UAW Strikes Spurred Adoption of Unions in Other Industries

The United Automobile Workers union (UAW) was formed in 1935 because workers in the automotive industry were unable to appoint their own leaders as part of the American Federation of Labor union (AFL). Within a year of its birth, the UAW began arranging sit-down strikes in a variety of automotive factories. The laborers were striking for fair wages, the right to use the bathroom during a shift and improved safety regulations. Their first strike occurred in a General Motors plant in Atlanta, with additional strikes occurring across the country throughout 1936 and into 1937.

In addition to creating a better working environment for autoworkers, the UAW strikes inspired workers in other industries to demand fair wages and safe working conditions, as well as legitimizing the labor movement. One of the major results of the strikes occurred on March 1, 1937 when the president of the Congress of Industrial Organizations, John L. Lewis, and Myron Taylor, president of U.S. Steel, signed an agreement that recognized the Steel Workers Organizing Committee as the sole negotiator for the unionized steel workers. The contract also gave steel workers a pay hike, established the 40-hour workweek and provided accommodations for overtime pay.


The California Gold Rush

James W. Marshall was the first to discover gold at Sutter’s Mill in Coloma, California, in 1848. People living in Oregon, the Sandwich Islands inHawaiiandLatin Americawere the first to hear about the discovery and flooded the state toward the end of 1848. The Gold Rush drew about 300,000 people to California during the 1840s and ‘50s.

Those seeking gold, referred to as forty-niners, came from as far as China, Australia and Europe to seek fortune in northern California. In the beginning, the forty-niners could simply pick gold nuggets off the ground. As more people flocked to the area, the gold became harder to find. Miners had to start recovering the nuggets from riverbeds and streams by panning and other methods. As supply waned, the number of gold companies searching for gold outnumbered the individual miners because of the equipment required to extract the gold.

The population of San Francisco exploded from about 200 residents to more than 36,000 in less than a decade thanks to the Gold Rush. Roads were built throughout the area, along with schools, churches and additional towns. A state constitution was written in 1849 and California became a state in 1850.

Aside from making many people rich, the Gold Rush had a positive effect on the U.S.economy as well as the global economy. The demand for food grown in Chile, Australia and Hawaii increased as did the desire for manufactured goods from Europe and China. Locally, the Gold Rush resulted in an influx of people into northern California, which lead to increased commerce, the construction of railroads and the establishment of a shipping port.

The Gold Rush also had some negative effects on the people of California and the environment. The Native Americans in the area hunted and fished on the lands surrounding Sutter’s Mill. The gold mining caused silt, gravel and toxic chemicals to contaminate the waters, killing off fish and other wildlife. Many Native Americans starved to death while others succumbed to diseases, including smallpox, influenza and diseases.

The Sale of Manhattan Island

The island of Manhattan was once home to the Lenape Indians. Englishman Henry Hudson was the first to map the area when he traveled up what is now the Hudson River to Albany in 1609. The first permanent European settlement was started in 1624 when a Dutch fur trading settlement was founded on Governers Island. A citadel was established in 1625 on Manhattan Island to protect the settlers. The area was officially recognized as New York City in 1625.

Peter Minuit, who served as the director of the Dutch colony from 1626 until 1638. It was Minuet who purchased the island of Manhattan on May 24, 1626 for goods totaling 60 Dutch guilders, which is roughly equivalent to $24 the 19th century. It’s possible the goods traded included iron kettles, ax heads, duffel cloth and hoes. They were among the goods traded for nearby Staten Island in the same time period. Minuit also founded New Sweden, a Swedish colony, in 1638.

Railway Mania: An Early Example of an Economic Bubble

You’re probably familiar with the dotcom explosion in the 1990s. During this period of explosive Internet growth, people were investing in Internet startups as quickly as they were popping up. Most of the companies blew through their venture capital and never produced any profits to pass on to their investors. The dotcom bubble is certainly not the first economic bubble to burst, nor will it be the last.

A similar investing craze occurred in Britain in the 1840s. The situation was dubbed Railway Mania and was characterized by an increase in investing in railways. Some people invested money they didn’t have to invest as shares in railways skyrocketed.

When the Liverpool and Manchester railway opened in 1830, it proved to be a successful way to transport both people and goods long distances. Although the railway itself was successful, the British economy experienced a bit of a slump in the early 1840s. With interest rates on the rise, people were more interested in investing in government bonds than in railway stocks, however, the economy began to improve in the mid-1840s and shares of railway stock began to pay out big time. Railways were promoted heavily throughout Britain as a foolproof investment, so families began investing their life savings in new railway companies.

The bubble reached its peak in 1846 with more than 272 new railway companies approved and 9,500 miles of new railroads planned. Some of the companies went out of business before they could even build their lines due to poor financial planning, while others were bought out by other companies. Some of the companies ended up being fraudulent companies set up to channel investment money into other businesses.

Although the railway bubble did eventually burst, resulting in financial losses for many people, one good thing did come out of this economic bubble.Britain’s railway system was greatly expanded, allowing people to travel throughout the area quickly and easily, and allowing for the inexpensive transport of good, such as coal.

History of the FDIC

The Federal Deposit Insurance Corporation (FDIC) is a U.S. corporation formed by the government under the Glass-Steagall Act of 1933. The corporation and the act that formed it were a direct result of the financial events that occurred during the Great Depression. The FDIC provides insurance on money deposited into a bank. If someone deposits $100,000 into a bank account and the bank does not have that money when the depositor wants it back, the FDIC steps in and provides the necessary funds. As of January 2012, the FDIC will insure up to $250,000 per depositor per bank.

The FDIC has been put to the test twice in the last 30 years. The first test came with the Savings & Loan Crisis in the 1980s. Although the S&L Crisis affected mainly savings and loan institutions that were covered through the Federal Savings and Loan Insurance Corporation, several large banks were also affected due to the insolvency of the S&L companies.

The most recent test came with the economic crisis the U.S. is still struggling with. In 2008, the FDIC seized 25 troubled banks. By the end of 2009, 140 banks were declared insolvent and 157 additional banks failed by the end of 2010.

Revisiting the S&L Crisis

The Savings & Loan Crisis is one of the greatest bank collapses in U.S. history, second only to the Great Depression in magnitude. It occurred in the 1980s and was brought on by a number of factors. One of the contributing factors was the inflation that occurred in the late 1970s. Because of this inflation, savings and loans (S&Ls) were losing money off their fixed-rate mortgages, which they depended on for income. Additionally, with the popularity of money market accounts, savings accounts were taking a hit, which meant the S&Ls had less capital to invest in mortgages.

As a result, the S&Ls asked Congress to remove some of the restrictions on investing. In 1982, Congress passed the Garn-St. Germain Depository Institutions Act. This act gave S&Ls the right to raise deposit interest rates and issue commercial and consumer loans. The act also removed the restrictions on loan-to-value ratios. Concurrently, the Federal Savings and Loan Insurance Corporation (FSLIC), the company that insured money kept in S&Ls, raised the maximum insured amount from $40,000 to $100,000.

With more investment freedom, S&Ls began investing in risky real estate and granting commercial loans. Many S&Ls experienced tremendous growth for the first few years — some even tripling in size, but by 1983, approximately one-third of the U.S. S&Ls were not profitable and nearly 10 percent were bankrupt. As more S&Ls and banks went out of business, the FSLIC ran out of money to back up the savings accounts. Additionally, many S&Ls stayed open and continued to issue risky loans.

As the losses kept piling up, Congress stepped in to put a stop to the lending and bail out the S&Ls. The bailout, known as the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), instituted new federal regulations for the S&L industry to abide by and provided $50 billion to close the banks that had failed and prevent further losses. FIRREA was enacted in 1989, but it took until at least the mid-1990s to deal with all the closed S&Ls.

More than 1,000 S&Ls failed between 1986 and 1995, with assets totaling $500 billion. In 1999, the total cost of the S&L Crisis was estimated at $153 billion, with nearly all of that money — $124 billion — coming from the taxpayers.

Jefferson’s Louisiana Purchase

The Louisiana Purchase, which occurred in 1803, doubled the size of the U.S., secured U.S. access to the port of New Orleans and ensured free passage all along the Mississippi River, all for the low, low price of 15 million dollars. While that may seem like a big chunk of change, especially considering it was paid in 1803, the purchase encompassed 828,000 square miles of territory, which works out to less than three cents per acre.

 The purchase was the brainchild of Thomas Jefferson, the president at the time. He knew westward expansion was necessary in order for the U.S. to grow both in size and power and he was worried that Napoleon would block U.S. access to the port of New Orleans. Jefferson faced opposition from those who considered the purchase unconstitutional, but he persevered and the Senate agreed upon the purchase with a vote of 26 to six. In addition to securing an important sea port, the Louisiana Purchase opened up the western portion of North America to the growing United States.