The American Economy:A Historical Encyclopedia

The American Economy:A Historical Encyclopedia

Volume One: Short Entries

edited by

Cynthia Clark Northrup

Santa Barbara, California Denver, Colorado Oxford, England

Copyright © 2003 by Cynthia Clark Northrup

All rights reserved. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted, in any form or by any means, electronic, mechanical, photo-copying, recording, or otherwise, except for the inclusion of brief quotations in a review,without prior permission in writing from the publishers.

Library of Congress Cataloging-in-Publication DataThe American economy : a historical encyclopedia / edited by CynthiaClark Northrup.

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ISBN 1-57607-866-3 (2 vols. : hardcover : alk. paper)ISBN 1-57607-867-1 (eBook)

1. United States—Economic policy—Encyclopedias. 2. UnitedStates—Economic conditions—Encyclopedias. 3. United States—Socialpolicy—Encyclopedias. 4. United States—Socialconditions—Encyclopedias. I. Northrup, Cynthia Clark, 1959–

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Contents

List of Short Entries, viiList of Essays and Primary Source Documents, xiii

Acknowledgments, xvA Note on Using the Encyclopedia, xvii

Introduction, xix

The American Economy: A Historical Encyclopedia

VOLUME ONE: SHORT ENTRIES

A&M Records v. Napster Inc. to Yazoo Land Companies, 1–316

VOLUME TWO: ESSAYS AND PRIMARY SOURCE DOCUMENTS

Essays: Advertising to Welfare State, 317–510

Primary Source Documents, 511–634

Selected Bibliography, 635About the Editor and Contributors, 665

Index, 669

v

List of Short Entries

A&M Records v. Napster Inc. (2001), 1Acquired Immune Deficiency Syndrome (AIDS), 1Advanced Technology Office (ATO), 2Affirmative Action, 2Affluence, 3Agricultural Adjustment Act of 1938, 3Agricultural and Mechanical (A&M) Colleges, 4Agricultural Credit Act of 1987, 4Agricultural Credit Improvement Act of 1992, 5Agricultural Government-Sponsored Enterprises (GSEs),

5Agricultural Policy, 5Agricultural Programs Adjustment Act of 1984, 7Aid to Dependent Children (ADC), 7Aid to Families with Dependent Children (AFDC), 7Alaska, 8Aldrich-Vreeland Act (1908), 9Alliance for Progress, 9American Economic Association (AEA), 9American Federation of Labor and Congress of

Industrial Organizations (AFL-CIO), 10American Inventors Protection Act of 1999, 10American Revolution (1775–1783), 10American Stock Exchange (AMEX), 11American System, 12Antidumping, 12Anti-Imperialist League, 13Antitrust Suits, 14Antiunion Policies, 15Arab Oil Embargo (1973–1974), 16Articles of Confederation (1776–1789), 16Automobile, 17Aviation, 18

Baby Boom, 19Bacon, Nathaniel (1647–1676), 19Bacon’s Rebellion (1676), 20Bakke v. Board of Regents of California (June 28, 1978), 20Balance of Payments, 21Balance of Trade, 21

Bank Failures, 22Bank of the United States (BUS), First: 1791–1811, 22Bank of the United States (BUS), Second: 1816–1836, 23Bank Protection Act (1968), 23Banking Act (1933), 24Banking System, 24Beard, Charles Austin (1874–1949), 26Berlin Wall, 26Biddle, Nicholas (1786–1844), 27Bison (Buffalo), 27Bland-Allison Act (1878), 28Block Grants, 28Board of Governors of the Federal Reserve System, 29Bond Sales, 30Bonus March (1932), 30Boston Tea Party (December 16, 1773), 30Boxer Rebellion (1898–1900), 31Boycotts, Colonial, 31Bretton Woods Agreement (1945), 32Budget and Accounting Act of 1921, 32Budget Deficits and Surpluses, 33Bunau-Varilla, Philippe Jean (1859–1940), 33Bureau of Corporations, 34Bureau of Freedmen, Refugees, and Abandoned Lands, 34Bureau of Indian Affairs (BIA), 35Bush, George Herbert Walker (1924– ), 35Bush, George W. (1946– ), 36Business, 37

Canada, Invasion of (1812–1813), 39Capitalism, 39Captains of Industry, 40Carey Act (1894), 40Carnegie, Andrew (1835–1919), 41Carpetbaggers, 41Census, 42Central Treaty Organization (CENTO), 42Charles River Bridge v. Warren Bridge (1837), 43Checkers Speech (September 23, 1952), 43Checks and Balances, 44

vii

Child Labor, 44China, 45Civil Rights Act of 1968, 46Civil Rights Movement (1955–1968), 46Civil Works Administration (CWA), 46Civilian Conservation Corps (CCC), 47Class, 47Clay, Henry (1777–1852), 48Clayton Anti-Trust Act (1914), 49Cleveland, Grover (1837–1908), 49Clinton, William Jefferson (1946– ), 49Cohens v. Virginia (1821), 51Coin’s Financial School (1894), 51Cold War (1947–1991), 52Colonial Administration, 53Commission Government, 54Committee on the Conduct of the War (CCW), 54Commonwealth v. Hunt (March 1842), 55Communism, 55Community Action Programs, 56Company Towns, 57Computer, 57Confiscation Acts (1861–1864), 58Congress, 59Conservation, 60Constitution (1788), 60Consumer Price Index (CPI), 61Consumer Spending, 62Continental Congress, 62Continental Impost, 63Continental System, 63Convict Lease, 64Coordinating Committee for Multilateral Export

Controls (CoCom), 64Corruption, 65Cotton, 66Council-Manager Government, 66Council of Economic Advisers (CEA) , 67Coxey’s Army (April 1894), 68Credit, 68Crédit Mobilier , 69Crime, 69Cuba, 70Currency Act (1764), 70Currency Act of 1900, 71

Dams, Construction of, 73Dartmouth College v. Woodward (1819), 74Dawes Plan, 74Dawes Severalty Act (1887), 74Debs, Eugene Victor (1855–1926), 75Defense Advanced Research Projects Agency (DARPA),

75Defense Plant Corporation (DPC), 76Defense Sciences, 76Deficit Spending, 77DeLima v. Bidwell (1901), 77Democracy, 78

Democratic Party, 78Depression of the 1890s, 79Depressions, 79Deregulation, 80Desert Land Act (1877), 81Digital Millennium Copyright Act of 1998, 81Dingley Tariff (1897), 82Disarmament, 82Disaster Assistance Act of 1988, 83Disease, 83Distribution Act (1836), 84Divorce, 85Dollar Diplomacy, 85Dominican Republic, 86Dow Jones Industrial Average, 86Downes v. Bidwell (1901), 86Dust Bowl, 87

Earnings, 89Economic Cooperation Administration (ECA), 90Economic Indicators, 90Economic Interpretation of the Constitution (1913), 91Economic Liberalism, 91Economic Opportunity Act of 1964, 92Economic Stabilization Act of 1970, 92Economy Act (1933), 92Ecosocialism, 93Edison, Thomas Alva (1847–1931), 93Education, 94Electricity, 95Electronic Commerce (E-Commerce), 96Emancipation Proclamation (January 1, 1863), 97Embargo of 1807, 97Embargoes, 97Emergency Price Control Act (1942), 98Employment Act of 1946, 98Energy, 99Energy Crisis, 99Entitlement Programs, 100Environment, 101Equal Pay Act of 1963, 102Export Control Act (1949), 102

Family Assistance Plan (FAP), 105Farm Credit Amendments Act of 1985, 105Farm Credit System Reform Act of 1996, 106Farm Crisis of 1982, 106Farm Disaster Assistance Act of 1987, 107Farm Security Administration (FSA), 107Farmer Mac Reform Act of 1995, 108Federal Agricultural Improvement and Reform Act of

1996 (FAIR Act of 1996), 108Federal Agricultural Mortgage Corporation (Farmer

Mac), 109Federal Deposit Insurance Corporation (FDIC), 109Federal Emergency Management Agency (FEMA), 110Federal Emergency Relief Administration (FERA), 110Federal Highway Act of 1956, 110

viii List of Short Entries

Federal National Mortgage Association (Fannie Mae),111

Federal Reserve Act (Owen-Glass Act) of 1913 , 111Federal Trade Commission Act (September 1914), 112Federal Trade Commission (FTC) (1916), 112Federalist Papers (1787–1788), 113Fletcher v. Peck (1810), 113Flex Acres, 114Floating Exchange Rates, 114Food and Drug Administration (FDA), 115Foot and Mouth Disease (FMD), 115Force Act (1833), 116Ford, Henry (1863–1947), 116Fordney-McCumber Tariff (1922), 117Foreign Policy, 117Forest Reserve Act (1891), 119Fort Knox, 119Forty Acres and a Mule, 120Fourteenth Amendment (1868), 120Free Market, 121Free-Soil Party, 121Free Trade, 122Free Trade Area of the Americas (FTAA), 122French and Indian War (1754–1763), 123Fugitive Slave Acts (1793, 1850), 124Full Employment, 124

Gadsden Purchase (1854), 127Gallatin, Albert (1761–1849), 127General Agreement on Tariffs and Trade (GATT), 128George, Henry (1839–1897), 128Gibbons v. Ogden (1824), 129Glass-Steagall Banking Act (1933), 129Globalization, 130Gold Reserve Act (1934), 131Gold Rush, California (1849), 132Gold Standard, 132Gold versus Silver, 132Good Neighbor Policy, 133Government Budgets, 134Gram-Rudman-Hollings, Balanced Budget, and

Emergency Deficit Control Act (1985), 134Great Depression (1929–1941), 135Great Railroad Strike of 1877, 136Great Society, 136Green Party, 137Greenpeace, 137Greenspan, Alan (1926– ), 138Gross National Product (GNP), 138Group of Seven (G-7), 139

Hamilton, Alexander (1755–1804), 141Harris Treaty (1858), 141Hawaii, 142Hawley-Smoot Tariff (1930), 142Hay-Pauncefote Treaties (1900, 1901), 143Hepburn Railroad Regulation Act (1906), 143High-Tech Industries, 144

Homestead Act (1862), 144Horseshoe Bend, Battle of (1814), 145Housing Act of 1949, 145Housing Act of 1954, 146Hull, Cordell (1871–1955), 146

Immigration, 149Indentured Servants, 150Indian Policy, 150Industrial Heartland, 151Industrial Revolution (1780s–1840s), 151Industrial Workers of the World (IWW), 152Industrialization, 153Inflation, 153Infrastructure, 154Insular Cases, 155Interest Rates, 155International Monetary Fund (IMF), 156International Trade Organization, 156Interstate Commerce Commission (ICC), 157Intolerable Acts (1774), 157Iran-Contra (1986–1987), 158Irrigation, 158Isolationism, 159

Jackson, Andrew, (1767–1845), 161Japan, 162Japanese Oil Embargo (1940–1941), 162Jay’s Treaty (1796), 163Jungle, The (1906), 163

Keating Owen Act (1916), 165Kennedy Round (1964–1967), 165Keynes, John Maynard (1883–1946), 165Keynesian Economics, 166Keyserling, Leon (1908–1987), 166Knights of Labor, 167

Labor Contract Law, 169Labor-Management Relations Act (Taft-Hartley Act)

(1947), 170Laissez-Faire, 170Lee, Henry (1782–1867), 171Lend-Lease Act (1941), 171Levittown, 172Lobbying, 173Long, Huey (1893–1935), 173Louisiana Purchase (1803), 173

Macon’s Bill No. 2 (1810), 175Macroeconomics, 175Mad Cow Disease, 176Manifest Destiny, 176Marshall, John (1755–1835), 177Marshall Plan (1948), 177Marxism, 178Maysville Road Bill of 1830, 178McAdoo, William G. (1863–1941), 179

List of Short Entries ix

McCulloch v. Maryland (1819), 179McKinley Tariff Act (1890), 180McNary-Haugen Bill (1924, 1928), 180Media, 180Medicaid (1965), 181Medicare (1965), 182Medicine, 182Mellon, Andrew William (1855–1937), 183Mental Illness, 183Mercantilism, 184Merchants of Death, 184Microeconomics, 185Microsoft, 185Microsystems Technology Office (MTO), 186Military-Industrial Complex (MIC), 186Minimum Wage, 187Mixed Economy, 187Monetary Policy, 188Montgomery Bus Boycott (1955–1956), 188Morgan, John Pierpont (1837–1913), 189Morrill Tariff Act (1861), 189Multinational Corporations, 189Munn v. Illinois (1877), 190Muscle Shoals (Tennessee Valley Authority), 190

Nader, Ralph (1934– ), 193Nasdaq, 193National Aeronautics and Space Administration (NASA),

194National Bank Act of 1863, 194National Cordage Company, 195National Currency Act of 1863, 195National Defense Education Act of 1958, 195National Endowment for the Arts (NEA), 196National Endowment for the Humanities (NEH), 196National Grange of the Patrons of Husbandry (1867),

197National Guard, 197National Income and Product Accounts (NIPA), 197National Industrial Recovery Act (NIRA) (1933), 198National Labor Relations Board (NLRB) (1935–Present),

198National Marketing Quota (1938–Present), 199National Oceanic and Atmospheric Administration

(NOAA), 199National Recovery Administration (NRA), 200National Technical Information Service (NTIS), 200National Telecommunications and Information

Administration (NTIA), 201National War Labor Board (NWLB) (1918–1919,

1942–1945), 201Navigation Acts (1651, 1660, 1672), 202New Deal, 202New York Stock Exchange (NYSE), 203Newlands Reclamation Act (1902), 203Nicaragua, 204Non-Importation Act (1806), 204

Non-Importation Agreements, Colonial (1765–1776),205

Non-Intercourse Act of 1809, 205North American Free Trade Agreement (NAFTA), 206North Atlantic Treaty Organization (NATO), 206Northern Securities Company, 207Northwest Ordinance (1787), 208Nullification Crisis (1832–1833), 208

Occupational Safety and Health Act of 1970 (OSHA),211

Office of Price Administration (OPA), 212Office of Production Management (OPM), 212Office of War Mobilization (OWM), 213Oil, 213Oil Embargoes, 214Open Door Notes (1899, 1900), 215Orders in Council (January 7, 1807; November 11, 1807),

215Ordinance of 1785, 216Organization of American States (OAS), 216Organization of Petroleum Exporting Countries (OPEC),

217

Pan American Union, 219Panama and the Panama Canal, 219Panic of 1819, 220Panic of 1837, 221Panic of 1873, 221Panic of 1893, 222Panic of 1907, 222Parity, 223Patronage, 223Payne-Aldrich Tariff Act (1909), 224Pell Grant, 224Pendleton Act (1883), 225Personal Responsibility Act of 1996, 226Personal Savings, 226Philippines, 226Pinckney Treaty (Treaty of San Lorenzo) (1795), 227Pinkerton Detective Agency, 227Piracy, 228Poll Tax, 228Pollock v. Farmer’s Bank & Trust (1895), 228Population, 229Populist Party, 229Poverty, 230President’s Commission on the Status of Women (1961),

231Price Supports/Agricultural Adjustment, 231Prigg v. Pennsylvania (1842), 231Prohibition (1919–1933), 232Protective Tariffs (1816–1930), 233Public Works Administration (PWA), 234Puerto Rico, 234Pullman Strike (1894), 234Pure Food and Drug Act (1906), 235

x List of Short Entries

Railroads, 237Raw Materials, 238Raymond, Daniel (1786–1849), 238Reagan, Ronald (1911– ), 239Reaganomics, 240Recession, 240Reciprocal Trade Agreements Act of 1934, 241Relief Act of 1821, 241Report on the Subject of Manufactures (December 5,

1791), 241Report on Public Credit (January 1790), 242Republican Party, 242Resumption Act (1875), 243Revenue Tariffs, 244Robber Barons, 244Rockefeller, John D. (1839–1937), 245Rolfe, John (1585–1622), 245Roosevelt, Franklin D. (1882–1945), 246Roosevelt, Theodore (1858–1919), 247Rule of 1756, 248Rural Credit and Development Act of 1994, 248Rural Electrification Administration (REA), 249

Schecter Poultry Corp. v. United States (1935), 251School Busing, 252Securities and Exchange Commission, 252Servicemen’s Readjustment Act (G.I. Bill of Rights)

(1944), 253Seward, William (1801–1872), 253Share Our Wealth Plan, 254Share Our Wealth Society, 254Shelley v. Kraemer (1948), 254Sherman Anti-Trust Act (1890), 255Sherman Silver Purchase Act (1890), 256Sinclair, Upton Beal, Jr. (1878–1968), 256Sixteenth Amendment (1913), 257Slavery, 257Smith-Connally Act (War Labor Disputes Act) (1943),

259Smith-Lever Act (1914), 260Smithsonian Agreement (1971), 260Smuggling, 261Social Security Act of 1935, 262Socialism, 263Soil Conservation and Allotment Act (1936), 263South Carolina Exposition and Protest (1828), 264Spanish-American War (War of 1898), 264Stagflation, 265Stamp Act (1765), 266Stamp Act Congress, 266Standard Oil, 267Steel, 267Strategic Defense Initiative (SDI) (1983), 268Sugar, 269Sugar Act of 1764, 269Supply-Side Economics, 270

Tariff of Abominations (Tariff of 1828), 271Taxation, Confederation, 271Tea Act of 1773, 272Technology Transfer, 272Tennessee Valley Authority (TVA), 273Thirteenth Amendment (1865), 273Timber and Stone Culture Act (1878), 274Timber Culture Act (1873), 274Townsend, Frances E. (1876–1948), 274Townsend Plan, 275Townshend Duties (1767–1773), 275Trademark Act of 1947, 275Trademark Amendments Act of 1999, 276Trail of Tears (1838), 276Transcontinental Railroad, 277Transportation Revolution, 277Treaty of 1783, 278Treaty of 1867, 279Treaty of Ghent (December 24, 1814), 279Treaty of Greenville (1795), 279Treaty of Guadalupe Hidalgo (February 2, 1848), 280Triangular Trade, 280Truman Doctrine, 281Trusts, 281Truth-in-Lending Act (1968), 282Truth in Securities Act (Securities Act of 1933), 282

Underwood-Simmons Tariff Act (1913), 285Unemployment, 286Unemployment Insurance, 286United Nations (UN), 287United Nations Children’s Fund (UNICEF), 288United States v. E. C. Knight Co. (1895), 288Urban Policy, 289U.S. Agency for International Development (USAID),

290U.S. Chamber of Commerce, 290U.S. Customs Service, 291U.S. Department of Commerce, 291U.S. Department of Defense (DOD), 292U.S. Department of Health and Human Services, 292U.S. Department of Housing and Urban Development

(HUD), 293U.S. Department of Labor, 293U.S. Department of Treasury, 294U.S. Environmental Protection Agency (USEPA), 295U.S. Housing Authority, 296U.S. Information Agency (USIA), 296U.S. Mint, 297

Van Buren, Martin (1782–1862), 299Vietnam Conflict (1954–1973), 299Virgin Islands, Purchase of (1917), 300Volcker, Paul A. (1927– ), 301

List of Short Entries xi

Wage and Price Freeze (1971), 303Wagner Act (1935), 304War and Warfare, 304War of 1812, 305War Production Board (WPB), 306Wealth Distribution, 306Welfare Economics, 307Whig Party, 307Whiskey Rebellion (1794), 308Williams v. Mississippi (1898), 308

Wilson-Gorman Tariff (1894), 308Wilson, Woodrow (1856–1924), 309Women, 309Workers’ Compensation, 310World Intellectual Property Organization (WIPO), 311World Trade Organization (WTO), 311World War I (1914–1918), 312World War II (1939–1945), 313

Yazoo Land Companies, 315

xii List of Short Entries

EssaysAdvertising, 319Agricultural Policy, 326Antitrust Legislation, 332Banking: Development and Regulation, 339Big Business and Government Relationships, 344Communications, 347Currency, 354Economic Theories, 360Education, 366Energy Policy, 374Federal Reserve Bank, 379Foreign Policy, 385Government Domestic Economic Policies, 387Immigration Policy, 394Insurance, 402Intellectual Property, 409Judiciary, 415Labor, 422Land Policies, 428Law, 433Monetary Policy, 439Money Laundering, 445Science and Technology, 451Slavery, 458Stock Market, 466Taxation, 473Trade Policy, 477Transportation Policy, 485Urbanization, 491War, 497Welfare State, 504

Primary Source Documents Ordinance of the Northwest Territory (1787), 513Report on the Subject of Manufactures (1791), 517Treaty between the United States of America and the

French Republic with Conventions (LouisianaPurchase, 1803), 549

Treaty of Guadalupe Hidalgo (1848), 554Gadsden Purchase Treaty (1853), 562Homestead Act (1862), 565Emancipation Proclamation (1863), 567Timber Culture Act (1873), 569Timber and Stone Culture Act (1878), 570Sherman Anti-Trust Act (1890), 572Panama Canal Treaty of 1903, 574Federal Reserve Act (1913), 579Federal Trade Commission (1915), 593Clayton Anti-Trust Act (1914), 598Franklin D. Roosevelt on Hawley-Smoot Tariff (1932),

605Herbert Hoover’s Response to Franklin D. Roosevelt on

Hawley-Smoot Tariff (1932), 610Lyndon B. Johnson’s Great Society Speech (1964), 614Panama Canal Treaty of 1977, 617Ronald Reagan’s Remarks and a Question and Answer

Session with Reporters on the Air Traffic Controllers’Strike (1981), 632

List of Essays and PrimarySource Documents

xiii

xv

I would like to thank Dr. James Ciment, who recommendedme to ABC-CLIO as editor for The American Economy: A His-torical Encyclopedia. During the course of this project, nu-merous people have provided invaluable advice, assistance,and encouragement, for which I am grateful. I offer a specialthanks to Drs. Walt Rostow, Sidney Weintraub, Robert Fair-banks, Alfred E. Eckes Jr., and Spencer Tucker for serving onthe Board of Advisers.

Throughout the entire endeavor, I have had the support ofthe Department of History at the University of Texas at Ar-lington. I would like to extend a special thank-you to the ref-erence librarians at Texas Christian University, the DallasPublic Library, and especially the University of Texas at Ar-lington, where I took advantage of an extensive library col-lection to verify the multitude of details and locate the pri-mary source material for this work.

Without the support and impressive effort of the contrib-utors, this work would not have been possible. Many of theauthors took their time and energy away from other projectsto ensure the success of the encyclopedia. A special thanks tothose who assisted during the final stages by writing the lastfew entries on relatively short notice—and for doing so withsuch welcomed enthusiasm. For their assistance in typingmany of the primary source documents, my deepest grati-tude goes to Christopher Nichols and Vonnie Peach.

To my family a special thanks. Through months of tele-phone calls, correspondence, writing, and editing they con-tinued to provide support and encouragement.

—Cynthia Clark Northrup

Acknowledgments

During the last half of the twentieth century, scholars havetended to direct their attention away from economics tofocus instead on social and cultural issues. But it is importantfor students and intellectuals to recognize the connection be-tween economics and all other aspects of life. Without signif-icant financial resources, the existence of which is determinedby economic policy, the federal government cannot addresssocial and cultural issues such as health care and Social Secu-rity. The shift in national economic policy that occurred pri-marily after the Civil War affected American life from immi-gration and settlement patterns to the manner in whichbusiness was conducted. The long-term effect of a specific actor policy is often complex.

Designed as a reference tool for anyone who wishes tolearn more about the role of economic policy in Americanhistory, the encyclopedia includes numerous entries dealingwith specific issues, longer essays that explore broader topics,and selected primary documents. The first volume containsmore than 600 biographical and topical entries arranged al-phabetically. The biographical entries provide brief but sig-nificant details about key individuals and concentrate on thespecific role of each in U.S. economic history. Topical entriesdescribe events, court cases, legislation, and so on in the lightof their influence on the economic life of the nation.

Each entry in volume one includes references that lead tomore thorough information about the topic and a “see also”section directing the reader to related entries in volumes oneand two.

In volume two, essays explore broader topics such as theeffect of economic policy on education, insurance, the judici-ary, and science and technology. These in-depth essays ex-plore topics from colonial times to the present. Also part ofvolume two are selected primary sources—the various actsand policies that have established economic policy through-out U.S. history—and a comprehensive bibliography withfull citations. A list of biographical sketches of the contribu-tors and a detailed subject index can be found at the end ofvolume two.

The encyclopedia contains detailed information abouteach economic policy act and about the individuals and de-bates that shaped the formation of economic policies in theUnited States from its infancy to the present day. Althoughthe materials are extensive, space prohibits the inclusion ofeach individual or action connected to the process. This two-volume set addresses the most prominent matters and pres-ents thorough, yet easy to understand, accounts of issues thatcontinue to dictate both the domestic and foreign economicpolicies of the United States.

A Note on Using theEncyclopedia

xvii

The American Economy: A Historical Encyclopedia providesdetailed information about the formation and developmentof economic policy throughout American history and de-scribes its continued importance. Historically, economic is-sues have played a prominent role in U.S. policymaking. Eco-nomic policy has influenced social, cultural, political, andeconomic events from colonial times to the present.

Economic PolicyEconomic policy has shifted many times over the course ofAmerican history. During colonial times, the British coloniesoperated under a mercantilist system in which all trade ben-efited the mother country. After the American Revolution,the fledgling United States attempted to operate under theArticles of Confederation, but the economic restrictions itplaced on the national government caused that system to fail.Delegates meeting at the Constitutional Convention agreedthat the federal government must have the power to tax. Adecision to tax only imports, not exports or direct income,proved to be decisive in the development of domestic indus-try. Congress passed revenue tariffs (taxes on imports) duringthe early years of the Republic; after the War of 1812, a shiftto protective tariffs occurred. These tariffs continued to in-crease reaching their apex during the Civil War under theMorrill Tariff. After the Civil War, tariff rates remained high,ensuring the rise of big business that did not have to competeagainst foreign manufacturers. The extreme wealth accumu-lated by captains of industry such as Andrew Carnegie andJohn D. Rockefeller stood in sharp contrast to the poverty ofmany Americans, especially new immigrants who crowdedinto tenements in major cities in the North and East. Publicawareness of this economic inequity resulted in a movementto replace the tariff as the primary source of tax revenue witha direct personal income tax. However, Congress lacked con-stitutional authority to institute such a tax unless the statespassed a constitutional amendment to allow direct taxation.Republicans finally agreed to lower the tariff rates if theamendment passed, thinking that the states would fail to passit. The plan failed, and ratification in 1913 of the SixteenthAmendment opened the door for direct taxation—a shift

that has influenced capital accumulation, investment, andpersonal savings ever since.

After reducing the tariff rates and increasing personal in-come tax rates, Congress once again increased import dutiesbecause of World War I. After that conflict, European coun-tries that had been carved out of the old empires raised theirtariff rates to protect their own industries. Consequently,trade slowed at the same time that the U.S. stock market col-lapsed under the burden of overvaluation of company worthand market overstimulation due to purchases on margin.Within nine months of the crash, Congress passed the Hawley-Smoot Tariff, which raised tariff rates to a record high. Mean-while, the Federal Reserve Board increased interest rates, con-tracting the money supply. The net effect was a prolongeddepression that finally ended when the United States enteredWorld War II.

The Great Depression and World War II mark a shift inU.S. economic policy. President Franklin D. Roosevelt fol-lowed the economic philosophy of John Maynard Keynes,who advocated deficit spending during periods of financialdifficulty. Deficit spending would allow the federal govern-ment to initiate programs that politicians had traditionallyshunned. For the first time, the federal government assumedthe role of employer to thousands of the country’s unem-ployed workers. Programs like the Civilian ConservationCorps and Works Progress Administration created jobs. So-cial Security was established to promote early retirement andso open up jobs to younger workers. In addition, the federalgovernment funded projects such as the Rural ElectrificationAdministration and the Tennessee Valley Authority to im-prove the lives of Americans in rural or poverty-strickenareas.

WelfareFrom the 1930s to the present, the federal government has in-creasingly used economic policy to deal with social and cul-tural issues. In the immediate post–World War II period,Americans experienced an unprecedented period of prosper-ity because of the accumulation of personal savings and theexpansion of industry during the war. But by the 1960s, it was

xix

Introduction

apparent that although most Americans’ standard of livinghad increased, African Americans and other groups hadfallen deeper into poverty. President Lyndon B. Johnson at-tempted to correct the problem by using tax revenues to funda new welfare state—the Great Society, which had programsranging from Head Start to Medicaid that supported health,education, and community development. The Great Societyredistributed the wealth but also created a group of peoplewho became dependent on the federal government. Afterseveral decades, states including Wisconsin began to experi-ment with ways to eliminate this dependency on welfare. Asof 2003, the number of people on the welfare rolls hasdropped because similar efforts have also been undertakenat the federal level. This change in economic policy led to adrop in the number of births to unwed mothers and thenumber of abortions.

EducationThe field of education has traditionally been the bailiwick oflocal and state governments rather than the federal govern-ment. By the second half of the twentieth century, however,the federal government had become a major participant inthe education arena. After World War II, Congress passed theServicemen’s Readjustment Act (also known as the G.I. Bill),which gave returning veterans the opportunity to attend col-lege at the government’s expense and even to receive a smallliving allowance to help support themselves and their familiesduring the process. As a result, during the 1950s and 1960sthe number of professionals such as engineers, accountants,business executives, lawyers, and doctors increased dramati-cally. During the 1960s, Congress approved financial aid pro-grams that gave all Americans, including those from poorfamilies, the opportunity to attend college. By 2000, moreAmericans had attended college than ever before.

Settlement PatternsThrough various acts and economic policies, Congress hasinfluenced settlement patterns. After the American Revolu-tion, when the nation operated under the Articles of Confed-eration, the government began to encourage the settlement ofthe old northwest territory, which at the time encompassedthe Ohio Valley region. Thomas Jefferson proposed surveyingthe land into townships and selling property to Americans in160-acre parcels. Initially only wealthy investors could affordto purchase the land, and they then subdivided the propertiesinto smaller farms and sold them. No credit terms existed be-tween the government and the purchaser. The land sold veryslowly, but gradually the population of the region increased.

After the purchase of the Louisiana Territory from France

in 1803, Congress attempted to pass legislation to allowhomesteaders to claim 160 acres of federal land in the newlyacquired territory. The debate over the expansion of slaveryprevented the passage of such legislation. Finally, during theCivil War, the Northern Republicans in Congress passed theHomestead Act of 1862, which encouraged western migra-tion. During the 1870s Congress passed two additional acts—the Timber and Stone Culture Act and the Timber CultureAct—that helped more Americans claim land in the westernpart of the country. By the 1900s the federal government hadinitiated a series of dam projects to help supply both farmsand cities with additional water so these communities couldgrow. Cities like Las Vegas, Nevada, could have not expandedwithout the water provided by the Hoover Dam. The govern-ment continues to influence settlement patterns by awardingcontracts to employers like Lockheed-Martin and other de-fense contractors who can entice workers into an area like theSouthwest by offering them jobs.

Although the government encouraged settlement of someareas, it restricted the use of other land. Beginning in the1880s, presidents began setting aside public lands as nationalparks. Theodore Roosevelt set aside more land than all of hispredecessors combined.

Science and TechnologyGovernment spending during wartime has led to manybreakthroughs in the fields of science and technology. In thepost–Civil War period, medical professionals explored thecause of diseases and infections. By the 1900s army surgeonshad discovered the cause of malaria and the public learnedabout germ theory. Wars also resulted in the development ofpenicillin and other antibiotic drugs. During World War I,Americans improved the airplane, and after World War II anentire aviation industry developed. During the cold war, thefederal government funded the missile and space programs,which yielded such inventions as the computer chip andeventually the Internet.

ConclusionAll social, cultural, and political policies must be funded. Theeconomic policies of the federal government affect all aspectsof life in the United States. In the future, the nation will haveto choose which economic policy to implement in connec-tion with such issues as population growth and the increas-ing number of elderly citizens, which will place tremendousstrain on the health care system. These economic decisionswill affect the younger generation, which will have to pay thetaxes to support these programs, and will determine the fu-ture history of this nation.

xx Introduction

The American Economy:A Historical Encyclopedia

A&M Records v. Napster Inc. (2001)Court case that challenged federal copyright laws underUnited States Code Title 17.

In 2000, A&M Records and several other plaintiffs filed acivil case against Napster citing infringement of copyrightlaws. Napster, utilizing the latest MP3 digital music compres-sion technology, allowed members to share music at no costto the member. The founder, Shawn Fanning, established theInternet website for the purpose of providing “samples” ofmusic from a variety of artists. When the recording industryfiled charges against Napster, attorneys for the defendantargued that the company operated under the 1992 AudioHome Recording Act that allowed for the noncommercialreproduction of audio materials. Because Napster provided afree service allowing members to share music, the companyargued that it complied with the existing copyright laws.Attorneys for A&M Records and various other plaintiffswithin the music industry argued that Napster providedaccess to copyrighted music that individuals could downloadand then copy. The lower court ruled in favor of the plaintiffs,and an appeal was filed with the Ninth District Court ofAppeals, which upheld the lower court’s decision butreturned the case to the lower court for the preparation of arevised injunction against Napster. According to the 2001 rul-ing, Napster must review its files and remove from its websiteall copyrighted music if the owner of the rights to that musicobjects to its use by Napster. Napster still retains the right toappeal the decision to the U.S. Supreme Court, but given theconservative nature of the Court, it appears improbable thatNapster attorneys will pursue that course of action.

—Cynthia Clark NorthrupReferencesMitten, Christopher. Shawn Fanning: Napster and the Music

Revolution. Brookfield, CT: Twenty-First Century Books,2002.

White, Ron, and Michael White. MP3 Underground.Indianapolis, IN: Que Corp., 2001.

See also Volume 2: Intellectual Property.

Acquired Immune Deficiency Syndrome(AIDS) A disease caused by a retrovirus that mutates so rapidly thatthe B-lymphocytes and the body’s natural antibodies cannotfight it off.

The introduction of AIDS (acquired immunodeficiencysyndrome) in the United States occurred primarily in thehomosexual and bisexual community. First diagnosed as adisease in 1981, it results in the vulnerability of the humanbody to disease and malignancies. As AIDS spread to includehemophiliacs and individuals who required blood transfu-sions, the public pressured the federal government forresearch funding. Symptoms appear initially like the flu butgradually develop into anxiety, weight loss, diarrhea, fatigue,shingles, and memory loss. Transmission of the diseaseoccurs through the exchange of body fluids such as breastmilk, semen, or vaginal secretions or through the exchange ofblood and blood products. Kissing and the exchange of salivado not appear to transmit the disease nor do urine, feces, orsweat.

The primarily economic implications of the diseaseinclude the increased health care cost associated with the careof AIDS patients as well as their medical treatments. As of2002, physicians rely on three drugs—AZT (also known asRetrovir or Zidovudine), ddI (Videx® EC brand didanesine[delayed-release capsules]), and 3TC (Epivir® brandIamivadine)—to delay the spread of symptoms in patients. Inaddition, another 30 alternative treatments are being tested.The enormous cost associated with the development of acure for the disease has taxed the economic resources of pri-vate foundations established for that sole purpose as well asthe federal government.

In the United States alone, the Centers for Disease Controland Prevention (CDC) estimates that about 850,000 to950,000 Americans are infected by the human immunodefi-ciency virus, or HIV. HIV attacks the immune system cells.All individuals with AIDS have HIV, but not all people withHIV have AIDS. AIDS is a fatal disease caused by a rapidlymutating retrovirus that leaves the victim susceptible toinfections, malignancies, and neurological disorders. Every

A

1

year another 40,000 cases are reported. During the 1980s, amassive public awareness program resulted in a decline innew cases from 60,805 in 1996 to 40,766 in 2000. The major-ity of the new cases have occurred in the African Americancommunity—half of new cases among men and 65 percentof new cases among women occur among this group. As ofthe end of 2001, the CDC reported more than 467,910 deathsfrom the disease.

As a result of the continuing crisis, the federal governmenthas appropriated millions of dollars for research. For the fis-cal year 1999, Congress approved $110 million just for theAfrican American community. The total figure for research,treatment, prevention, and educational programs amountedto $4.87 billion. During the last year of the Clinton adminis-tration that figure declined, but the incoming administrationof George W. Bush increased the budget for AIDS once again.

—Cynthia Clark NorthrupReferencesFeldman, Douglas A., and Julia Wang Miller, eds. The AIDS

Crisis: A Documentary History. Westport, CT: GreenwoodPress, 1998.

See also Volume 1: Disease.

ADCSee Aid to Dependent Children.

Advanced Technology Office (ATO)Office responsible for the integration of new and future tech-nology into military systems.

In 1957, Congress created the Defense Advanced ResearchProjects Agency (DARPA) in response to the Soviet Union’slaunching of Sputnik I. The Advanced Technology Office(ATO), functioning under the authority and funding ofDARPA, conducts research and integrates advanced technol-ogy into existing U.S. military systems. Researchers place spe-cial emphasis on maritime, communications, specialoperations, command and control, and information assur-ance and survivability mission areas. The goal of the ATOremains the most cost-effective use of technology to assist allbranches of the military to fight against existing and futurethreats by outmaneuvering, gathering more intelligence, andreacting more quickly than the adversary. Current ATO pro-grams include the development of artificial intelligencethrough the use of robotics, sensors, and satellites. Projectsinclude Airborne Communications Node; AntipersonnelLandmine Alternative; Buoyant Cable Array Antenna; Centerof Excellence for Research in Oceanographic Sciences; FutureCombat Systems (FCS) Command and Control; FCSCommunications; Metal Storm; Robust Passive Sonar;Submarine Payloads and Sensors Program; Tactical MobileRobotics; Tactical Sensors; Undersea Littoral Warfare: NettedSearch, Acquisition and Targeting (Net SAT); andUnderwater Fighter (LOKI). Additional programs such as the

Self-Healing Minefield system use the most advanced tech-nology to prevent the breaching of minefields by the enemy.Instead of creating a static minefield, the program creates adynamic minefield with the intelligent capability of physi-cally reorganizing mines to prevent breaches by oppositionforces. Government funding of the research has producedbenefits for the American public as well because consumerapplications for the technology exist and because ATOresearchers continue to use high-tech devices developed bythe private sector, which receives public funding for itsresearch and development.

—Cynthia Clark NorthrupReferencesKeever, David B., ed. Interactive Management and Defense

Advanced Research Projects Agency. Fairfax, VA: Institutefor Advanced Study in the Integrative Sciences, GeorgeMason University, 1990.

See also Volume 1: Defense Advanced Research ProjectsAgency.

AEASee American Economic Association.

AFDCSee Aid to Families with Dependent Children.

Affirmative ActionLegislative attempt to eliminate economic discrimination byensuring that blacks and other minorities play “on a levelplaying field.”

Executive Order 10925, issued by President John F.Kennedy, recognized the need for affirmative action. AfterKennedy’s assassination, President Lyndon B. Johnson pushedthe Civil Rights Act of 1964 through Congress. On September24, 1965, Johnson signed Executive Order 11246, which pro-vided for the enforcement of affirmative action, primarily ineducation and jobs. The federal government attempted toensure that blacks and other minority groups played on a levelplaying field when it came to promotions, salaries, schooladmissions, scholarship, financial assistance, and participa-tion in federal contracts. Although designed as a temporarymeasure, affirmative action assumed permanency after theintroduction of quotas. (Racial quotas required employers tohire a percentage of their workers on the basis of race.)

Affirmative action’s goals were met better in the educa-tional realm than in the workplace. Colleges and universitiesreserved a specific number of positions for disadvantagedminorities, including women, under the quota system. As aresult, some white males who qualified received rejectionnotices. In 1978, Allan Bakke sued the University ofCalifornia for accepting less-qualified students to its medicalschool while refusing to accept him for two years in a row. In

2 ADC

the landmark case Regents of the University of California v.Bakke, the U.S. Supreme Court ruled in 1978 that the inflex-ible quota system violated Title VI of the 1964 Civil RightsAct because it engaged in reverse discrimination. In 1986, theCourt heard a second case, Wygant v. Jackson Board ofEducation, in which the justices ruled that white men couldnot be dismissed to make room for women or minorityemployees. The following year the Court heard United Statesv. Paradise and issued an opinion that allowed for a one-for-one promotion requirement—for every white male pro-moted, one minority employee must be promoted.

The debate over affirmative action continued through the1990s. The federal government initiated programs that wouldeconomically support small businesses owned by women orminority groups. Employers attempted to achieve a reason-able diversity among employees without the rigid quotas.Congress even tried, unsuccessfully, to pass an affirmativeaction amendment to the Constitution, but the measure wasdefeated in 1979 by a 171 to 249 margin. Affirmative actionhas achieved some limited success—more women andminorities have reached senior-level positions, and studentbodies in universities and colleges have become diverse.

Currently the U.S. Supreme Court is reviewing two casesconcerning affirmative action—Gratz v. Bollinger and Grutterv. Bollinger—involving admission requirements or quotasused by the University of Michigan law school. The outcomeof these cases will decide the future direction of affirmativeaction.

—Cynthia Clark NorthrupReferencesAltschiller, Donald, ed. Affirmative Action. New York: H. W.

Wilson, 1991.Cahn, Steven, ed. The Affirmative Action Debate. New York:

Routledge, 2002.See also Volume 1: Civil Rights Movement.

AffluenceWidespread prosperity.

A society in which a large proportion of members possesspurchasing power in excess of that required for any necessarylevel of well-being is categorized as affluent. In an affluentsociety, most individuals satisfy their basic sustenance, accom-modation, and entertainment needs. Beyond that level, suffi-cient wealth exists for many people to consume goods thatoffer only trivial value. An affluent society has resources toprotect members from problems such as the loss of incomeand extra expense due to unemployment and health crises.

With the availability of a wide range of goods, many ofwhich consumers do not need, producers are forced to createa demand through marketing and advertising. Continuedeconomic growth requires the continuous creation of newdemands to absorb the ever-increasing volume of produc-tion. Consumer purchases become increasingly influenced bythe marketing of brand images rather than specific products.

Even in the midst of affluence, an inequality of wealthexists, with some people living in great poverty. As the

requirements of producers evolve to take precedence overthose of consumers, individuals who lack enough disposableincome to afford the advertised lifestyle frequently buy oncredit, leading them to live beyond their means. Demands byindividual consumers, encouraged by marketing, mayincrease at the expense of the public good. Consumers whomove to the suburbs for bigger, newer homes cause increasedpoverty in the inner urban areas and a crumbling infrastruc-ture in many of the formerly tax-wealthy cities. The tax bur-den shifts to the expanding suburbs (for road, sanitation,water, and other systems) and lessens the amount of taxmoney available to major cities.

In the United States, the post–World War II era produceda period of affluence beginning in the 1950s. Most Americansrealized an increase in disposable income, even though themajority of women remained outside the workforce. Familiesduring this period purchased automobiles, homes in the sub-urbs, and modern appliances. Poverty did continue butremained overshadowed by the affluence of the majority.

During the 1960s it became apparent that not everyone inthe United States enjoyed a prosperous lifestyle. PresidentLyndon B. Johnson attempted to address this disparity inwealth through the Great Society program. However, a gapcontinues to exist into the twenty-first century.

—Tony WardReferencesGalbraith, John Kenneth. The Affluent Society. 2d ed.

Boston: Houghton Mifflin, 1969.See also Volume 1: Consumer Spending.

AFL-CIOSee American Federation of Labor and Congress ofIndustrial Organizations.

Agricultural Adjustment Act of 1938Legislation signed by President Franklin D. Roosevelt onFebruary 16, 1938, that focused on the need for long-termconsideration of agricultural production and soil conserva-tion as well as the prevention of potential drought periods.

The Agricultural Adjustment Act (AAA) of 1938 wasdeveloped in 1937 as basic price-support legislation toreplace the recently discredited AAA of 1933. Title I of the actamended the Soil Conservation and Domestic Allotment Actof 1936, and Title II authorized the secretary of agriculture toargue before the Commerce Commission regarding freightrates on agricultural commodities. The remaining three titlesaddressed loans and parity payments (government fundsprovided to farmers that help maintain a stable relationshipbetween the level of farm prices and the general price level),cotton pool participation, and crop insurance.

The new act expanded the soil conservation features of the1936 act with provisions for water conservation and erosion

Agricultural Adjustment Act of 1938 3

control in semiarid regions. The 1938 act sought to preventthe displacement of tenants and sharecroppers. Title III of the1938 act redefined parity prices, creating a more precise for-mulation that included total interest payments and farmestate taxes as well as freight charges and shifts in prices ofcommodities. Congress also implemented changes in themethod of figuring allotments for individual farmers to limitthese to commercial growing areas.

This act provided the secretary of agriculture with threemeasures for controlling major crop surpluses: (1) Paymentscould be shifted from “soil-depleting” to “soil-conserving”crops by farming operations termed “cooperators” (thosethat limited production to established quotas); (2) the secre-tary could announce marketing quotas; or (3) the secretarycould provide nonrecourse loans that enabled farmers andgrowers to hold market crops until the farmer could sellthem at adequate prices. Congress authorized the secretaryto continue parity payments after receiving congressionalallocation of funds. The federal government sent these pay-ments to cooperating producers to compensate them for thedifference between market prices and established parityprices.

The AAA of 1938 included several other sections added asamendments to ensure that the legislation passed Congress.For example, Section 202 provided for four regional labora-tories to conduct scientific research into new commercialuses of farm products.

—Lisa L. OssianReferencesBenedict, Murray R. Farm Policies of the United States,

1790–1950: A Study of Their Origins and Development.New York: Twentieth Century Fund, 1953.

Talbot, Ross B., and Don F. Hadwinger. The Policy Process inAmerican Agriculture. San Francisco: ChandlerPublishing, 1968.

See also Volume 2: Agricultural Policy.

Agricultural and Mechanical (A&M)CollegesPostsecondary institutions established to promote the devel-opment of the practical arts and sciences.

Agricultural and mechanical (A&M) colleges were formedafter the passage of the Morrill Land Grant Act in 1862.Congress granted the states 30,000 acres of federal land foreach senator and representative that the state had in thenational legislature for the purpose of establishing A&M col-leges. The main curriculum would concentrate on agricul-ture, engineering, and home economics—the practical arts.The act, passed during the Civil War, also required the estab-lishment of a Reserve Officers Training Corps (ROTC) atevery land-grant institution. Most of the colleges imple-mented mandatory participation programs, but after the1920s, membership in the ROTC became voluntary.Congress expanded the policy of assistance to A&M collegesin 1887 with the passage of the Hatch Act, which made fundsavailable for research and experimental facilities. Additional

resources, allocated under the Smith-Lever Act of 1914,extended agricultural and home economics research.

The study and development of a variety of crops and thestudy of animal husbandry encouraged improved farmingtechniques, which in turn stimulated the economy throughthe increase in annual yield. But as farmers exceeded thedemands of consumers, prices dropped. Agricultural depres-sions remained a recurrent theme from the late 1880sthrough the 1930s until the United States sought marketsoverseas and implemented domestic policies that includedfarm subsidies. In recent years, A&M colleges have shiftedtheir emphasis to engineering. As of 1999, more than 10,000universities and colleges, including 29 Native American tribalinstitutions, have achieved land-grant status as agriculturaland engineering schools.

—Cynthia Clark NorthrupReferencesParker, William B. The Life and Public Services of Justin

Smith Morrill. New York: Da Capo Press, 1971.Ross, Earle Dudley. Democracy’s College: The Land-Grant

Movement in the Formative State. New York: Arno Press,1969.

See also Volume 2: Land Policies.

Agricultural Credit Act of 1987Legislation that authorized $4 billion in a financial assistancefor financially vulnerable institutions of the Farm CreditSystem (FCS) and protected many farmers whose loans felldelinquent.

Due to the 1980s farm crisis, which was brought on bytight credit and plummeting farm land prices, the FCS expe-rienced deep financial problems. The Agricultural Credit Actrequired the FCS to establish a new Farm Credit SystemAssistance Board to take over bad loans and supervise finan-cial assistance to system banks for the next five years(1987–1992). This board would allow these troubled institu-tions to issue preferred stock eventually purchased by theFarm Credit System Assistance Corporation. Troubled insti-tutions could apply for this assistance when borrower stock,which makes up most of their capital reserves, failed to coverfinancial losses. The assistance board imposed several condi-tions on the institutions receiving these loans; it had powerover debt issuance, interest rates on loans, and business andinvestment plans.

The act also required the Farmers Home Administration(FmHA) to modify delinquent loans to the maximum extentpossible to avoid losses to the government. It required thesecretary of agriculture to provide notice to each FmHA bor-rower of all loan-service programs available. If foreclosurehappens, priority for purchasing goes to previous owners.The secretary also releases income from household and oper-ating expenses for farmers who apply for loan restructuring.

The law mandated that the federal land bank and federalintermediate credit bank in each of the system’s 12 districtsmerge. The 12 districts reorganized to allow for no fewer than6 districts. This restructuring and consolidation allowed for

4 Agricultural and Mechanical Colleges

more efficiency. Finally, the act created a secondary marketfor agricultural real estate and certain rural housing loans,establishing a Federal Agricultural Mortgage Corporation(Farmer Mac) within the FCS. System banks could packagetheir agricultural real estate loans for resale to investors astradable, interest-bearing securities. The Agricultural CreditAct of 1987 saved the FCS and made it financially sound inthe 1990s. The FCS has continued to perform efficientlythrough 2003 and has received high marks from auditors.

—T. Jason SoderstrumReferencesHarl, Neal. The Farm Debt Crisis of the 1980s. Ames: Iowa

State University Press, 1990.See also Volume 1: Farmer Mac Reform Act of 1995.

Agricultural Credit Improvement Actof 1992Bill to assist beginning farmer to acquire his or her own farm.

This act required the U.S. Department of Agriculture’s(USDA) Farm Service Agency (FSA) to target a percentage ofits direct and guaranteed farm operating and farm ownershiploans to beginning farmers and ranchers. In 1992, the averageage of farmers had increased to 52 years of age. Twice as manyfarmers were 60 or older as were under the age of 35. Theincreased cost of farming since the 1970s and the farm crisisof the 1980s had washed many younger farmers out of thebusiness.

To get the loans, the beginning farmer had to draw up adetailed 10-year plan of action for his or her farm. Once theUSDA Farm Service Agency approved the plan, new farmersbecame eligible for direct, subsidized, operational loans fromthe FMHA for 10 years and federal loan guarantees for thenext 5 years. After 15 years, these farmers became ineligiblefor the program. The federal government took up liability for80 to 90 percent of these loans if they were defaulted on.

Another minor change in the law allowed banks, ratherthan the Farmers Home Administration (FmHA), to decidewhich farmers met eligibility requirements for this program.Members of Congress believed that this would get money tothe farmer faster. The bill also called for special efforts tomake loans more available to those who are “socially disad-vantaged,” including women.

—T. Jason SoderstrumReferences“Bill Easing Credit Designed to Recruit Young Farmers.”

Congressional Quarterly (August 8, 1992): 2351.See also Volume 1: Agricultural Policy; Agricultural Credit

Act of 1987.

Agricultural Government-SponsoredEnterprises (GSEs)Organizations federally chartered, but privately owned andoperated, that receive direct and indirect benefits from the

government to improve credit availability and enhance mar-ket competition.

Congress charters a government-sponsored enterprise, orGSE, when perceived failures in private credit markets exist.Congress established GSEs to improve credit availability andenhance financial market competition in specific sectors ofthe economy.

GSEs can access a direct line of credit to the U.S. Treasuryto achieve their goals, and Congress structures them so thatthey benefit from an implicit federal taxpayer guarantee ontheir obligations. The first GSE, the Farm Credit System, dealtprimarily with agricultural and rural sectors. It was createdby the Federal Farm Loan Act of 1916 (FFLA) and acts as anetwork of cooperative lending institutions that operates as adirect lender to agricultural producers, agricultural coopera-tives, farm-related businesses, and rural residents. AnotherGSE, the Federal Agricultural Mortgage Corporation, wasestablished in 1988 and acts as a secondary market for agri-cultural and rural housing mortgages.

—Jonah KatzReferencesU.S. Department of Agriculture Economic Research Service.

“Can Federal Action Improve Efficiency in the Marketfor Farm Loans?” Agriculture Information Bulletin no.724-01, 1996.

See also Volume 1: Federal Agricultural MortgageCorporation.

Agricultural PolicyThe evolution of the federal government’s efforts to stabilizeagricultural markets.

The federal government had always maintained policiesdesigned to encourage the development of agriculture, butnot until the 1920s did it formulate policies to specificallyregulate fundamental market forces in the agricultural sector.

Intensifying urbanization at the turn of the twentieth cen-tury generated increased demand for American farm prod-ucts and subsequent improvements in the standard of livingfor American farmers. World War I further stimulated thisexpanding market as European allies began to depend onAmerican agricultural exports. However, this wartimedemand could not be sustained after the Armistice, and agri-cultural prices fell precipitously.

As falling commodity prices began to trigger bankruptciesin rural areas, Congress searched for the means to strengthenagricultural markets. An alteration of the mandate of the WarFinance Corporation provided credit for farm exports; theCapper-Volstead Act (1922) protected agricultural coopera-tives from antitrust prosecution; the Fordney-McCumberTariff (1922) protected American farmers from foreign com-petition. The most controversial of these efforts came with theMcNary-Haugen legislation. Beginning in 1924, members ofCongress attempted to legislate a price support system in aneffort to restore to farmers the purchasing power they hadduring the prewar boom. This system would guaranteedomestic prices for key agricultural products and dump any

Agricultural Policy 5

surpluses on the international market. President CalvinCoolidge’s two vetoes (in 1924 and 1928) of the McNary-Haugen legislation sparked a debate over farm policy thatformed the groundwork for the New Deal’s approach to agri-culture in the administration of Franklin D. Roosevelt.

The farm crisis that began after World War I continued todeepen with the Great Depression. Under the New Deal, thefederal government responded with the AgriculturalAdjustment Act (1933). As it had done with the McNary-Haugen proposals, Congress designed the AAA to guaranteefarmers a higher standard of living by enabling the federalgovernment to set prices for key agricultural products. UnlikeMcNary-Haugen, the bill contained limits on agriculturalproduction. By the end of the 1930s, the government’s abilityto set minimum prices for agricultural products and to limitthe number of acres in production formed the core of federalagricultural policy.

This effort to create stability in prices coincided with sup-port for modernization. Under the Rural ElectrificationAdministration (REA), farmers in remote areas gained accessto inexpensive electricity. The REA encouraged diversifica-tion by permitting extensive use of technologies, includingrefrigeration, irrigation pumps, and storage ventilation sys-tems. The federal government built dams and levees to con-trol flooding. These initiatives worked to improve theprofitability of farming and raise the standard of living inrural areas.

The goals of agricultural policy set during the New Dealcontinued during World War II. As had been the case inWorld War I, demand for agricultural production increasedtremendously. The federal government permitted farmers toput more land into production temporarily to meet wartimedemand. However, at the end of the war, the governmentquickly reined in production to prevent agricultural sur-pluses that would have lowered commodity prices and farm-ers’ income.

During the postwar period, efforts by the federal govern-ment to prevent overproduction became complicated due tocontinued improvements in farm technology. During theEisenhower presidency, the administration initiated twomajor adjustments to compensate for this problem. Underthe Agricultural Trade Development and Assistance Act of1954 (PL 480), farmers could export agricultural surpluses todeveloping nations to alleviate food shortages. Exports underPL 480 projected American influence abroad while absorbingthe surplus production of American farmers. To further limitthe growing stocks of grain and cotton, the government cre-ated the Soil Bank, which permitted farmers to take land outof production for conservation purposes. The Soil Bank ini-tiated a long-term pattern in which overproduction wascurbed for reasons of ecological protection.

The construction of agricultural policy presented aconundrum in the postwar era. The ideal of the family farmpermeated American culture, and the government remainedcommitted to creating the circumstances under which familyfarms could provide a reasonable standard of living.However, the costs of agricultural programs remained high.As farmers made up a declining proportion of the American

population, price support systems became harder to legit-imize.

During the 1960s, federal agriculture policy continued tocurtail surplus production and raise farm incomes, but itplaced greater emphasis on guaranteeing low food prices toAmerican consumers. The government dropped price sup-port levels to reflect prevailing world market prices, notdomestic spending patterns. This action by the governmentlowered food prices for American consumers and simultane-ously pushed American farmers into more competition inthe international market. The political effort to link low foodprices and agricultural policy expanded under PresidentLyndon B. Johnson’s Great Society, as the U.S. Department ofAgriculture (USDA) supervised the food stamp and freeschool lunch programs.

The debate over farm subsidies intensified during the1970s and 1980s, as American political rhetoric emphasizedthe importance of lowering food prices and limiting spend-ing on farm subsidies. The Agricultural and ConsumerProtection Act of 1973 reformulated the price support sys-tem. Under this new “deficiency payment” system, crop priceswere compared with a USDA target price, and farmersreceived compensation for any shortfall. The deficiency pay-ment system continued to form the basis for federal agricul-tural policy into the presidency of Bill Clinton, but it did littleto curb overproduction or raise income levels for familyfarms. This failure was further complicated by increasingpublic support for balancing the federal budget by cuttingspending for deficiency payments.

Dissatisfaction with the high costs resulting from federalagriculture policy led to the passage of the FederalAgricultural Improvement and Reform Act in 1996. Theproduct of conservative rhetoric supporting “freedom tofarm,” the new policy—designed to eliminate federal subsi-dies and encourage diversification according to internationalmarket demands—returned American farmers to a free mar-ket system. The act marked the first legislative attempt toabandon the direction of marketplace regulation initiated inthe 1920s.

—Karen A. J. MillerReferencesBrowne, William P. Private Interests, Public Policy, and

American Agriculture. Lawrence: University Press ofKansas, 1988.

Hansen, John Mark. Gaining Access: Congress and the FarmLobby, 1919–1981. Chicago: University of Chicago Press,1991.

Robinson, Kenneth L. Farm and Food Policies and TheirConsequences. Englewood Cliffs, NJ: Prentice-Hall, 1989.

Sheingate, Adam D. The Rise of the Agricultural WelfareState: Institutions and Interest Group Power in the UnitedStates, France, and Japan. Princeton, NJ: PrincetonUniversity Press, 2001.

See also Volume 1: Great Depression; McNary-Haugen Bill;Rural Electrification Administration.

6 Agricultural Policy

Agricultural Programs Adjustment Actof 1984Legislation that froze target price increases provided for inthe 1981 act; authorized paid land diversions for upland cot-ton, rice, and feed; and provided a wheat payment-in-kind(PIK) program for 1984.

Signed into law on April 10, 1984, this overhaul of the fed-eral crop program sparked controversy between the adminis-tration of President Ronald Reagan and members ofCongress from the farm belt. With Reagan’s approval, SenatorRobert Dole (R-Kansas) and budget director David A.Stockman negotiated in private sessions to lessen federalspending by freezing target prices. However, farm groups lob-bied for more aid to help with the recovery from the previousyear’s drought. With the exception of certain wheat interests,no one felt satisfied with the bill.

The act froze target prices so that the federal governmentpaid farmers the difference if crop market prices droppedbelow a certain level (for example, $4.38 per bushel forwheat) over the next two years. It also maintained 1985 tar-get levels for corn, cotton, and rice and authorized an acreagereduction program in which wheat farmers would take 20percent of their land out of production to qualify for farmprogram benefits such as loans and price supports. A wheatfarmer could receive compensation if he or she retired an-other 10 percent of his or her land. A farmer could set asideup to 20 percent more land and receive surplus wheat certifi-cates (PIKs) at a rate of 85 percent of the expected yield. Thehope was that this would lessen the nation’s wheat surplusand increase prices well above target prices.

The law also stipulated that lenders value farm assetsused as collateral for emergency disaster at their value priorto the disaster. Direct loans for economic emergencies suchas drought, flooding, or falling land values increased by$250 million in 1984, providing farmers with $600 millionin total loans ($310 million for direct loans and $290 forguaranteed loans). The secretary of agriculture made emer-gency loans available to farmers in counties touched by dis-aster. The ceiling on Farmers Home Administration (FmHA)farm operating loans increased from $200,000 to $400,000.Finally, the act required the lowering of the interest rate forthe balance of rescheduled FmHA loans and the extensionof the time period for repayment from 7 to 15 years. Asawareness of the 1980s farm crisis deepened, subsequentlegislation changed many components of the law anddestroyed President Reagan’s notion of withdrawing federalsupport of agriculture.

—T. Jason SoderstrumReferencesHarl, Neal. The Farm Debt Crisis of the 1980s. Ames: Iowa

State University Press, 1990.See also Volume 1: Agricultural Policy.

Aid to Dependent Children (ADC)Mid- to late-twentieth-century government program thatprovided financial assistance to poor families with children.

Aid to Dependent Children (ADC), later known as Aid toFamilies with Dependent Children (AFDC), was a provisionof the Social Security Act of 1935. Although the impulse toassist poor and orphaned children dates to after the Civil War,no formal federal government program aimed at alleviatingpoverty existed until President Franklin D. Roosevelt’s NewDeal. The Social Security Act called on states to develop plansto aid the poor, with the federal government matching up toone-third of these expenditures. The states had discretion todetermine income eligibility and benefits levels, but theycould not place a time limit on benefits or require recipientsto work.

Originally intended to enable poor widows to care fortheir children, the program by the 1960s came to supportmostly unmarried mothers. In fewer than 10 years, from 1961to 1970, AFDC caseloads nearly tripled. Several SupremeCourt cases decided in the late 1960s and early 1970s weak-ened state restrictions that had blocked some from receivingbenefits, resulting in a further expansion in AFDC caseloads.Lower courts built on these precedents to expand the conceptthat citizens were entitled to receive welfare benefits, placingthe burden on government to justify eligibility restrictions.

AFDC became the primary method of providing cashassistance to the poor for more than 60 years, and the termbecame synonymous with welfare. Critics of AFDC claimedthat the absence of work requirements and time limits onbenefits established a precedent for relief that fostered aculture of dependency. These concerns prompted severalattempts at reform in the 1960s and 1970s, including Presi-dent Richard Nixon’s Family Assistance Plan and PresidentJimmy Carter’s Program for Better Jobs and Income, but nei-ther proposal passed Congress.

Passage of the Personal Responsibility and Work Oppor-tunity Reconciliation Act of 1996 (PRWORA) eliminated theopen-ended federal entitlement of AFDC by establishingtime limits on benefits and by requiring recipients to work orparticipate in job training. Under the PRWORA, the federalgovernment provided block grants to the states for theTemporary Assistance for Needy Families (TANF) program.Opponents of AFDC hailed the new measures and celebratedthe precipitous decline in welfare caseloads in the late 1990s,while critics of the reforms of 1996 warned of rising povertyin poor economic times.

—Christopher A. PrebleReferencesTeles, Steven. Whose Welfare? AFDC and Elite Politics.

Lawrence: University Press of Kansas, 1996.See also Volume 1: Aid to Families with Dependent

Children; Volume 2: Welfare State.

Aid to Families with Dependent Children(AFDC)Welfare program in the United States intended to providefinancial assistance to low-income families.

Initially created in 1935 under Title IV of the SocialSecurity Act as Aid to Dependent Children, the program’s

Aid to Families with Dependent Children 7

principal objective focused on preventing poor families fromplacing their children in orphanages in exchange for directcash payments. The program was renamed Aid to Familieswith Dependent Children (AFDC) in 1962, and the federalgovernment matched state funds for the program. AlthoughAFDC remained an entitlement of the federal government’sbudget, individual states determined eligibility and amountof benefits received, resulting in significant variation fromstate to state.

Typical recipients included single-parent families, espe-cially unmarried mothers and their children. The basic eligi-bility requirement was that a family include a dependentchild 18 years of age or younger, with an exception for 19-year-old high school students. The child must prove U.S. cit-izenship or possess a legal permanent alien status and mustlack financial support from one parent. Two-parent familiesmay receive benefits if one parent remains unemployed.

The American public perceived the ADFC program, cus-tomarily identified within the larger context of the welfaresystem, as flawed. It subsequently remained a target of bipar-tisan criticism that culminated in varied proposals to reformthe system and to address the nation’s poverty problem.These proposals typically sought to require the recipient towork, to assume personal responsibility, and to become self-sufficient. In 1988, Congress redefined AFDC through theFamily Support Act, a comprehensive reform initiative thatfocused on employment rather than income support. Then,in 1996, Temporary Assistance for Needy Families (TANF), acomponent of the Personal Responsibility and WorkOpportunity Reconciliation Act, replaced AFDC entirely.TANF differs from its predecessor on several levels. Primarily,it perceives welfare as a temporary circumstance rather thana lifelong situation, and consequently it establishes a five-yeartime limit for benefits. In addition, the program receivesfunding from federal block grants, which provide greaterflexibility to the states and allow them to address their indi-vidual circumstances.

—John MarinoReferencesAmott, Teresa, and Michael D. Calhoun, with Don Reeves.

Let’s Get Real about Welfare. Silver Spring, MD: Bread forthe World Occasional Paper no. 5, 1995.

See also Volume 1: Welfare Economics.

AIDSSee Acquired Immune Deficiency Syndrome.

AlaskaForty-ninth state of the United States, known for the Trans-Alaska Pipeline.

“Seward’s Folly” no longer has a place—if it ever did—inthe lexicon as a nickname for Alaska, given the actual andpotential reserves of Alaskan oil and gas, not to mention theabundance of coal. The oil field at Prudhoe Bay, discovered

by Atlantic Richfield in 1968, has the potential productivecapacity of 10 billion barrels—twice as much as the next-largest field ever found in the United States, that of East Texasin 1930. As of 2000, the oil output of Alaska equaled 20 per-cent of the nation’s yield.

During the global oil boom between 1973 and 1985,Alaska gloried in its oil revenues—so much so, in fact, that itslegislature abolished the state’s income tax in 1979, when oilprices neared their peak.

At the same time came the wrangling between oil compa-nies and environmentalists over the proposal to build apipeline from Alaska’s North Slope 789 miles to the port ofValdez. In support of this objective, a consortium of oil com-panies formed, known first as the Trans-Alaska PipelineSystem and then as the Alyeska Pipeline Service Company.The companies in the consortium saw the proposed pipelineas the most desirable way of solving a major problem—trans-porting the oil from Prudhoe Bay to distant markets.

Environmental activists protested the plan. They forcedthe national government to implement the National Envi-ronmental Policy Act of 1969, which called for an impactstatement to precede the issuance of permits. A federal dis-trict court upheld this initiative by environmentalists when itforbade the secretary of the interior to issue the necessarypermits.

The legal battle continued from August 1972 throughApril 1973, and in April 1973 the U.S. Supreme Court uphelda court of appeals decision, which delayed further theissuance of permits. At the insistence of environmentalists,the court of appeals had applied a provision of the MineralLeasing Act of 1920, which limited rights-of-way across pub-lic lands to widths of 50 feet. The oil companies wantedwidths up to three times that distance.

Congress then intervened. After a period of protracteddebate, a bill finally cleared the Senate, then the House.Signed by President Richard Nixon in November 1973 underthe title Trans-Alaska Pipeline Authorization Act, it permit-ted construction—the result being the completion of theTrans-Alaska Pipeline by 1977, which constituted an eco-nomic boon.

For the future, Alaska looks to further development of itspetroleum resources, the mining of metals, tourism, andoverseas trade with Asia as bases for prosperity. After the ter-rorist attacks on September 11, 2001, the administration ofPresident G. W. Bush stepped up efforts to gain support forits proposal to drill for oil and gas in the Arctic NationalWildlife Reserve, but the Senate rejected the measure April18, 2003. New initiatives have been proposed to drill onNative American lands, but their future remains uncertain.

—Keith L. MillerReferencesBrown, Thomas. Oil on Ice: Alaskan Wilderness at the

Crossroads. San Francisco: Sierra Club, 1971.Cicchetti, Charles J. Alaskan Oil: Alternative Routes and

Markets. Baltimore, MD: Johns Hopkins University Press,1972.

See also Volume 1: Energy; Oil.

8 AIDS

Aldrich-Vreeland Act (1908)Act meant to remedy perceived inadequacies of the U.S.banking structure revealed during the bank failures and pan-ics of 1873, 1893, and 1907, which occurred because of thelack of regulatory federal legislation.

In January 1908, Senator Nelson Aldrich, Republican fromRhode Island, introduced a bill to permit the creation ofemergency currency backed by state, municipal, and railroadbonds. But the currency commission of the AmericanBankers Association and other banking and merchant inter-ests immediately opposed the Aldrich Bill, which many feltsimply raised the value of railroad bonds and thus benefitedthe large eastern banks. In March, Aldrich—after meetingwith George Perkins, a representative of the J. P. MorganCompany—removed railroad bonds as collateral for emer-gency currency. By the end of the month, the Senate hadpassed the bill. During the hearings in the House ofRepresentatives, overwhelming opposition arose. Yet manywanted some type of regulation to prevent a financial panicsimilar to that in 1907. Congressman Edward B. Vreeland,speaking for the Republican caucus in the House, subse-quently introduced a compromise bill.

Passed by Congress on May 30, 1908, the Aldrich-VreelandEmergency Currency Act made available $500 million inemergency currency to certain national banks over the nextsix years by allowing them to issue circulating notes. The billalso allowed extra currency on bonds of towns, cities, coun-ties, and states. But a graduated tax of up to 10 percent lim-ited the issuance of currency. Moreover, the act establishedthe National Monetary Commission, composed of ninemembers from the Senate and nine members from the Houseof Representatives, to investigate the deficiencies in the coun-try’s banking system. The commission, with Senator Aldrichas its chair, appointed experts to study the history of bankingand the current condition of the industry in the UnitedStates. The commission subsequently issued a 49-volumereport in 1911 that recommended the establishment of anational reserve association with branches to act as a centralbank run by private bankers free of any real government con-trol. The Aldrich-Vreeland Act preceded the Federal ReserveAct of 1913, which established a stable banking system in theUnited States.

—Steven E. SiryReferencesStephenson, Nathaniel Wright. Nelson W. Aldrich: A Leader

in American Politics. New York: Scribner’s, 1930.See also Volume 1: Banking System, Federal Reserve Act;

Volume 2: Banking.

Alliance for ProgressEconomic program designed to improve relations betweenthe United States and its southern neighbors, thereby com-bating the spread of communism.

Shortly after John F. Kennedy became president in 1961,he appointed Adolph Berle to establish a commission toinvestigate ways to improve relations between the United

States and Latin American nations. This commission rec-ommended expansive economic and social objectives thatbecame the center of Kennedy’s Latin American policy. InAugust 1961, the United States and the Organization ofAmerican States (OAS) signed the Charter of Punta delEste, which formally created the Alliance for Progress. Thealliance would provide technical advice and financial assis-tance to Latin American nations interested in upgradingtheir economic positions, increasing their agricultural out-put, and improving their systems of education and healthcare.

The Alliance for Progress did not realize many of its stat-ed objectives because of Kennedy’s short time in office (hewas assassinated in 1963), a lack of financial resources, andgrowing distrust of the United States by many LatinAmerican nations. In the final analysis, the United Statesspent $10 billion in an unsuccessful effort to limit the influ-ence of communism in Latin America in the decade follow-ing the Cuban Revolution and the Bay of Pigs invasion.

—James T. CarrollReferencesBurner, David, and Thomas West. The Torch Is Passed: The

Kennedy Brothers and American Liberalism. New York:Brandywine Press, 1984.

See also Volume 1: Organization of American States.

American Economic Association (AEA)Organization of professional economists established in 1885.

Founded primarily by a group of younger professors ledby Richard Ely of Johns Hopkins University, the AmericanEconomic Association (AEA) challenged the economicorthodoxy of laissez-faire espoused by David Ricardo.However, to attract membership from a wide range of aca-demics (including the organization’s first president, theMassachusetts Institute of Technology’s Francis Walker), theorganization soon adopted a policy concentrating on thepromotion of scholarly and scientific activities while stu-diously avoiding partisanship and official positions on policyissues. Although individual members have frequently signedpetitions and called for the government to adopt or alter spe-cific economic policies, the AEA has consistently maintainedits stance of neutrality for more than a century—much moreso than professional organizations in other social sciences.The association remains an open society, with no significantmembership restrictions such as nationality, education, orideology.

The AEA holds annual meetings at which economists cansocialize, present their research findings, comment on theideas of others, and search for jobs and job candidates. Theorganization focuses on the dissemination of research find-ings. The AEA’s publications include the prestigiousAmerican Economic Review, established in 1911, whichincludes technical research articles; the Journal of EconomicLiterature, established in 1963, which includes book reviewsand surveys of recent research; and the Journal of EconomicPerspectives, established in 1987, which aims to put economic

American Economic Association 9

research into the hands of college students and educatedreaders.

Since its early days, the AEA has repeatedly providedexpert advice in the design and development of the censusand other government statistics. During both world wars, theAEA played a notable role in organizing professional expert-ise for government service. Presidents of the AEA haveincluded the profession’s most noted researchers—includingNobel Prize recipients and governmental advisers.

—Robert WhaplesReferencesCoats, A. W. “The American Economic Association and the

Economics Profession.” Journal of Economic Literature,vol. 23 (1985): 1697–1727.

American Economic Association. http://www.vanderbilt.edu/AEA/; accessed January 15, 2003.

See also Volume 2: Economic Theories.

American Federation of Labor andCongress of Industrial Organizations(AFL-CIO)Largest labor union in the United States.

The AFL-CIO formed in 1955 when the AmericanFederation of Labor and the Congress of Industrial Organi-zations merged. During the 1950s and 1960s, the AFL-CIOconcentrated on increasing the wages of union members andon improving employee benefits. Collective bargaining, legalunder the Wagner Act, provided labor with a powerful bar-gaining tool, and the prosperity of the times resulted inemployers agreeing to most union demands. However, by the1970s economic stagflation (the coexistence of high unem-ployment and high inflation) resulted in many workers beinglaid off.

One of the most difficult challenges faced by the unionwas that the Japanese automakers flooded the U.S. marketwith their smaller, more fuel-efficient cars just when theOrganization of Petroleum Exporting Countries (OPEC)placed embargoes on oil shipped to western nations. For thefirst time, AFL-CIO officials petitioned Congress to raise tar-iff rates on Japanese imports. Congress did not acquiesce toan increase, because tariff officials agreed that Americanswanted smaller vehicles and the Japanese had not engaged inunfair trade practices. The AFL-CIO continued to pressurethe government, fearing the loss of American jobs. TheJapanese agreed to voluntary export restrictions and beganbuilding plants in the United States to address the issue of lostjobs. Since the late 1980s, the union has opposed free trade.During the negotiating process for the North American FreeTrade Agreement (NAFTA), the AFL-CIO pushed for provi-sions that would protect American workers and the environ-ment and expressed its disapproval when Congress ratifiedthe agreement without such provisions.

—Cynthia Clark NorthrupReferencesSweeney, John J., and David Kusnet. America Needs a Raise:

Fighting for Economic Security and Social Justice. NewYork: Replica Books, 2000.

Zieger, Robert. H. American Workers, American Unions,1920–1985. Baltimore, MD: Johns Hopkins UniversityPress, 1994.

See also Volume 1: Wagner Act; Volume 2: Labor.

American Inventors Protection Actof 1999Act passed to modify existing patent law.

In November 1999, Congress passed the IntellectualProperty and Communication Omnibus Act of 1999. Title IVof the act contains the American Inventors Protection Act.President Bill Clinton signed the bill on November 29, 1999,and it became effective in 2000. The American InventorsProtection Act established a first-to-invent infringementdefense that allows inventors who have used the invention forone year prior to the filing date of the patent to defend them-selves against this purported infringement. This clause isrestricted to methods of doing business, not production ormethods of manufacture. The act also authorizes the publi-cation of foreign applications after 18 months and requiresfilers to make application to the U.S. Patent Office if theywish to restrict publication of their application within a spe-cific time period. If the applicant agrees to have the patentapplication published, penalties for infringements prior tothe issuance of the patent remain restricted to a reasonableroyalty. In addition, Congress approved grant extensions ofpatents due to delays arising from the Patent and TrademarkOffice. The American Inventors Protection Act reducespatent fees and restricts disclosure of sensitive military orintelligence patent information. It also allows third parties tochallenge the validity of a patent but restricts the involvementof third parties—they cannot participate in, nor will theyreceive a full transcript of, the interview of the patentee, andthey cannot file a suit in civil court after the patent boardissues a ruling that upholds the validity of the patent.

—Cynthia Clark NorthrupReferencesElias, Stephen, and Richard Stim. Patent, Copyright, and

Trademark. Berkeley, CA: Nolo, 2002.See also Volume 2: Intellectual Property.

American Revolution (1775–1783)Event that severed the political ties between Great Britain andits 13 North American colonies, setting the stage for thedevelopment of the United States of America.

In its Navigational Acts of the latter half of the seventeenthcentury, England created a closed mercantile system designedto control, regulate, and tax trade with its American coloniesand to ensure that New World wealth flowed back toEngland. This system benefited the English state and econ-omy, but for the American colonies it created problems, astheir specie (gold and silver coin used as money) flowed backto England. As the trans-Atlantic trade flourished, the Britishencountered difficulties enforcing the restrictions on their

10 American Federation of Labor and Congress of Industrial Organizations

distant colonies and failed to maintain a truly mercantileclosed system that benefited the mother country.