The economic development after civil war laid the foundation of the modern America industrial economy. Despite the civil war experienced previously, US gained its momentum in becoming the world leading economy. This paper will expound the economic history of US by dividing it into three primary sections, the golden age section lasting from 1865 to 1920s, the depression period and second world war era, and the economic situation from 1950 to present.
The golden age that lasted from 1865 to 1920s was a period of economic development that has never seen before in the history of US. The wealth exploded during this era, and middle class lived a better life than kings of the previous century. During this period, the slavery was dissolved, and plantations were divided. Sharecropping became the predominant form of agriculture applied by the majority of the freed slaves. Following the war, the American economy was driven by innovation and rapid growth in the industrial infrastructure. Individual business enterprise was the backbone of the US economy (Gordon, 2017) . Manufacturing, commerce, and entrepreneurs had overtaken agriculture economic contribution by 1880s.
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The civil war that devastated South led to spurred economic growth and industrial growth in the North. Government policies supported economic development through low taxation and trade tariffs. By 1900, 200,000 rail tracks were laid creating a connection in all regions (Gordon, 2017) . “Rags to riches” a novel by Horatio Alger’s established protestant work ethics and gave rise to the belief of the American dream of capitalism. Corruption was widespread as businesses attempted to influence the government policies in their favor. Despite the massive growth, child labor persisted, and women and children were discriminated in the workplace. Additionally, labor unions emerged such as American Federation of Labor which was linked to anarchism and socialism leading to violence such as homestead strike and Hay market strike. In early 1890 farmers formed a populist party to address government regulation on big business, rails control and the party supported William Jennings Brian in 1890, but he lost, and the party faded away. At the beginning of world war 1, financing militants become the focus of the federal government and in 1917 taxes were raised through war revenue act. To prevent inflation, the US clanged on gold standards to support its currency (Gordon, 2017) . This period is followed by the great depression and the second world war.
The great depression and the second world war (1929-1945) were the two most influential events of the economy in the 20 th century. The economic effects during this period were disastrous. Unemployment reached its peak nearly 25%, 40% of the banks failed, and hundreds of million deposits were lost (Wolfson, 2017) . The giant stock market crash of 1929 scared millions of investors and affected the confidence of investors. President Franklin Roosevelt launched a rapid economic spur program called the “New Deal.” The program aimed at pooling back the lost spirit of the economy through government-sponsored projects. The federal deposit insurance corporation (FDIC) enticed people back to banks, and public work administration provided cheap housing through mortgages.
The “New Deal” rapidly expounded the role of federal government in the economy of America. The period of high depression assisted in building a healthy relationship between the private sector and the government. The industrial areas in the US were organized by the government and contributed its products straight to the war effort. 1941-1945 was the comeback period where the Gross National Product (GNP) increased by 50% with an unemployment rate of 1.2% (Wolfson, 2017) . The agricultural technology advanced with new mechanization and was conducted by big businesses. Urbanization rose as the population migrated to the cities. This period followed the modern era of the 1950s to the present.
The American economy and population continued to expand despite the second world war effects. The level of consumption was on rising, and the middle class became dominant throughout the states. Federal-Aid Highway Act of 1956 led to massive influx of suburbs, and at this time the US became the wealthiest nation in the world. The GNP rose from $200,000 million in 1940 to $ 300,000 in 1950 and more than half a billion in 1960 (Fernald & Jones, 2014). As the cold war lit, US continually invested in the sophisticated weapon in 1953-1961 with Dwight D. Eisenhower as the president. Additionally, the American workforce changed with the majority working on white collar jobs in 1956. Labor unions emerged with long-term employment contract from their members. Despite economic growth in other sectors, small farmers faced challenges to compete with big companies, and the number of farmers declined from 7.9 million in 1947 to 3.4 million in 1998 (Fernald & Jones, 2014).
The 1960s to 1970s was a period of significant change as compared to 1950s. President John F. Kennedy sought to improve the economy by increasing government expenditure, cutting taxes, and raised education funds. Similarly, Lyndon Johnson formulated “Great Society” and guaranteed the minorities access opportunities in America while the Congress supported federal spending through programs such as food stamps and Medicare. Another economic trouble began in the 1970s as a result of Vietnam war and high domestic expenditure (Fernald & Jones, 2014). The government suffered inflation and reactions from global crises that made the oil prices and consumer products prices to become extremely high.
Jimmy Cartel, the president in the period between 1977-1981, was stricken by high trade deficits, inflation, and unemployment which had raised to 9% (Fernald & Jones, 2014). This period is associated with massive borrowing as a result of increased government expenditure on consumables, military and defense, and decreased taxation. The recession period of 1990, enduring the stock market crash of 1987 came about as a result of high oil prices from Persian of Gulf war, but the high consumer expenses made the economy afloat. The economy from 1990 is driven by high technology and internet which has created more chances in the global market. Low employment and low inflation accompany this era. The US economy has undergone boom since 1990, and in 2017 the real Gross Domestic Product (GDP) rose by 2.3% (Fernald & Jones, 2014). United States has the largest GDP compared to any country in the globe, and although China’s economy is rapidly growing, it produces half of what the US provides.
The economic growth since 1865 to the present has faced a lot of fluctuations due to market changes. The period between 1865 to 1920s was a period of innovations and massive industrial growth. Despite growth in this period, challenges such as child labor, monopoly tycoons who manipulated the government was a big challenge. Only business owners had a say in the economy during this period. The depression period of 1929 to 1945 had a significant impact on the US economy. A massive stock market crash in the history of US was experienced during this period but through effort from the federal government financing major project and FDIC the market was stabilized in the 1940s. The 1950s and 1960s was a boom period where the majority of the population was in the middle class. The government faced inflations and economic instability since 1970 to 1980s which were primarily contributed by Vietnam wars and increased citizen expenditure. The period from 1990 to the present is a period of economic recession making America the leading economy.
Reference
Fernald, J. G., & Jones, C. I. (2014). The future of US economic growth. American economic review , 104 (5), 44-49.
Gordon, R. J. (2017). The rise and fall of American development: The US standard of living since the civil war . Princeton University Press.
Wolfson, M. H. (2017). Financial crises: Understanding the postwar US experience . Routledge.
