Week 4 and 5 MT

Week 4 and 5 MT - Week 1-2 Federalist papers why states...

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Federalist papers : why states want a union internal free trade, central government to impose common external tariff, one centralized power to represent country abroad Also meant to convince states to ratify the new constitution -Fed 11: promote commerce, Fed 12 maximize revenue earned in commerce, fed 75 how government would be structured -Federalist 44 (1788): Talks about management of single currency. No state can enter into treaty, alliance, coin money (only congress can regulate the alloy and value), use anything but gold and silver, or lay tariffs or duties on exports. Money supplies must be backed by alloys. Week 3 Key concepts: -Federalists think that only the federal government should control gold and silver coinage. Object to state-issued money as it had worked until the Civil War. -Federal Reserve created in 1913 (Broz says why). Did Fed protect US as a whole or of Wall Street? Wall Street advocated heavily because it wanted to lend to Europe, but it did help public good. -Fed stabilizes economy (controls economic fluctuations), smoothes interest rates fluctuations, it is not an arm of the government (which thinks in short term only), and avoids panics. Also makes dollar a stronger currency in international view. Bad because it is expensive to set it up (public goods problem) and centrality (along with non elected officials) make people nervous. Association vs Dissociation: Late 19 th century- wondering what model serves development better. -Hamilton: thought import substituting industrialization would work best vs. Adam Smith comparative advantage and free trade -Hamilton’s view=association=export specializing -Adam Smith’s view=dissociation=import substitution (cutting yourself off in order to develop industry before opening up) -The US was associative until civil war- except for few embargoes on trade with Europe which led to War 1812 (…) -South (cotton goes to GB and is 30% of US exports). Calls from South for increase in slavery since the perfection of the cotton gin while North pushes for dissociation because it is beginning textile manufacturing and other industries and it does not want competition -This debate creates civil war-if government had let association be lowered, war would not have happened. Gold Standard (1880-1914or 1930?): After the Civil War, the states want to return to species (peg to alloys) and in 1879 the US returns to the Gold Standard=fix value to gold. $20.67=1oz gold until 1930s (having a dollar was not exactly as good as gold but it was close in a ratio of 3:1 +establish convertibility + money supplies fully depend on gold supplies (supply of naturally made gold, same as man made money) -Contrasts to current system in which dollar is backed by faith. -Good because it controls the amount of money in an economy and controls price fluctuations.
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This note was uploaded on 04/16/2009 for the course POL 173A taught by Professor Chase during the Spring '09 term at Brandeis.

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Week 4 and 5 MT - Week 1-2 Federalist papers why states...

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