Money Issues

History Affects Today

• Theme: Many of the issues surrounding money and the government in 1790 affect our world today

What kind of citizens are best?

• Federalists wanted to encourage business and industry

• Democrat-Republicans wanted to encourage people to farm and own land

Bartering

• Cities and factories were growing– Less people getting their own food– More things available to buy

• If people can’t (or don’t) make something, they need to trade for it

• Bartering is a system of trading things for other things– I’ll give you this cow for that tractor

• This is not always easy

Bob is a plumber.He sells a service. Fixing pipes.

Jim is a farmer with a cow to sell.

Ashley sells computers.

Exchange

• Bob the plumber needs a computer.• Ashley the saleswoman needs some food.• Jim has a leak at his farmhouse.

• And they don’t know each other.

Everyone wants something from someone, but no one can barter. Why?

Wants a computer

Wants a burgerNeeds a leak fixed

Solution: Create something that everyone can exchange

Wants a computer

Wants a burgerNeeds a leak fixed

1790s

• “United States” is changing from an agricultural (farm-based) economy to a capitalist economy– Capitalist economy uses money or assets that can

be turned into money– Guns, cars, computers…if you can sell it for money,

it’s capital, and belongs in a capitalist economy

Borrowing Money

• Why might people want to borrow money?• Capitalist economies really work well when

people borrow money– And pay it back

• Not good to borrow too much money– Average US citizen owes $7,000 on credit cards,

$30,000 in student loans and $150,000 in home loans

Government also borrows

• Sells bonds for money• Pays money back for bonds, plus a little more

(interest)• Too much debt is bad– Currently, the U.S. owes $17 trillion– That’s $50,000 per citizen

Back to history

• U.S. Government was in debt for $65 million after fighting the war

• Owed it to private citizens in the form of bonds

• Some people in government said they didn’t have to pay it back– ‘old’ government borrowed, not ‘new’

Constitution government

• People panicked and sold their bonds for less than they bought them for– Sold $100 for $25– Afraid the government would never pay them

• One part of government said not to pay• Another said to pay• Jefferson came up with a compromise

• Government would pay bonds off if….• New Capital Building would be built off of

Virginia’s Potomac River• What do those things have in common?• Nothing; it was just something that the two

different sides both wanted

• U.S. develops into a free enterprise capitalism• Government does regulate (FDA regulates

what goes into your food)• Government rules kept to a minimum to allow

business to grow

Review

• U.S. became more “industrial” and “urban” after 1790

• Became a free enterprise capitalist system– Economy based on money and things that can be

sold for money with just a little government involvement

– Borrowing money is a big part of this– Too much debt is bad• Both governments and people can get into debt

Assignment• Choose a topic and write ½ a page about it– 1. What type of people make the best citizens?– 2. What type of people make better citizens – people

living in big cities or people living in rural areas? And why?

– 3. What are some problems that might occur from too much personal debt? Think individually and nationally.

– 4. What are some problems that might occur from too much national debt? What should we do about this?

– 5. What are the pros and cons of a capitalist system? How might a capitalist system be made better, or what system might be better than capitalism?