History of American Business: A Baruch College Blog

Author: YUKI ZHENG

Final Blog Post

Over the course of the semester, I learned how trade really helped develop the economy and jump started the business industry in the United States. Different regions of the colonies had their own strengths. For example: The South grew cotton and tobacco, whereas, the North had oil and boats. The Colonies traded with each other to spread goods that other colonies had a harder time getting. I never really thought too much into how this played into the economy because I always thought of this as a form of survival and helping each other survive. But, trade definitely played a big part into the economy and start of the business industry.

Judith Stein – Pivotal Decade: How the United States Traded Factories for Finance in the Seventies (Preface and Chapter 1)

In Judith Stein’s “How the United States Traded Factories For Finance in the Seventies”, Stein tells readers how she learned that the 1970s was the only decade other than the 1930s where the Americans ended up poorer than they began.

In 1945, Americans were a lot richer than people of other nations. 54% of families in the United States owned their own cars. 44% of the population were homeowners. But more than 40% of the population still lived below the poverty line. By 1970, 63% of families were homeowners. There were as many private cars as there were families. 10% of the population were poor. After WWII, the economy grew 4% per year. The income of the lowest fifth increased by 115% and the top fifth grew 85%. Between 1947 and 1973, disposable income had increased 15%.

John Maynard Keynes showed that the economies lacked mechanisms to attain full employment. Through Keynes’ research and studying, he had discovered that the governments could either spend money or reduce taxes to increase the demand that would create more private investment, which would lead to full employment. Keynes believed that mass unemployment was not right and that it threatened free society and civilization. It was Keynesian idea that the state could “promote employment fostered polices that produced the great compression”. President Kennedy and Johnson had followed such ideas as Keynesianism was as it highest peak of popularity in the 1960s. Taxes were cut by 11.6B to increase demand and investment. The resulting investment rates of 16%-17% was equal to those of the boom in the mid-1950s. In 1969, the unemployment rate fell to 3.9%. Keynes became “Man of the Year” and Economists became an honored profession.

The 1970s had the deepest recession since World War II. The United States had growing and permanent trade deficits, declining productivity, rising oil prices, high unemployment, and inflation. Stein states that the economy is shaped by politics. Postwar United States liberalism was created by the New Deal. It was thought that high wages and regulated capital would create and sustain U.S. prosperity.

During the Age of Compression (1947-1973), income and wealth were mildly redistributed. Economic growth had soared and U.S. economic superiority was vast. But the United States suffered its first trade deficit, since 1893, in 1971. Stein explains that the Age of Compression became the Age of Inequality. The Age of Compression officially ended in 1973. Wages stopped growing because of the drop in productivity. Productivity had continued to decline until 1995 and wage growth could continue to fall.

 

Blog Post #2: Richard White, Railroaded

In Richard White’s book Railroaded, White argues that although railroads were important to the development of North America, railroads were failures politically, economically, and socially. White makes a point that they should not have been built when they were and where they were. White states, “[Railroads] created modernity as much by their failure as their success” (Page XXI).

White says that although North Americans were aware of the Transcontinental Railroads failures, they chose to look past it because North Americans loved the railroads because it represented the era they were in. It was the era where technology was advancing. Many railroad companies had to be bailed out by the governments and forgiven for their loans that could not be paid back. By the end of the century, the Transcontinental railroad was even under political attack. The government had to suppress workers and protect the rights of their owners and managers for the sake of keeping public good and order.

White says that the railroad allowed people to travel and settle in the West. It also helped transport goods, like: silver, wheat, gold, timber, coal, corn, and livestock. However, White questioned why so many of the railroads were built when there was not much need of them yet. The railroads lured people to settle into places that produced crops, cattle, and minerals that the markets could not even absorb profitably. There weren’t markets created for such things yet, so it ended up for the most part, going to waste. From this, I can tell that White thinks it was a waste to invest so much into the railroads because its cost ended up exceeding their benefits in the long term (Page XXIV).

Blog Post #1

While reading American Business History: A Very Short Introduction by Walter A. Friedman, I noticed that the idea of trade was prevalent. Walter speaks on how the English colonizers paved the way of American business through trade. It then slowly created a strong network of Atlantic trade.

Friedman also speaks on the start of joint-stock companies in the United States. When English investors and colonizers failed in Roanoke, they created the idea of a joint-stock company. This idea is also still very popular today. It allows investors to share a risk and reward. If their company was to fail, they would not suffer as big of a loss as to if they were to start a company on their own. Some of them were successful and lasted centuries and others failed.

Friedman mentioned how the Hudson Bay Company that was established in 1670 entered the fur trade and that this company is still successfully operating today. I think it’s impressive how far along that companies like this have gone. It’s been through times when technology was not refined and now it’s in an era where technology is only going to get better.

Colonies like Virginia grew cash crops to survive. According to Friedman, in 1615, Virginia exported 2,300 pounds of tobacco and that number grew tenfold by 1617. Because of a drop in Native American populations and indentured servitude, tobacco growers turned to growing the transatlantic slave trade. Dutch traders brought the first documented slaves from Africa to Virginia. This shows how trade really transforms many aspects of business and survival.

Other areas like Massachusetts did not have Virginia’s climate for growing crops like tobacco, so they turned to other resources to create their own goods for trade and business. They pursued business in furs and salted fish. They also had a lot of wood for ships to transport their goods to the market. Shipbuilding soon became Massachusetts industry. I learned that the salted fish that New England produced helped feed the slave population in Barbados. Thus, indirectly linking them to the slave trade, as well.

Friedman really showed me how it really is human instinct to learn to survive and adapt to the situation they are in and how trade was a big part of how the colonizers adapted and survived in the Americas.