The Role and Powers of the Presidency - Term Paper Example

HISTORY OF AMERICAN ECONOMIC The American economy has a rich history, right from the pre-colonial era to the modern era. Prior to the first European visitors, such as Christopher Columbus, the Native American traded goods and services among themselves, working as hunters and gathers mainly. The arrival of Europeans who were looking for various riches and treasures such as gold and other minerals changed the nature of the economy. The arrival of the colonialists Although some of the new immigrants from Europe were not necessary interested economic endeavors, they nonetheless affected the economic systems in the America. The new arrivals led to the formation of the thirteen colonies which were fundamental in shaping the early American economy. They formed charter companies which were mainly funded by private investors as well as the King of England who granted them political and economic rights to explore the region. During these early years, the economy was mainly dependent on farming as the main economic activity. Some of the main exports were tobacco, rice, cotton, and indigo. Those products, produced from the rich agricultural and supports by good climate, were the main economic agencies of the time and contributed in a big way in the development of the economy. Later, farming was to become a major part of the southern economy where agriculture was a sustainable economic activity, powered by the availability of slave labor. The southerners provided the economy with cotton and other agricultural products for experts. The northern parts however did not fair very well in the agricultural sector and most of the colonies in the northern areas were mainly set as trading centers. This was to later determent how trade was done in the United States. The American Revolution It is obvious that the American Revolution war had a major implication on the economics of the USA. As time had gone by, the settlers in the various colonies were looking to be granted freedom, especially economy freedom from the Britain and started demanding that they be given the right to elect their own government which would tax them and run their affairs. Needless to mention, the British government was not comfortable with this suggestions and refused to grant them the freedoms. The settlers retaliated with an all-out war against the British government. In retaliation, the government tried to close up all the harbors around the United States, especially the ones used for trade. Fortunately, as Hummel (2001) says, this did not have a crippling effect on the economy because during this crucial time the economy was not depending much on international trade but rather was dependent on agriculture and trade within the continent. Due to this phenomenon, the economy was able to sustaining itself through an eight-year war. The recessions and depressions When discussing the history of the American economy, it is imperative to talk about the recessions and depressions which have happened in the history of American economy. The first major economic depression of course was the 1807-1814 depression. The depression as David (1978) says, was majorly caused by the by the trade embargos imposed by the government of President Thomas Jefferson whose main intension was to prevent American from playing a role in the war going on in Europe. The trade embargo by President Thomas Jefferson led to the decline of both exports from the United States and imports into h country and this led to the decline of the economy. The economy went into recession and the eventually, President Thomas Jefferson’s intension to keep the united states from the war were defeated, as the United States had to eventually get drawn into the conflict in the 1812. Depression of 1837 After Jefferson’s economic mistake, it was President Andrew Jackson who was next in line in 1836. President Andrew Jackson was trying to curb speculation on land and thus issued a circular regarding specie (gold and silver) circulation. His main intension was to reduce the value of bank notes so that to prevent the increased circulation of the bank notes in the economy. His plan was not entirely effective as it failed to entirely affect the value of the dollar and only affected the value of the same only in relation to the value of gold and silver. The effect was increased deflation of the currency. Eventually, these affected many businesses which under deflated currency could not operate normally. President Andrew Jackson learnt his lesson but it was too late for the economy, it had already slipped into a depression. Depression of 1873-1879 This time the depression was caused by at least two main factors. The first and the most significant one was the failure of the money supply to match the demand in the economy. According to Morgan (1972), the United States of America was still using the gold standards and the gold reserve was not growing at a rate which could match the economic growth. As a result there was deflation of the currency as there was a discrepancy between the nominal and real interest rates. The economic growth had boosted the rail building industry and when the deflation came, firms such as Jay Cooke and Co. which were rail building firms could not be able to keep up with the changes in the value of iron and steel. The resulted was their failure. Jay Cooke and Co. and many other rail building firms which contributed largely in the economy had to fail and this affected the economy in a negative way. Depression of 1893 to 1898 In the period of 1893 to 1898, the American economy suffered another depression and this time it was not fully clear what the cause of the depression was. Most scholars however agree that the main reason could have been a financial panic caused by the chain failure of railroad projects. People had learned that the depression of 1873-1879 had been caused by failures in the railroad projects (John, 2012). As a result, the failure of Philadelphia and Reading Railroad in January of 1893 was a red flag for most people who panicked finally this leading a crippling of the economy. Depression of the 1929-1939 This was a whole decade of economic depression and was defined as the great depression the United States economy has ever suffered. As a result, this depression has come to be referred as the great depression. The depression was not only an economic catastrophe but was also a social and political phenomenon. Millions of Americans of all races and ethnicity were affected. Families had to survive without income and homeless, some of them having to move from their home to go look for employment in farms. The government came up with numerous polices which were geared towards helping ht economy to pull out of the depression. The economy had been doing so well after the Second World War as veterans got back home and were investing in the economy. Employment rates had shot up after the Second World War and the stock markets were doing so well. As (Maxwell, 2009), the collapse of the stock market in October 1929 was a big shock to everyone and the whole nation was left as awe as so many people lost their fortune in a matter of hours. There are not clear causes of the 1929-1939 depression and there are various explanations and speculations as to what could have caused the recession. There are however some obvious factors which could have been a red flag. One, according to Thorndike (2006) was the fact that the big boom of the economy in 1920s decade was a result of the world war ending in 1919. Economic booms caused by wars have a tendency to end in an economic recession because they have to bust sooner than later. WWI had led to the growth of technological advances which were then useful after for the expansion of the economy. The soldiers in the war were also being paid very well, both during the war and after the war and this led to them investing heavily in the economy which led to a boom in the economy. However, this boom was not to last long since it was not practically sustainable. The biggest problem with economic booms caused by war is always not sustainable since war does not always lead to any economic production (Marcuss & Kane, 2007). While war provides employment for so many people, there are very few if any, economic returns to the economy and therefore the economic growth achieved so are not sustainable. The war-effect on the economy after the First World War was also seen during the period after the Second World War. After the War, the American economy went through a boost and many people born during this time are said to have enjoyed some of the golden years of the American economy. However, these golden years, just like the economic boost of the post world-war I, were short-lived and ended in the depression of the recession of 1973-75. Stock exchange craze The stock exchange craze in the United States was also another issue which led to the economic depression of the 1930s. Before the stock market collapsed, a lot of people were buying stocks in the market in speculation of growth of company shares. This lead to the stock market being overwhelmed and the resulting issue was the collapse of the market in the United States. At the time there were no clear regulatory environment to regulate the way the stock market was being operated and it was possible for stock brokers to operate in ways which were not entirely legal or ethical. After the collapse of the stock market, people shied away from trading in the market and the confidence was only restored after many years. President Franklin D. Roosevelt and the New Deal The New Deal was a set of programs set into place by both congress and President Franklin D. Roosevelt. President Roosevelt was trying to respond to the economic depression and starting from 1933, under the advice of his closet economic advisors, he started signing into place various polices which were geared towards bringing back the economy into its tracks. President Roosevelt signed these laws and policies although many people, especially the conservative republicans did not agree with. The New Deal programs were majorly geared towards giving economic power to the various minority groups in the United States of America. As a result of this new deal the Democratic Party was able to take seven of the nine terms since 1933 to 1969. The programs of the New Deal were geared three main issues with regard to the economy and the economic system in the United States. These included Relief, Recovery, and Reform. Some of the programs such as the Agricultural Adjustment Act were very controversial in nature thus causing disagreements between the two major political parties in the United States. The Agricultural Adjustment Act required the taxing of food processing firms and the use of the revenues acquired in this regard to pay the farers in order to not produce. The intention was to reduce the surplus of agricultural products in order to increase the value of the same. Relief President Roosevelt’s new deal programs were mainly geared towards making sure that those who were most affected by the recession were relieved of any economic burden. This is one of the reasons why the New Deal programs were geared towards the marginalized. President Roosevelt’s advisors recognized that by helping out the poor and the various other minorities, it would be possible to heal the economy much faster. An example of a relief program which was part of the new deal was the Federal Emergency Relief Act (FERA) which offered relief aid to poor Americans who could not afford food or other necessities of life. Recovery The programs also included those geared towards helping the economy recover from recession. These programs were geared towards bringing back the economy to its track by shifting economic issues, a good example of this is the Agricultural Adjustment Act which was geared towards restoring the value of agricultural products. Reforms Reforms programs were those programs which were geared to permanently shifting the economic conditions in the United States (Romer, 1992). Unlike the relieve and recovery programs, the reforms programs were permanent measures which were put in place as part of the New Deal to reform the America once and for all and to also make sure that the events of the 1929-39 would not repeat themselves. One such program was the formation of the Securities & Exchange Commission (SEC) which was mandated with monitoring and regulating the stock market in the United States. The post world war II economic boom and the resulting recession of the 1970s After the implementation of the New Deal from 1933 to 1939, the economy had once again picked and managed t slip out of the nasty depression. However, after that, the World War II which took place between 1939 and 1945 was one of the wars in which the United States of America participated. As a result of the war, the economy if united states went through an economic boom, especially after the ear. However this was not to last for a long time since by 1973, the American economy was going through a tough recession. This recession lasted until 1975 and was considered the worst since WWII. References: David, N. (1978). British Conduct of the American Revolutionary War: a review of interpretations. The Journal of American History , Vol 65 (3) , pp. 623-653. Hummel, R. (2001). Te A Merican Militia And The O R I Gin Of C Onscription : A R Eassessment . Journal of Libertarian Studies Volume 15, (4) , pp. 29 – 77 . John, W. (2012). American Economy: the Long Journey. American History Journal , pp. 22-29. Marcus, R. Kane, R. (2007). U.S. National Income and Product Statistics Born of the Great Depression and World War II. US Congress, Senate, Resolution 220 (1933), Pp. 1-18 Maxwell, O. (2009). The Great Depressiona nd Great American Times. Journal of American History , PP. 59-64. MORGAN, E. (1972). Slavery and Freedom: The American Paradox . The Journal of American History, Vol. 59, (1) , pp. 5-29. Romer, C. (1992). What Ended the Great Depression? . Journal of Economic History 52 , PP.757-784. . Thorndike, J. (2006). Retail Revolt : Chain-Store Taxes in the 1930s. State Tax Notes 42 (1) , PP. 69-74. . Read More