American Economies
A short summary of the economic history of the United States.
Pre-Colonial Economics of North America
The first economies of the United States developed over thousands of years. The people of pre-colonial North America for the most part led subsistence lifestyles suited to their climate and its resources. Some nomadic groups followed fish and game migrations; other cultures led sedentary lives raising crops. Maize, squash, and beans, the “three sisters,” were widespread from the Southwest to the Northeast. These three crops could be grown together in mounds, an efficient system that replenished the soil rather than depleting it. Each of these cultures also produced their own tools, art, textiles, and transportation.
The Americas’ lack of native draft animals and related technology like the wheel limited long-distance trade. Despite this, trade networks existed across the continent. One prominent center was the city now known as Cahokia, built around man-made mounds in modern Illinois. The people of this culture, which peaked in the 13th century, conducted trade as far as the Great Lakes and Gulf Coast. They likely traveled up and down rivers as well as by dirt roads. Common valuables included copper, obsidian, pearls, shells, foods, hides, and salt. Commerce was not the only way goods moved between people. Among many, though not all, Native American cultures, gift-giving was an important display of status and generosity.
Economies of Colonial North America
When Europeans arrived on the shores of North America, they found a land far removed from the economies of the Old World. Without specialized industries in place, most settlers needed to grow their own food, build their own houses, and make their own clothing and tools. Small farmers grew the three sisters alongside wheat, barley, oats, and vegetables. Agriculture on unfamiliar land proved difficult at first, particularly in the wintry Northeast. Settlers often relied on trade with Native Americans for survival during lean times. Fishing and hunting also provided a valuable source of food.
After several lean winters, the colonies turned to cash crops and other industries. Tobacco, a New World crop, gained rapid popularity in European markets. The people of Jamestown responded by growing the crop wherever they could, even at the risk of famine. In areas less suited to tobacco, crops like rice and indigo were grown. The expansion of these plantations and resulting labor shortages encouraged landowners to import slaves from Africa. The northern colonies, meanwhile, relied more on shipbuilding and fishing and had little need for slavery.
Luxury items and most manufactured goods needed to be imported from Britain. The Crown imposed taxes on certain goods and restricted the production of others. For the most part, however, the economies of the early colonies were allowed to develop organically. In the 1760s, a series of new taxes on goods like sugar and paper stoked anti-British sentiments among the colonists. In 1773, the revolutionary Sons of Liberty dumped 92,000 pounds of tea into Boston Harbor in protest. Public debate over the right of the Crown to impose these taxes was one of the primary causes of the Revolutionary War.
Further Reading:
Westward Expansion and Urbanization
Since its founding, the United States’ economy has been driven by its abundant natural resources and rapid progress in technology. The nation declared its independence in 1776, the same year that Adam Smith published his most famous work, The Wealth of Nations, Smith believed that government interference in the market hindered the production of wealth. This capitalist ethos would drive the United States to the present day.
The regional specialties established in the colonial era continued to grow on the Atlantic Coast. The more industrial Northern states thrived through textiles, whaling, fishing, and manufacturing. The rural South, still dependent on slave labor, grew crops like tobacco and cotton for export. The invention of the steamboat, railroad, cotton gin, coal power, and factories all improved economic efficiency in the 19th century. The difference in manufacturing power between North and South would play a pivotal role in the American Civil War. The South, unwilling to lose its source of wealth, attempted to secede from the Union over the issue of slavery. Throughout the war, its rural economy could not keep up with the smoke-belching factories of the North.
As the United States gained a reputation as a booming land of freedom, it attracted millions of immigrants from Europe, Asia, and the rest of the world. While some chose to stay in cities like New York, Philadelphia, and Boston, others began pushing west. Like the earlier colonists, these ‘pioneers’ needed to be largely self-sufficient. The agrarian tradition traveled with them, along with an individualist mindset. Where they could not grow crops, ranchers instead herded sheep and cattle. Beef soon became a lucrative industry in the West. Cowboys, later a cultural icon, drove immense herds across plains once dominated by bison to reach hungry markets in the East.
In many cases, the original people of the land, Native American tribes, were not compensated for their losses. The tribes of the Great Plains had undergone their own economic revolution through the horse, which opened new possibilities in hunting and trade. With the arrival of settlers, however, came the death of their staple food, the bison. Violent conflicts broke out in defense of indigenous ways of life. Despite this resistance, the flow of settlers kept coming, and the tribes were at last defeated. Most survivors were pushed onto reservations, which remained underdeveloped until recent years.
Further Reading:
The Great Depression and World War II
By the early 20th century, the United States had expanded to the Pacific Coast and established itself as a major world power. Its cities grew taller, powered by large reserves of coal and oil. In its eagerness to grow, the nation often exploited the working poor. Long hours and dangerous work for little pay led to an environment of extreme wealth and poverty. Socialist ideas entered the national discourse. Eugene Debs, a socialist founder of the IWW labor union, won 6 percent of the vote as a presidential candidate in 1912. The labor movement began in earnest in the mid-19th century and reached its peak during the Great Depression. While the economy limped through the 1930s, unions grew stronger and gained millions of members. President Franklin Delano Roosevelt spearheaded the New Deal, a series of regulations and public programs meant to strengthen the position of American workers.
World War II propelled the United States out of its economic slump and into another boom era. A sudden demand for manufacturing and the absence of young men in the workforce led to abundant jobs. Women stepped in to fill the gaps, setting the stage for later feminist movements. By the end of the war, the U.S. was one of the few industrial nations not devastated by bombings and invasion. This placed it in a prime position to dominate global markets for several decades.
Global Economics of the 20th and 21st Centuries
The Cold War era hardened attitudes against socialism within the United States. In opposition to the communist Soviet Union, American workers strove to prove the superiority of capitalism through hard work and new technologies. This competition led to the space race and the United States’ eventual moon landing in 1969. A period of prosperity in the 1950s and 1960s encouraged the standard of nuclear families, home ownership, and retirement in old age. New Deal programs like Social Security provided a strong social safety net for the elderly and disabled. Despite several boom and bust cycles, the U.S. economy continued its strong growth through the ‘90s.
Over the last two decades, new challenges have confronted the United States. Globalization, driven by growing infrastructure in other nations, has led to the export of jobs and manufacturing. In 2007, a housing market collapse and financial crisis triggered a global recession. While the economy has since recovered, issues such as public debt, rising wealth inequality, access to opportunity, and budget deficits remain.
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References
Engerman, Stanley L. and Robert E. Gallman, eds. The Cambridge Economic History of the United States. Cambridge University Press. 1996.
Grant, Susan-Mary. A Concise History of the United States of America. Cambridge University Press. 2012.
Nies, Judith. Native American History: A Chronology of a Culture's Vast Achievements and Their Links to World Events. Random House Publishing Group. 2012.
Remini, Robert. A Short History of the United States: From the Arrival of Native American Tribes to the Obama Presidency. Harper Collins. 2009.
“The World Factbook: United States.” Central Intelligence Agency, Central Intelligence Agency, 5 Sept. 2018, www.cia.gov/library/publications/the-world-factbook/geos/us.html.
Weaver, Fredrick S. An Economic History of the United States: Conquest, Conflict, and Struggles for Equality. Rowman & Littlefield. 2015.
Zinn, Howard. A People's History of the United States: 1492-Present. Routledge. 2015.
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