Question

1. For each of the following policies, discuss the extent to which the federal government significantly expanded its role during the Civil War: a) money and banking, b) increased protection of U.S.industry from foreign competition, c) transportation infrastructure, and d) promoting western settlement. During the War, what policy changes occurred in each of these areas, why were they taken during the war and not sooner, and do you think the policy changes were appropriate or not? (Please discuss each policy a), b), etc. separately).

Answer 1

a) The federal government had to expand the amount of currency in the economy, in order to do that, it had to buy federal bonds and deposit the bonds with the treasury, thus the bank capital was converted into cash to finance the war. In addition tax rates were increased and new paper currency was printed.

The government needed the money to fund the war, which is why this policy was undertaken, it was the easiest form of raising money by buying bonds which would have to be repaid after a long duration.

Policy changes were appropriate at that time as the government did not have any choice, it needed cash.

b) Higher tariffs kept foreign goods outside and industrial workers had much higher wages because of this. It was advocated that higher tariffs brought prosperity to the nation. Thus higher tariff kept foreign companies outside.

The government wanted to protect local jobs and not increase more discontent in the population, the policy changes were appropriate from the perspective of the employment situation and people getting enough pay and jobs during such crisis.

c) Ships and trains were used to move heavy artillery and steam was used to power the trains and ships. Roads and canals were developed for swift transportation.

During the war transportation played a key role and improved efficiency, war made the government act fast to develop roads, etc to help connectivity. This proved a boon in later stages when industrial revolution took place.

d) The government tried to claim lands belonging to the natives, as they wanted to encourage settlement and reach in the western parts for greater connectivity.

To increase people's reach and connectivity, government decided to undertake this in order to control other areas as well and it helped the economy grow in the later stages.