history of american business unit 2 study guides

Key Economic Factors Leading to Revolution

• Mercantilism policies benefited Britain at the expense of the colonies through trade restrictions, tariffs, and limited manufacturing
• Navigation Acts required goods to be shipped on British ships and traded through British ports, increasing costs for colonists
• Colonies served as a source of raw materials (tobacco, cotton, timber) and a market for British manufactured goods
• Proclamation of 1763 prohibited colonial expansion west of the Appalachian Mountains to reduce conflicts with Native Americans, limiting access to land and resources
• Sugar Act of 1764 raised duties on imported sugar and molasses, negatively impacting colonial rum distilleries
• Stamp Act of 1765 taxed printed materials (newspapers, legal documents, playing cards), seen as a violation of colonial rights
• Townshend Acts of 1767 placed duties on imported goods (glass, lead, paper, tea) to raise revenue for colonial administration

British Economic Policies and Colonial Reaction

• Colonies viewed mercantilism as exploitative and detrimental to their economic growth and self-sufficiency
• Lack of representation in British Parliament led to the slogan "No taxation without representation" in response to taxes and duties
• Colonial protests and resistance included petitions, boycotts, and destruction of tax stamps
• Sons of Liberty organized protests and intimidated tax collectors, leading to the repeal of the Stamp Act in 1766
• Boston Tea Party in 1773 saw colonists dumping British tea into the harbor in protest of the Tea Act, which granted the East India Company a monopoly on tea sales
• Intolerable Acts, including the Boston Port Act, punished Massachusetts for the Boston Tea Party, further straining relations
• First Continental Congress in 1774 organized a colonial boycott of British goods and called for the repeal of the Intolerable Acts

Boycotts and Non-Importation Agreements

• Colonists used economic pressure to protest British policies and assert their rights
• Non-importation agreements were collective decisions to boycott British goods until grievances were addressed
• Boycotts aimed to harm British merchants and manufacturers, pressuring Parliament to repeal unpopular acts
• Daughters of Liberty promoted homespun clothing and domestic goods as alternatives to British imports
  • Women played a crucial role in enforcing boycotts and supporting colonial resistance
• Committees of Correspondence coordinated boycotts and shared information between colonies
• Continental Association, formed by the First Continental Congress, established a unified boycott of British goods across all colonies
• Effectiveness of boycotts varied, but they demonstrated colonial unity and willingness to sacrifice for political goals

Development of Domestic Industries

• Boycotts and non-importation agreements stimulated the growth of colonial manufacturing and self-sufficiency
• Homespun movement encouraged the production of local textiles and clothing as a substitute for British imports
• Spinning bees and weaving circles brought women together to produce homespun goods and support the patriot cause
• Iron industry expanded to produce nails, tools, and weapons, reducing reliance on British imports
  • Charcoal blast furnaces and forges increased iron production
• Gunpowder mills and armories were established to supply the Continental Army during the war
• Shipbuilding industry grew to support coastal trade and privateering against British ships
• Cottage industries, such as shoemaking and furniture-making, developed to meet local demand
• Domestic industries laid the foundation for post-war economic independence and industrial growth

Financial Aspects of the Revolutionary War

• Continental Congress issued paper money, known as Continentals, to finance the war effort
  • Overprinting and lack of backing led to hyperinflation and depreciation of Continentals
• States also issued their own paper money, compounding inflation and economic instability
• Robert Morris, Superintendent of Finance, worked to stabilize the currency and secure foreign loans
• France, Spain, and the Netherlands provided crucial financial aid and loans to the United States
• Privateering, or the use of private ships to attack British vessels, helped disrupt British trade and provide revenue through captured cargo
• Wartime profiteering and speculation contributed to economic inequality and social tensions
• Funding the war through borrowing and paper money left the new nation with significant debt

Economic Challenges of the New Nation

• High inflation and depreciated currency made it difficult for the government to pay debts and for individuals to conduct business
• Trade disruptions during the war led to shortages of imported goods and raw materials
• British mercantilism policies continued to limit American trade with other nations
• Lack of a strong central government under the Articles of Confederation hindered the development of a unified economic policy
• States engaged in protectionist trade policies, leading to interstate trade barriers and economic fragmentation
• Shays' Rebellion in 1786-1787, a revolt by debt-ridden farmers in Massachusetts, highlighted the need for a stronger federal government to address economic issues
• Constitutional Convention of 1787 aimed to create a more stable and centralized economic system

Emergence of American Capitalism

• Shift from mercantilism to capitalism, emphasizing private property, free markets, and individual entrepreneurship
• Alexander Hamilton, first Secretary of the Treasury, advocated for a strong central government and a diversified economy
  • Hamilton's economic plan included assuming state debts, creating a national bank, and promoting manufacturing
• Tariffs protected domestic industries and provided revenue for the federal government
• Patent system encouraged innovation and technological progress
• Banking system developed to provide credit and facilitate commerce
  • First Bank of the United States, chartered in 1791, served as a central bank and helped stabilize the currency
• Joint-stock companies and corporations emerged as a means of pooling capital for large-scale enterprises
• Rise of a merchant class and the growth of commercial agriculture contributed to economic development

Long-Term Economic Impact of Independence

• Political independence allowed for the pursuit of economic policies that prioritized American interests
• Constitution provided a framework for a stronger federal government with the power to regulate trade and commerce
• Westward expansion opened up new land and resources for economic exploitation
  • Northwest Ordinance of 1787 established a process for the organization and admission of new states
• Industrial Revolution gained momentum in the early 19th century, transforming the American economy
  • Textile mills, such as those in Lowell, Massachusetts, symbolized the shift to mechanized production
• Transportation improvements, including roads, canals, and railroads, facilitated trade and market integration
• Slavery and the cotton boom in the South became a significant driver of economic growth, while also perpetuating a system of human exploitation
• Economic nationalism and the American System, championed by Henry Clay, promoted internal improvements, tariffs, and a national bank to stimulate economic development
• Long-term economic growth and dynamism set the stage for the United States to become a global economic power in the 20th century