economic history of the united states – a review but not including slavery
TRANSCRIPT
Economic History of the United States – A Review
But not including slavery
Early Years
• Navigation Laws– From Britain – begin in 1651– Purpose – to enforce British mercantilist
system– What is mercantilism?
• Salutary neglect– Why?
Revolutionary Period
• Colonial boycotts and non-importation agreements– Why?
Articles of Confederation
• Trade and Commerce– No jurisdiction
• No taxation power
The Critical Period – Accomplishments under the Articles
• Land Ordinance of 1785– What is the significance of section 16?
• Northwest Ordinance of 1787
Land Ordinance of 1785Land Ordinance of 1785
Northwest Ordinance of Northwest Ordinance of 17871787
A major accomplishment of the Confederation Congress!
Forbade slavery in the Northwest Territory
Statehood achieved in three stages:
1. Congress appointed 3 judges & a governor to govern the territory.
2. When population reached 5,000 adult male landowners elect territorial legislature.
3. When population reached 60,000 elect delegates to a state constitutional convention.
The New Constitution
• Power to tax
• Regulating trade and commerce– Between the states– Between the US and
foreign nations
The New Country
• Hamilton’s Plan
• Based on:– Report of Manufactures– Report on Credit
• Details of the plan
Economic History Review• Five Components in
Hamilton’s Plan (1)– Funding at Par
• Define• Why?• The good and the bad
Economic History Review• Five Components in Hamilton’s Plan (2)
– Assumption of state debts• Underlying motive• Problems
– The Compromise
Economic History Review
• Five Components in Hamilton’s Plan (3)– Tariff
• What is a tariff? • Main purpose?• Secondary goal
Hamilton's Financial Structure Supported by Revenues
Economic History Review
• Five Components in Hamilton’s Plan (4)– Excise taxes
• Define and give examples from today• Whiskey
Economic History Review
• Five Components in Hamilton’s Plan (5)– National Bank – the foundation of the whole
plan– How would it work?– Opposition
• Jefferson• Madison
Original National Bank
Washington’s Administration
• Loose construction vs. strict construction– Define– “Elastic clause”
Economic & Social Changes
• Eli Whitney – cotton gin– 1793– Significance– How did it work?
Economic & Social Changes
• Economy– 1800 – typical family had 7 kids – farmers– NE – new businesses– Samuel Slater – “Father of the American
factory system” – why? (1790)
Jefferson’s Presidency
• Embargo Act – 1807– Define – What
was its purpose?
– Effects/ Significance
• Long term vs. short term effects
“Era of Good Feelings” – 1816-1824
• Henry Clay’s American System– National bank
• Second BUS – 1816• Why?
– Protective Tariff• Tariff of 1816• Effects
– Internal Improvements• Examples
Monroe’s Presidency
• Panic of 1819– Causes– Define overspeculation– Define specie
Supreme Court• John Marshall – Chief Justice – Federalist
• Key economic cases– McCulloch v. Maryland – 1819
• The national government is supreme over the states
• The national bank is constitutional • Role of the elastic clause
– Gibbons v. Ogden – 1824 (steamboat case)• Only the national government can regulate
interstate trade and commerce
• Why is Marshall’s role so significant?
The Market Economyin Antebellum America
• Define: antebellum
• What was the Market Revolution?– Encompasses about eight areas– Define: subsistence farming
• Not the same as the Industrial Revolution– 1st Industrial Revolution (before Civil War 1814-
1860) textiles, railroads, iron, coal– 2nd Industrial Revolution (after Civil War)
railroads (transcontinental), oil, steel, electricity
Market Revolution• The "Market Revolution" in antebellum
America encompassed several areas:– Industrial Revolution (and its impact on American
society) – Transportation Revolution: roads, canals, steamboat,
railroad – Change from subsistence farming to large-scale cash-
crop farming. – Creation of a national market economy – Regional specialization: East, West and South – Immigration: Irish and German (U.S. need for labor) – Westward movement – Growth of cities
The Transportation Revolution
• Why? – Desire of the East to access the West (why?)
• Roads
• Turnpikes
Cumberland (National Road), 1811
Cumberland (National Road), 1811
What is the purpose of this road?
The Transportation Revolution
• Steamboat– Robert Livingston & Robert Fulton
• The Clermont (below) – 1807• Gibbons v. Ogden – 1824
– Significance of the steamboat
The Transportation Revolution
• Canals
• The Erie Canal– Where is it?– What did it connect? Significance?– What was its effect on New York City?
The Transportation Revolution
• Railroads• Significance
The Mohawk and Hudson Railroad’s DeWitt Clinton began service in 1831
TheRailroad
Revolution,1850s
TheRailroad
Revolution,1850s
Immigrant laborImmigrant laborbuilt the built the Northern Northern Railroads.Railroads.
Slave laborSlave laborbuilt the built the Southern Southern Railroads. Railroads. 1840 – 3000 miles of track; 1860 – 30,000 miles of track
Growth of Cities
• Why did some cities grow more than others?
• What was the role of rivers?
• How did canals change the patterns of growth?
• How did railroads change this pattern of growth?– Railroads are America’s first big business.
Why?
Growth of Cities - Railroads
• T or F - By 1860, the US has more railroad track than the rest of the world combined
• Rails link the East and Midwest
• Creates cities like Atlanta
Growth of Cities - Railroads• Mega Growth – Chicago
– 1849 – a few hundred people– 1860 – over 100,000 served
by 11 railroads– Becomes the main
commercial hub for the Midwest, supplanting New Orleans
• Railroad financial center – New York– Wall Street – NYC becomes
the investment center– Money is power!
Industrialization• Samuel Slater
• New England– First textile mill is
in Pawtucket, RI– Much cloth still
produced in the home
• Causes– Embargo– Protective tariff– Waterpower-why?
Samuel Slater - Father of the American Factory
System
Samuel Slater - Father of the American Factory
System
Industrialization• Eli Whitney
– Interchangeable parts
– Gun Factory• New England is the center of the American gun industry• Samuel Colt• Smith & Wesson
• Textiles in New England– Waltham & Lowell mills– Lowell girls – where do they come from? Why?– Are they typical?
New EnglandTextile
Centers:
1830s
New EnglandTextile
Centers:
1830s
Industrialization
• What was the effect of industrialization on consumer prices? Why?– Ex.- Clocks – in 1800 cost $50 (made by hand),
in 1850 cost 50 cents (made by machine)
• Why did the growth of towns lead to an increase in wages?– Steam engines allowed factories to remain
open in very cold weather – why?– More jobs, year-round work (compare to farms)
Industrialization
• Quality of life– Cities – most live in Row Houses – define
• Smaller for working class than middle class• Subdivided row houses become tenements (?)• Who lived in tenements? Free blacks & Irish
immigrants
– Rural areas – one-room log cabins• Windows covered by paper or cloth
IndustrializationConveniences/ Inconveniences
– Coal-burning stoves (pollution?)– Railroads bring in fresh vegetables– Cities have water (at the street hydrant)
• Baths? Infrequent, so you smell bad!
– Flush toilets still rare• A sign of wealth
– Sanitation – the hog department– Horses in cities–manure cleanup?
Boom/Bust Cycles: 1790-1860Boom/Bust Cycles: 1790-1860
The blue line shows, for comparison, the The blue line shows, for comparison, the price of a year’s tuition at Harvard price of a year’s tuition at Harvard College. In 1790 it was $24, but by 1860 College. In 1790 it was $24, but by 1860 had risen to $104.had risen to $104.
Regional SpecializationRegional Specialization
EAST EAST IndustrialIndustrial
SOUTH SOUTH Cotton & SlaveryCotton & Slavery
WEST WEST The Nation’s The Nation’s “Breadbasket”“Breadbasket”
John Quincy Adams
• Tariff of 1828 – “Tariff of Abominations”– What was it?– Why an abomination?
• “The South Carolina Exposition”– John C. Calhoun Nullification– What does this remind you of?
Jackson and the Bank
• Nicholas Biddle
• Pet banks
Economic History
• Jackson’s Specie Circular
• Panic of 1837– Causes– Results
• Treasury Bill of 1840
• Panic of 1857 – notice any trends?– Causes
More Economic History
• Commonwealth v. Hunt– Massachusetts SC ruled unions are legal
as long as they are peaceful
• Independent Treasury– Van Buren & Polk
– Government deposited $ in private banks
Finances of the Civil War
• Raising money – North– First income tax– Excise taxes increased
• What is an excise tax?
• Morrill Tariff of 1861– What did it do? (protective)– Which party is associate with the protective
tariff?
Finances of the War
• Greenbacks– Define– Backed by
gold
• Bonds
Westward Movement
• Homestead Act of 1862– Details– Why move west?
• Morrill Land Grant Act of 1862– Details– Some examples
• Kansas State, Iowa State, Michigan State
• Pacific Railway Act – 1863– To build a transcontinental railroad
The Southern Economy after the War - Life for the Freedmen
• Sharecropping– Why?
• Tenant Farming– Why?
• Crop lien system– How did this work?
SharecroppingSharecropping
Tenancy & the Crop Lien SystemTenancy & the Crop Lien SystemFurnishing Merchant Tenant Farmer Landowner Loan tools and
seed up to 60% interest to tenant farmer to plant spring crop.
Farmer also secures food, clothing, andother necessities oncredit from merchant until the harvest.
Merchant holds “lien” {mortgage} on part of tenant’s future crops as repayment of debt.
Plants crop, harvests in autumn.
Turns over up to ½ of crop to land owner as payment of rent.
Tenant gives remainder of crop to merchant inpayment of debt.
Rents land to tenant in exchange for ¼ to ½ of tenant farmer’s future crop.
Economic Issues • Panic of 1873
• Greenback issues
• Specie Resumption Act of 1875
• Push for silver – why?– Bland-Allison Act
1878– Greenback Party
formed – why?
Overview – What does this reveal?
Characteristics of Industrial Change
• Cheap energy – coal
• Technological innovation
• Need for workers – a lot of them!
• Competition
• Decline in prices
• Failure of the money supply to keep up with productivity
Railroads
• Growth• Where?• Leaders
Collis Huntington • Central Pacific
Jay Gould • Union Pacific
James J. Hill • Northern Pacific
Cornelius Vanderbilt • NY Central
• Funding and debt
Railroads - Significance• Spurred the industrialization of the post-Civil War years (especially
steel)• Sprawling nation became united physically. • Created huge domestic market for US raw materials and
manufactured goods. -- Probably the largest integrated market in the world.
• Stimulated creation of 3 Western frontiers: mining, agriculture, and ranching
• Led to great exodus to cities from rural areas in late 19th century -- Railways could feed huge cities; supply raw materials & markets
• Facilitated large influx of immigrants. -- Railroads advertised in Europe free travel to new farms in the West
• Spurred investment from abroad • Creation of distinct "time zones" from coast to coast. • Maker of millionaires; a new railroad aristocracy emerged • Native Americans displaced and herded into ever-shrinking
reservations.
Railroads - Regulation
• Laissez-faire – define?
• Regulation from Washington– Interstate Commerce Act – 1887
• Creates the ICC• Bans monopolistic behaviors like pooling and
rebates• First large-scale legislation passed by the
federal government to regulate corporations in the interest of society
• But no real enforcement powers
Oil and Steel• The cornerstone of the
Second Industrial Revolution– Steel – skyscrapers to railroad
tracks– Bessemer Process– Andrew Carnegie – sold out to
JP Morgan
• Oil– Would create far more wealth
than all the gold mined in the West
– Kerosene for lamps
Impact of the Second Industrial Revolution
-Standard of living rose sharply and remained highest in the world
-Urban centers mushroomed as factories increasingly demanded more labor
-American agriculture eclipsed by industrialism: railroads, steel, oil, electricity
-Free-enterprise eclipsed by monopoly -The work-place became regimented and
impersonal
Impact of the Second Industrial Revolution-Women achieved social and
economic independence in new careers as typing, stenography, and switchboard operating -- Marriages delayed, smaller families resulted
-Social stratification most pronounced in U.S. history 1. By 1900, about 10% controlled 90% of the nation’s wealth. 2. Lower classes envious and resentful of the nouveau riche
-Foreign trade developed as high U.S. productivity resulted in overproduction.
Steel
• Andrew Carnegie• “Watch the costs…”• Vertical integration
– One of the most famous examples of vertical integration was the Carnegie Steel company. The company controlled not only the mills where the steel was manufactured but also the mines where the iron ore was extracted, the coal mines that supplied the coal, the ships that transported the iron ore and the railroads that transported the coal to the factory, the coke ovens where the coal was cooked, etc.
– Control every aspect of the production process– Improve efficiency, reduce costs
Oil and John D. Rockefeller• Origins (Western PA)• Standard Oil• Trusts
– Define– Purpose
• Consolidated operations of previously competing enterprises
• Horizontal integration– Consolidate with
competitors to monopolize a given market
Trusts
• More trusts– Copper, sugar, whiskey, lead…
• Congressional reaction
– Sherman Anti-Trust Act – 1890• Sought to prevent trusts from consolidating
and restricting trade• Courts will use it against labor (strikes)
More Robber Barons
• J. P. Morgan – Banking
• Gustavus Swift & Philip Armour– Meatpacking
• Andrew Mellon– Financier
New Business CultureNew Business Culture1. Laissez Faire the ideology of the
Industrial Age.1. Laissez Faire the ideology of the
Industrial Age.
Individual as a moral and economic ideal. Individuals should compete freely in the
marketplace. The market was not man-made or invented. No room for government in the market!
Individual as a moral and economic ideal. Individuals should compete freely in the
marketplace. The market was not man-made or invented. No room for government in the market!
The Gospel of Wealth:Religion in the Era of
Industrialization
The Gospel of Wealth:Religion in the Era of
Industrialization
Russell H. ConwellRussell H. Conwell
$ Wealth no longer looked upon as bad.
$ Viewed as a sign of God’s approval.
$ Christian duty to accumulate wealth.
$ Should not help the poor.
$ Wealth no longer looked upon as bad.
$ Viewed as a sign of God’s approval.
$ Christian duty to accumulate wealth.
$ Should not help the poor.
“On Wealth”“On Wealth”
Andrew CarnegieAndrew Carnegie
$ The Anglo-Saxon race is superior.
$ “Gospel of Wealth” (1901).$ Inequality is inevitable and
good.$ Wealthy should act as
“trustees” for their “poorer brethren.”
$ The Anglo-Saxon race is superior.
$ “Gospel of Wealth” (1901).$ Inequality is inevitable and
good.$ Wealthy should act as
“trustees” for their “poorer brethren.”
Rise of Labor
• Knights of Labor– Terence Powderly– “one big union” including blacks and women– Beliefs and Goals– Demise
• Haymarket Square
bombing – 1886– Effects
Terence V. Powderly of the Knights of Labor
Copyright + 1999 by Harcourt Brace & Company All rights reserved
Rise of Labor
• Working Conditions– How does the existence of low-skilled jobs
affect workers when there are technological advances?
– Low wages, long hours– Poor working conditions– Role of immigrants
• Key terms– Injunction, collective bargaining, strike, scabs
Rise of Labor
• American Federation of Labor– Samuel Gompers– Association of self-governing unions– Goals– Skilled workers– Belief in Closed Shop
Samuel Gompers of the American Federation of LaborCopyright + 1999 by Harcourt Brace & Company All rights reserved
Rise of Labor
• Major strikes– Homestead Strike – 1892
• Carnegie’s steel plant• Result
– Pullman Strike – 1894• Role of Eugene V. Debs• Results• Role of government
Pennsylvania Militia at Carnegie’s Homestead Steel Mill, 1892Copyright + 1999 by Harcourt Brace & Company All rights reserved
Rise of Labor
• Long term effects– Acceptance of workers’ right to organize,
bargain collectively, and strike– Which political party is more supportive of
labor? Why?– Labor Day made a holiday by Congress - 1894
Causes of the 1893 Causes of the 1893 PanicPanic
Causes of the 1893 Causes of the 1893 PanicPanic Worst of the centuryWorst of the century
Begun 10 days after Cleveland took office.Begun 10 days after Cleveland took office.
1.1. Several major corporations went bankrupt.Several major corporations went bankrupt.
Over 16,000 businesses disappeared.Over 16,000 businesses disappeared.
Triggered a stock market crash.Triggered a stock market crash.
Over-extended investments.Over-extended investments.
2.2. Bank failures followed causing a Bank failures followed causing a contractioncontractionof credit [nearly 500 banks closed].of credit [nearly 500 banks closed].
3.3. By 1895, unemployment reached 3 million.By 1895, unemployment reached 3 million.
Americans cried out for relief, but the Americans cried out for relief, but the GovernmentGovernmentcontinued its laissez faire policies!!continued its laissez faire policies!!
Coxey’s Army, Coxey’s Army, 18941894
Coxey’s Army, Coxey’s Army, 18941894
Jacob Coxey & his “Army of Jacob Coxey & his “Army of the Commonweal of Christ.”the Commonweal of Christ.”
March on Washington March on Washington “hayseed “hayseed socialists!”socialists!”
Wanted a public works program – Why?Wanted a public works program – Why?
Bryan’sBryan’s“Cross of Gold” “Cross of Gold” Speech - 1896Speech - 1896
Bryan’sBryan’s“Cross of Gold” “Cross of Gold” Speech - 1896Speech - 1896You shall not You shall not
press down press down upon the brow upon the brow of labor this of labor this crown of crown of thorns; you thorns; you shall not shall not crucify crucify mankind upon mankind upon aa cross of goldcross of gold!!
Gold Triumphs Over Gold Triumphs Over SilverSilver
Gold Triumphs Over Gold Triumphs Over SilverSilver
1900 1900 GoldGoldStandard ActStandard Act
Confirmed theConfirmed thenation’s nation’s commitment tocommitment tothe gold the gold standard.standard.
A victory for the A victory for the
forces offorces ofconservatism.conservatism.
Copyright + 1999 by Harcourt Brace & Company All rights reserved
TR as President - Corporations
• Anthracite Coal Strike – 1902– Miners vs. owners– TR’s mediation -
Significance?
• Created the Dept. of Commerce and Labor in 1903 – Why?
TR as President - Corporations
• TR as Trustbuster– Northern Securities
Company– Elkins Act – 1903– Hepburn Act – 1906– Good trusts vs. bad
trusts – Compared with Taft
as a trustbuster
Taming the good trusts
Taft
• Trustbuster– Compare with TR– Standard Oil broken
up
• Federal Reserve Act – 1913– Most significant economic legislation between the
Civil War and New Deal– Established the modern Federal Reserve system
• Clayton Anti-Trust Act of 1914
“Black Tuesday”
October 29,1929
Causes• Buying on margin/ Credit structure• Overspeculation/ Unstable banks• Weakened Industries (Railroads, cotton)• Overproduction/ Underconsumption• Lack of diversification• Uneven distribution of income• Weak international economy
– International debt– Hawley-Smoot Tariff 1930– This exacerbates the problem
Effects of the Depression by 1932
• 25% - 33% unemployment
• About 25% of banks had failed
• About 25% of farmers had lost their farms
• Thousands of businesses failed
• But, before the inauguration,– Congress passed bill to repeal prohibition – 21st amendment ratified later that year (1933)
by the states
FDR Begins• Experimentation – First “Hundred Days”• Fireside Chats• Relief, Recovery, Reform
– 1933-1935 – First New Deal
• Banking Crisis– Banking Holiday– Off the gold standard– Emergency Banking Relief Act 1933– Home Owner’s Loan Corporation– Glass-Steagall Banking Reform Act 1933
• Created the Federal Deposit Insurance Corp. (FDIC)
– SEC - Securities and Exchange Commission– 1934 – more reform of the stock market
Industry
• Wagner Act – National Labor Relations Act of 1935 (2nd New Deal) – After NRA declared unconstitutional, this restored
collective bargaining rights to unions
The Growth of Labor Union Membership, 1933–1946
Social Changes - Labor• John L. Lewis
– CIO
• Strikes– US Steel– GM (sit-down strike)– Ford
• Why did the biggest corporations finally yield to the unions? (Hint: what was the attitude of the federal government?)
Truman’s Domestic Policy
• Taft-Hartley Act – 1947– Passed over Truman’s veto (how?)– No more closed shop– Added “cooling off” period
• Strikes and John L. Lewis– United Mine Workers– Truman’s Response
1950s Union Politics• Labor Unions
• Merger of AFL-CIO - 1955
• Jimmy Hoffa - Teamsters
• Landrum-Griffin Act – 1959– Tries to reduce political
influence of unions
1959
Economic Issues
• Union membership (35%) peaks in 1970
• Inflation
• Wage and Price Controls under Nixon– What happened?
• Stagflation– Slowing productivity and rising inflation – a
rare combination – will plague the Ford and Carter presidencies
Reagan’s Domestic Policies
• Supply-side economics (Reaganomics)– Define– Trickle-down effect– Tax cut– More defense spending– Results (big deficits)
Social Trends – How has the workforce changed?
Slave-Owning Families Slave-Owning Families (1850)(1850)
Slave-Owning Families Slave-Owning Families (1850)(1850)
259,950
464,700
1,040,655
818,925
565,355
317,049
68,820