

1. Calculate equations for the line of best fit for each of your graphs, and the R2 for the same. Plot the lines of best fit on your scatter diagrams. (Note to TA: Half-marks are allowed on this question, if a student has, say, the equation right but R2 wrong.) (3 marks)

   1. 1. If you are using Excel, this is as simple as creating a linear trend-line and asking Excel to write the equation and R2 for you.

      2. If you are doing this by hand, use the formulas and methods listed at http://sciencefair.math.iit.edu/analysis/linereg/hand/ . While time-consuming, they are not very difficult. Show your work.

1. Was the relationship between gold production and CPI as expected in the True Gold Standard Era? Explain briefly. (1 mark)

1. If your calculations are correct, the R2 for the ‘Quasi-Gold Standard’ era should have been much lower than for the other two eras. Assume this is the case. Explain why this makes sense, given the time period that we are looking at. (2 marks)

Hints:

• Remember that the R2 measures ‘goodness of fit’. A low R2, in this case, means that movements in gold production aren’t well explained by changes in CPI.

• You may wish to read the ‘Quasi-Gold Standard: 1934 – 1973’ section on pages 11 and 12 of ‘Brief History’ for help in answering the question.

1. If your graph and calculations are correct, you should see a positive relationship between gold production and the price level in the Fiat Currency era. Assume this is true. Provide a possible explanation for this relationship. (2 marks)

• Hint: you may find the attached plots of gold production vs CPI and/or the real price of gold useful.

1. [Research] According to Mica Jorgenson, as of 2015, “historians … have not yet studied the particulars of First Nations involvement in the gold rush … at a regional level for the Cariboo. … The only scholarly work that addresses the topic … argues that Aboriginal people were absent from the mines and towns” (p. 111). In this question, you’ll help correct this absence of knowledge.

The B.C. Genesis project, hosted at UVic, has digitized Colonial Dispatches (letters between BC and the British government) from 1846 to 1871. Easy-to-read transcriptions are currently available for the years 1846 – 1863.

1. 1. Access the BC Genesis database’s search function at http://bcgenesis.uvic.ca/search.htm . Search for ‘Cariboo AND Indian’. From the search results that appear, select (at least) two letters written in 1863 or earlier that talk about the economic activity of native peoples in the Cariboo. Provide the ‘Ref’ number for each article (e.g. 1234 567 / 8) and explain why you chose it. (We want to make sure you chose letters that actually talk about indigenous economic activity, and not just a letter that mentions Indians in another context.) (4 marks)

1. 1. According to the letters you chose, is it true that “Aboriginal people were absent from the mines and towns”? Explain, using properly cited evidence from the letters. (5 marks)

1. 1. These letters were written by government officials, for government officials. By reading them, what did you learn about how the BC and British governments viewed the involvement of Indians in the Cariboo gold rush? Explain briefly, using properly cited evidence from the letters. (5 marks)

Useful References (UVic connection or VPN needed for free access)

Question 3

Mica Jorgenson, “”INTO THAT COUNTRY TO WORK”: Aboriginal Economic Activities during Barkerville’s Gold Rush,” BC Studies, No. 185, Spring 2015, pp. 109 – 136.

Available (open access) at: http://ojs.library.ubc.ca/index.php/bcstudies/article/view/185910

BC Genesis Project, “Colonial Despatches: The colonial despatches of Vancouver Island and British Columbia 1846 – 1871”.

Available at http://bcgenesis.uvic.ca/index.htm

(For data sources, see Question 2 References)

Use this data if you’re doing Question 2 by hand:

10