Colonization
Southern Colonies
Economic gain motivated the first English settlers to
colonize North America. The colony at Jamestown,
Virginia was setup to make a
profit for the share
holders of the joint stock company that funded the trip.
Initially, the Jamestown colony faced problems, but
after they began to cultivate tobacco, profits started
to rise. As other colonies in the south began to
form, they followed Virginia's economic example and
established plantations which grew tobacco,
indigo,
sugar, and cotton. The labor force consisted of
slaves imported from Africa via the West Indies, and
indentured servants. Indentured servants were
people who signed work agreements in exchange for
passage to the New World. The agreement stated
that the worker would provide seven years of labor in
exchange for passage, housing, food, and land at the end
of the contract.Northern Colonies
 Northern colonies were settled by people seeking
religious freedom. Puritans and Pilgrims both
settled the Massachusetts Bay Colony. Although
they wished to succeed in commercial ventures, they also
wished to live free of the persecution they had faced
back in England. Commercially, the early northern
colonies were not as successful as the south, but they
were a success in setting up a community where they
could live as they wished. Northern colonies were
made up of family farms and some early
industries.
Early
Republic
The American Revolution started in response to England
trying to enforce mercantilist policies.
Mercantilism states that colonies exist to provide the
mother country with raw materials and new
markets for
finished goods. American colonists rejected these
policies, and the taxes that came with them, and started
a colonial rebellion. After the formation of the
United States government under the Constitution, one of
the first tasks of the new administration was to
formulate an economic policy. The United States
had amassed a large debt due to the Revolutionary War,
and was eager to pay it off and begin the business of
government. President Washington appointed
Alexander Hamilton as the first Secretary of
the Treasury.
Hamilton quickly devised a number of plans to make the
United States financially sound.
|
Hamilton's
Economic Programs |
|
Assumption of Revolutionary War debt |
Hamilton wanted to pay off all of the debt of the
states and the old Continental Congress. He
believed this would give the new country financial
stability. Congress approved assumption. |
|
Creation of a National Bank |
Hamilton believed that a National Bank would gain
the support of the business community which would
invest in the new country. Congress approved the
Bank in 1791. |
|
Protective Tariff |
Hamilton wanted to protect U.S. industry from
overseas competition to allow it a chance to grow.
This initial tariff was rejected by Congress. |
|
Excise Tax |
As
a means of generating revenue, Hamilton proposed a
tax on whiskey. Congress approved this tax, which
in turn led to the Whiskey Rebellion. |
The
American System
The American System was a program proposed by Senator
Henry Clay of Kentucky to promote trade and business
in the United States. The program called for a
number of internal improvements including
the building of a national road. The
program also wanted a protective tariff
and a second National Bank. While a
National Road was built between Cumberland, Maryland and
Wheeling, Virginia, there was much opposition to it due
to the protective tariff that financed it's
construction. Southern states opposed the Tariff of
1828 because it cost them more for imported goods.
John C. Calhoun
of South Carolina called for the nullification of
the tariff, which nearly sparked a civil war. The
Tariff of 1832 lowered import duties but still
caused trouble with South Carolina.
The Second National
Bank
Controversy surrounded the Second National Bank as well.
Southern and Western states disliked the control the
bank had over state banking systems, and wanted more
money in circulation. Also, many saw the bank as a
tool of rich northern riches. President
Andrew Jackson vetoed the bank in 1832 and withdrew
all federal funds from it. This destroyed the
bank. Factors of
Production
The building of the National Road spurred others to seek
out cheaper transportation between states to promote
commerce. The National Road was something
of a failure due to the high cost in shipping goods, but
less expensive transportation was
 found
on the rivers. Initially, river travel was not popular
because goods could only be shipped downriver. But, with
the improved steamboats built by Robert
Fulton, river transportation could be accomplished
both ways, and much cheaper than using the toll roads.
Canals were developed to enhance transportation
already on the vast river system. The first major
canal, the Erie Canal, was
built from Albany, NY to Buffalo, NY and
provided a much cheaper way to transport goods. Soon
other states followed NY's example and began building
canals. Later, the building of railroads
became a major focus of the United States during the
1840's and 1850's. This had a negative effect on canals
as freight could be moved cheaper on the railroads, plus
the railroads reached more places. The building of
railroads also contributed to the rise of the
Industrial Revolution and the promotion of
interstate commerce. |
