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Economic History of the United States – A Review

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1 Economic History of the United States – A Review
But not including slavery

2 Early Years Navigation Laws Salutary neglect
From Britain – begin in 1651 Purpose – to enforce British mercantilist system What is mercantilism? Salutary neglect Why?

3 Revolutionary Period Colonial boycotts and non-importation agreements

4 Articles of Confederation
Trade and Commerce No jurisdiction No taxation power

5 The Critical Period – Accomplishments under the Articles
Land Ordinance of 1785 What is the significance of section 16? Northwest Ordinance of 1787

6 Land Ordinance of 1785

7 Northwest Ordinance of 1787
A major accomplishment of the Confederation Congress! Forbade slavery in the Northwest Territory Statehood achieved in three stages: Congress appointed 3 judges & a governor to govern the territory. When population reached 5,000 adult male landowners  elect territorial legislature. When population reached 60,000  elect delegates to a state constitutional convention.

8 The New Constitution Power to tax Regulating trade and commerce
Between the states Between the US and foreign nations

9 The New Country Hamilton’s Plan Based on: Details of the plan
Report of Manufactures Report on Credit Details of the plan

10 Economic History Review
Five Components in Hamilton’s Plan (1) Funding at Par Define Why? The good and the bad

11 Economic History Review
Five Components in Hamilton’s Plan (2) Assumption of state debts Underlying motive Problems The Compromise

12 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

13 Economic History Review
Five Components in Hamilton’s Plan (4) Excise taxes Define and give examples from today Whiskey

14 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

15 Washington’s Administration
Loose construction vs. strict construction Define “Elastic clause”

16 Economic & Social Changes
Eli Whitney – cotton gin 1793 Significance How did it work?

17 Economic & Social Changes
Economy 1800 – typical family had 7 kids – farmers NE – new businesses Samuel Slater – “Father of the American factory system” – why? (1790)

18 Jefferson’s Presidency
Embargo Act – 1807 Define – What was its purpose? Effects/ Significance Long term vs. short term effects

19 “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

20 Monroe’s Presidency Panic of 1819 Causes Define overspeculation
Define specie

21 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?

22 The Market Economy in 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 ) textiles, railroads, iron, coal 2nd Industrial Revolution (after Civil War) railroads (transcontinental), oil, steel, electricity

23 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

24 The Transportation Revolution
Why? Desire of the East to access the West (why?) Roads Turnpikes

25 Cumberland (National Road), 1811
What is the purpose of this road?

26 The Transportation Revolution
Steamboat Robert Livingston & Robert Fulton The Clermont (below) – 1807 Gibbons v. Ogden – 1824 Significance of the steamboat

27 The Transportation Revolution
Canals The Erie Canal Where is it? What did it connect? Significance? What was its effect on New York City?

28 The Transportation Revolution
Railroads Significance The Mohawk and Hudson Railroad’s DeWitt Clinton began service in 1831

29 The Railroad Revolution, 1850s
Immigrant labor built the Northern Railroads. Slave labor built the Southern Railroads. 1840 – 3000 miles of track; 1860 – 30,000 miles of track

30 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?

31 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

32 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!

33 Samuel Slater - Father of the American Factory System
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

34 Industrialization Eli Whitney Textiles in New England 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?

35 New England Textile Centers: 1830s

36 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)

37 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

38 Industrialization Conveniences/ 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?

39 Boom/Bust Cycles: The blue line shows, for comparison, the price of a year’s tuition at Harvard College. In 1790 it was $24, but by 1860 had risen to $104.

40 Regional Specialization
EAST  Industrial SOUTH  Cotton & Slavery WEST  The Nation’s “Breadbasket”

41 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?

42 Jackson and the Bank Nicholas Biddle Pet banks

43 Economic History Jackson’s Specie Circular Panic of 1837
Causes Results Treasury Bill of 1840 Panic of 1857 – notice any trends?

44 More Economic History Commonwealth v. Hunt Independent Treasury
Massachusetts SC ruled unions are legal as long as they are peaceful Independent Treasury Van Buren & Polk Government deposited $ in private banks

45 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?

46 Finances of the War Greenbacks Define Backed by gold Bonds

47 Westward Movement Homestead Act of 1862 Morrill Land Grant Act of 1862
Details Why move west? Morrill Land Grant Act of 1862 Some examples Kansas State, Iowa State, Michigan State Pacific Railway Act – 1863 To build a transcontinental railroad

48 The Southern Economy after the War - Life for the Freedmen
Sharecropping Why? Tenant Farming Crop lien system How did this work?

49 Sharecropping

50 Tenancy & the Crop Lien System
Furnishing Merchant Tenant Farmer Landowner Loan tools and seed up to 60% interest to tenant farmer to plant spring crop. Farmer also secures food, clothing, and other necessities on credit 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 in payment of debt. Rents land to tenant in exchange for ¼ to ½ of tenant farmer’s future crop.

51 Economic Issues Panic of 1873 Greenback issues
Specie Resumption Act of 1875 Push for silver – why? Bland-Allison Act 1878 Greenback Party formed – why?

52 Overview – What does this reveal?

53 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

54 Railroads Growth Where? Leaders Funding and debt Collis Huntington
Central Pacific Jay Gould Union Pacific James J. Hill Northern Pacific Cornelius Vanderbilt NY Central Funding and debt

55 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.

56 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

57 Oil and Steel The cornerstone of the Second Industrial Revolution Oil
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

58 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

59 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 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.

60 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

61 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


63 Trusts More trusts Congressional reaction
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)

64 More Robber Barons J. P. Morgan Gustavus Swift & Philip Armour
Banking Gustavus Swift & Philip Armour Meatpacking Andrew Mellon Financier

65 New Business Culture 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!

66 The Gospel of Wealth: Religion in the Era of Industrialization
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. Russell H. Conwell

67 “On Wealth” The Anglo-Saxon race is superior.
“Gospel of Wealth” (1901). Inequality is inevitable and good. Wealthy should act as “trustees” for their “poorer brethren.” Andrew Carnegie

68 Rise of Labor Knights of Labor Haymarket Square bombing – 1886
Terence Powderly “one big union” including blacks and women Beliefs and Goals Demise Haymarket Square bombing – 1886 Effects

69 Terence V. Powderly of the Knights of Labor
Copyright by Harcourt Brace & Company All rights reserved

70 Rise of Labor Working Conditions Key terms
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

71 Rise of Labor American Federation of Labor Samuel Gompers
Association of self-governing unions Goals Skilled workers Belief in Closed Shop

72 Samuel Gompers of the American Federation of Labor
Copyright by Harcourt Brace & Company All rights reserved

73 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

74 Pennsylvania Militia at Carnegie’s Homestead Steel Mill, 1892
Copyright by Harcourt Brace & Company All rights reserved

75 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

76 Causes of the 1893 Panic Worst of the century
Begun 10 days after Cleveland took office. Several major corporations went bankrupt. Over 16,000 businesses disappeared. Triggered a stock market crash. Over-extended investments. Bank failures followed causing a contraction of credit [nearly 500 banks closed]. By 1895, unemployment reached 3 million. Americans cried out for relief, but the Government continued its laissez faire policies!!

77 Coxey’s Army, 1894 Jacob Coxey & his “Army of the Commonweal of Christ.” March on Washington  “hayseed socialists!” Wanted a public works program – Why?

78 Bryan’s “Cross of Gold” Speech - 1896
You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold!

79 Gold Triumphs Over Silver
1900  Gold Standard Act Confirmed the nation’s commitment to the gold standard. A victory for the forces of conservatism.

80 Copyright + 1999 by Harcourt Brace & Company All rights reserved

81 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?

82 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

83 Taft Trustbuster Compare with TR Standard Oil broken up

84 Clayton Anti-Trust Act of 1914
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

85 “Black Tuesday” October 29, 1929

86 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

87 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

88 FDR Begins Experimentation – First “Hundred Days” Fireside Chats
Relief, Recovery, Reform – 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

89 Industry Wagner Act – National Labor Relations Act of 1935 (2nd New Deal) After NRA declared unconstitutional, this restored collective bargaining rights to unions

90 The Growth of Labor Union Membership, 1933–1946

91 Social Changes - Labor John L. Lewis Strikes
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?)

92 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

93 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

94 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

95 Reagan’s Domestic Policies
Supply-side economics (Reaganomics) Define Trickle-down effect Tax cut More defense spending Results (big deficits)

96 Social Trends – How has the workforce changed?



99 Slave-Owning Families (1850)
259,950 464,700 1,040,655 818,925 565,355 317,049 68,820

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