1. U.S. Economic History

2. Mercantilism  Trade benefits Mother country  Colonies supplied cheap raw materials  Mother country provided expensive manufactured goods  Lack of strict enforcement encouraged colonies to develop profitable trade by smuggling… Salutary neglect

3. The Constitution: An Economic Document ( Federal Government’s Economic Jobs)  Protect private property  Regulation of interstate & foreign trade  May tax imports (tariffs), but never tax exports  Uniform currency  Issue patents and copyrights

4. Creation of a National Economy  Hamilton’s Financial Plan  Bank of the U.S.  Tariff to protect infant industries  Federal assumption of state debt →good credit  Excise tax (on Whiskey…leads to Whiskey Rebellion)  Decisions of the Marshall Court  McCulloch v. Maryland- ok to use elastic clause (bank)  Gibbons v. Ogden – federal regulation of transportation (interstate commerce)  Dartmouth College v. Woodward- uphold terms of contract – not even gov’t can interfere

5. Factors Encouraging Economic Growth in USA  Resources/Land  Capital to invest  Labor  Slavery  Immigration – no restrictions until 1882  Completion of Transcontinental Railroad

6. Business Consolidation (late 1800’s – early 1900’s)  Proprietorships & Partnerships → Corporations  Advantages of corporations:  Rise of monopolies (pools, trusts, holding companies)  Problems caused by monopolies: higher consumer prices; lower wages; poorer working and living conditions, widening gap between rich and poor, etc.

7. Regulation of Business  Interstate Commerce Act (1887)  To regulate railroads  Created Interstate Commerce Commission to enforce  Sherman Anti-Trust Act (1890)  To restore competition in all businesses in the form of a trust in restraint of trade

8. Rise of Labor Unions  Attempts to Organize Unions  Knights of Labor (Powderly)-Skilled & Unskilled in same union  American Federation of Labor (Gompers) – craft unions, “bread & butter unionism”, closed shop  Early Strikes – Unsuccessful  Haymarket Affair  Homestead Steel Strike  Pullman Strike  Government Actions – Anti-Labor  Use of federal troops  Use of injunctions  Use of Anti-trust laws against unions in restraint of trade

9. Populism  Problems of the Farmers  Overproduction  High operating costs (machinery, technology)  Cycle of debt (mortgages, repay loans)  Granger Laws  States attempted to regulate railroads  Supreme Court cases  Munn v. Illinois  Wabash v. Illinois  Federal government passed Interstate Commerce Act

10. Populist Party  Platform  Unlimited coinage of silver  Direct election of US Senators  Graduated Income Tax  Government ownership of Railroads, telephone, & telegraph systems  Election of 1896  McKinley v. Bryan  “Cross of Gold” speech  Significance of election?

11. Progressive Era Reforms (1900 – 1920)  Trustbusting  To restore competition  TRoosevelt made it popular  Graduated Income Tax  Fair – based on ability to pay  Federal Reserve Act  Manage nation’s money supply (interest rates, reserve requirement)  Conservation of Natural Resources  TRoosevelt – national concern to protect

12. Propsperity of the 1920’s  Mass Production (Age of the Automobile)  Radio and Advertising →more uniform culture  Buying on Credit – installment plan  Supply-side Economics – “Trickle-down”  Speculation in stocks & real estate

13. Causes of the Great Depression  Overproduction  Underconsumption  High tariffs  Buying stocks on margin  Unsound banking practices  World-wide depression  Crash of the stock market

14. Effects of the Great Depression  ↑ unemployment (25% +)  Businesses closed  People lost homes  Hoovervilles, Hoover blankets, breadlines, soup kitchens  President Hoover’s policies associated with worsening conditions (Bonus Army, lack of direct gov’t relief)

15. The New Deal  The 3 R’s  Relief – to provide immediate help to stop suffering  Recovery – to get economy moving in the right direction  Reform – lasting changes so this would never happen again

16. Lasting Effects of the New Deal  Government responsible for “economic well- being” of U.S.  Safety Net programs to prevent economy from total collapse  Social Security  Tennessee Valley Authority  Federal Deposit Insurance Corporation (FDIC)  Securities & Exchange Commission (SEC) to regulate the stock market

17. World War II and the Post-War Prosperity  War-time Economy  US – “Arsenal of Democracy”  Rosie the Riveter – role of women & minorities  Rationing  Post-War Prosperity  Consumerism/Materialism  The Marshall Plan – economic recovery of Europe  Move to the suburbs

18. The Great Society (LBJ – 1960’s)  War on Poverty  Medicare  Federal Aid to Education  Job Corps/On-the-Job Training

19. Reaganomics (1980’s)  Supply-side economics – “Trickle down”  Deficit spending  ↓ government regulation  ↑ military spending  ↑ national debt

20. Shift to Service-Oriented Economy  Fewer Manufacturing Jobs  Closing of steel plants  Robotics on the assembly line  Need for educated, flexible workforce  Computer Revolution  Improved manufacturing techniques  Access to databases  Internet access

21. Free Trade Agreements  NAFTA (North American Free Trade Agreement)  US-Canada-Mexico  GATT (General Agreement on Tariffs & Trade)  Attempt to reduce tariffs and promote trade on world-wide basis