Checks and Balances: U.S. Presidents and the Economy Directions: Working in teams, match the president with the appropriate Economic Situation, Government Response, and Primary Source Document cards you are presented. Check your answers with the teacher. Use the Student Handout sheet and write a three sentence synopsis of the economic events of each of the presidents presented. George Washington (1789-1797) Andrew Jackson (1829-1837) Abraham Lincoln (1861-1865) William McKinley (1897-1901) Woodrow Wilson (1913-1921) Government Response Economic Situation Primary Source
CARD A Since the death of the Second Bank of the United States in 1836, the American financial system was carried out by state-chartered banks with no federal regulation. As a result, financial panics plagued the nation, leading to bank failures and business bankruptcies that severely disrupted the economy throughout the 19 th century and the beginning of the 20 th century. During this time, America experienced a wave of economic recessions including the Panic of 1857 and Panic of 1873 and a severe economic depression known as the Panic of 1893. When another recession struck in 1907, this panic persuaded many Americans that U.S. banking was sadly out of date and in need of major reform. In addition, many Progressive Era reformers were calling for the return of a central bank to regulate U.S. monetary policy. CARD B During the Civil War, the national government faced extraordinary challenges. Among the challenges was finding a way to raising $3 billion to fight the Confederacy and pay for war supplies, soldiers pay, new transportation initiatives, and other war-related expenses. At the time of the Civil War, the national government did not have a central bank, a national banking system, a national currency or a means for collecting internal federal taxes. CARD C During the Gilded Age, farmers and western settlers began to attack the nation s monetary system. Since 1873, Congress declared that all federal money must be backed by gold. This gold standard limited the nation's money supply and benefited the wealthy. Farmers wanted to create inflation and supported expanding the money supply to include dollars backed by gold and silver. Bimetallism was one of the platform issues of the new Populist Party and its presidential candidate William Jennings Bryan who s Cross of Gold speech called for the free coinage of silver money. In addition, America was in the depths of its worst economic depression until the Great Depression in 1929. CARD D One of the most pressing issues facing the new nation was the national debt incurred during the Revolutionary War. When the United States was formed, the federal government was essentially bankrupt, and its bonds nearly worthless. States had huge war debts. There was runaway inflation. In fact, one of the reasons for the Constitutional Convention of 1789 was Shays Rebellion which was incited by high debts by farmers and was made worse by the inability of the government to raise money to stop the rebellion CARD E The Second Bank of the United States was chartered in 1816 for a term of 20 years. The BUS was a depository for federal funds and paid national debts, but it was answerable only to its directors and stockholders and not to the American people. The supporters of a central bank were those involved in industrial and commercial ventures. They wanted a strong currency and central control of the economy. The opponents (mostly farmers) were distrustful of the federal government. Many farmers had been financially damaged by speculation and a tightening of bank credit. At this time, many people were concerned about the constitutionality of the Second Bank of the US and debated whether the national government should support paper money ( soft money that provided easy credit) or gold and silver ( hard money which limited the money supply). CARD 1 This president was the first and only president to eliminate the national debt. However, his presidency is more remembered for ordering the premature removal of the government s deposits from the Second Bank of the United States in an attempt to kill it outright. He appointed a Treasury Secretary who removed and then deposited the reserves in various state banks (known as pet banks or wildcat banks ). However, his victory over the BUS is considered questionable because this and other policies, such as the Specie Circular of 1836, destabilized the financial system and economy, rendering them susceptible to shocks. When the US suffered a banking panic in 1837, the economy slipped into a severe depression that lasted until 1844. The resulting decline in government revenues ironically led to deficits that led to the rebirth of the national debt.. CARD 2 During the Progressive Era, Congress passed the Federal Reserve Act. The Federal Reserve System, also known as "The Fed," is the central bank of the United States. The Fed is a network of twelve Federal Reserve district banks and serves as a bank for other banks and a bank for the federal government. It was created to provide the nation with a safer, more flexible, and more stable monetary and financial system. Its two primary responsibilities include controlling inflation and unemployment by regulating the U.S. monetary policy. CARD 3 Federalists like Secretary of the Treasury, Alexander Hamilton, believed the best way to create a lasting republic was to give the central government an efficient system of tax collection and public credit. Hamilton wanted the federal government to assume, or take over, and then pay the war debts of the individual states. At Hamilton s urging, the government used revenues from tariffs to pay of federal and state war bonds. The government chartered a new central bank, the Bank of the United States, which provided loans to the government as well as to merchants and other businesses. Hamilton s system established the young nation s credit and stabilized the American economy under the direction of a strong national government. CARD 4 The bimetallism debate was at the heart of the presidential election of 1896. Election results proved to be a victory for the Republican Party and the death of the Populist Party. After the election, Congress passed the Gold Standard Act which officially placed the United States on the gold standard and killed the free silver issue. However, Populists Party ideas like the income tax, direct election of senators, initiative, referendum, recall, and the secret ballot were all later enacted by Progressive reformers CARD 5 During the war, the federal government created innovative ways to collect federal revenues that are still used today. New taxes, such as the first income and inheritance tax, were introduced in the war years, along with new excise taxes. Also, for the first time since the American Revolution, the federal government printed its own money, called greenbacks, and took the first steps toward creating a national regulatory system for banks. Bond drives were organized to raise money for the war. By the war s end, the Union raised about two-thirds of its money through loans, and about a quarter by increasing tariffs and taxes.
Primary Source: CARD BB
CARD CC Primary Source:
Primary Source: CARD AA
Primary Source: CARD DD
Primary Source: CARD EE
ANSWER KEY
George Washington (1789-1797) CARD D One of the most pressing issues facing the new nation was the national debt incurred during the Revolutionary War. When the United States was formed, the federal government was essentially bankrupt, and its bonds nearly worthless. States had huge war debts. There was runaway inflation. In fact, one of the reasons for the Constitutional Convention of 1789 was Shays Rebellion which was incited by high debts by farmers and was made worse by the inability of the federal government to raise money to stop the rebellion CARD 3 Federalists like Secretary of the Treasury, Alexander Hamilton, believed the best way to create a lasting republic was to give the central government an efficient system of tax collection and public credit. Hamilton wanted the federal government to assume, or take over, and then pay the war debts of the individual states. At Hamilton s urging, the government used revenues from tariffs to pay of federal and state war bonds. The government chartered a new central bank, the Bank of the United States, which provided loans to the government as well as to merchants and other businesses. Hamilton s system established the young nation s credit and stabilized the American economy under the direction of a strong national government. CARD BB Primary Source:
Andrew Jackson (1829-1837) CARD E The Second Bank of the United States was chartered in 1816 for a term of 20 years. The BUS was a depository for federal funds and paid national debts, but it was answerable only to its directors and stockholders and not to the American people. The supporters of a central bank were those involved in industrial and commercial ventures. They wanted a strong currency and central control of the economy. The opponents (mostly farmers) were distrustful of the federal government. Many farmers had been financially damaged by speculation and a tightening of bank credit. At this time, many people were concerned about the constitutionality of the Second Bank of the US and debated whether the national government should support paper money ( soft money that provided easy credit) or gold and silver ( hard money which limited the money supply). CARD 1 This American president was the first and only president to eliminate the national debt. However, his presidency is more remembered for ordering the premature removal of the government s deposits from the Second Bank of the United States in an attempt to kill it outright. He appointed a Treasury Secretary who removed and then deposited the reserves in various state banks (known as pet banks or wildcat banks ). However, his victory over the BUS is considered questionable because this and other policies, such as the Specie Circular of 1836, destabilized the financial system and economy, rendering them susceptible to shocks. When the US suffered a banking panic in 1837, the economy slipped into a severe depression that lasted until 1844. The resulting decline in government revenues ironically led to deficits that led to the rebirth of the national debt. CARD CC Primary Source:
Abraham Lincoln (1861-1865) CARD B During the Civil War, the national government faced extraordinary challenges. Among the challenges was finding a way to raising $3 billion to fight the Confederacy and pay for war supplies, soldiers pay, new transportation initiatives, and other war-related expenses. At the time of the Civil War, the national government did not have a central bank, a national banking system, a national currency or a means for collecting internal federal taxes. CARD 5 During the war, the federal government created innovative ways to collect federal revenues that are still used today. New taxes, such as the first income and inheritance tax, were introduced in the war years, along with new excise taxes. Also, for the first time since the American Revolution, the federal government printed its own money, called greenbacks, and took the first steps toward creating a national regulatory system for banks. Bond drives were organized to raise money for the war. By the war s end, the Union raised about two-thirds of its money through loans, and about a quarter by increasing tariffs and taxes. CARD AA Primary Source:
William McKinley (1897-1901) CARD C During the Gilded Age, farmers and western settlers began to attack the nation s monetary system. Since 1873, Congress declared that all federal money must be backed by gold. This gold standard limited the nation's money supply and benefited the wealthy. Farmers wanted to create inflation and supported expanding the money supply to include dollars backed by gold and silver. Bimetallism was one of the platform issues of the new Populist Party and its presidential candidate William Jennings Bryan who s Cross of Gold speech called for the free coinage of silver money. In addition, America was in the depths of its worst economic depression until the outbreak of the Great Depression in 1929. CARD 4 The bimetallism debate was at the heart of the presidential election of 1896. Election results proved to be a victory for the Republican Party and the death of the Populist Party. After the election, Congress passed the Gold Standard Act which officially placed the United States on the gold standard and killed the free silver issue. However, Populists Party ideas like the income tax, direct election of senators, initiative, referendum, recall, and the secret ballot were all later enacted by Progressive reformers. CARD DD Primary Source:
Woodrow Wilson (1913-1921) CARD A Since the death of the Second Bank of the United States in 1836, the American financial system was carried out by state-chartered banks with no federal regulation. As a result, financial panics plagued the nation, leading to bank failures and business bankruptcies that severely disrupted the economy throughout the 19 th century and the beginning of the 20 th century. During this time, America experienced a wave of economic recessions including the Panic of 1857 and Panic of 1873 and a severe economic depression known as the Panic of 1893. When another recession struck in 1907, this panic persuaded many Americans that their banking structure was sadly out of date and in need of major reform. In addition, many Progressive Era reformers were calling for the return of a central bank to regulate American monetary policy. CARD 2 During the Progressive Era, Congress passed the Federal Reserve Act. The Federal Reserve System, also known as "The Fed," is the central bank of the United States. The Fed is a network of twelve Federal Reserve district banks and serves as a bank for other banks and a bank for the federal government. It was created to provide the nation with a safer, more flexible, and more stable monetary and financial system. Its two primary responsibilities include controlling inflation and unemployment by regulating the nation s monetary policy. CARD EE Primary Source: