We look at how the United States has developed its economy and the numerous legislative procedures that have aided it in becoming what the world knows as the Breadbasket of the World. We pay special attention to the 1873 Economic Panic (along with several others); American industry; the Progressive era and Roosevelt’s ‘New Deal’. The 1873 Economic Panic was not the first time America had seen, but it was the first recession they saw after the Civil War. It began on the 18 September 1873, the day a large financial banking institution closed its doors to the public and declared bankruptcy (Precious Metals News, 2008).
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Jay Cooke and Company were in fact the first of many institutions that were to close. There had been a boom in the railway industry and many financial institution including Cooke and Company had invested in it. It appeared that the business itself was expanding while the cash that it needed was dwindling (Precious Metal News, 2008). Financial institutions plowed their money into the railway production and suddenly realized that they had overextended themselves and had to close their doors (PMN, 2008). The obvious ensued, with strikes, wage cuts and redundancies causing unemployment.
The tension this caused between banks, the public and employees lasted a full 6 years after the Panic had apparently ended. Troops were employed to control the rioting masses and although it lasted so long to be rewarded with a new wave of economic growth in the 1920’s (Precious Metals News, 2008). As an independent country, the United States found its industry dominated by the railways, gold and oil in a re-birth after the Civil War. The Great Depression was different to the Panic in that it was a global issue.
This recession occurred for ten years between 1929-1939 (Precious Metals News, 2008). Prior to the Great Depression, a great deal of political and economic growth occurred, and the situation was volatile (VanGiezen & Schwenk, 2003). Ironically, the greatest growth occurred after the first World War and ended in 1929. the country had seen an increase in urban populations and had weathered both international crises and civil crises but was perhaps unprepared for the dip the worlds economy would see (VanGiezen & Schwenk, 2003).
Employment had also seen an increase both in acquisition and in remuneration between 1913 and 1925 (VanGiezen and Schwenk, 2003). “The Great Depression, a long and severe period of economic decline, affected the United States and the entire industrialized world. ”(VanGiezen & Schwenk, 2003). So there had clearly been a huge impact on social structure and economy in the 1920’s with many people earning much more than they had before the war. The stock market fell between 1929 and 1932 by 90% a stark contrast to previous years and uncannily similar to the 1873 Panic (VanGiezen & Schwenk, 2003).
It is not known what precisely caused the Great Depression, but it is hypothesised that governmental mis-management was partly to blame and the Wall Street Crash was seen at the beginning of the huge decline (Precious Metal News, 2008). The financial explanation was that the governments monetary policy was fixated on the contraction of the money supply as an attempt to stop inflation but that the actual problem in the economy was deflation (Precious Metal News, 2008). The strength of the economy prior to the Wall Street Crash was largely thanks to the Progressive Movement in what was later termed the Progressive Era.
Taking place between 1900 and 1918 the Movement had followers from both the Democratic and Republican parties and strove for economic and social reform (Rutgers, 2004). It began as a reaction to immigration and industrialization and the period 1900-1910 showed an influx of eastern European immigrants that were by all intents and purposes, cheap labor (Rutgers, 2004). The rapid and extensive growth of industry supported this influx and the urban areas became more and more populated.
There followed exploitation of immigrants and the Progressive movement members fought to have these conditions to be alleviated. The Progressive members came from the upper class or middle class strata of society and at times t was motivated by religious conviction and at other times for personal gain. To an extent the Progressive movement wished to emancipate these workers and seek a fairer method of dealing with industrial workers (Rutgers, 2004). It would make sense that the emancipation that was to ensue was to cause a financial deficit among employers.
The Progressive era also wanted to make society more democratic, giving rights to anyone who would be an American citizen, including the immigrants (The Library of Congress, 2008). The 1920’s ushered in the New era which was dominated by the automobile which changed lives for ever and dominated industry (Library of Congress, 2008). Following the first World War Franklyn D Roosevelt promised the United States a New Deal, which basically saw the reformation of financial institutions and the banking environments.
The New Deal lasted 6 years and greatly helped those who had been irreversibly affected by the depression (Library of Congress, 2008). The New Deal gave the government power in the banking industry and therefore a right to involve itself in the affairs of the financial industry. It also helped those who were migrant workers and those previously down-trodden during the Progressive Era (Library of Congress, 2008). Some historical data shows urbanization through industry in around 1900 shows and intersection where agriculture declined and more people were employed in urban areas (Sukkoo, 2004: 20).
Despite this it was still known as the breadbasket of the world given the amount of food it produced on large scale farming operations. Even during the depression, America still produced a large amount of agricultural products which helped to feed many nations (Diagram) (Sukkoo, 2004: 20-22). The Steam Engine is seen as a contributing factor to this advance in the world market, research done by Kim Sukkoo believes that water-powered firms faired better in urban areas and that while it did not contribute to urbanization it did contribute to the agricultural sector (Sukkoo, 2004: Abstract).
Expansion of people and migration towards the urban centers as well as towards the coastlines was due mostly to the invention of major railways (Sukkoo, 2004: 3). Not only though, did it contribute to the growth of agriculture and industry but has also sustained it (Sukkoo, 2004: 3). With the changes in Progressive era and movements and the inception of the ‘golden age’ the world saw an America that had re-invented itself from the Civil War country with few rights for minority groups change to an America that was democratic and warmed to the minority groups.
It showed a boom on all fronts from social to economic, this included becoming the social hub of the world and still is (Hollywood). America showed reform on many fronts but it suffices to say that when a country’s economic waivers, its social structure also falters. This is the case on many occasions and is not specific or unique to the United States. The morale at the time of the 1973 Panic and then again during the Great Depression of the civilians in the United States was obviously low but it was to degree saved by its president Franklyn D Roosevelt who actually delivered what he said he would.
The Panic of 1873 erupted following a growth in the economy that was perhaps a little false. It appeared to be that the rail industry was growing too quickly and banks should have waited to invest when the rail industry was actually making a profit and not before then. This is a problem that one always needs to learn. Furthermore, the age when immigrants were filtering into the country and being used for cheap labor was bound to end with a swift bang.
This is because at some stage they become emancipated and have to be paid properly, so firms and factories are forced to pay than before causing overextension of funds and an imbalance. This is true also in slavery when employers suddenly have to pay their slaves and therefore lose a portion of their profits. We may have come full circle from an upside in the economy to a downside which is economic recession. American history swims in economic fluctuation but remains a super-power even to this day.
Sources:
Library of Congress. (2008). Great Depression and World War II, 1929-1945: President Franklin Delano Roosevelt and the New Deal, 1933-1945. Accessed 24 July 2008.
Library of Congress. (2008). Progressive Era to New Era, 1900-1929. Learning Page. Accessed 24 July 2008.
