The years from 1776 to 1815 consisted of four distinct periods: 1) first was war (the Revolution), then 2) peace and independence, followed by 3) war again (Napoleonic Wars) with the new United States acting as a neutral, and, finally, 4) the young nation’s second war with England. These events caused economic fluctuations and imposed significant shocks on the economy, pressing resources into new areas of production as trade lanes opened and closed. Years of war generally reduced American trade and economic activity. However, during the years of war when U. S. neutrality gave American shipping and commerce the opportunities to fill the void of others who were engaged in combat, times were especially prosperous.
Even during peacetime, great economic adjustments occurred because the new nation was now outside the British Empire; severe peacetime trade restrictions added to the nation’s difficulties.
Finally, the new nation faced the problems of paying the debts accumulated during the Revolutionary War years and of forging agreements among the states on how to form a government based on constitutional limitations. Recall Economic Reasoning Propositions 1, scarcity forces us to make choices; 2, choices impose costs; and 4, laws and rules matter, in Economic Insight 1.1 on page 9.
World History
