US Economic History: From Civil War to the New Deal

The United States: From Civil War to Economic Powerhouse

The Civil War's Impact on the US Economy

The United States began its industrialization later than some European nations. The process was initially slow until the advent of the Civil War. This war resulted in a strong acceleration of industrial growth, ultimately leading the US to become the world's leading power. The principal drawback for European populations was that the industrialization process in the US was initially concentrated in the East and needed to extend throughout the entire country.

The US had several advantages:

• Vast, untouched lands.
• Most of the population was of European origin, unlike Asian industries. The European population that had not been absorbed by European industries provided a qualified workforce already familiar with industrial processes.
• A rapidly configured domestic market without tariffs.
• Very extensive natural resources.
• The US took advantage of European technological advances.
• Labor was scarce, forcing technological innovations with more intensity than in Europe, especially in steel production.
• Petroleum was quickly discovered and utilized.
• Efficient transportation via coastal shipping channels and the railroad.
• Banking and finance also supported the industrialization process.

Until 1860, agriculture remained the dominant sector, but consumer goods sectors were essential. The Civil War dramatically accelerated these changes; production multiplied, and mass consumption began. By 1900, the United States was already the world's leading power.

The Great Depression and Roosevelt's New Deal

In 1932, President Franklin D. Roosevelt found a country slumped in crisis. Industries were scarce, the banking system had collapsed, and unemployment was at 26%. The "New Deal" was a slogan used to mobilize the population to overcome the crisis using their own resources. Between 1933 and 1935, aid programs and economic legislation were established so that society could find a solution to the crisis.

In 1936, there was a concern that these measures could lead to government deficits. This sparked a reaction of fear from economic authorities. This fear paralyzed progress, and in 1937, the crisis deepened, further increasing unemployment.

Roosevelt was reelected and implemented a "New" New Deal. He turned to deficit spending, implementing Keynesian policies aimed at retaking the banking system by imposing a moratorium and issuing 3 billion dollars. He also devalued the dollar. This provided a significant benefit to the population, improving imports and encouraging investment.

Roosevelt directly reactivated productive sectors. In agriculture, he implemented a system of subsidies for production. In industry, he conducted a program to convince businesses not to compete with low prices. He also put in place a system of private saving plans to maintain production levels. He carried out Keynesian measures to incentivize demand through various actions, pressured businesses to raise wages, invested in infrastructure, and granted unemployment benefits.

Even so, the effects of Roosevelt's policies were timid. Although a recovery was felt, it was not clear that the crisis was fully under control.