Post War Expansion and Economic growth

#1 GEOGRAPHIC GROWTH  and WESTERN EXPANSION

Maintaining sectional balance is the primary goal

1800-1820 – US population grows from 5.3 million to 9.6 million 

1812-1821 – Six new states added to the Union

WHY? lots of cheap land while land prices in the East are steadily rising; Embargo (1807-09) pushed people west looking for $

Transportation revolution (Cumberland Road –1811) and successful victories over Indians led to increased migration west.
By 1820 25% of the population lived in the west

#2 HENRY CLAY’s AMERICAN SYSTEM (1824)  

 Leads to specialization  and inter regional dependency (and sectionalism)

 
Re-charter National Bank (BUS –1816) – to provide national ; extend credit for land purchases and check state banks. 

Protective tariffs – promote American manufacturing and raise revenue for transportation infrastructure- Tariff revenues would fund roads and canals and eastern trade would flourish under tariff protection

Internal improvements  used to promote growth and commercial agriculture. 

HOW? Roads and waterways + new and faster vehicles = farmers connecting to new markets!!! 

#3 TRANSPORTATION REVOLUTION
“Let us bind the republic together with a perfect system of roads and canals.  Let us conquer space”

Bonus Bill (1817) John C Calhoun

GOAL: to set aside money (1.5 million to states) made on stock sales from the Bank of the United States for internal improvements. March, 1817 - Madison vetoed the bill because he believed in strict interpretation, and using federal money for internal improvements is not a power granted to the federal government in the Constitution

Erie Canal – 1817

Construction on the Erie Canal financed by the state of New York + private investment finished in 1825.  

Steamboats

Robert Fulton – 1810 – improved on Fitch’s boat ;with the backing of Robert Livingston – they created the first commercial uses for a steamboat 

#4 GROWTH OF MANUFACTURING

AFTER THE WAR OF 1812:

British Merchants saw the U.S. as a market for their goods. They were willing to sell at well below costs – just to re-establish business in America this hurt American manufacturers who were just starting to get on their feet

these businesses pushed for protection

Calhoun’s Tariff of 1816  The South believed that the development of a home market would help the U.S. economy which would benefit everyone…the protection – especially in the textile industry – led to the beginning of the factory system. This was made possible thanks to two developments:

#1 system of interchangeable parts – Eli Whitney

#2 system of all the work done in one building was developed by Lowell 

CASE STUDY: Waltham, Mass. – factory was driven by waterpower. A group – the Boston Manufacturing Company was set up Francis Cabot Lowell hired young, unmarried women just out of high school “factory girls” gave them a place to stay, food, education, recreation..American Industry will get its start 

http://www.tubechop.com/watch/1600305

#5 THE SECOND B.U.S (1816)
With the economy expanding – our financial system had to keep up 

FIRST BUS: In 1811 – the original charter for the Bank of the United States ended and wasn’t renewed by James Madison and the Republican Congress

PROBLEM The number of state banks then increased, but in most states there was little banking control credit was easily given many people couldn’t pay back loans  the financial situation wasn’t good (Sound familiar???)

SOLUTION  1816 – the Second Bank of the United States was chartered. Henry Clay and John C Calhoun had led the move in Congress.

IRONY: The Republicans used the same formulas as First BUS: 4/5 of the $ came from private investment and 1/5 came from the federal government. 

National bank was able to get the states back in line, but we still faced financial panic in 1819 

#6 THE PANIC of 1819 
An economic panic and depression 

First financial since at the “Critical Period (1780’s) under the Articles of Confederation – Cyclic panics and depressions will occur every 20 years

CAUSES

#1 Over speculation of frontier lands by Banks (especially BUS)

#2 Inflation from war of 1812 + economic drop-off = vulnerable economy

#3 Deficit trade in balance with Britain

#4 BUS forced wildcat western banks to foreclose on western farms

RESULTS
Western farmers viewed banks as a evil financial monster
Hard hit poor classes looking for more representative government (beginnings of Jacksonian democracy) 

Attention drawn to the inhumanity of debtors prisons