Download The development of “Western Culture,” has been unwittingly crafted

Economic History of the U.S.
Econ 1740, Class Time Line.
Part 1: The Colonial Era;
1607 – 1776
Alex Twede, Daniel Gandy, Mark Hansen
The development of “Western Culture,” has been unwittingly crafted via a collective dualism fathered in the
passionate, individualistic tenets of the purveyors of the mystical and the material. Our civilization, even our
nationalism, has developed and continues in refinement along those many paths traversed by the individual in his or
her quest for religious freedom and/or unbounded wealth.
From the very founding of the English colonies in America in the early 1600’s, common paths were oft
traveled, yet viewed from two holistically different perspectives, the bifurcation being manifest in the deep cultural
splits separating the colonies to the North in New England and to the South in Virginia.
Those in New England took the mystical or intensely Christian path; the early adventurers and enterprisers of
Virginia took the more secular or materialist path. This division would play a key role in how these and subsequent
English colonies would develop – even from the outset in the early 1600s all the way up to today. These early
distinctions in world view were simply reflections in those differences that brought English colonizers to America
whether pursuant to the quest for wealth or for religious freedom.
There is no question that “the southern colony of Virginia was founded on the secular quest for wealth – and
the aristocratic status that wealth brought an individual and his family.” And that “the northern colonies of New
England were founded on the religious quest for the right to live as God directed – not as man, not even kings or
bishops, directed.”
Not only was America divided into two ideological encampments from the very outset of the colonization
effort, this bifurcation would lead the country in the mid-1800s into the violent conflict we know as our civil war.
And this cultural divide, though no longer geographic, grips us even – and in particular – today.
From our Text, HISTORY OF THE AMERICAN ECONOMY: Eleventh Edition by Gary M. Walton and
Hugh Rockoff, we have come to rely on five “Economic Reasoning Propositions.” These propositions when viewed
either singularly or in combination can be applied as the basic tenets that have directly or indirectly lead to the
events, ideas and cultural happenings that have been highlighted within our included time line.
The five “Economic Reasoning Propositions” are summarized as follows:
1. Choices matter; people choose, and individual choices are the source of social outcomes.
2. Costs matter; choices impose costs.
3. Incentives matter, rewards encourage people to act.
4. Institutions matter and the “rules of the game” influence choices.
5. Evidence matters, understanding based on knowledge and evidence imparts value to opinions.
We hope that you find the events highlighted in our timeline as interesting as we have. Certainly the formation of
our Nation has been dynamic and collectively unequalled in any other country on earth since the beginning of the
Colonial Era and the first permanent settlement in Jamestown, Virginia in 1607.
1607
First Permanent British Settlement ►
1608
Frontier Women ►
1614
FOR SALE: cheap to a good home! ►
Indian tobacco ►
1616
Tobacco Exports ►
1618
The Headright System ►
Tobacco Exports Up! ►
1619
Africans in a New World ►
1620
The Dutch Arrive ►
The Plymouth Colony Is Settled ►
1624
Virginia Becomes a Crown Colony ►
1631
Ship building ►
1651
Navigation Act(s) ►
1652
Show me the Money! ►
1664
British Takeover of New York ►
1670
Hudson Bay Company ►
1695
Pass the Rice! ►
1699
Duplication Production Law ►
1719
Of Pirates and Privateers – “Avast ye bilge rats!” ►
1732
Georgia Is Settled ►
1732
Molasses Act ►
1743
Indigo ►
1751
Currency Act(s) ►
1756
French and Indian War ►
1763
Treaty of Paris: Conclusion of the Seven Years’ war. ►
1764
Sugar Act ►
1765
Stamp Act ►
First meeting of Stamp Act Congress ►
Quartering act ►
1766
Declaratory act ►
1767
Townsend act ►
1770
Boston massacre ►
1773
Tea Act ►
Boston Tea Party ►
1774
Coercive acts ►
1774
Continental Congress ►
1775
States of Rebellion ►
The Revolution Begins! ►
1776
IN CONGRESS, July 4, 1776. ►
Chapter 7-8
1775Revolutionary War: Though the Declaration of Independence didn’t come until 1776, the war against the
British started with the battles at Lexington and Concord in 1775.
1776Declaration of Independence: The colonies in an act of defiance against the British signed the Declaration and
officially declared war.
Wealth of Nations: The book written by Adam Smith which laid the basis for American economic theory.
1783Treaty of Versailles: This treaty granted independence to the American colonies after the Revolutionary war.
1785Land Ordinance of 1785: This ordinance called for public lands to be divided into square lots and surveyed.
Although the conservatives hoped that land would become a major source of revenue, it never did.
1786Annapolis Convention: A convention called to settle questions about trade regulations but no action was
taken.
1787Land Ordinance of 1787: This ordinance set the guidelines that territories would take in order to become
states. The main principle being the eventual equality with the older states.
1789Constitution: The rules and regulations that form the American government.
1791Bill of Rights: These rights were added onto the Constitution two years after it was ratified.
1794Treaty of 1794: With this treaty the British agreed to leave the posts they had established in the Northwest.
1796The Land Act of 1796: Largely similar to the Land Ordinance of 1785 but it added a credit provision which
was ultimately revoked because it caused losses to the government.
1803Louisiana Purchase: Thomas Jefferson acquired the Louisiana territory from France for the very reasonable
cost of 15 million dollars.
1808Embargo Act of 1808: In fear of war Thomas Jefferson enacted the Embargo Act which stopped trade with
any foreign ports.
1809Non-importation Act of 1809: Partially opened up trade with specific prohibitions against Great Britain,
France, and their possessions.
1812The War of 1812: This war with the British was started when the British Navy began kidnapping American
sailors and forcing them into their army.
1814The Treaty of Ghent: Ended the War of 1812.
1819Acquisition of Florida: The Florida territory was acquired from the Spanish.
1845Texas annexed as a state: Texas becomes a state after winning its independence from Mexico.
1846Treaty of 1846: This Treaty with Britain established the boundary between Oregon and Canada on the 49th
parallel.
Oregon annexed as a state: As part of the Treaty of 1846, America became the soul owner of the Oregon
Territory.
1848Acquisition of the Mexican Cession: The Mexican Cession was acquired by conquest.
1853Gadsen Purchase: Acquired from Mexico.
1862Homestead Act of 1862: This act made it possible for anyone over 21 to have 160 acres of public land on the
payment of small fees as long as they lived on the land for at least 5 years.
1867Alaskan Purchase: The Alaskan Territory was purchased from Russia.
1898Hawaiian Annexation: Hawai’i becomes the last state added to the United States of America.
Chapters 9-10
1800-1860
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Increase of Railroads, Boats efficiency, Canals and Roads.
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Mechanisms made to produce of flour and cotton without the aid of man.
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1807 -Steam boat was invented by Robert Fulton and Robert R. Livingston.
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Railroad and canals were made privately and publicly few railroads were funded by the federal
government.
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Effects of increased railroads/canals and more efficiency in boats created.
Transportation of goods costs decreased since transferring goods took less time to get from point A to
B downstream as well as upstream. Traveling Costs a large portion of money that ate away ate
profits became a fraction of the cost.
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Transportation freight rates with the easier transportation of goods came with the industrial
revolution.
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America started with only a few factories and lumber mills. The new nation arouse by 1860 America
was only second to Great Britain.
Industrial revolution began with the north. Started from the New England expanding to the Middle
Colonies. With up rise of industry production made household production declined dramatically.
Factories characteristics
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A substantial output of a standardized product made to be sold in a wide, rather than a strictly local,
market.
Complex operations carried on in one building or group of adjacent building or group of adjacent
buildings. A considerable investment in fixed plant, the mechanization of processes, and the use of
power are implied.
An assembly of workers under a definite organizational discipline.
Factories were not just a building it was assembly line for processing raw goods. Something Great
Britain had forbid the U.S while under their power/watch. The hope of becoming a more united
states was near. We worked together, traded with each other, and produced together. Even though
we had this period of unity it was broken with the disagreement of slavery.
First developed factory was cotton textile industry. Made by Almy, Brown, and Slater.
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The Lowell shops and the Waltham system
Cabot Lowell observed a power loom in Great Britain and copied it design. It included all stages of
production (spinning, weaving, dying, and cutting) all under one
roof.
Oliver Evans builds a flour mill in Philadelphia. (1782)
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Latter copied by Henry Ford and his production of the automobile.
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Water was power and energy.
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Slow moving water wheels were an equivalent to several thousand horse power. Most effective of
them all was the (Breast wheel) water flew up and underneath as oppose to above or underneath.
Steam engines were introduce but not effective as water power. They broke down frequently and had
little skilled mechanics to repair them.
Result of improved machinery, cheaper distribution of goods, increase railroads, canals, roads. The
north had capital-intensive industries: cotton textiles, iron, liquors, flour/grist mills, paper, tanning,
and wool textile.
Other industries such as boots/shoes, coaches/harnesses, furniture/wood work, and glass were had
less job opportunities then capital-intensive industries. Farming was in the south, but if you were in
the north you had to have a skill/trade to be able to work.
Transportation was easier and less costly, new inventions for factory lines and transportation created
the market growth. We became a united nation threw goods and increased production of man and
machinery.
Chapter 11
1860There were 31,443,000 American in the country. The population was growing about 3% per year. This
growth was a natural increase of the population and also due to the immigrants that were arriving then to the
country.
1830Child labor in spinning was common, especially in areas south of Boston. Family-based labor system known
as the Rhode Island system developed there.
1840-1850’s
Similar to current changes in the labor force, mainly from Asian and Hispanic immigrants,
further composition changes came from immigration. The large waves of immigrants came principally from
three countries: England, Ireland, and Germany.
1845-1847
The tragic potato famine precipitated the heavy Irish emigration. Fleeing starvation
and the oppression of hated absentee landlords, the Irish found employment as common
laborers and factory hands.
1860
Women constituted only one-fifth of the manufacturing labor force, indicating the lessening relative
importance of textile manufacture and the competition of cheap immigrant labor, most of which was male.
1820In monetary terms, annual manufacturing wages in New England were only about 1 percent higher than in
the Middle Atlantic States.
1827Unions of different crafts in Philadelphia federated to form a “city central” or “trades’ union,” the
Mechanics’.
1776–1860
Union of Trade Associations. Six years later the societies in New York established a General Trades’Union.
1860White male citizens of the Unite States could vote, black males could vote in New York and New England,
and alien males could vote in the agricultural Northwest.
1847The New Hampshire legislature passed the first regulatory law setting a 10-hour upper limit for a day’s work,
but there was a loophole in it. The law provided that if workers agreed to work longer hours, the 10-hour
limit might be exceeded.
Chapter 12 and 13
1781Robert Morris established and organized the first bank of the United States.
1783U.S. adopts the Decimal System.
1787Northwest Land Ordinance forbids slavery in the Northwest Territory.
1792The Coinage Act.
1793Cotton Gin is invented.
1808Gold to Silver ration rises to 16 to 1.
1812War of 1812.
1816Second Bank of U.S. is chartered.
1825U.S. is the leading slave nation.
1827Safety-Fund Act.
1828Andrew Jackson becomes President of the U.S.
1837Michigan passes Free Banking Law.
1839Great Depression hits.
1842Louisiana Law of 1842.
1843Great Depression ends.
1848Gold is discovered in California.
1850California becomes a free state.
1854Kansas-Nebraska Act of 1854.
The Civil War
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The South had to use some of its precious manpower to repress its slave labor force. And,
when circumstances permitted, slaves and free blacks joined the Union forces, further
tipping the balance in the favor of the North.
The South’s hope was that the North would eventually tire of the enormous human costs of
the war and agree to let the south go its own way. The Revolutionary War had provide a
forceful example of a nation winning independence from an economic and militarily more
powerful foe.
The South’s early confidence in the power of King Cotton and the likelihood of a quick end
to fighting, moreover, encouraged it to adopt trade policies that reinforced its poor
preparation for war.
Despite the heroism and daring displayed by the Confederates, Union troops increasingly
disrupted and occupied more and more southern territory.
Once a Union victory appeared likely, confidence declined even more sharply, producing the
astronomical rates of inflation experienced in the final months of the war.
The economic strain of the war was not as severe in the North as it was in the South, but the
costs of the war were extremely high even there. A substantial portion of the labor force was
reallocated to the war effort, and the composition of production changed with the disruption
of cotton trade and growing number of defaults on southern debts.
The Union government also resorted to inflationary finance. Paper notes, termed
“greenbacks” because of their color were issued.
The Beard-Hacker thesis emphasized that the war stimulated the economy and the increased
investment. This part of the thesis, however, has been rejected in subsequent research, based
on estimates of economic activity that were not available when the thesis was formulated.
The tragedy of the Civil War is compounded by the fact that in 1860, the total market value
of slaves was approximately $3.06 billion. The costs of the war were more than twice the
cost of purchasing the slaves. This does not mean that peaceful abolition was realistic before
the war.
The economic outcome of the war was a distinct reversal in the relative POSITIONS OF
THE North and South. In 1860, the North’s real commodity output per capita was slightly
less than the South’s. By 1870, the North’s per capita output exceeded the South’s by nearly
two-thirds.
During the decline in the Deep South, firstly, the highly efficient plantation system was
destroyed, and attempts to resurrect plantation methods proved futile. A second closely
reason was the significant withdrawal of labor from the fields, especially labor by women and
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children. Finally, the growth of the demand for southern cotton slowed because of
competition from India, Brazil, and Egypt, and because of the growth of world demand
slowed. The decline in the Deep South immediately after the Civil War was to be expected.
The tragedy was that southern agricultural production remained depressed for decades
afterward.
Concentration on cotton production was not irrational. Stephen DeCanie has shown that the
South had a comparative advantage in cotton production and that southern cotton farmers
were about as responsive to price changes as northern wheat farmers were to wheat prices.
The recruitment and drafting of large numbers of men might have been expected to raise the
real wages of those working on the home front by reducing the availability supply of labor,
but this did not happen.
The South did not use slaves for fighting because both masters and slaves knew the enemy
provided a route to freedom. Ironically, the efforts of slaves to grow cotton, spurred by the
exceptionally high prices in the early 1860’s, was negated by the South’s trade policies to
England. Most of this vital labor was simply wasted as high stockpiles of cotton rotted in the
countryside and on the docks.
The Thirteenth Amendment to the Constitution freed all slaves; the Fourteenth Amendment
ensured that no state shall deprive any person of life, liberty or property, without the due
process of law and guaranteed that the right of citizens to vote shall not abridged. These
amendments were passed soon after the war but were not sufficient to ensure sustained
progress for blacks.
Land reform that broke up the plantations and gave the land to former slaves was pushed by
Republicans in Congress. This might have set the South, and ultimately the whole country,
on a different course. The House and Senate each passed a bill to give black heads of
households 40 acres, but President Andrew Johnson vetoed it. Except in a few isolated areas
such as the Sea Islands of Georgia and on the former plantation of Confederate President
Jefferson Davis, where land reform proved to be a success in promoting stable farming
communities, most of the land remained in the hands of the same people who had owned it
before the war.
Agriculture’s Western Advance
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1800’s Government land policies including the homestead act of 1862. This policy gave 160
acres of land to one person, or 320 to a married couple. This was not terribly successful as
the land available was good for cattle grazing and ranching which required more land. Only 1
acre in 5 belonged to a homesteader. 1873 The Timber-Culture act. This policy gave a
person 160 acres of land if 40 were used to plant trees. 1877 the desert land act. This act
gave640 acres at $1.25 an acre if the owner agreed to irrigate the land in three years. A
problem with this act was the loose definition of irrigation. 1878 the Timber and Stone act.
For $2.50 an acre a person could buy valuable timber and mining land in the northwest and
west coast. 1878 the Timber-Cutting act. This allowed people of certain regions to cut down
trees on government land for free, provided that the timber were used for agriculture,
mining, or domestic building.
1880 Refrigerated railroad cars allowed for transport of perishable items such as dairy, meat,
and fruits and vegetables. The cars allowed for region specific items to have a national
market.
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1857 Excerpt from the Scientific American “Every Farmer who has a hundred acres of land
should have at least the following: a combined reaper and mower, a horse rake, a seed
planter, and mower…a thresher and grain cleaner, a portable grist mill, a corn-sheller, a
horse power, three harrows, a roller, two cultivators, and three plows. (Danhof 1951, 150)”
this was a list of mechanical advancements made to help industrialize farming.
1867 The National Grange of the Patrons of Husbandry was formed, this was the first farm
organization. By 1874 it had 20,000 branches and 1.5 million members. They work
unofficially with reform parties in politics to pass agriculture friendly laws, and help farmers
fight unfair business practices by getting farmers into business for themselves. The grangers
were also responsible for the farmer’s cooperative markets where farmers could sell and buy
from each other. At this time there were also independent farm clubs forming in the south
and the west. These usually joined together to form state alliances which joined together to
make the Northwest alliance and the Southern alliance. They each advocated monetary
reform, government owned transportation, and cooperative business ventures. Below is a
picture of a granger meeting found in the textbook on page 273.
Land, Water and Timber Conservation. 1907, President Theodore Roosevelt’s
Achievements. 1901 Bureau of Forestry, in 1905 this became the United States Forest
Service. Roosevelt appointed Gifford Pinchot to be chief advisor for conservation, they
made a program for scientific forestry. The government also kept 75 million acres of land
containing coal, phosphates and oil.
Chapter 16 Railroads and Economic Change
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Few developments have captured the attention of historians and contemporary observers
quite like the railroad. Fast and powerful, reaching everywhere, the railroad came to
dominate the American Landscape and the American imagination. Trains became the
symbol of modern America, epitomizing America’s economic superiority in an
industrializing world.
The Gold rush of 1849 yielded knowledge about riches of the Pacific Coast and about the
vast spaces that separated East from West
Transcontinental’s
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There were 3 ways to get to the West, all difficult, wagons trains had bad weather. Sea route
via the Isthmus of Panama cut 6 to 8 month trip to as little as 6 weeks, but from the Eastern
Port on the Isthmus to Panama City was 5 day journey by native dugout and mule back, and
at Panama City, travelers might have a long wait before securing passage north. For those
who could afford it, the best way to California was by clipper ship, which made the passage
around the Horn in about 100 days.
Government participation was viewed as essential. It was assumed that while the profits to
the nation would be enormous, the profits to private investors would be insufficient to
compensate for the enormous uncertainty surrounding such project.
By 1853, congress was convinced of the feasibility of a railroad to the West Coast and
directed government engineers to survey practical routes.
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From Minneapolis to New Orleans, cities along the Mississippi River vied for the position of
gateway to the west, boasting of their advantages while deprecating the claims of their rivals.
Civil war outbreak removed the proponents of the Southern routes from Congress, and in
1862, the Northern Platte River route was selected because it was used by the Pony Express
Stages and Freighter Wagons.
Pacific Railways Act of 1862, Congress granted a charter of incorporation to the Union
Pacific Railroad, which was authorized to build a line from Council Bluffs, Iowa, to the West
of Nevada.
The government agreed to furnish financial assistance in 2 ways: 10 sections of public land
were granted for each mile of track laid. The government agreed further to lend the
companies certain sums per mile of construction, the loans were to be secured by FirstMortgage bonds.
Act of 1862 failed to attract sufficient private capital, the law was amended in 1864 to double
the amount of land grants and to provide second-mortgage security of government loans,
thus enabling the railroads to sell first mortgage bonds to the public
To encourage speed of construction, the Central Pacific was permitted to build 150 miles
beyond Nevada line, later it was authorized to push eastward until a junction was made with
the Union Pacific.
Last 2 years of construction were marked by storied race between the 2 companies to lay the
most tracks.
The Union Pacific, relying on ex-soldiers and Irish immigrants, laid 1086 miles of track, the
Central Pacific, relying on Chinese immigrants, laid 689 miles, part of it through the
mountains.
Total Construction: Pace and Patterns
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All major lines tried to secure access to NY in the East and to Chicago and St. Louis in the
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west.
1877 Northerly Routes, the New York Central completed a through line from New York to
Chicago by 1877, and Erie did the same only a few years later.
From 1864to 1900, the greatest percentage of track varying from 1/3 to nearly 1/2 of the
Country's total annual construction, was laid in the Great Plains States.
Chicago became Chief railroad terminus, the center of web of rails, extending North, West,
and South. STL, KC, MN, Omaha and Denver became secondary.
The Southeast and Southwest lagged both in railroad construction and in the combination of
local lines into through systems.
The only Southern Trans mountain crossing utilized before 1880 was the Chesapeake and
Ohio, except for the Southern, no main north-south line was completed until the 1890's.
It is interesting to note, however, that the total absolute mileage doubled in the 25 years
preceding 1910.
Railroad construction had a strong influence on aggregate demand and business cycles. It
accounted for 20 % of U.S. gross capital formation in the 1870's, 15% of the total in the
1880's and 7.5% of the total in each of the remaining decades until 1920
1920, railroad employment reached its peak.
Productivity Advance and Slowdown
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The rapid but slowing pace of growth in construction is also seen in the gains in railroad
productivity.
Total factor productivity of the railroad somewhat more than doubled in the 40 years
between 1870 and 1910.
Despite the expected slowing of the railroads productivity advance, it continued throughout
the period up to WWI.
The railroads were not, in themselves, the cause of America's rapid economic progress in the
19th century but for several generations of Americans, they symbolized the ceaseless wave of
entrepreneurial energy and technology advance that was the cause of progress.
Railroad Building and Railroad Demand
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Joseph Schumpter, one of the leading economists of the early 20th century, argued that
many midwestern railroad projects "meant building ahead of demand in the boldest sense of
phrase" and that "Middle Western and Western projects could not be expected to pay for
themselves within a period such as most investors care to envisage."
The implication of Schumpeter's argument was that government aid to the railroads was
necessary in order to open the West.
Albert Fishlow tested Schumpeter's assertion by analyzing profit rates on railroad
investments in the antebellum period.
Fishlows findings on all 3 tests failed to support Schumpeter's assertion that the railroads
were built ahead of demand.
The Central Pacific and the Union Pacific had private rates of return above rates on
alternative investments in the long run. The Texas and Pacific, the Santa Fe, and the
Northern Pacific did not.
Interesting to note that the total absolute mileage doubled in the 25 years preceding 1910.
Railroad construction had a strong influence o aggregate demand and business. It accounted
for 20% of U.S. gross capital formation in the 1870’s, 15% of the total in the 1880’s and
7.5% of the total in each of the remaining decades until 1920
In 1920, railroad employment reached its peak
Land Grants, Financial Assistance, and Private Capital
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Before the Pacific Railway Act of 1862, America’s largest manufacturing plants rarely had
more than $500,000 invested in capital or as many as 1000 employees. In contrast, five
railroads at that time each had more than $20 million invested and tens of thousands of
employees.
Perhaps 175$ million in government bonds was loaned to the Union Pacific, the Central
Pacific, and four other transcontinental, but after litigation, most of this amount was repaid.
Congress gave a portion of the unsettled lands in the public domain to the railroads in lieu of
money or credit.
Land grant subsidies to railroads were discontinued after 1871 because of public opposition,
but not before 79 grants amounting to 200 million acres, reduced by forfeitures to just over
131 million acres had been given.
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However, that aid to the railroads was not given unconditionally. Congress required that
companies that received grants transport mail, troops, and government property at reduced
rates.
While land grant rates were in effect, the government obtained estimated reductions of more
than 500$ million- a sum several times the value of land grants when they were made and
about equal to what the railroads received in land grants with an allowance for the long run
increase in the value of the land.
First examples of truly large corporations, railroad companies led the way in developing
fundraising techniques by selling securities to middle class investors.
After civil war, these securities proliferated as railroads appealed to people who had been
introduced to the investing through purchases of government debt during the war.
Conservative investors avoided the common stock of the railroads, the proliferation of such
issues added tremendously to the volume of shares listed and traded on the floor of the
NYSE.
Unscrupulous Financial Practices
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Railroad promoters sometimes indulged in fraudulent practices.
Railroad contracted with a construction company to build a certain number of miles of road
at a specific amount per mile then met the costs by paying cash that they obtained by selling
bonds to the public, and issuing common stock to the construction company.
The system was easily abused
Not all railroad construction was financed through inside construction companies, but it was
common especially during the 1860s and 1870s.
Rate Setting and Regulation in Railroad Markets
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Major companies often faced no competition at all in local traffic and therefore had great
flexibility in setting prices for relatively short hauls, but for long hauls between major cities
there were usually two or more competing carriers.
Railroad managers were in charge of firm and high fixed costs
Rates were inflated when hauling empty cars, for shippers this practice was called “blackhaul
problem”
Another form of rate discrimination arose when the same railroad was in a monopolistic
position with respect to certain customers
State Regulation
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Started in the early 1870s  the Granger movement = wanted regulation of railroads, grain
elevators, and public warehouses
The legislation was known as the Granger Laws
The review of the laws by the Supreme Court was known as the Granger case
Munn v Illinois 1877
Supreme Court said that when businesses are “clothed with a public interest,” their
regulation as public utilities is constitutional
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Settled the constitutionality of the state regulation of railroads and certain other enterprises
within the states – but not between states
1886 Wabash case – St. Louis and the Pacific Railway Company v Illinois
States could not regulate interstate commerce due to the fact that was given to the federal
government based on the Constitution
Federal Regulations
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1887 Act to Regulate Commerce
Brought all railroads engaged in interstate commerce under federal regulation
Railroads were to be just and reasonable
Prohibited personal discrimination. A lower charge could no longer be made in the form of
a “special rate, rebate, drawback, or other device.”
No due preference of any kind should be accorded by any railroad to any shipper, any place,
or any special kind of traffic
Enacted the pro rata clause of the Granger legislation by prohibiting greater charges “for the
transportation of passengers or of like kind of property, under substantially similar
circumstances and conditions, for a shorter than for a longer distance, over the same line, in
the same direction, the shorter being included in the longer distance.”
Pooling was also prohibited
Created Interstate Commerce Commission (ICC)  the 1st permanent independent federal
regulatory agency
Commission was required to examine the business of the railroads
Charged with hearing complaints that arose from possible violations of the act and was
empowered to issue cease and desist orders if unlawful practices were discovered
Required railroads to submit annual reports based on a uniform system of accounts
The commission was required to submit to congress annual reports of its own operations
Hepburn Act of 1906
Extended the jurisdiction of the ICC to private-car companies that operated joint express,
tank, and sleeping cars
Services such as storage, refrigeration, and ventilation were also made subject to the controls
of the commission
Shifted the burden of proof from ICC to the carriers
Railroads and Economic Growth
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Argued that growth was a dynamic process of applying major technological advances, both
invention and innovation, and that the railroad epitomized these growth-generating forces
Argued that the railroad was a “leading sector” in the nation’s “take-off” to modern
economic growth
The measure of the direct effect on the economy of the railroad suggests that the output per
capita counted for about 2 years’ worth of growth
This countered the popular belief that the railroads were indispensable to the economic
growth of the US
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Credit Mobilier of America :
The federal government in 1864 had chartered a “Union Pacific Railroad,” with
$100,000,000 capital, to complete a transcontinental line west from the Missouri River. It
offered to assist it by a loan of $16,000 to $48,000 a mile according to location, over
$60,000,000 in all, and a land grant of 20,000,000 acres, worth $50,000,000 to $100,000,000.
Even this offer attracted no subscribers: it meant building 1,750 miles of road through desert
and mountain, at enormous freight costs for supplies, with frequent bloody encounters with
Indians, and no probable early business to pay dividends.[1]
George Francis Train and Thomas C. Durant, a vice president of the Union Pacific Railroad,
formed the Crédit Mobilier in 1864. The original company, Pennsylvania Fiscal Agency, was
a loan and contract company chartered in 1859.[1] The creation of Crédit Mobilier of
America was a deliberate attempt to falsely present to the Government of the United States
and the general public the appearance that an independent (of the Union Pacific Railroad
and its principal officers) corporate enterprise had been impartially chosen by the Union
Pacific Railroad’s officers and directors to be the principal construction contractor and
construction management firm for the Union Pacific Railroad project. It was created by the
officers of the Union Pacific to shield the companies' shareholders and management from
the then common charge that they were using the construction phase of the Union Pacific
project (as opposed to the operating phase of carrying passengers and freight), to line their
pockets in excess profits, profits which these corporate officers did not in fact believe would
come to exist from the actual operation of the railroad. So they created a sham company to
charge the U.S. Government extortionate fees and expenses for the construction of the line.
In simplified terms the Crédit Mobilier fraud worked in the following manner. The Union
Pacific made contracts with Crédit Mobilier, paid by check, to build the Union Pacific
railway. The Crédit Mobilier would use these checks to buy stock and bonds in the Union
Pacific at par value, the crux to the whole fraud, and then would sell them on the open
market to make huge profits. These construction contracts brought huge profits to the
Crédit Mobilier, which was owned by Durant and the other directors and principal stock
holders of the Union Pacific. The Crédit Mobilier would split these huge profits with the
stockholders. The net result was that the U.S. Congress paid $94,650,287.25 and
$50,720,958.94 respectively to the Union Pacific and Crédit Mobilier. This left
$43,929,328.31 in profits, counting at par values the shares and bonds that Crédit Mobilier
paid itself. The Crédit Mobilier directors reported this as a cash profit of only
$23,366,319.81, a financial misrepresentation.[1][2]
If the Union Pacific’s corporate officers had openly undertaken the construction of the
railroad themselves, this scheme (to make windfall profits immediately through the
construction of the railroad), would have been exposed to public scrutiny, and it would have
given proof of fraud to the opponents of the plan as an unprofitable venture. These
opponents believed that the whole project was in fact an ambitious fraud to build a "railroad
to nowhere" and to make tremendous profits doing so; all the while getting the United States
Government to pay for it. And most importantly, to construct the railroad in such a way,
and going to such locations, that the project had no regard for trying to create a worthwhile
and profitable transportation enterprise when it was completed.
The principal means of the fraud was the method of indirect billing. The Union Pacific itself
could and did present to the U.S. Government genuine and accurate invoices for
construction costs, generated by Crédit Mobilier of America, and presented to the Union
Pacific Railroad for payment. The railroad then prepared meticulously detailed invoices to
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the U.S. Government, requesting payment for these bills, accrued by the Union Pacific from
Crédit Mobilier of America, for the construction of the line, with only a small additional fee
over the cost stated on the Crédit Mobilier invoices, for the Union Pacific's overhead
expenses,
Any audit of the Union Pacific and its invoices to the U.S. Government would have revealed
no evidence of fraud or profiteering. Union Pacific was only accepting for payment genuine
Crédit Mobilier invoices and was only applying an auditable overhead expense for
management and administration during construction of the railroad.
The underlying fraud of a common and unified ownership of the two companies, as regards
their principal officers and directors, was not immediately revealed. Nor was it immediately
revealed that in every major construction contract drawn up between the Union Pacific and
Crédit Mobilier, the contract’s terms, conditions and price had been offered (by Crédit
Mobilier) and accepted (by the Union Pacific) through the actions of corporate officers and
directors who were one and the same persons. Furthermore, the company sought, and was
largely successful in maintaining, this fraud and its secrecy by giving discounted (well below
the market value, of this highly profitable company) shares of stock (in Crédit) to members
of Congress who also agreed to support additional funding for the railroad, when (through
the excessive charges for building the line), the Union Pacific had to come back to the
government for additional construction funds. For its time, it was a very sophisticated
corporate scam, and it was, at the time, largely not illegal.
Industrial Expansion and Concentration
Structural Change and Industry Composition
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Rise of industrial manufacturing sector in the United States was a key feature of modern
economic growth and development.
Agriculture expanded greatly during these times but fell relatively because of more rapid
increases elsewhere.
Relative to the rest of the world, American gains in manufacturing output were also
phenomenal.
In 1913 the U.S. accounted for more than 1/3 of the world’s industrial production
1865-1900, U.S. experienced tremendous economic growth
8 factors of economic growth
1. Technology
2. Natural resources
3. Investment in Human Capital
4. Capital
5. New organizational business trade
6. Economics of trade
7. New energy sources
Up to 1850’s - ¾ of all power came from Animal & Human power
1860-61 - Water Power #1 Energy Source for Manufacturing
1870’s - Steam Power Surpassed Water
Coal
1890 90% of energy in manufacturing was by coal
1920 80% of all industrial energy was from coal
Petroleum
1945 petroleum and natural gas became strategic fuels
Electricity
By WWI 1/3 of the nation’s industrial power was electricity
½ of urban dwellings had electricity
98% of farms were still burning kerosene lamps after dark
8. Shifts in resource from lower to higher productivity uses
Ex. Standardization of men’s clothing due to standardization of sizes
taken from uniform measurements from the Army during the Civil
War, then in the 1870s rotary cutting machines and reciprocating
knives made it possible to cut several thicknesses of cloth at once. By
1895, sewing machines had been improved to the point where they
could sew at speeds of 2,800 stitches per minute
Ex. Boot and shoes industry
In the 1850s they started to make shoes shaped for the right and left
foot
1857 Goodyear welt process
In 1871 Charles Goodyear patented his welting machine. The
Goodyear welt, as it is now called, is a method of securing the upper
and insole of a shoe. Shoes made in this way are still generally
regarded as the highest quality, and the region is still the largest area
of Goodyear welted manufactured shoes in the world.
Ex. Advances in metalworking machinery for steel processing,
copper, and aluminum 1860-1810
Machine tools became automatic of semiautomatic
Compressed air and electricity were used to drive high-speed cutting
tools and presses
Real Value Added Per Worker in Leading Select Industries, 1860 and
1910
1860 1910
%
Change
Lumber
$710 $930
31%
Cotton goods
480
680
42
Machinery
810
1,290 59
Iron and steel
720
1,370 90
Boots and shoes
400
910
Men’s clothing
320
1,180 269
128
New Technologies
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Technological changes, investments in human capital, new energy sources that widened
markets and brought new organizational business structures and economies of scale, and
structural shifts in resources from lower to higher productivity uses all combined to cause
these exceptional long term trends.
The boot and shoe industry, the second fastest growing in terms of value added per worker,
was also markedly changed by invention and products standardizing innovations.
Improvements in steel processing and in nonferrous metals, especially copper and
aluminum, made possible rapid advances in metalworking machinery, which jumped
between 1860 and 1910 from the seventh largest to the largest manufacture.
New Forms and Sources of Energy
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Between 1860 and World War 1, there was a remarkable transition from reliance on the
power of wind and water and the physical exertion of humans and animals to other sources
of energy.
1870, steam surpassed water as a source of power.
Another way of utilizing the force of water flow was to be devised.
Structural Changes & Industry Composition

Between 1869 - 1899 agriculture & manufacturing flip-flopped in their % of the economy
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By 1914 the industry was industrialized
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This era became known as the Second Industrial Revolution
In 1869: 53% agriculture 33% manufacturing 14% mining and construction
In 1899: 33% agriculture 53% manufacturing 14% mining and construction
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1860-1910 - All major sectors of the economy grew but railroads grew most (more than 23
times)
The Sherman Antitrust Act - 1890
First U.S. legislation enacted to curb concentrations of power that restrict trade and reduce
economic competition.
Proposed by Sen. John Sherman, it made illegal all attempts to monopolize any part of trade or
commerce in the U.S.
Section 1. Trusts, etc., in restraint of trade illegal; penalty
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or
commerce among the several States, or with foreign nations, is declared to be illegal . . .
Section 2. Monopolizing trade a felony; penalty
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize any part of the trade or commerce among the several States,
or with foreign nations . . .
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Sherman Act enforced by the US Attorney General/Justice Dept. by pursuing either civil
and/or criminal charges
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Actual meaning of Act left to the courts
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Initially Sherman Act not enforced against business corporations - Initially used against trade
unions
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In time, Sherman Act used to prosecute monopolistic companies
President Teddy Roosevelt “The Trust Buster” - His administration prosecuted several large
companies for Sherman Act violations
The Emergence of America’s Labor Consciousness
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1880’s/90’s labor statistics 2.5 million women working 1900 it increases to 5.3 million 1920
8.5 million
1885 Knights of Labor 750,000 members
1905 AFL (American Federation Labor) had 1.5 million member
1886 Haymarket Affair. This was an altercation between labor activist and police in Chicago.
A bomb was thrown to disrupt a meeting. Several people died as a result. Seven men who
were probably innocent were executed as punishment for the attack. It was used by both
labor activists and anti-unionists to promote their separate agendas.
1892 a strike at the Carnegie Homestead Works was turned violent when Henry Frick, a
close associate of Carnegie, brought in Pinkerton detectives to help stop the strike. The
union won the battle but ultimately lost the war because the Pennsylvania state militia was
called in to stop the violence.
Chapter 19
Money, Prices, and Finance in the Postbellum Era
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Coinage
Gold and silver coins were used in tandem with each other to keep their values
balanced in contrast. When the value of gold went up, the value of silver would drop
and vice versa.
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Paper Money
Paper money was introduced during the civil war and a dual monetary system was
put in place after the civil war allowing paper to be traded with coins and coins into
paper. Paper money was also known as “Greenbacks”.

Panic of 1907
Bank members feeling unsure of their banks financial future, were quickly
demanding their accounts be withdrawn to them in physical money, because the
bank ran off of a fractional reserve principle many were not able to give their
members their own money all at one time, ensuing a recession.

Federal Reserve
On December 23 of 1913 president Woodrow Wilson signed a bill in order to
establish the Federal Reserve System. Composed of 12 reserve banks, each in their
own district was designed to protect each region unlike the 20 year charter of the
first and second banks. This solution would also be in place permanently
1907-
Aldrich-Vreeland ActWas brought into effect in 1907. Which allows banks to issue emergency currency to be substituted instead of gold.
19131914-
19151916-
1917-
1919-
1920-
Woodrow Wilson elected President
After the election of 1912, Woodrow Wilson became the 28th President of the United
States. He would lead our country throughout the First World War and also passed the
legislative that created income tax.
Assassination of Austrian Archduke Ferdinand- June 28th 1914
On June 28th Archduke Ferdinand of Austria was assassinated by a group of 6 Serbians in the
Austrian town of Sarajevo. In response to the assassination, Austria along with its allies
Hungary declared war against Serbia and ultimately led to the start of the First World War.
British Blockade
The blockade of Germany was done by the British Navy during and after the First World War from 19141919.
Germany Sinks British Ship- May 7th 1915
On May 7th 1915, German submarines sank the British ship, the Lusitania, which killed 1,200
people out of 1,900 people on board, including 128 Americans. This act became a key factor in
turning public opinion against Germany and enraged Americans because of the American
civilians that were killed in the attack. This would contribute as one of the factors for America
declaring war against Germany and its allies.
Federal Aid Road Act
Was an act that made the U.S. gov. to spend money to build roads.
The 1916 Minnesota Miner’s strike against US Steel
Strikers wanted a higher wage but because the employers didn’t meet their demands, they
continued to strike. Since the strikers failed, the employers just ended firing them.
Federal Farm Loan Act
Established 12 long-term land banks to provide to farmers on July 17th 1916
US Declares War
After the sinking of the British ship the Lusitania, American opinion about Germany turned mostly negative and the
thought of imminent war drew closer. Then on April 6th 1917, after two and a half years of keeping neutral, the
United States declared war on Germany and its allies and entered itself into the First World War.
Lever Food and Fuel Control Act
Congress passed this act in 1917 and appointed Herbert Hoover as the food and fuel Administrator. The
purpose was to ensure an adequate food supply domestically and to our allied countries while
maintaining an equilibrium price-point.
U.S Draft
The Selective Service Act went to effect in May of 1917. The guidelines of the act included that all males
21-30 were required to register for military service for the United States. By the end of World War 1,
more than 2.8 million men were drafted into the various branches of the military.
Prohibition Act
The act took place in 1917 where it prohibited alcohol.
War Revenue act
The war revenue act was passed on October 3rd 1917 and greatly increased income tax in
order to raise more money for the war effort.
18th Amendment proposed
The 18th amendment was used to prohibit the use/making/disrupting any kind of
intoxicating liquors.
Year of Strikes
In 1917, there was a total of about 4,450 strikes due to low wages and bad working
conditions.
War Industries Board
President Wilson reorganized the War Industries Board with Bernard Baruch as the head.
This board was established for the sake of the supply of goods necessary to fuel the war.
They used a system called bulk-line pricing to urge efficiency within the supplying
manufacturers and reduce cost of raw material.
Treaty of Versailles
The Treaty of Versailles was one of the first peace treaties that would end the First World
War. The Treaty was signed on June 28th 1919, exactly 5 years after the assassination of
Archduke Ferdinand, and ended the state of war between Germany and the Allied powers.
Volstead Act
Took place to tighten the enforcement of the prohibition act.
Ponzi Scheme
Ponzi was an Italian immigrant who made a statement that if people invested into him he
could find a way to make a stamp from Italy be able to be used in the U.S and be sold at a
higher price.
Recession
In 1937 things began to improve but then the process suddenly stopped when prices
reached a high and everything fell and deflation began again while unemployment
increased.
Electric appliances
In 1920 electric appliances such as ranges vacuum cleaners radios and refrigerators began to fill the
American home although only 8 percent of American families had mechanical refrigeration by 1930 the
days of the "ice man" were numbered
1st Commercial Radio Broadcast
In 1920 KDKA, a radio station in Pittsburgh became the first to broadcast commercially.
This is important because it was a building block to radio broadcasting today.
Assembly line
Before having some stiff competition with General Motors Henry ford introduced the first
moving assembly line which helped him with the mass production of low cost automobiles.
Soon leading to improved models that incorporated the self-starter, the windshield wiper,
and improved brakes.
Warren G. Harding elected President
In 1921, Warren G. Harding became the 29th President of the United States in the first
election after the 19th amendment was passed, which allowed women the right to vote.
Joint Commission of Agriculture Inquiry
An inquiry performed by congressing resulting in the discovery that the farming troubles
occurring stemmed from the general business decline and decrease in exports during this
time. Possible solutions to the problem involved improving the credit available to farmers
and research findings provided by the Department of Agriculture.
Enforcement of Prohibition
In 1920, the 18th amendment was passed and the sale, transportation and importation of
alcohol became illegal in the United States. Although actual consumption of alcohol
decreased in the country, homicide and crime went up because of gang’s illegal activity of
“bootlegging” alcohol. Alcohol remained illegal until the passing of the 21st amendment in
1933 that repealed the 18th amendment.
Federal Highway Act of 1921
The act amended the original law by requiring the secretary of agriculture to give preference
to states that had designated a system of highways to receive federal aid.
Emergency Immigration Act of 1921
Restricted the number of people to be ad- mitted each year from any country to 3 percent of
the number of people of that nationality residing in the United States in 1910.
1922-
1923-
Herbert Hoover appointed Secretary of Commerce
In 1921, Herbert Hoover was appointed Secretary of Commerce under President Harding
and eventually President Calvin Coolidge. During his time as Secretary, he created many
sub-departments such as census, radio and air travel and also reached to forge
partnerships between government and business, which created the philosophy of
“associationalism”.
Joint Commission of Agricultural Inquiry created
In 1921, Congress created the Joint Commission of Agricultural Inquiry which reported and
tried to fix farm troubles that were caused by general business depression and decline in
exports. Throughout the 1920’s, these bills aimed to secure “parity prices” and sought to
determine a fair exchange value for farm products.
Capper-Volstead law
Exempted farmers’ cooperatives from the threat of prosecution for violation of antitrust laws.
National Agriculture Conference
The National Agriculture Conference was convened by Henry C. Wallace, in order to
produce a new approach to address the problems concerning agriculture. The idea of
“parity”, meaning agriculture was to be entitled to its fair share of the net income if the ratio
of prices farmers received to the prices they paid was consistent with the ratio that occurred
from 1910 to 1914, was the chosen angle by the deciding parties of the conference.
High school movement
During the 1920’s, a modern American standard of living that arrived was the American high
school. Complete with 45- minute periods, a diverse curricula, and athletic teams. A rapid
increase of enrollment would occur during the 1920’s and 1930’s and by 1938, almost half
of American boys would graduate from high school.
The Automobile Industry Boom
During the 1920’s, The Automobile became the economic symbol. Between the years 19211929, annual production of automobiles rose from 1.5 million to 4.8 million. By 1960, 60% of
American families owned an automobile.
France & Belgium occupy Germany
In Response to the failure of payments of reparations by Germany to France following WWl, France and
Belgium took back the Ruhr area that they previous had prior to the war. Beginning in 1923, the
occupation took 2 years with pretty mild conflict and little to no response by outside countries.
Florida Land Boom
Real estate boomed in Florida when land that was sold for thousands of dollars was being
cut into lot and sold for millions. Although the climate and low cost; over building was clearly
obvious. Florida was the earthly paradise until 1926 when a hurricane destroyed most of
Miami which was the heart of the boom.
President Harding’s death
On August 2nd, 1923, President Warren G. Harding died suddenly of what is believed to be
a heart attack in San Francisco while on a tour of the west coast. He was succeeded by
Vice President Calvin Coolidge.
Calvin Coolidge becomes president
In 1923, Calvin Coolidge becomes the 30th President of the United States, succeeding
President Harding after his death. Coolidge spent a prosperous time in if office during the
“roaring twenties”, a period of rapid economic growth in the U.S.
Dawes Plan
Germany was given more time to pay its reparations, and a large loan, mostly from the
United States, was floated to help Germany restore its economy and make its debt
payments.
McNary–Haugen Bills
Which sought to determine the fair-exchange value of each farm product. The fair value was
to be a price that would have preserved pre–World War I purchasing power and was to be
maintained in two ways: first, a tariff was to protect the home market from imports, and
second, a private corporation chartered by the federal government (modeled on the War
Finance Corporation) was to buy a sufficient amount of each commodity to force its price up
to the computed fair value.
Federal Intermediate Credit Act
This act provided 12 intermediate credit banks that would rediscount agriculture paper for
commercial lending banks and other lending agencies. This act occurred under the
President Coolidge, who, vetoed the McNary-Haugen bills just before this time period.
Financing Companies
after the high demand for consumer durables went up the development of consumer credit also known
as "buy now, pay later'' Rather than saving up cash or interest-earning assets to buy a consumer
durable, a consumer could make a down payment, take immediate possession of the durable, and pay
for it on the installment plan. The finance company that made the loan was protected because it had a
claim on the durable and could repossess it if the buyer failed to make the requisite payments.
National Broadcasting Company
In 1926 the national broadcasting company (NBC) was formed as a medium for advertising particularly
towards women.
Columbia Broadcasting System
In 1927 the Columbia broadcasting system (CBS) was another medium formed as well.
Ford Model T discontinued
On May 27, 1927, Ford announces the end of the Model T. The Model T would be known
most for being America’s first Affordable car and helped the country into the automobile
revolution.
Polling Systems
Polling systems by telephone were used to determine program ratings, and programs with low rating
were canceled. Certain goods became tied to particular programs as producers sought any and all
means to address the desires, fads, and fancies of the American public.
Herbert Hoover elected President
In 1929, Herbert Hoover is elected the 31st President of the United States. Months into
office, the stock market crashed, which began the Great Depression and lasted throughout
his presidency.
Bank closure peak
The Great Bull Market
A financial market in which prices are expected to rise. Characterized by optimism, investor confidence
and expectations that strong results will continue.
Stock Market Crash
By 1929 the cost of the New York Times index of 25 industrial stocks had risen to 338 from
110 in 1924 and investors began to see a huge return on investment. President Hoover
attributed this to the readily available credit at low interest rate and in August of 1929 the
Federal Reserve raised the discount rate to 6 percent in fear of a crash. The market still
persisted through this attempt to curb the increase making the crash imminent. Sharply a
break occurred on October 23 and 24 and by the time November came the prices had
decreased to half of what they had cost in August. Almost overnight the previous optimism
rd
th
of the future transferred to severe pessimism.
Agricultural Marketing Act of 1929
This pre-depression law committed the government to a policy of farm price stabilization
and established the Federal Farm Board to encourage the formation of cooperative
marketing associations.
The paycheck rises
Annual earnings rose between 1919-1929 by 23% Because of consumer revolution which
produced a strong demand in industrial labor which rose hours to 48 as standard and higher
wages.
Federal Reserve raises its discount rate
Young Plan
Germany’s reparation payments were scaled back. During the early 1930s further attempts
were made to relieve Germany’s reparations burden, but the deteriorating economic
situation and the rise of Hitler soon made these efforts irrelevant.
1930-
19321933-
Smoot-Hawley Tariff Act
It rose tariffs on a wide array of goods, especially agricultural products. It was one of the
reasons why the U.S went into the great depression.
1935-
1941-
1944-
New York's Bank of United States collapses
In Dec.11 1930 the New York bank collapsed although it was just a common bank many
others had collapses before; the New York bank was the largest failed measured. The
name of the bank represent certain importance to the people because it had the United
States. When people viewed the downfall they thought that meant the financial system was
in danger.
Start of Unprecedented Depression
Al Capone
In the 1930’s Al Capone was an American gangster who bootlegged alcohol.
Jack "Legs" Diamond
In the 1930’s Jack Diamond was another major American gangster who also bootlegged
alcohol.
Harlem Renaissance
After the large migration of African Americans to the urban center of Harlem that would
follow World War 1, a cultural movement began that emphasized a remarkable flowering of
literature and arts in the African American community. Beginning in the 1920’s, the Harlem
Renaissance spanned into the 1930’s with many of its ideas living much longer.
More Bank Failures
People viewed the banking system in danger and quickly wanted to remove their money
causing more bank failure and forced to close.
Glass-Steagall Act of 1932
Commercial banking, taking deposits from the public and making short-term loans was
separated from investment banking.
Franklin D. Roosevelt elected President
In 1933, Franklin D. Roosevelt becomes the United States 33rd President. Roosevelt would
eventually usher the U.S out of the Great Depression and lead during World War ll.
First New Deal
The First New Deal in 1933-1934 was Franklin D. Roosevelt’s administration’s response of
The Great Depression through a passage of a wide range of legislation designed to both
provide immediate relief and to promote recovery of the economy. All passed in a span of
100 days, the first achievements of the First New Deal were the Civilian Conservation Corps
in March of 1933 and the Agricultural Adjustment Act in May of 1933.
Return of Gold
On April 5 , 1933 the Roosevelt Administration prohibited transactions of gold and required
all holders of gold to return their stockpiles to the Federal Reserve. This occurred for 2 main
reasons. The first was that it was becoming popular to transfer your assets to gold, and
second to break the direct line from gold to currency to devalue it compared to other foreign
markets to increase exports.
th
President Roosevelt announces bank holiday
Beginning March 6th 1933, President Roosevelt announced a bank holiday meaning that all of the
banking system would be shut down for four days. The hope was that the holiday would help stabilize
the economy and create a newfound confidence in the banking system.
Civilian Conservation Corps (CCC) is established
March 1933 operated under the army’s control program was intended to promote
environmental conservation. The work focused on soil conservation and reforestation.
Establishment of the SEC
Also in 1934, due to the crash, people were suspicious of the activities of investors in on
Wall Street. The result of this was the establishment of the Securities and Exchange
Commission. This body was created to regulate and defraud to stock market.
Federal Emergency Relief Administration
The first relief operation under the New Deal in 1933. The main goal was to alleiviate household
unemployment during the Great Depression. In its time, FERA gave up to 20 million jobs during a time
period of America’s worst unemployment rate in history.
Agricultural Adjustment Act
The Agriculture Adjustment Administration decreased the amount of acreage allotted to
each farm. The land was subdivided and allotted based on previous crop history. The land
was then paid for by the taxes paid by the first processor of any product, yet still the tax was
directed at the consumer rather than the producer.
National Industrial Recovery Act
Were to raise prices and wages, spread work by reducing hours, and prevent price cutting
by competitors trying to maintain volume
Federal Deposit Insurance Corporation was established
A corporation created under the Banking Act of 1933. Guarantees the safety of the depositor’s account
under insurance policies.
The Second New Deal
The Second New Deal (1935-1938) followed the successful First New Deal and Roosevelt called for three
goals: improved use of resources, security against old age, as well as a national welfare program. Social
Security was started following the start of the Second New Deal.
Social Security Act
In 1935, Federal old-age and survivors’ insurance program based on workers’ payments of
1 percent of earnings up to $3,600. It further provided for assistance to the needy aged,
dependent children, and the blind. Subsequent amendments have added other groups.
Empire of Japan attacks Pearl Harbor
On December 7th, 1941, The United States naval base Pearl Harbor was attacked by a
Japanese surprise air strike. The attack killed over 2,400 Americans and sunk or damaged
8 Navy battleships. In result, America declared war on Japan and entered itself into World
War ll.
US declares War
Following the attack on Pearl Harbor, the United States declared war on Japan. In result the
other countries in the Axis Powers, Germany and Italy, declared war on the United States,
entering itself fully into World War ll. The war would last until August of 1945, when America
dropped the atomic bomb on Japan, forcing them to surrender and end the war.
Roosevelt established OPA
The OPA was established to police and enforce black markets. This was because the
existence of a black market prices would take over that specific market and drive the prices
down. Fraud was occurring very frequently in car dealerships by report the cost sold at the
OPA but cash payments would be coming in under the radar.
Smith–Connally Act
Allowed the U.S government to take over mines and factories in essential war industries
that were being hampered by strikes.
Servicemen's Readjustment Act
It is also known as the G.I Bill of Rights. The GI Bill provided a wide range of benefits,
including mustering-out pay; health care; assistance with job placement; low-interest loans
to buy a home, farm, or business; unemployment benefits; reemployment rights;
employment preferences; and education benefits.
Women in the workforce
After men were called for war women were encouraged to join the labor force. About
200,000 women joined the military services including the Women’s Army Corps (WAC) and
Women Accepted for Volunteer Emergency Services (WAVES). While others joined the
civilian labor force symbolized by “Rosie the Riveter,” entered jobs traditionally filled by
men. Women became toolmakers, crane operators, lumberjacks, and stevedores. Paving
the way for women in the workforce.
Taft–Hartley Act
Individual workers should be protected by public policy not only in their right to join a labor
organization but also in their right to refrain from joining
1945-
Roosevelt death, Truman becomes president
After battling a very long fight with polio, which he kept secret about from the public mostly, Franklin D.
Roosevelt passes away. Succeeding him was Vice-President Harry Truman, who would famously make
the decision to drop the atomic bomb on and Japan and help end World War II.
World War Two ends
In the months of April and May of 1945, the allied forces capture more than 1.5 million axis prisoners in
the final battles of Europe forcing the axis powers to surrender to the allies and ending the war in
Europe. Following the dropping of the atomic bomb on Japan, The Empire of Japan is forced to
surrender thus ending the war in the Pacific and World War ll in August of 1945.