The American Economy: A Historical Encyclopedia pdf

The American Economy:
A Historical Encyclopedia
The American Economy:
A Historical Encyclopedia
Vo lume One: Short Entries
edited by
Cynthia Clark Northrup
Santa Barbara, California Denver, Colorado Oxford, England
Copyright © 2003 by Cynthia Clark Northrup
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photo-
copying, recording, or otherwise, except for the inclusion of brief quotations in a review,
without prior permission in writing from the publishers.
Library of Congress Cataloging-in-Publication Data
The American economy : a historical encyclopedia / edited by Cynthia
Clark Northrup.
p. cm.
Includes bibliographical references and index.
ISBN 1-57607-866-3 (2 vols. : hardcover : alk. paper)
ISBN 1-57607-867-1 (eBook)
1. United States—Economic policy—Encyclopedias. 2. United
States—Economic conditions—Encyclopedias. 3. United States—Social
policy—Encyclopedias. 4. United States—Social
conditions—Encyclopedias. I. Northrup, Cynthia Clark, 1959–
HC102.A66 2003
330.973'003—dc22
2003020334
07 06 05 04 03 10987654321
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This book is printed on acid-free paper .
Manufactured in the United States of America
∞
Contents
List of Short Entries, vii
List of Essays and Primary Source Documents, xiii
Acknowledgments, xv
A Note on Using the Encyclopedia, xvii
Introduction, xix
The American Economy: A Historical Encyclopedia
VOLUME ONE:SHORT ENTRIES
A&M Records v. Napster Inc. to Ya zoo Land Companies, 1–316
VOLUME TWO:ESSAYS AND PRIMARY SOURCE DOCUMENTS
Essays: Advertising to Welfare State, 317–510
Primary Source Documents, 511–634
Selected Bibliography, 635
About the Editor and Contributors, 665
Index, 669
v
List of Short Entries
A&M Records v. Napster Inc. (2001), 1
Acquired Immune Deficiency Syndrome (AIDS), 1
Advanced Technology Office (ATO), 2
Affirmative Action, 2
Affluence, 3

Agricultural Adjustment Act of 1938, 3
Agricultural and Mechanical (A&M) Colleges, 4
Agricultural Credit Act of 1987, 4
Agricultural Credit Improvement Act of 1992, 5
Agricultural Government-Sponsored Enterprises (GSEs),
5
Agricultural Policy, 5
Agricultural Programs Adjustment Act of 1984, 7
Aid to Dependent Children (ADC), 7
Aid to Families with Dependent Children (AFDC), 7
Alaska, 8
Aldrich-Vreeland Act (1908), 9
Alliance for Progress, 9
American Economic Association (AEA), 9
American Federation of Labor and Congress of
Industrial Organizations (AFL-CIO), 10
American Inventors Protection Act of 1999, 10
American Revolution (1775–1783), 10
American Stock Exchange (AMEX), 11
American System, 12
Antidumping, 12
Anti-Imperialist League, 13
Antitrust Suits, 14
Antiunion Policies, 15
Arab Oil Embargo (1973–1974), 16
Articles of Confederation (1776–1789), 16
Automobile, 17
Aviation, 18
Baby Boom, 19
Bacon, Nathaniel (1647–1676), 19

Bacon’s Rebellion (1676), 20
Bakke v. Board of Regents of California (June 28, 1978), 20
Balance of Payments, 21
Balance of Trade, 21
Bank Failures, 22
Bank of the United States (BUS), First: 1791–1811, 22
Bank of the United States (BUS), Second: 1816–1836, 23
Bank Protection Act (1968), 23
Banking Act (1933), 24
Banking System, 24
Beard, Charles Austin (1874–1949), 26
Berlin Wall, 26
Biddle, Nicholas (1786–1844), 27
Bison (Buffalo), 27
Bland-Allison Act (1878), 28
Block Grants, 28
Board of Governors of the Federal Reserve System, 29
Bond Sales, 30
Bonus March (1932), 30
Boston Tea Party (December 16, 1773), 30
Boxer Rebellion (1898–1900), 31
Boycotts, Colonial, 31
Bretton Woods Agreement (1945), 32
Budget and Accounting Act of 1921, 32
Budget Deficits and Surpluses, 33
Bunau-Varilla, Philippe Jean (1859–1940), 33
Bureau of Corporations, 34
Bureau of Freedmen, Refugees, and Abandoned Lands, 34
Bureau of Indian Affairs (BIA), 35
Bush, George Herbert Walker (1924– ), 35

Bush, George W. (1946– ), 36
Business, 37
Canada, Invasion of (1812–1813), 39
Capitalism, 39
Captains of Industry, 40
Carey Act (1894), 40
Carnegie, Andrew (1835–1919), 41
Carpetbaggers, 41
Census, 42
Central Treaty Organization (CENTO), 42
Charles River Bridge v. Warren Bridge (1837), 43
Checkers Speech (September 23, 1952), 43
Checks and Balances, 44
vii
Child Labor, 44
China, 45
Civil Rights Act of 1968, 46
Civil Rights Movement (1955–1968), 46
Civil Works Administration (CWA), 46
Civilian Conservation Corps (CCC), 47
Class, 47
Clay, Henry (1777–1852), 48
Clayton Anti-Trust Act (1914), 49
Cleveland, Grover (1837–1908), 49
Clinton, William Jefferson (1946– ), 49
Cohens v. Virginia (1821), 51
Coin’s Financial School (1894), 51
Cold War (1947–1991), 52
Colonial Administration, 53
Commission Government, 54

Committee on the Conduct of the War (CCW), 54
Commonwealth v. Hunt (March 1842), 55
Communism, 55
Community Action Programs, 56
Company Towns, 57
Computer, 57
Confiscation Acts (1861–1864), 58
Congress, 59
Conservation, 60
Constitution (1788), 60
Consumer Price Index (CPI), 61
Consumer Spending, 62
Continental Congress, 62
Continental Impost, 63
Continental System, 63
Convict Lease, 64
Coordinating Committee for Multilateral Export
Controls (CoCom), 64
Corruption, 65
Cotton, 66
Council-Manager Government, 66
Council of Economic Advisers (CEA) , 67
Coxey’s Army (April 1894), 68
Credit, 68
Crédit Mobilier , 69
Crime, 69
Cuba, 70
Currency Act (1764), 70
Currency Act of 1900, 71
Dams, Construction of, 73

Dartmouth College v. Woodward (1819), 74
Dawes Plan, 74
Dawes Severalty Act (1887), 74
Debs, Eugene Victor (1855–1926), 75
Defense Advanced Research Projects Agency (DARPA),
75
Defense Plant Corporation (DPC), 76
Defense Sciences, 76
Deficit Spending, 77
DeLima v. Bidwell (1901), 77
Democracy, 78
Democratic Party, 78
Depression of the 1890s, 79
Depressions, 79
Deregulation, 80
Desert Land Act (1877), 81
Digital Millennium Copyright Act of 1998, 81
Dingley Tariff (1897), 82
Disarmament, 82
Disaster Assistance Act of 1988, 83
Disease, 83
Distribution Act (1836), 84
Divorce, 85
Dollar Diplomacy, 85
Dominican Republic, 86
Dow Jones Industrial Average, 86
Downes v. Bidwell (1901), 86
Dust Bowl, 87
Earnings, 89
Economic Cooperation Administration (ECA), 90

Economic Indicators, 90
Economic Interpretation of the Constitution (1913), 91
Economic Liberalism, 91
Economic Opportunity Act of 1964, 92
Economic Stabilization Act of 1970, 92
Economy Act (1933), 92
Ecosocialism, 93
Edison, Thomas Alva (1847–1931), 93
Education, 94
Electricity, 95
Electronic Commerce (E-Commerce), 96
Emancipation Proclamation (January 1, 1863), 97
Embargo of 1807, 97
Embargoes, 97
Emergency Price Control Act (1942), 98
Employment Act of 1946, 98
Energy, 99
Energy Crisis, 99
Entitlement Programs, 100
Environment, 101
Equal Pay Act of 1963, 102
Export Control Act (1949), 102
Family Assistance Plan (FAP), 105
Farm Credit Amendments Act of 1985, 105
Farm Credit System Reform Act of 1996, 106
Farm Crisis of 1982, 106
Farm Disaster Assistance Act of 1987, 107
Farm Security Administration (FSA), 107
Farmer Mac Reform Act of 1995, 108
Federal Agricultural Improvement and Reform Act of

1996 (FAIR Act of 1996), 108
Federal Agricultural Mortgage Corporation (Farmer
Mac), 109
Federal Deposit Insurance Corporation (FDIC), 109
Federal Emergency Management Agency (FEMA), 110
Federal Emergency Relief Administration (FERA), 110
Federal Highway Act of 1956, 110
viii List of Short Entries
Federal National Mortgage Association (Fannie Mae),
111
Federal Reserve Act (Owen-Glass Act) of 1913 , 111
Federal Trade Commission Act (September 1914), 112
Federal Trade Commission (FTC) (1916), 112
Federalist Papers (1787–1788), 113
Fletcher v. Peck (1810), 113
Flex Acres, 114
Floating Exchange Rates, 114
Food and Drug Administration (FDA), 115
Foot and Mouth Disease (FMD), 115
Force Act (1833), 116
Ford,Henry (1863–1947), 116
Fordney-McCumber Tariff (1922), 117
Foreign Policy, 117
Forest Reserve Act (1891), 119
Fort Knox, 119
Forty Acres and a Mule, 120
Fourteenth Amendment (1868), 120
Free Market, 121
Free-Soil Party, 121
Free Trade, 122

Free Trade Area of the Americas (FTAA), 122
French and Indian War (1754–1763), 123
Fugitive Slave Acts (1793, 1850), 124
Full Employment, 124
Gadsden Purchase (1854), 127
Gallatin, Albert (1761–1849), 127
General Agreement on Tariffs and Trade (GATT), 128
George, Henry (1839–1897), 128
Gibbons v. Ogden (1824), 129
Glass-Steagall Banking Act (1933), 129
Globalization, 130
Gold Reserve Act (1934), 131
Gold Rush, California (1849), 132
Gold Standard, 132
Gold versus Silver, 132
Good Neighbor Policy, 133
Government Budgets, 134
Gram-Rudman-Hollings, Balanced Budget, and
Emergency Deficit Control Act (1985), 134
Great Depression (1929–1941), 135
Great Railroad Strike of 1877, 136
Great Society, 136
Green Party, 137
Greenpeace, 137
Greenspan, Alan (1926– ), 138
Gross National Product (GNP), 138
Group of Seven (G-7), 139
Hamilton, Alexander (1755–1804), 141
Harris Treaty (1858), 141
Hawaii, 142

Hawley-Smoot Tariff (1930), 142
Hay-Pauncefote Treaties (1900, 1901), 143
Hepburn Railroad Regulation Act (1906), 143
High-Tech Industries, 144
Homestead Act (1862), 144
Horseshoe Bend, Battle of (1814), 145
Housing Act of 1949, 145
Housing Act of 1954, 146
Hull, Cordell (1871–1955), 146
Immigration, 149
Indentured Servants, 150
Indian Policy, 150
Industrial Heartland, 151
Industrial Revolution (1780s–1840s), 151
Industrial Workers of the World (IWW), 152
Industrialization, 153
Inflation, 153
Infrastructure, 154
Insular Cases, 155
Interest Rates, 155
International Monetary Fund (IMF), 156
International Trade Organization, 156
Interstate Commerce Commission (ICC), 157
Intolerable Acts (1774), 157
Iran-Contra (1986–1987), 158
Irrigation, 158
Isolationism, 159
Jackson, Andrew, (1767–1845), 161
Japan, 162
Japanese Oil Embargo (1940–1941), 162

Jay’s Treaty (1796), 163
Jungle, The (1906), 163
Keating Owen Act (1916), 165
Kennedy Round (1964–1967), 165
Keynes, John Maynard (1883–1946), 165
Keynesian Economics, 166
Keyserling, Leon (1908–1987), 166
Knights of Labor, 167
Labor Contract Law, 169
Labor-Management Relations Act (Taft-Hartley Act)
(1947), 170
Laissez-Faire, 170
Lee, Henry (1782–1867), 171
Lend-Lease Act (1941), 171
Levittown, 172
Lobbying, 173
Long, Huey (1893–1935), 173
Louisiana Purchase (1803), 173
Macon’s Bill No. 2 (1810), 175
Macroeconomics, 175
Mad Cow Disease, 176
Manifest Destiny, 176
Marshall, John (1755–1835), 177
Marshall Plan (1948), 177
Marxism, 178
Maysville Road Bill of 1830, 178
McAdoo, William G. (1863–1941), 179
List of Short Entries ix
McCulloch v. Maryland (1819), 179
McKinley Tariff Act (1890), 180

McNary-Haugen Bill (1924, 1928), 180
Media, 180
Medicaid (1965), 181
Medicare (1965), 182
Medicine, 182
Mellon, Andrew William (1855–1937), 183
Mental Illness, 183
Mercantilism, 184
Merchants of Death, 184
Microeconomics, 185
Microsoft, 185
Microsystems Technology Office (MTO), 186
Military-Industrial Complex (MIC), 186
Minimum Wage, 187
Mixed Economy, 187
Monetary Policy, 188
Montgomery Bus Boycott (1955–1956), 188
Morgan, John Pierpont (1837–1913), 189
Morrill Tariff Act (1861), 189
Multinational Corporations, 189
Munn v. Illinois (1877), 190
Muscle Shoals (Tennessee Valley Authority), 190
Nader, Ralph (1934– ), 193
Nasdaq, 193
National Aeronautics and Space Administration (NASA),
194
National Bank Act of 1863, 194
National Cordage Company, 195
National Currency Act of 1863, 195
National Defense Education Act of 1958, 195

National Endowment for the Arts (NEA), 196
National Endowment for the Humanities (NEH), 196
National Grange of the Patrons of Husbandry (1867),
197
National Guard, 197
National Income and Product Accounts (NIPA), 197
National Industrial Recovery Act (NIRA) (1933), 198
National Labor Relations Board (NLRB) (1935–Present),
198
National Marketing Quota (1938–Present), 199
National Oceanic and Atmospheric Administration
(NOAA), 199
National Recovery Administration (NRA), 200
National Technical Information Service (NTIS), 200
National Telecommunications and Information
Administration (NTIA), 201
National War Labor Board (NWLB) (1918–1919,
1942–1945), 201
Navigation Acts (1651, 1660, 1672), 202
New Deal, 202
New York Stock Exchange (NYSE), 203
Newlands Reclamation Act (1902), 203
Nicaragua, 204
Non-Importation Act (1806), 204
Non-Importation Agreements, Colonial (1765–1776),
205
Non-Intercourse Act of 1809, 205
North American Free Trade Agreement (NAFTA), 206
North Atlantic Treaty Organization (NATO), 206
Northern Securities Company, 207

Northwest Ordinance (1787), 208
Nullification Crisis (1832–1833), 208
Occupational Safety and Health Act of 1970 (OSHA),
211
Office of Price Administration (OPA), 212
Office of Production Management (OPM), 212
Office of War Mobilization (OWM), 213
Oil, 213
Oil Embargoes, 214
Open Door Notes (1899, 1900), 215
Orders in Council (January 7, 1807; November 11, 1807),
215
Ordinance of 1785, 216
Organization of American States (OAS), 216
Organization of Petroleum Exporting Countries (OPEC),
217
Pan American Union, 219
Panama and the Panama Canal, 219
Panic of 1819, 220
Panic of 1837, 221
Panic of 1873, 221
Panic of 1893, 222
Panic of 1907, 222
Parity, 223
Patronage, 223
Payne-Aldrich Tariff Act (1909), 224
Pell Grant, 224
Pendleton Act (1883), 225
Personal Responsibility Act of 1996, 226
Personal Savings, 226

Philippines, 226
Pinckney Treaty (Treaty of San Lorenzo) (1795), 227
Pinkerton Detective Agency, 227
Piracy, 228
Poll Tax, 228
Pollock v. Farmer’s Bank & Trust (1895), 228
Population, 229
Populist Party, 229
Poverty, 230
President’s Commission on the Status of Women (1961),
231
Price Supports/Agricultural Adjustment, 231
Prigg v. Pennsylvania (1842), 231
Prohibition (1919–1933), 232
Protective Tariffs (1816–1930), 233
Public Works Administration (PWA), 234
Puerto Rico, 234
Pullman Strike (1894), 234
Pure Food and Drug Act (1906), 235
x List of Short Entries
Railroads, 237
Raw Materials, 238
Raymond, Daniel (1786–1849), 238
Reagan, Ronald (1911– ), 239
Reaganomics, 240
Recession, 240
Reciprocal Trade Agreements Act of 1934, 241
Relief Act of 1821, 241
Report on the Subject of Manufactures (December 5,
1791), 241

Report on Public Credit (January 1790), 242
Republican Party, 242
Resumption Act (1875), 243
Revenue Tariffs, 244
Robber Barons, 244
Rockefeller, John D. (1839–1937), 245
Rolfe, John (1585–1622), 245
Roosevelt, Franklin D. (1882–1945), 246
Roosevelt, Theodore (1858–1919), 247
Rule of 1756, 248
Rural Credit and Development Act of 1994, 248
Rural Electrification Administration (REA), 249
Schecter Poultry Corp. v. United States (1935), 251
School Busing, 252
Securities and Exchange Commission, 252
Servicemen’s Readjustment Act (G.I. Bill of Rights)
(1944), 253
Seward, William (1801–1872), 253
Share Our Wealth Plan, 254
Share Our Wealth Society, 254
Shelley v. Kraemer (1948), 254
Sherman Anti-Trust Act (1890), 255
Sherman Silver Purchase Act (1890), 256
Sinclair, Upton Beal, Jr. (1878–1968), 256
Sixteenth Amendment (1913), 257
Slavery, 257
Smith-Connally Act (War Labor Disputes Act) (1943),
259
Smith-Lever Act (1914), 260
Smithsonian Agreement (1971), 260

Smuggling, 261
Social Security Act of 1935, 262
Socialism, 263
Soil Conservation and Allotment Act (1936), 263
South Carolina Exposition and Protest (1828), 264
Spanish-American War (War of 1898), 264
Stagflation, 265
Stamp Act (1765), 266
Stamp Act Congress, 266
Standard Oil, 267
Steel, 267
Strategic Defense Initiative (SDI) (1983), 268
Sugar, 269
Sugar Act of 1764, 269
Supply-Side Economics, 270
Ta r iff of Abominations (Tariff of 1828), 271
Taxation, Confederation, 271
Tea Act of 1773, 272
Te c hnology Transfer, 272
Te nnessee Valley Authority (TVA), 273
Thirteenth Amendment (1865), 273
Timber and Stone Culture Act (1878), 274
Timber Culture Act (1873), 274
To w nsend, Frances E. (1876–1948), 274
To w nsend Plan, 275
To w nshend Duties (1767–1773), 275
Tr ademark Act of 1947, 275
Tr ademark Amendments Act of 1999, 276
Tr ail of Tears (1838), 276
Tr anscontinental Railroad, 277

Tr ansportation Revolution, 277
Treaty of 1783, 278
Treaty of 1867, 279
Treaty of Ghent (December 24, 1814), 279
Treaty of Greenville (1795), 279
Treaty of Guadalupe Hidalgo (February 2, 1848), 280
Tr iangular Trade, 280
Tr uman Doctrine, 281
Tr usts, 281
Tr uth-in-Lending Act (1968), 282
Tr uth in Securities Act (Securities Act of 1933), 282
Underwood-Simmons Tariff Act (1913), 285
Unemployment, 286
Unemployment Insurance, 286
United Nations (UN), 287
United Nations Children’s Fund (UNICEF), 288
United States v. E. C. Knight Co. (1895), 288
Urban Policy, 289
U.S. Agency for International Development (USAID),
290
U.S. Chamber of Commerce, 290
U.S. Customs Service, 291
U.S. Department of Commerce, 291
U.S. Department of Defense (DOD), 292
U.S. Department of Health and Human Services, 292
U.S. Department of Housing and Urban Development
(HUD), 293
U.S. Department of Labor, 293
U.S. Department of Treasury, 294
U.S. Environmental Protection Agency (USEPA), 295

U.S. Housing Authority, 296
U.S. Information Agency (USIA), 296
U.S. Mint, 297
Van Buren, Martin (1782–1862), 299
Vietnam Conflict (1954–1973), 299
Virgin Islands, Purchase of (1917), 300
Volcker, Paul A. (1927– ), 301
List of Short Entries xi
Wage and Price Freeze (1971), 303
Wagner Act (1935), 304
War and Warfare, 304
War of 1812, 305
War Production Board (WPB), 306
Wealth Distribution, 306
We lfare Economics, 307
Whig Party, 307
Whiskey Rebellion (1794), 308
Williams v. Mississippi (1898), 308
Wilson-Gorman Tariff (1894), 308
Wilson, Woodrow (1856–1924), 309
Wo men, 309
Wo rkers’ Compensation, 310
Wo rld Intellectual Property Organization (WIPO), 311
Wo rld Trade Organization (WTO), 311
Wo rld War I (1914–1918), 312
Wo rld War II (1939–1945), 313
Ya zoo Land Companies, 315
xii List of Short Entries
Essays
Advertising, 319

Agricultural Policy, 326
Antitrust Legislation, 332
Banking: Development and Regulation, 339
Big Business and Government Relationships, 344
Communications, 347
Currency, 354
Economic Theories, 360
Education, 366
Energy Policy, 374
Federal Reserve Bank, 379
Foreign Policy, 385
Government Domestic Economic Policies, 387
Immigration Policy, 394
Insurance, 402
Intellectual Property, 409
Judiciary, 415
Labor, 422
Land Policies, 428
Law, 433
Monetary Policy, 439
Money Laundering, 445
Science and Technology, 451
Slavery, 458
Stock Market, 466
Taxation, 473
Tr ade Policy, 477
Tr ansportation Policy, 485
Urbanization, 491
War, 497
We lfare State, 504

Primary Source Documents
Ordinance of the Northwest Territory (1787), 513
Report on the Subject of Manufactures (1791), 517
Treaty between the United States of America and the
French Republic with Conventions (Louisiana
Purchase, 1803), 549
Treaty of Guadalupe Hidalgo (1848), 554
Gadsden Purchase Treaty (1853), 562
Homestead Act (1862), 565
Emancipation Proclamation (1863), 567
Timber Culture Act (1873), 569
Timber and Stone Culture Act (1878), 570
Sherman Anti-Trust Act (1890), 572
Panama Canal Treaty of 1903, 574
Federal Reserve Act (1913), 579
Federal Trade Commission (1915), 593
Clayton Anti-Trust Act (1914), 598
Franklin D. Roosevelt on Hawley-Smoot Tariff (1932),
605
Herbert Hoover’s Response to Franklin D. Roosevelt on
Hawley-Smoot Tariff (1932), 610
Lyndon B. Johnson’s Great Society Speech (1964), 614
Panama Canal Treaty of 1977, 617
Ronald Reagan’s Remarks and a Question and Answer
Session with Reporters on the Air Traffic Controllers’
Strike (1981), 632
List of Essays and Primary
Source Documents
xiii

xv
I would like to thank Dr. James Ciment, who recommended
me to ABC-CLIO as editor for The American Economy: A His-
torical Encyclopedia. During the course of this project, nu-
merous people have provided invaluable advice, assistance,
and encouragement, for which I am grateful. I offer a special
thanks to Drs. Walt Rostow, Sidney Weintraub, Robert Fair-
banks, Alfred E. Eckes Jr., and Spencer Tucker for serving on
the Board of Advisers.
Throughout the entire endeavor, I have had the support of
the Department of History at the University of Texas at Ar-
lington. I would like to extend a special thank-you to the ref-
erence librarians at Texas Christian University, the Dallas
Public Library, and especially the University of Texas at Ar-
lington, where I took advantage of an extensive library col-
lection to verify the multitude of details and locate the pri-
mary source material for this work.
Without the support and impressive effort of the contrib-
utors, this work would not have been possible. Many of the
authors took their time and energy away from other projects
to ensure the success of the encyclopedia. A special thanks to
those who assisted during the final stages by writing the last
few entries on relatively short notice—and for doing so with
such welcomed enthusiasm. For their assistance in typing
many of the primary source documents, my deepest grati-
tude goes to Christopher Nichols and Vonnie Peach.
To my family a special thanks. Through months of tele-
phone calls, correspondence, writing, and editing they con-
tinued to provide support and encouragement.
—Cynthia Clark Northrup

Acknowledgments
During the last half of the twentieth century, scholars have
tended to direct their attention away from economics to
focus instead on social and cultural issues. But it is important
for students and intellectuals to recognize the connection be-
tween economics and all other aspects of life. Without signif-
icant financial resources, the existence of which is determined
by economic policy, the federal government cannot address
social and cultural issues such as health care and Social Secu-
rity.The shift in national economic policy that occurred pri-
marily after the Civil War affected American life from immi-
gration and settlement patterns to the manner in which
business was conducted. The long-term effect of a specific act
or policy is often complex.
Designed as a reference tool for anyone who wishes to
learn more about the role of economic policy in American
history, the encyclopedia includes numerous entries dealing
with specific issues, longer essays that explore broader topics,
and selected primary documents. The first volume contains
more than 600 biographical and topical entries arranged al-
phabetically. The biographical entries provide brief but sig-
nificant details about key individuals and concentrate on the
specific role of each in U.S. economic history. Topical entries
describe events, court cases, legislation, and so on in the light
of their influence on the economic life of the nation.
Each entry in volume one includes references that lead to
more thorough information about the topic and a “see also”
section directing the reader to related entries in volumes one
and two.

In volume two, essays explore broader topics such as the
effect of economic policy on education, insurance, the judici-
ary, and science and technology. These in-depth essays ex-
plore topics from colonial times to the present. Also part of
volume two are selected primary sources—the various acts
and policies that have established economic policy through-
out U.S. history—and a comprehensive bibliography with
full citations. A list of biographical sketches of the contribu-
tors and a detailed subject index can be found at the end of
volume two.
The encyclopedia contains detailed information about
each economic policy act and about the individuals and de-
bates that shaped the formation of economic policies in the
United States from its infancy to the present day. Although
the materials are extensive, space prohibits the inclusion of
each individual or action connected to the process. This two-
volume set addresses the most prominent matters and pres-
ents thorough, yet easy to understand, accounts of issues that
continue to dictate both the domestic and foreign economic
policies of the United States.
A Note on Using the
Encyclopedia
xvii
The American Economy: A Historical Encyclopedia provides
detailed information about the formation and development
of economic policy throughout American history and de-
scribes its continued importance. Historically, economic is-
sues have played a prominent role in U.S. policymaking. Eco-
nomic policy has influenced social, cultural, political, and

economic events from colonial times to the present.
Economic Policy
Economic policy has shifted many times over the course of
American history. During colonial times, the British colonies
operated under a mercantilist system in which all trade ben-
efited the mother country. After the American Revolution,
the fledgling United States attempted to operate under the
Articles of Confederation, but the economic restrictions it
placed on the national government caused that system to fail.
Delegates meeting at the Constitutional Convention agreed
that the federal government must have the power to tax. A
decision to tax only imports, not exports or direct income,
proved to be decisive in the development of domestic indus-
try. Congress passed revenue tariffs (taxes on imports) during
the early years of the Republic; after the War of 1812, a shift
to protective tariffs occurred. These tariffs continued to in-
crease reaching their apex during the Civil War under the
Morrill Tariff. After the Civil War, tariff rates remained high,
ensuring the rise of big business that did not have to compete
against foreign manufacturers. The extreme wealth accumu-
lated by captains of industry such as Andrew Carnegie and
John D. Rockefeller stood in sharp contrast to the poverty of
many Americans, especially new immigrants who crowded
into tenements in major cities in the North and East. Public
awareness of this economic inequity resulted in a movement
to replace the tariff as the primary source of tax revenue with
a direct personal income tax. However, Congress lacked con-
stitutional authority to institute such a tax unless the states
passed a constitutional amendment to allow direct taxation.
Republicans finally agreed to lower the tariff rates if the

amendment passed, thinking that the states would fail to pass
it. The plan failed, and ratification in 1913 of the Sixteenth
Amendment opened the door for direct taxation—a shift
that has influenced capital accumulation, investment, and
personal savings ever since.
After reducing the tariff rates and increasing personal in-
come tax rates, Congress once again increased import duties
because of World War I. After that conflict, European coun-
tries that had been carved out of the old empires raised their
tariff rates to protect their own industries. Consequently,
trade slowed at the same time that the U.S. stock market col-
lapsed under the burden of overvaluation of company worth
and market overstimulation due to purchases on margin.
Within nine months of the crash, Congress passed the Hawley-
Smoot Tariff, which raised tariff rates to a record high. Mean-
while, the Federal Reserve Board increased interest rates, con-
tracting the money supply. The net effect was a prolonged
depression that finally ended when the United States entered
Wo rld War II.
The Great Depression and World War II mark a shift in
U.S. economic policy. President Franklin D. Roosevelt fol-
lowed the economic philosophy of John Maynard Keynes,
who advocated deficit spending during periods of financial
difficulty. Deficit spending would allow the federal govern-
ment to initiate programs that politicians had traditionally
shunned. For the first time, the federal government assumed
the role of employer to thousands of the country’s unem-
ployed workers. Programs like the Civilian Conservation
Corps and Works Progress Administration created jobs. So-
cial Security was established to promote early retirement and

so open up jobs to younger workers. In addition, the federal
government funded projects such as the Rural Electrification
Administration and the Tennessee Valley Authority to im-
prove the lives of Americans in rural or poverty-stricken
areas.
Welfare
From the 1930s to the present, the federal government has in-
creasingly used economic policy to deal with social and cul-
tural issues. In the immediate post–World War II period,
Americans experienced an unprecedented period of prosper-
ity because of the accumulation of personal savings and the
expansion of industry during the war. But by the 1960s, it was
xix
Introduction
apparent that although most Americans’ standard of living
had increased, African Americans and other groups had
fallen deeper into poverty. President Lyndon B. Johnson at-
tempted to correct the problem by using tax revenues to fund
a new welfare state—the Great Society, which had programs
ranging from Head Start to Medicaid that supported health,
education, and community development. The Great Society
redistributed the wealth but also created a group of people
who became dependent on the federal government. After
several decades, states including Wisconsin began to experi-
ment with ways to eliminate this dependency on welfare. As
of 2003, the number of people on the welfare rolls has
dropped because similar efforts have also been undertaken
at the federal level. This change in economic policy led to a
drop in the number of births to unwed mothers and the
number of abortions.

Education
The field of education has traditionally been the bailiwick of
local and state governments rather than the federal govern-
ment. By the second half of the twentieth century, however,
the federal government had become a major participant in
the education arena. After World War II, Congress passed the
Servicemen’s Readjustment Act (also known as the G.I. Bill),
which gave returning veterans the opportunity to attend col-
lege at the government’s expense and even to receive a small
living allowance to help support themselves and their families
during the process. As a result, during the 1950s and 1960s
the number of professionals such as engineers, accountants,
business executives, lawyers, and doctors increased dramati-
cally. During the 1960s, Congress approved financial aid pro-
grams that gave all Americans, including those from poor
families, the opportunity to attend college. By 2000, more
Americans had attended college than ever before.
Settlement Patterns
Through various acts and economic policies, Congress has
influenced settlement patterns. After the American Revolu-
tion, when the nation operated under the Articles of Confed-
eration, the government began to encourage the settlement of
the old northwest territory, which at the time encompassed
the Ohio Valley region. Thomas Jefferson proposed surveying
the land into townships and selling property to Americans in
160-acre parcels. Initially only wealthy investors could afford
to purchase the land, and they then subdivided the properties
into smaller farms and sold them. No credit terms existed be-
tween the government and the purchaser. The land sold very
slowly, but gradually the population of the region increased.

After the purchase of the Louisiana Territory from France
in 1803, Congress attempted to pass legislation to allow
homesteaders to claim 160 acres of federal land in the newly
acquired territory. The debate over the expansion of slavery
prevented the passage of such legislation. Finally, during the
Civil War, the Northern Republicans in Congress passed the
Homestead Act of 1862, which encouraged western migra-
tion. During the 1870s Congress passed two additional acts—
the Timber and Stone Culture Act and the Timber Culture
Act—that helped more Americans claim land in the western
part of the country. By the 1900s the federal government had
initiated a series of dam projects to help supply both farms
and cities with additional water so these communities could
grow.Cities like Las Vegas, Nevada, could have not expanded
without the water provided by the Hoover Dam. The govern-
ment continues to influence settlement patterns by awarding
contracts to employers like Lockheed-Martin and other de-
fense contractors who can entice workers into an area like the
Southwest by offering them jobs.
Although the government encouraged settlement of some
areas, it restricted the use of other land. Beginning in the
1880s, presidents began setting aside public lands as national
parks. Theodore Roosevelt set aside more land than all of his
predecessors combined.
Science and Technology
Government spending during wartime has led to many
breakthroughs in the fields of science and technology. In the
post–Civil War period, medical professionals explored the
cause of diseases and infections. By the 1900s army surgeons
had discovered the cause of malaria and the public learned

about germ theory. Wars also resulted in the development of
penicillin and other antibiotic drugs. During World War I,
Americans improved the airplane, and after World War II an
entire aviation industry developed. During the cold war, the
federal government funded the missile and space programs,
which yielded such inventions as the computer chip and
eventually the Internet.
Conclusion
All social, cultural, and political policies must be funded. The
economic policies of the federal government affect all aspects
of life in the United States. In the future, the nation will have
to choose which economic policy to implement in connec-
tion with such issues as population growth and the increas-
ing number of elderly citizens, which will place tremendous
strain on the health care system. These economic decisions
will affect the younger generation, which will have to pay the
taxes to support these programs, and will determine the fu-
ture history of this nation.
xx Introduction
The American Economy:
A Historical Encyclopedia
A&M Records v. Napster Inc. (2001)
Court case that challenged federal copyright laws under
United States Code Title 17.
In 2000, A&M Records and several other plaintiffs filed a
civil case against Napster citing infringement of copyright
laws. Napster, utilizing the latest MP3 digital music compres-
sion technology, allowed members to share music at no cost
to the member. The founder, Shawn Fanning, established the

Internet website for the purpose of providing “samples” of
music from a variety of artists. When the recording industry
filed charges against Napster, attorneys for the defendant
argued that the company operated under the 1992 Audio
Home Recording Act that allowed for the noncommercial
reproduction of audio materials. Because Napster provided a
free service allowing members to share music, the company
argued that it complied with the existing copyright laws.
Attorneys for A&M Records and various other plaintiffs
within the music industry argued that Napster provided
access to copyrighted music that individuals could download
and then copy. The lower court ruled in favor of the plaintiffs,
and an appeal was filed with the Ninth District Court of
Appeals, which upheld the lower court’s decision but
returned the case to the lower court for the preparation of a
revised injunction against Napster. According to the 2001 rul-
ing, Napster must review its files and remove from its website
all copyrighted music if the owner of the rights to that music
objects to its use by Napster. Napster still retains the right to
appeal the decision to the U.S. Supreme Court, but given the
conservative nature of the Court, it appears improbable that
Napster attorneys will pursue that course of action.
—Cynthia Clark Northrup
References
Mitten, Christopher. Shawn Fanning: Napster and the Music
Revolution. Brookfield, CT: Twenty-First Century Books,
2002.
White, Ron, and Michael White. MP3 Underground.
Indianapolis, IN: Que Corp., 2001.
See also Vo lume 2: Intellectual Property.

Acquired Immune Deficiency Syndrome
(AIDS)
A disease caused by a retrovirus that mutates so rapidly that
the B-lymphocytes and the body’s natural antibodies cannot
fight it off.
The introduction of AIDS (acquired immunodeficiency
syndrome) in the United States occurred primarily in the
homosexual and bisexual community. First diagnosed as a
disease in 1981, it results in the vulnerability of the human
body to disease and malignancies. As AIDS spread to include
hemophiliacs and individuals who required blood transfu-
sions, the public pressured the federal government for
research funding. Symptoms appear initially like the flu but
gradually develop into anxiety, weight loss, diarrhea, fatigue,
shingles, and memory loss. Transmission of the disease
occurs through the exchange of body fluids such as breast
milk, semen, or vaginal secretions or through the exchange of
blood and blood products. Kissing and the exchange of saliva
do not appear to transmit the disease nor do urine, feces, or
sweat.
The primarily economic implications of the disease
include the increased health care cost associated with the care
of AIDS patients as well as their medical treatments. As of
2002, physicians rely on three drugs—AZT (also known as
Retrovir or Zidovudine), ddI (Videx® EC brand didanesine
[delayed-release capsules]), and 3TC (Epivir® brand
Iamivadine)—to delay the spread of symptoms in patients. In
addition, another 30 alternative treatments are being tested.
The enormous cost associated with the development of a
cure for the disease has taxed the economic resources of pri-

vate foundations established for that sole purpose as well as
the federal government.
In the United States alone, the Centers for Disease Control
and Prevention (CDC) estimates that about 850,000 to
950,000 Americans are infected by the human immunodefi-
ciency virus, or HIV. HIV attacks the immune system cells.
All individuals with AIDS have HIV, but not all people with
HIV have AIDS. AIDS is a fatal disease caused by a rapidly
mutating retrovirus that leaves the victim susceptible to
infections, malignancies, and neurological disorders. Every
A
1
year another 40,000 cases are reported. During the 1980s, a
massive public awareness program resulted in a decline in
new cases from 60,805 in 1996 to 40,766 in 2000. The major-
ity of the new cases have occurred in the African American
community—half of new cases among men and 65 percent
of new cases among women occur among this group. As of
the end of 2001, the CDC reported more than 467,910 deaths
from the disease.
As a result of the continuing crisis, the federal government
has appropriated millions of dollars for research. For the fis-
cal year 1999, Congress approved $110 million just for the
African American community. The total figure for research,
treatment, prevention, and educational programs amounted
to $4.87 billion. During the last year of the Clinton adminis-
tration that figure declined, but the incoming administration
of George W. Bush increased the budget for AIDS once again.
—Cynthia Clark Northrup
References

Feldman, Douglas A., and Julia Wang Miller, eds. The AIDS
Crisis: A Documentary History. Westport, CT: Greenwood
Press, 1998.
See also Vo lume 1: Disease.
ADC
See Aid to Dependent Children.
Advanced Technology Office (ATO)
Office responsible for the integration of new and future tech-
nology into military systems.
In 1957, Congress created the Defense Advanced Research
Projects Agency (DARPA) in response to the Soviet Union’s
launching of Sputnik I. The Advanced Technology Office
(ATO), functioning under the authority and funding of
DARPA, conducts research and integrates advanced technol-
ogy into existing U.S. military systems. Researchers place spe-
cial emphasis on maritime, communications, special
operations, command and control, and information assur-
ance and survivability mission areas. The goal of the ATO
remains the most cost-effective use of technology to assist all
branches of the military to fight against existing and future
threats by outmaneuvering, gathering more intelligence, and
reacting more quickly than the adversary. Current ATO pro-
grams include the development of artificial intelligence
through the use of robotics, sensors, and satellites. Projects
include Airborne Communications Node; Antipersonnel
Landmine Alternative; Buoyant Cable Array Antenna; Center
of Excellence for Research in Oceanographic Sciences; Future
Combat Systems (FCS) Command and Control; FCS
Communications; Metal Storm; Robust Passive Sonar;
Submarine Payloads and Sensors Program; Tactical Mobile

Robotics; Tactical Sensors; Undersea Littoral Warfare: Netted
Search, Acquisition and Targeting (Net SAT); and
Underwater Fighter (LOKI). Additional programs such as the
Self-Healing Minefield system use the most advanced tech-
nology to prevent the breaching of minefields by the enemy.
Instead of creating a static minefield, the program creates a
dynamic minefield with the intelligent capability of physi-
cally reorganizing mines to prevent breaches by opposition
forces. Government funding of the research has produced
benefits for the American public as well because consumer
applications for the technology exist and because ATO
researchers continue to use high-tech devices developed by
the private sector, which receives public funding for its
research and development.
—Cynthia Clark Northrup
References
Keever, David B., ed. Interactive Management and Defense
Advanced Research Projects Agency. Fairfax, VA: Institute
for Advanced Study in the Integrative Sciences, George
Mason University, 1990.
See also Vo lume 1: Defense Advanced Research Projects
Agency.
AEA
See American Economic Association.
AFDC
See Aid to Families with Dependent Children.
Affirmative Action
Legislative attempt to eliminate economic discrimination by
ensuring that blacks and other minorities play “on a level
playing field.”

Executive Order 10925, issued by President John F.
Kennedy, recognized the need for affirmative action. After
Kennedy’s assassination, President Lyndon B. Johnson pushed
the Civil Rights Act of 1964 through Congress. On September
24, 1965, Johnson signed Executive Order 11246, which pro-
vided for the enforcement of affirmative action, primarily in
education and jobs. The federal government attempted to
ensure that blacks and other minority groups played on a level
playing field when it came to promotions, salaries, school
admissions, scholarship, financial assistance, and participa-
tion in federal contracts. Although designed as a temporary
measure, affirmative action assumed permanency after the
introduction of quotas. (Racial quotas required employers to
hire a percentage of their workers on the basis of race.)
Affirmative action’s goals were met better in the educa-
tional realm than in the workplace. Colleges and universities
reserved a specific number of positions for disadvantaged
minorities, including women, under the quota system. As a
result, some white males who qualified received rejection
notices. In 1978, Allan Bakke sued the University of
California for accepting less-qualified students to its medical
school while refusing to accept him for two years in a row. In
2 ADC