The Economic Development of the United States - Essay Example

In what ways has the changing economy shaped the development of America?  Introduction The economic development of the United States has its connections with European colonization. In last 230 years the United States has become a large, industrialized, integrated economy that contributes almost one third of the world’s economy. Started with marginal colonial economies and then become United States of America in 1776. 13 small marginal economies joined together. The modern American economic root can be traced in 16th, 17th and 18th centuries. American economic development has evolved through different historical periods. As the American history came across different periods, the economy also transformed with changing times. It is very evident from different periods that different historical period has left its marks on American economy. All those periods have laid strong base for modern world’s economic super power. Discussion Colonial American economy was mainly driven by agriculture. The country tilted towards industrialization from the time of independence. All the industrialization was expanded in 18th century. It started long back in 1776. In that period economy of time 13 original colonies were very strong and stable. At this point of time the country faces great economic expansion as number of population increased and lots of foreign people in fluxed in to the country. People of America became very self sufficient which gave huge boast to their economy. Due to its strategic geographical location, abundant of natural resources has attracted lots of foreigners in to the country. Massachusetts was a great shipping hub. Virginia was an attractive place for business ventures. Fur industry and fishing industry has boosted the local economy very much. Increasing population and foreign trade has developed the American economy at that stage. It was the starting time of global power shifting. At that point of time white free Americans were accustomed with higher life styles (French 149). In that colonial period people of America earned their livelihood on the basis of small farms. As the colonies grew small local industries like gristmills and sawmills came up. Entrepreneurs started their business endeavours. People started farming rice, grew tobacco and indigo. Building ships and sailing them also was very common for creating wealth. It was a very important phase for economic development in America. It is the time when American people started to unleash their entrepreneurial skills. Americans were fighting for their rights with British people. Britain refused American demand of equality. Americans decided to boycott all different British manufactured items. British people responded with intolerable act and American Revolution begun. At that point of time British tried to destroy American economy. They blocked all ports. But American economy was very resilient. 90% of total Americans were related with farming. They were present in 10% of total American cities. People of America at that point of time weathered the storm of war very well. American Revolution brought about significant changes in American society and economy. People of America tilted towards more liberalism and republicanism. Adverse war situation made people more creative and innovative. Economic entrepreneurship came in to the picture. Individual liberty also became a trend in that time. Financing the war against British was an uphill task for America. Gold worthy of more than 12million dollars were spend for the war (Northrup 101). At that point of time main source of money for war were donations from patriotic Americans and army personnel. At that point of time for reducing expenditure Americans started competitive bidding for any public projects and accounting procedure was also very strict. One new concept came into the picture, When Federal Government demanded complete share of money from different states. This period saw first time issue of paper money. Paper money was issued twice in this period. Once it was issued in between 1775–1780 and then again it was issued in 1780–81. Amount of the first issue were 242 million dollars. Paper money acted as a method of hidden tax. At that time individual states like Carolinas and Virginia issued 200 million$ for their own currency. In that period the country was facing high inflation. As almost 90% of total people were farmers so, inflation did not affect them in a direct manner. During the war the American congress started taking loans from wealthy persons. In 1791 after the end of the war all those persons were given different Government bonds in face value. This historical juncture has changed the direction of American economy significantly. In 1848 gold was discovered in California. It attracted thousands of people from West. It also tilted economic balance towards United States of America. American Civil war was begun in 1861. Both southern and northern part of the country was facing serious inflation problems. But southern part of the country was facing more problems than north. National debt increased a lot during the civil war. At that point of time national debts were 80 times higher than pre civil war period. The country was facing the problem of slavery. In 1860’s Abraham Lincoln and his Republican party came into the power (Fishback 133). New tariff on foreign goods were imposed in 1861. During this period industry in the northern part of the country grew heavily. Great cities, national banks, more productive farms were there in northern part of the country on the other hand in the southern part was badly affected with slavery and racism. Many historians have debated that American civil war enhanced economic growth of the country. In 1862 the country raised 400 million $ dollars to fight against civil war. In the civil war victory of north was sealed with different industrial advantages. It was a decisive moment for nation’s economy. Slavery systems were abolished. Prices of Cotton dipped. Agriculture was the only largest industry during the war. The industry saw huge price rise. But large demands from soldiers and Britain have adjusted the situation. The industry came across different innovations in terms agricultural technologies. Period of civil war changed the economic scenario of America. After the civil war southern part of the country was in the darkness of economic destruction. Then reconstruction had begun. People in the southern part of the country started tenant style agriculture. They started sharecropping. Civil war was very decisive for some parts of the nation especially northern part of the country (Harris 145). Then economic recession hit the country. Depression in 1873 and 1893 was a serious threat for the country’s economy. Panic of these two depressions destroyed small businesses of the country. Unemployment rate was very high. American economic reconstructions were begun in twenties. It was engineered by great technological innovations. Modern electricity, automobile industry came in to the picture. In this period country converted itself from gold standards to currency. Role of American central bank Federal Reserve increased as New York became world’s financial capital. It was the beginning of modern American economy (Gary and Hugh 123) Conclusion Every economy has its own history. United States of America is also has its own history of economic development. During those periods American economy came across different ups and downs. Every period of history has affected American economy in positive and negative ways. In every period world’s oldest democracy has added some values to its economy. Each and every period has invisible connections and fabric among them. Lives of American people also changed over those periods with changing patterns of economy. American economy has come across lots experiments. In every time changing economy has shaped the development process of United States of America. Economic changes and developments are very deeply connected with each other. Works Cited Fishback, Price. Government and the American Economy: A New History. Chicago: University of Chicago Press. 2008. Print. French, Michael. US Economic History since 1945. Manchester: Manchester University Press. 1997. Print. Gary, Walton. and Hugh Rockoff. History of the American Economy. London: Cengage Learning. 2013. Print. Harris, Seymour. American Economic History. New York: Beard Books. 2002. Print. Northrup, Cynthia. The American Economy: A Historical Encyclopedia, Volume 1. New York: ABC-CLIO. 2011. Print. Read More