In prices where banks collapsed and many businesses

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Unformatted text preview: Doctrine was introduced to Congress. It basically called for: no more European colonization of the Western Hemisphere or European intervention in independent American nations. In return the US wouldn’t interfere in Europe. - Essentially, the MD was a big bluff b/c the US didn’t have the military strength to enforce it. Luckily, the British had their own motives for keeping the rest of Europe away [trade], so it worked out. *Economic Growth after the War of 1812* 83 - After the War of 1812 Americans became increasingly involved in the market economy, and jobs became more specialized as transportation improved. - As farmers and craftsmen formerly had only to cater to the needs of their small communities, where bartering allowed them to get goods they couldn’t produce themselves, with the spread of canals and railroads, they began producing crops and goods for cash sale in nat’l and internat’l markets. - The division of labor, combined with increasing mechanization, new financial methods and transportation caused tremendous expansion in the economy, which prompted more improvements, and so on. - Growth, however, was uneven: there was great prosperity from 1823 – 1835 and from 1839 – 1843, but in between there were periods of deflation [dec. in prices] where banks collapsed and many businesses failed. These cycles were known as boom-and-bust cycles. - The first crash occurred in Panic of 1819 – avid speculation on Western lands had led to a precarious situation, and when manufacturing fell in 1818, prices fell drastically. This devastated workers. - What caused the boom-and-bust cycles? Direct result of the market economy b/c prosperity first stimulated demand for manufactured goods, leading to higher prices, higher production, and speculation in land. When production surpassed demand, prices and wages fell, causing land and stock values to collapse. - Most felt that the B&B cycles were a way of weeding out unprofitable businesses, making the economy more efficient. And, at least in theory,...
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This note was uploaded on 04/02/2014 for the course APUSH AP United taught by Professor Orban during the Fall '10 term at Harrison High School, Harrison.

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