I've been thinking about all the economic turmoil lately, and I realized something today as I was talking to Justin about it. Every 40 years the economy is reset, often either right before or right after a war. In 1776, we had the war over taxation without representation/separation from England. 1812 was the war with Great Britain; "Great Britain had been at war with France since 1793 and in order to impede neutral trade with France in response to the Continental Blockade Britain imposed a series of trade restrictions that the U.S. contested as illegal under international law. The blockade devastated American agricultural exports but helped stimulate local factories that replaced goods previously imported."
The Mexican/American War was from 1846-1848, with the compromise coming in 1850. Besides the fight over the land itself, there was the conflict over whether slavery would be allowed in the states that were included in the union. "The delay of hostilities for ten years allowed the free economy of the northern states to industrialize. The southern states, to a large degree based on slave labor and cash crop production, lacked the ability to heavily industrialize. By 1860, the northern states had many more miles of railroad, steel production, modern factories, and population. The North was better able to supply, equip, and man its armed forces, an advantage that would prove decisive in the later stages of the war." Then of course they went into the civil war, and the debilitation of the country, and eventual rebuilding of the states.
In the 1890's was another great depression, equal to the depression of the 1930's. I found a few really interesting articles from the New York Times, actually from 1893, doing research for this post. "That business depression exists and has existed since mid-summer no one doubts. Much as we deplore this fact, the painful proof of it is manifest; confident as we are that the worst is over and the country is now on the road to recovery, it is certainly true that a general depression, starting with stringency of money and a financial panic, has extended through all branches of business and has brought suffering and misery. It is equally true that this condition has not been limited to our country, bus has been world-wide in extent, and is in part due to world-wide causes which it is quite beyond the power of legislation here, past or future, to control.....The fact remains however, that legilation cannot escape its share of responsibility. Unwise laws can impair confidence, shake credit and disturb industrial stability, until the people, under the stress of suffering, demand and get remedial legislation by repeal or otherwise." That's from December 1893.
Here's a synopsis from a history/encyclopedia website "This panic was an extension of the Panic of 1873, and like that earlier crash, was caused by railroad overbuilding and shaky railroad financing which set off a series of bank failures. . . The 1880s had seen a period of remarkable economic expansion in the United States. In time, the expansion became driven by speculation, much like the "tech bubble" of the late 1990s, except that the preferred industry was railroads. Railroads were vastly over-built, and many companies tried to take over many others, seriously endangering their own stability so to do. In addition, many mines were opened (frequently with rail connections), and their products, especially silver, began to flood the market. . . .As concern of the state of the economy worsened, people rushed and caused bank runs. The credit crunch rippled through the economy. Smart European investors only took payment in gold, weakening the US gold reserve, which further dropped the US dollar's value. People attempted to redeem silver notes for gold; ultimately the statutory limit for the minimum amount of gold in federal reserves was reached and U.S. notes could no longer be successfully redeemed for gold. The investments during the time of the Panic were heavily financed through bond issues with high interest payments.. . . This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks failed (many in the west). About 17%-19% of the workforce was unemployed at the Panic's peak. The huge spike in unemployment, combined with the loss of life savings by failed banks, meant that a once secure middle class could not meet their mortgage obligations. As a result, many walked away from recently built homes."
Then of course we have the depression of the 1930's, cured mostly by World War II because we used our factories to manufacture the goods that we needed to use to fight. Now of course we don't manufacture our own goods, but that's for later. Also contributing to the upswing was women going to work. Men went to war, and women and children went to work in the factories to support their families.
The depression of the 1970's came after the Vietnam War. Now we have this depression around the time of the Iraq war. And this post is not about the politics of war, I want to focus on the economic side. We have a war now, that if we were in the 30's we would be strengthened by using our factories for manufacturing the tools, cloths, etc. for the soldiers, and also for producing our own goods. But now we don't produce anything, we have switched from an economy of trading items for money (items we produce as well as use) to being an economy set up on buying goods from other countries. I don't know about anyone else, but its become the norm to find that the stuff we have was made outside the USA, and I'm surprised and excited when I pick something up and it was made here. Or course it usually says manufactured and assembled in America with USA and imported pieces, sigh, but at least we can still put things together in this country.
I just thought it was so fascinating to start counting back through the years and look at basically every 40 years our economy is re-set and restructured. Pretty interesting stuff. I don't know if it helps anyone else, but I found it very comforting, in a weird way. :) I hope someone else does too.