Money Issues: 1790 and today

1. Money Issues
History Affects Today

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

3. What kind of citizens are best?
• Federalists wanted to encourage business and
industry
• Democrat-Republicans wanted to encourage
people to farm and own land

4. 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

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

6. Jim is a farmer with a cow to sell.

7. Ashley sells computers.

8. 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.

9. Everyone wants something from
someone, but no one can barter. Why?
Wants a computer
Wants a burger
Needs a leak fixed

10. Solution:
Create something that everyone can
exchange
Wants a computer
Wants a burger
Needs a leak fixed

11. 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

12. 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

13. 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

14. 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

15. • 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

16. • 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

17. • 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

18. 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

19. 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?