*** economies United States America economic history








United States Economic History

American economkic histiory
Figure 1.--Free market capitalism conbined with low taxes, a limited government, and a fine public education system transformed Americans from a mostly poor rural population to a prosperous urban population. Americans from modest rural backgrounds found themselves leading confortable lives beyond what they could have imsgined as children. The emphasis was on personal responsibility. Despite this achievement many Americans today have negative opinions of capitalism and believe that higher taxes and a bigger more controlling government will guarantee prosperity even though the historical record suggests the opposite is true. This photograph was taken after the turn-of-the 20th century. Two boys from an obviously affluent boys wear sailor caps stand next to their impressive toy sailboat. On the back it says " This was taken when we lived in Glenelg (?) with the Boat Father made for the boys"

The ecomomy of the modern United States began its development with the European colonization of North America. This included several European countries, but was primarily conducted by the English. At the time the colonization began, neither the British political system or capitalism itself had been fully developed. The first two colonies (Jamestown in Virginia and Plymouth in Massachusetts) served as prototypes for the two competing economic system that would develop in North and South. Plymouth was founded by religious dissenters influenced by Calvinist theology which had decided views on economic success. The Northern economy developed on the basis of small family farms and handicrafts. British legislation restricted manufacturing. The South developed on the basis of plantation agriculture and slave labor. Unlike the Spanish Empire, they produced little gold and silver, but in the long run generated far greater wealth. Only a few years after the colonies were established, living conditions for average people weee highrr than in the nother country. And in Britain both the modern English constitution and the capitalist system had evolved by the turn-of-the 18th century. Both were of enormous influence on America. The two differed models of economic developed survived the Revolution and became a dividing line of regional politics in the early years of the Republic. The independent farming and handicraft economy of the north layed the foundation for the industrial revolution. The invention of the cotton gin made possible the expansion of the plantation system in the South. Export earings from cotton helped finance the industrialization of the north. The eventual ecomomic direction of the United States was determined by the Civil War and settled in large measure by the superior capital and industrial resources of the Northern states. After the Civil War, the United States began a rapid period of industrial expansion which made it the worlds largest industrial power as well as the greatest agricultural producer. The United States developed ever more complex economic and capital institutions to accomodate its industrial expansion. The system was essentially laize faire or ecomonic growth with mimimal taxation and government regulation. The Government did promote economic growth in many ways such as land grants to rail road companies. With the rise of the Progressive Movement in the late-19th century, that involvement has expanded.

Native Americans


Colonial History

The ecomomy of the modern United States began its development with the European colonization of North America. This included several European countries, but was primarily conducted by the English. At the time the colonization began, neither the British political system or capitalism itself had been fully developed. The first two colonies (Jamestown in Virginia and Plymouth in Massachusetts) served as prototypes for the two competing economic system that would develop in North and South. Plymouth was founded by religious dissenters influenced by Calvinist theology which had decided views on economic success. The Northern economy developed on the basis of small family farms and handicrafts. British legislation restricted manufacturing. The South developed on the basis of plantation agriculture and slave labor. Unlike the Spanish Empire, they produced little gold and silver, but in the long run generated far greater wealth. Only a few years after the colonies were established, living conditions for average people weee highrr than in the nother country. And in Britain both the modern English constitution and the capitalist system had evolved by the turn-of-the 18th century. Both were of enormous influence on America.

United States Economy: 18th Century (1783-1800)

The two differed models of economic developed survived the Revolution and became a dividing line of regional politics in the early years of the Republic. The independent farming and handicraft economy of the north layed the foundation for the industrial revolution.

United States Economy: 19th Century

Two major economic development dominated the history of the United States during the 19th century. First the invention of the cotton gin and the American seizure of land from the Native merivans in the Southeast (1810s-30s) made possible the expansion of the plantation system in the South and the expansion of slavery. Second was the industrial revolution which transformed the economy of the North. Industrialization was based on free labor. The industrial revolution began in Britain (mid-18th century). America as a British colony was exposed to the British developments. Emigrants from Britin carried technological developments. British colonial lehilation, however, restricted mnufacturing in the colonies. This only chnged with the Revolution (1776-83). The americcan economy wa devestated by the War, but gew countries had more of a potential for inditrilizstion as America. Export earings from cotton helped finance the industrialization of the north. The eventual ecomomic direction of the United States was determined by the Civil War and settled in large measure by the superior capital and industrial resources of the Northern states. After the Civil War, the United States began a rapid period of industrial expansion which made it the worlds largest industrial power as well as the greatest agricultural producer. The United States developed ever more complex economic and capital institutions to accomodate its industrial expansion. The system was essentially laize faire or ecomonic growth with mimimal taxation and government regulation. The Government did promote economic growth in many ways such as land grants to rail road companies. With the rise of the Progressive Movement in the late-19th century, that involvement has expanded.

United States Economy: 20th Century

Germany in Europe exceedded the industrail power of Britain. But something even more was occurfing outside of Europe. The United States by the turn of the 20th century had become the greatest industrial power and the largest econmy in the world. Most Americans still lived on the farm, but the United States was bcoming an economic powerhouse beyond the dimnsions of the European powers. The Unitd States wsas developin an exceedingly complex economy. And the issue of goverment regulation became increasinly discussed. Congress which still dominated Federal policy had passed the Interstate Commerce Act, a law regulating railroads (1887). This was followed by the Sherman Antitrust Act, a law preventing large firms from controlling a single industry through monopolies (1890). These laws were not enforced with any vigor in the 19th centuty. And economic theory had not yet develoed to match economiv growth. The Depression of 1893 and now the Panic of 1907, shook American decision makers. J.P. Morgan helped prevebt an economic disaster. It would bevthe last time a ignificant individual could do this. Republican President Theodore Roosevelt (1901-1909), William Howard Taft (1909-14, and Democratic President Woodrow Wilson (1913-1921) significantly expanded the previiusly limited Givernment involvement in the economy. America was not only surpassing Europe in industrial power, it was also expanding agricultural production and unlike the European powes was not only self suficient in food production, but exported food. And even more significant, the United States was evloping vast oil fields just at the time that industrial economies were making a transition from coal which had domimated the 19th century to oil which bwould dominate the 20th century. Partbof this was the velopment of the internal combustion engine which would lead to whole new industries--esceially cars and trucks. And America ledd the way. The United States did not have an imprtant arms industry when it entered World War I and no time to build one. It did have trucks which would play a major role in adding mobility to The Allies. Along with the American infantry, it playd a major role in defeating the Germans. America not only helped the Allies win thewar, but also to mprevent Europe rom starving after the war. The Roaring Twebties were a time of unparalleded economic expansion in America, leaving Europe behind. The American population for the first time became a majority urban population. America by the end of the 1920s not only had surpased every European country, but had an economy comparable to all of Europe combined. The stock market crash and enesuing Great Depression shocked Americans (1929). It was the most serious economic dislocation in American history. The result was massive Governent intervention in the economy--the New Deal. The New Deal had many positive accomplishments, but one of them was not ending the Depression. Contrary to popular belief, the Crash was not the true cause if the Depression. of 1929 was not a substantial cause of the Great Depression and President Roosevelt's New Deal may have actually slowed economic recovery, World War II only deepened government economy only deepened Government involvement in the economy. The American economy was damaged by the Depression, but proved to be the Aesenal of Democracy that saved democracy and Western Civilization from the nightmare Totalitarain states that emerged from socialism (Soviets, Fascists, and NAZIs). The United States borrowed the greatest amount of money in history to defeat the Axis. It was unclear that it could ever be paid back but the economic boom of the 1950s and economic growth did just that. Many including some Americans began to see socialism as a superior system to capitalism. The newly independent countries emerging from the Euroean colonial empires adopted socialist polices and failed miseravly. The NKVD/KGB managed to disguise Soviet economic failure until the 1980s. The Asian Tigers first demonstarted what market reforms (capitalism) could do in developimg countries. Even the Chinese were concinced. These countries achieved the fraetest outburst of human well-being in humant history, thrusting some ONE BILLION people from abject poverty to the prosperous middle-class in only none generation. Despite this Ameicans began moving in the oppoosite direction with more Government involvement in the economy and movenent toward a European-style welfare state. The Government gave less attention to the economy, pursuing trade policies thatked to the destruction of American manufacturing exposing American industry to unfair competition from Europe, Japan, and China. The econmy was furher traumatized by the Arab oil embargo mand increased oil prices. The entreprenurial American sprit led to a leadership in the new insusties of the digital age.,

United States Economy: 21st Century












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Created: 6:48 AM 4/10/2011
Last updated: 2:15 AM 4/10/2019