Study Notes: The Era of Good Feelings, Economic Panics, and Sectional Conflict

The Era of Good Feelings and the Presidency of James Monroe

• Historical Context: The "Era of Good Feelings" began following the election of James Monroe after the War of 1812.
• Definition of the Era: The period is characterized by "one-party rule" in the United States government.
      * While only one political party existed, members still disagreed internally on policy.
      * The absence of rival parties meant there was less partisan dissent in the traditional sense.
• The Demise of the Federalist Party: The Federalist Party ceased to exist following the Hartford Convention.
      * Public Perception: Federalists were viewed as radicals during a time of intense nationalism.
      * The Hartford Convention: This event was hated by the general public because it was seen as an attempt to break up national unity, leading to the party's eventual disappearance.

Rising Sectionalism and Political Disagreements

• Sectionalism Defined: This refers to the rising tension between the North and the South, characterized by different viewpoints on how the federal government should be managed.
• Major Areas of Disagreement:
      * Tariffs: The Tariff of 1816 was the first protective tariff in U.S. history.
          * Manufacturers: Favored the tariff as it protected domestic industry.
          * Agricultural Interests: Generally opposed the tariff.
      * Internal Improvements: While seemingly beneficial, the Northeast was concerned that building roads and canals would drain their population by making it easier for people to move West.
      * The Bank of the United States (BUS): Disagreement existed over the power of the national bank. Farmers specifically felt that the bank did not make money readily available to them.
      * Sale of Public Lands: Conflict arose regarding what the government should do with the revenue generated from the sale of land.

The Panic of 1819 and Economic Principles

• Definition of a "Panic": Historically, economic downturns were called panics. Today, they are referred to as "recessions."
      * Reason for Name Change: The term "panic" causes people to literally panic, which worsens economic conditions.
• The Business Cycle: A recession is a natural part of the business cycle, typically occurring every $10$ to $20$ years.
• Recession vs. Depression:
      * Recession: Usually lasts between $2$ and $5$ years and is not as significant in depth.
      * Depression: An anomaly that is not part of the standard business cycle. It is deeper and longer; for example, the Great Depression lasted approximately $10$ years.
• Next Predicted Recession: There is a prediction for a recession around the year $2028$.
• Core Cause of Panics: Over-speculation:
      * Instructional Tip: If the Panic of 1819 appears on a quiz, the answer to the "cause" is always "over-speculation."
      * Mechanism: Over-speculation involves buying assets at a low price and attempting to sell them at a high price to make a profit.
• Comparison of Speculative Markets:
      * 2007–2008 (The Great Recession): Caused by over-speculation in the housing market. Banks gave $100\%$ loans to people (e.g., teachers) regardless of their ability to pay. When the market crashed, it affected individuals, companies, and banks broadly because everyone lost value on their homes.
      * 1819: Caused by over-speculation on land. Because land speculation affected fewer people than the modern housing market, the recession was less impactful overall.
      * Stock Market (Great Depression): People bought stocks on margin (paying only half the price) because values were rising, but they were forced to sell lower once the market crashed.
      * AI (Modern Context): Currently, financial advisors suggest investing in AI as its value rises exponentially, though some predict an eventual market crash.
      * 2020 Recession: Considered an anomaly because it was caused by a pandemic, not the standard business cycle.
• Inflation: War typically causes inflation because the government spends heavily on the military and weapons, often by printing more money. An increase in the money supply reduces the value of the dollar.
• Specie and Currency Value:
      * Specie: Hard currency, specifically gold or silver ($Au$ or $Ag$).
      * Specie Circular: Later advocated by Andrew Jackson, who believed only gold and silver should be used for trade to keep the dollar's value stable.
      * Paper Currency: In this era, paper currency had little value because people/banks printed their own, leading the government to try to fix the economy by making fewer/smaller loans (e.g., requiring a $15\%$ to $20\%$ down payment instead of current full loans).
• Farmer Perspectives: Farmers view banks as "evil financial monsters." To operate, farmers must take out loans for seed and equipment; when banks stop lending to control the money supply, farmers' livelihoods are threatened.

Westward Expansion (1791–1819)

• Political Nature of the West: Unlike the South, the West has no history of "states' rights" because settlers always relied on the federal government for help.
• Demographics: A diverse population including immigrants, businessmen seeking opportunity, and criminals fleeing their past.
• Growth: Nine new states joined the Union between $1791$ and $1819$.
• Drivers for Westward Movement:
      * Cheap Land: The Land Act set prices at approximately $\$1.25$ per acre.
      * Soil Exhaustion: Tobacco and cotton farming had exhausted the land in the South, forcing farmers to seek new territory.
      * Economic Stress: Hardships caused by the previous economic embargoes.
      * Safety: Moving West became increasingly safer as native populations were suppressed.
• Political Importance: While the West did not have enough people to dominate politics alone, they were crucial as a "swing vote" that could ally with either the North or the South on specific bills.

The Missouri Compromise

• The Tallmadge Amendment: The first significant piece of legislation regarding slavery since the Northwest Land Ordinances.
      * Provisions: Proposed that no more slaves be brought into Missouri and called for the gradual emancipation of slaves already there.
      * Southern Reaction: Southerners were furious. They feared that if the government could interfere with slavery in Missouri, it would eventually interfere with slavery in the South.
      * Contrast with Northwest Ordinances: The ban on slavery in the Great Lakes region was not controversial because there were no slaves there yet and the climate did not support tobacco or cotton. Missouri, however, was already an agricultural state with existing slave labor.
• Henry Clay: Known as "The Great Compromiser."
• Terms of the Compromise (1820):
      1. Missouri: Admitted as a slave state.
      2. Maine: Admitted as a free state (to maintain sectional balance in Congress).
      3. The 36°30' Line: Slavery was prohibited in the remainder of the Louisiana Territory north of the line $\text{36}^{\circ} \text{30}'$.
• Legacy: The compromise preserved the balance between slave and free states and established a precedent that the North and South could reach agreements to maintain peace.

Questions & Discussion

• Audience Question: "Where's the Monroes?"
      * Response: The speaker was discussing the image of James Monroe on a slide.
• Audience Anecdote (Portrait of Monroe): Students noted that the specific picture of James Monroe on the presentation slide looked exactly like a teacher at the school, Mr. Wiebe. This is a recurring observation every year according to the speaker.
• Dialogue on Cell Phone Policy:
      * Question: How are students feeling about the cell phone ban next year?
      * Student Response: Mentioned the "five stages of grief" or "eight stages of anger, denial, acceptance."
      * Speaker Explanation: The state legislature passed a law regarding phone use. The current school policy is that phones must be out of sight (in backpacks). However, some legislators are advocating for a stricter policy where phones are not even allowed in backpacks, potentially requiring the use of lockers. The school currently lacks enough lockers to accommodate this, and "lock boxes" are too expensive to mandate.
• Audience Question on Economics: "What's the difference between depression and recession?"
      * Response: A recession is a temporary 2-5 year dip in the business cycle. A depression is a 10-year anomaly that is much deeper and more significant.
• Audience Question on Current Economy: "Are we not in a recession right now?"
      * Response: Not officially. Multiple economic indicators must be met for the label to be official.
• Audience Comment on Technology: A student observed that investments in computers and AI might be risky because hardware loses value rapidly as new generations are released.
• Class Activity Instructions: The speaker introduced a "cut up activity" involving a document divided into $20$ pieces. Students were instructed to read their piece, trade with others to gather information, but ultimately ensure they got their original piece of paper back so they could piece together the full document's meaning with their partners.