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A Brief Economic History of North America!. Sections: 1. Exploration and Conquest (up to 1400s +/-) 2. Colonization and Exploitation (1400s to 1770s) 3. Revolution and New Government (1770s to the late 1700s) 4. US Expansion (late 1700s to 1850s) 5. Civil War (1850s to 1880s)
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A Brief Economic History of North America! Sections: 1. Exploration and Conquest (up to 1400s +/-) 2. Colonization and Exploitation (1400s to 1770s) 3. Revolution and New Government (1770s to the late 1700s) 4. US Expansion (late 1700s to 1850s) 5. Civil War (1850s to 1880s) 6. Development of the Nation (1800s to 1920s) 7. Venturing Abroad (1880s to 1920s) 8. Looking Inward (1920s to 1940s) 9. Super Power and Beyond (1940s to Present)
A Brief Economic History of North America! This is Not a history class! Why are we studying this? You are correct. This is not a history class, but many of the economic issues we will discuss in this class have been substantially impacted by what has happened from a historical perspective. Examples: Why are there 3 primary languages spoken in N.America? Why were there great difficulties in creating NAFTA from a legal perspective? Why are the 3 countries substantially different in terms of economic development? Etc. The following slides and lecture will provide a VERY brief history of the North American continent. It will focus on many broad themes encountered when exploring the economic history of the region and will eventually lead up to how they impact today’s current business environment.
Exploration and ConquestEuropean Explorers • Starting in the 1400s, waves of European captains set out to explore the world. • The primary goals behind this exploration were primarily: • Gain economic wealth • Find/develop trade routes to the East Indies (China and the Far East) • Conquer new territories for nature resources and markets • Spread the Christian Religion • Intellectual Curiosity • Adventure
Colonization and ExploitationEuropean Wars Impact the New World • European powers had many armed conflicts in the late 1600s to the 1800s. These conflicts, although started in Europe, often spilled over into the New World. • The principle conflicts are known as the French and Indian Wars. These conflicts were a series of 4 wars fought between 1688 and 1815 by the expanding French and British colonies as they contended for control of the western, or interior, territories. • These conflicts ultimately decided the control of French possessions in North America. The English, through capture of Montreal in 1760, took most of French Canada. This weakened France’s control on the rest of their possessions in North America, eventually leading to their purchase by the United States.
Colonization and ExploitationOther Economic Issues • Economic Base: • Canadian and New England Colonies • Shipbuilding / Fishing / Lumber / Farming / Furs • Mid Atlantic Colonies • Shipbuilding / Farming / Trading • Southern Colonies • Cash Crops (Tobacco, Rice, Indigo) • Mexico – Gold, silver • These goods are then shipped to their home countries in exchange for manufactured goods. • Labor: • -Although most of the labor in Northern N.Am. Came from settlers, many were indentured servants or slaves.
Colonization and ExploitationOther Economic Issues Triangular Trade Route - Fueled the growth of slavery in the Americas and provided much needed labor. • Slave traders brought Africans to the Americas • Rum and sugar cane from the Americas went to Europe • Sales of these products provided money to European slave traders to capture and transport more Africans to the Americas.
Revolution and New Govt.War with France Effects • Although the French and Indian War provided increased British control over the New World, it also started the process for the new American colonies to revolt. • Gave the colonies a chance to unite against a common enemy. • Provided colonies opportunities to increase ties. • Left large numbers of British troops in America. • The war was Extremely costly for the British and caused them to impose many taxes on the colonies to recoup their expenses. This issue proved to be the key that caused the revolt.
Revolution and New Govt.What were points of conflict? Illegal Search Warrants Sugar Act in 1764 • Allowed entrance to homes or businesses to search for smuggled goods • tax on sugar, molasses, and other imported goods ` Primary Conflict Areas Stamp Act in 1765 Quartering Act in 1765 Required all legal and commercial documents to carry an official stamp showing that a tax had been paid • required colonists to house soldiers in their homes and provide them with supplies Other taxes were also levied, further angering colonists.
Revolution and New Govt.Colonial Response to Taxes • Due to the increasing amounts of taxes, colonists began to boycott British goods and anti-British sentiments ran high. • Events, such as the Boston Massacre (1770) or the Boston Tea Party (1773), began to occur as the colonists started resenting and resisting against British rule. • The Boston Tea Party was a case where the British crown granted the East Indies Trading company an exclusive monopoly on the American market. Due to increased prices and taxes relating to this market, the colonists struck back through boycotts and violence.
Revolution and New Govt.The Next Step • The crown further increased pressure to force obedience. • First Continental Congress (1774) • Called for each colony to begin training troops. • Voted to ban all trade with Britain until the Intolerable Acts ended. • Planted the seed for a future independent government. • The “Shot Heard Round the World” (1775) • British tried to disrupt colonial militarization in Concord, MA and were repulsed. • Seen as the first real “battle” of the War for Independence. • Declaration of Independence (1776) - Thomas Jefferson “We hold these Truths to be self- evident that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness…”
Revolution and New Govt.WAR!!! • The Revolutionary War (USA name) or the American Revolt (British name) was fought between 4/19/1775 to 10/17/1781 (or 9/1783 for the final treaty. • Negative: • 1/3 of the people didn’t want a war and 1/3 were neutral. • Each colonies was loyal to itself, not to the “USA” • No central govt. to raise money for war efforts • Started with no formal, trained army. • Positive: • Colonies received assistance from France, the Netherlands and Spain • Home court advantage • War of attrition and distance
Revolution and New Govt.Aftermath • The war left the new nation with some problems. • The Revolution had cost a lot of money, and Congress had borrowed from foreign sources and American citizens. Now the money needed to be repaid. • Setting up a central government to deal with debt and other national issues was going to be complicated. The Continental Congress would meet many times to discuss economic issues and a new system of government. • This new central government would prove to be a struggle between Federalists (those favoring a strong central government) and Anti-Federalists (those favoring a system based on stronger state governments) • The Federalists, led by Adams & Hamilton, believed in a strong national government and industrial economy and were supported by bankers and business interests in the Northeast. • The Democratic Republicans, led by Thomas Jefferson, believed in a weaker national government and an agricultural economy. They were supported by farmers, artisans, and frontier settlers in the South.
Revolution and New Govt.Aftermath • The US Constitution was finally passed in 1787 and was followed by the Bill of Rights in 1791. • The Constitution was the official framework upon which the government was built, ie. the balancing of the Executive, Legislative and Judicial governmental branches, etc. • The Bill of Rights guaranteed the basic liberties of American citizens, ie. freedom of speech, press, religion, etc. aswell as no taxation without representation.
Revolution and New Govt.Economic Implications • Exports and Imports Wholesale Price Index
Revolution and New Govt.Beginnings of the National Debt • The first Secretary of the Treasury, Alexander Hamilton, pushed for the new nation to borrow money. • He thought that the war debts must be paid off to establish good credit and faith in our new government, plus, it was to enforce strong ties between all the states by jointly owing money. • He also believed that govt. needs the support of the business people to remain strong. • His report to the President on the proposal to establish a national bank included the following message on business in America: “ Industry is increased, commodities are multiplied, agriculture and manufacturers flourish: and herein consists the true wealth and prosperity of a state.” * Report on a National Bank, Dec. 13, 1790
US ExpansionMoving West • There had been a lot of pressure on the colonies and then the new USA to expand. Settlers wanted more and more land to settle, this led to land purchases by the US. • The first purchase was the Louisiana territory owned by France.
US ExpansionSouthern Expansion • The next expansion came with the military acquisition of Florida from Spain in 1818. • In 1836, Texas had won it freedom from Mexico and had voted to become part of the US in 1846. The US Army won a short war with Mexico when it tried to reclaim the territory. • Further territory was purchased in 1853 for its mining and railroad uses.
US ExpansionUS, UK and Russia • More territory was acquired or ceded by the UK (Canada) and Russia to make up the current borders. • With this expansion, there were no other lands to move into. • This completion caused a number of issues.
Westward ExpansionEarly 1800s Trends • US Westward Expansion • Encouraging Factors • Canals • Railroads • Economic Development • Manufacturing Capability Developed in the North • Steam / Water Power • Technology Improvement – interchangeable parts, etc. • Farming Technology in the South • Cotton Gin (invented by Eli Whitney in 1793)
Westward ExpansionCanada • During this period, Canada also began a movement of westward expansion. • Immigration greatly increased from the UK and the new settlers began to spread across the country. • However, during this time, there was also an immigration movement out of Canada to the US, especially amongst French Canadians.
Civil WarCauses Leading to the Civil War • Primary Causes from an economic standpoint • Economic/Production Basis Opposite Ends of the Spectrum • Manufacturing vs. Agriculture • Paid vs. Unpaid Labor • Economic (and Political) Balance of the North vs. the South • Trade vs. Trade Barriers
Civil WarCauses Leading to the Civil War • Economic/Production Basis Opposite Ends of the Spectrum • Manufacturing vs. Agriculture • North – Major manufacturing of consumer, military and other goods • South – Cash Crop Orientation • Paid vs. Unpaid Labor • North - Paid Labor • South – Slavery widespread • 25% of the citizens owned slaves • 4 million total Negros • Not enough whites to work
Civil WarCauses Leading to the Civil War • Economic (and Political) Balance of the North vs. the South • Trade vs. Trade Barriers • North • Created tariffs to protect and encourage domestic manufacturing • Not import/export oriented • Enough power to create tariffs (19 free states / 15 slave states – originally, the N/S had been balanced, but with the additional states entering the union, imbalance occurred.) • South • Received reciprocal tariffs from other countries in the export of their goods • Completely import/export oriented • Difficult to create more slave states to balance Northern political power
Civil War N vs. S Industrialization • Rail Lines
Civil WarWar Starts • The Civil War started in 1861 and ended in 1865. • In this time, there were 865,000 casualties (dead and wounded) total from both sides. This was the bloodiest conflict that the United States has ever faced. • The war began with the secession of the Southern states from the Union. President Lincoln fought to restore the union (not end slavery).
Civil War Troubles South of the Border • During the course of the US Civil War, Mexico also experienced war. • In 1862, France invaded under the pretense of collecting unpaid debt. Mexican patriots successfully fought off the French armies under Ferdinand Maximilian Joseph of Austria and finally regained independence in 1867. • Mexico then went through several leaders to be governed by President Diaz who held power through approx. 1920 before another revolution threw him out of power. Under Diaz, Mexico’s infrastructure improved greatly but social inequities caused major problems within the country.
Developmentof the NationInventions / Advances • The US (and Canadian/Mexican) began to quickly industrialize in what is known as the 2nd Industrial Revolution. • Several breakthroughs greatly assisted. • Bessemer process for making steel. (1850s) • Cheap steel for railroads, machinery, etc. • Refinement of oil (1850s) • Replaced whale oil with kerosene, created gasoline, etc. • Harnessing of electricity (1879) • Telegraph and Telephone (1850s and 1876 respectively) • Automobiles • US built its first gas powered car in 1893 • Airplanes (1903)
The rise of corporations and powerful business leaders led to the dominance of big business in the United States. Developmentof the NationBig Business • Many entrepreneurs formed their businesses in the late 1800s as corporations. • Corporations encouraged more investment in businesses because stockholders could sell stock whenever they wanted. • This led to a Huge and rapid growth of business in America. • Canada soon followed America to a lesser extent. • Big Business in Mexico was constantly hampered by inefficiency, non-rule of law, govt. nationalization of companies, etc.
Developmentof the NationLabor Movement Ideas • People and the government began to view big business as a problem in the late 1800s. • Concerned about child labor, low wages, and poor working conditions
Developmentof the NationAnti Trust Movement • Critics said many businesses earned their fortunes through unfair business practices. • Used size and strength to drive smaller competitors out of business • Powerful trusts sold goods and services below market value until smaller competitors went out of business, then raised prices. • Some people were concerned when a trust gained a monopoly,or total ownership of a product or service. • The Sherman Antitrust Act passed in 1890 made it illegal to create monopolies or trusts that restrained trade. • The act did not clearly define a trust in legal terms, so it was hard to enforce. • Corporations and trusts continued to grow in size and power.
Developmentof the NationTransportation Systems • All three countries had a very similar progression for their transportation systems. However, all 3 progressed at different rates. • System Progression • Stage Coach • Rail Roads • Roads
Pacific Railroad Act, 1862 • Authorized a route from Omaha, Nebraska, to San Francisco, California. • Building the railroad could not have been possible w/out the substantial land grants from the US gov’t to the railroad companies • Land grants financed construction. Allowed homesteaders to claim 160 acres (about 200,000 pyeong) of land free if they lived and worked on it for 5 years. • Companies received 120km right of way => 60 km on either side of the rail line • Value of this land increased w/the coming of the railway b/se it was close to the line • 1920: peak of railroad construction w/420,000 km of track
Automobiles • 1900: 8,000 automobiles in the US • 1920: 8 million cars, 1 million trucks • 1904: rural roads were dirt tracks • 1924: 750,000 km of rural highways w/paved surfaces
Venturing AbroadTrade and Muscle – Asian Policy • China • European powers gained spheres of influence in China and the United States feared it would be shut out of the valuable China trade. • Increased foreign presence in China led to the Boxer Rebellion in 1900 and the US contributed troops to help. • Japan • Commodore Matthew Perry brought four steamships into Tokyo Bay in 1853 to pressure Japan to • open its ports to trade. Tactic was • known as Gunboat Diplomacy. • Korea • Similar to Japanese opening tactic.
Venturing AbroadSpanish – American War • The US and Spanish fought on 2 fronts: • Caribbean • Philippines • Decisively defeating Spain in both areas, the US took over the areas (as well as Guam) and governed them for varying periods of time before letting the people declare independence and forming their own pro-US countries.
Annexing the Philippines For Annexation • Believed the United States had a duty to spread its values overseas. • Philippines had economic and strategic value that should not fall into the hands of other countries. Controversy raged in the United States over whether to annex the Philippines. • Against Annexation • Believed annexation would violate the ideal of self-government • Did not want oppression to occur; The United States should not export racism and violence • Some Americans believed annexation would increase immigration to the United States. The US did annex the Philippines. Several years later, they were fighting Filipino rebels. Full independence was giving in 1944.
Venturing AbroadCentral America • The US had long claimed that the Western Hemisphere was off-limits to “Foreign Powers”. • Monroe Doctrine was an early declaration in 1823. • However, until the late 1800s, the US was too weak to force European countries to stay out. Post civil war, the US gained the strength and will to use their new power. • Reasons for creation: • Keep Europe out of the Western hemisphere • Reserve area for US commercial and political interests • Roosevelt’s motto: "Speak softly and carry a big stick, and you will go far.”
Venturing AbroadCentral America • The US began an interventionist policy to “protect” US political and commercial interests in central America. • The US invaded many countries in the area, from Mexico, Haiti, Nicaragua, Honduras, etc. • Sometimes on the request of the home govt., ie. Panama • Sometimes on the request of US business interests, ie. Guatemala (United Fruit – now Chiquita)
Venturing AbroadPanama Canal • Another extension of American military and economic might was the building of the Panama Canal. • In 1902, the US purchased the right to build the canal from the French and went on to support the new Panamanian government against rebel troops. For their help, they were given a lease for the Panama canal. • Took from 1904 to 1914. • Allows trade and military vessels much quicker travel between the Atlantic and Pacific oceans.
Venturing AbroadWWI • World War I was an important time period in US and Canadian history that must be mentioned. Although the main points, as they relate to N.America, are not primarily business related, they still have a large degree of economic meaning. • When the great powers of Europe went to war in 1914, the US wanted to remain neutral although they did have greater support for England and France due to historical and business ties. • Canada, however, began shipping volunteer troops early.
Venturing AbroadWWI • Despite remaining neutral for some time, the US finally entered the war for 2 reasons: • U-Boats sinking of US passenger and merchant ships • Zimmerman note where Germany proposed an allience with Mexico and requested them to attack the USA. Mexico declined. • In 1917, the US began raising an army. • Both the US and Canadian troops fought with distinction until the war ended in 1918.
Going to war was extremely expensive, and President Wilson needed to find ways to pay for it. • Regulating Industry • Congress created administrative boards to prepare industries for war. • The War Industries Board (WIB) regulated all war materials. • Industrial production increased by 20 percent. • Food and fuel were also regulated. Taxes • Congress passed the War Revenue Act of 1917, which established very high taxes. • It taxed wealthy Americans up to 77 percent of their incomes. • It increased federal revenue by 400 percent within two years. • Loans and Liberty Bonds • Wilson sparked an intense campaign to sell Liberty Bonds. • They were a form of loan to the government from American people. • The national debt grew from $1.2 billion to $25.5 billion in three years. Mobilizing the Economy
Mobilizing Workers • During the war, the profits of many major industrial companies skyrocketed because companies sold to the federal government. • This created enormous profits for stockholders of industries like steel, oil, and chemicals. • Factory wages also increased, but the rising cost of food and housing meant that workers were not much better off. • War demands also led to laborers working long hours in increasingly dangerous conditions in order to produce the needed materials on time and faster than other companies. • These harsher conditions led many workers to join labor unions. Union membership increased by about 60 percent between 1916 and 1919, and unions boomed as well, with more than 6,000 strikes held during the war.
Looking InwardBefore the Collapse • The Roaring 20s were a period of great social and economic change in the US. • Women sought more rights. • Urbanization • First time that there were more Americans in cities than on farms. • Many negros migrated to northern cities. • Prohibition • Business prospered • Rise of radio and movies
Strong Economy Between 1922 and 1928 the U.S. gross national product, or total value of all goods and services, rose 40 percent. Though farmers and some other workers didn’t benefit, the overall economy performed well, especially for automakers and those who made auto parts. Overall unemployment remained low, averaging around five percent between 1923 and 1929. Union membership slowed as employers expanded welfare capitalism programs, or employee benefits. This feeling of prosperity encouraged workers to buy new products and enjoy leisure activities such as movies. Strong Stock Market The stock market, where people buy stocks, or shares, in companies, performed very well in the 1920s, with stock values sharply increasing each month. The value of stocks traded quadrupled over nine years. The steep rise in stock prices made people think the market would never drop, and more ordinary Americans bought stocks than ever before. The number of shares traded rose from 318 million in 1920 to over 1 billion in 1929. Business leaders said everyone could get rich from stocks. The Appearance of Prosperity
