250 YEARS: The United States – from independence to empire (part two) Follow this link for part 1.
It took some time after independence and the defeat of the British before the new economy of the United States got going. War continued on and off with the British over Canada and ithrough a short British invasion and destruction of Washingto DC in 1812.
During this period, trade was volatile, rising to over 20% of GDP after the revolution and then collapsing during the subsequent war with the British. After that though, the US economy started to expand fast. Trade as a share of GDP stayed low only because domestic output rocketed as agricultural production exploded.
The US administration under its early Presidents encouraged the settlement of the West and South at the expense of the native Americans who were driven further and further west. The US expanded its territory by purchasing Louisiana from the French in 1803. With the Indian Removal Act of 1830, native Americans were forced to relocate, leading to the devastation of thousands in a ‘Trail of Tears’.
In 1823, President Monroe proclaimed his famous ‘doctrine’ that the Western hemisphere would be under American control and the old former European colonial powers were not welcome.
In 1846, the US expanded its territory by signing the Oregon Treaty with the British to allow settlements and went even further by launching a war against Mexican control of Texas, eventually taking over vast areas in the South-West right to the Pacific Coast.
But there was one important factor holding back the United States from becoming a major industrial and trading nation: slavery in the southern states. When the southern states tried to secede from the Union, the north launched a long and bitter war lasting nearly five years. But the resulting victory for the industrial north with its much larger ‘free’ working population laid the basis for a huge expansion of output. The Civil War shifted political power to the Republican party from the North, which instituted high tariffs to raise revenue and to protect domestic industry. The US economy became more diversified, with a growing manufacturing sector that reduced the nation’s dependence on imported manufactured goods. By the end of the civil war, the US had already become the largest capitalist economy in the world in GDP terms.
The advent of the railway boom after Civil War which culminated in the transcontinental rail connecting East to West in 1869 was a huge step forward for domestic production and trade.
By the 1900's, US per capita income exceeded that of then current but declining hegemonic power, the UK. So in just one century, the American capitalists had overtaken their former masters.
Beginning in the 1850s, the United States took its first steps toward developing an overseas empire in the Pacific. In 1867, the US bought Alaska from the Russians. Trade with Asia now became possible and the US elite began to open their eyes to gaining control of the vast Pacific Ocean.
The new empire was driven by economic interests. When there was a commodity boom, entrepreneurs raced into Pacific islands to set up shop, creating farms and plantations or staking claims for mining. The first islands were annexed in the 1850s and 1860s starting with Midway. By the 1870s, American citizens were effectively running the Hawaiian government, steering the course toward annexation. And by the 1880s, the US government was directly administering Samoa and behaving like a traditional imperial power in cooperation with the British and German governments.
The late 19th century marked a transition from a continental nation to an established global power, largely galvanized by the Spanish-American War of 1898. Using the excuse of an unexplained explosion of the US battleship Maine in February 1898, the US declared war on Spain and quickly took over Cuba. Soon after, the Philippines, Guam, and Puerto Rico were occupied and the independent Republic of Hawaii was annexed by the US.
The construction of this American empire was riddled with racism from the start. For some in the elite, building an empire in the Pacific was a problem because it could lead to “polluting and weakening our system of government by taking to our bosom a horde of Asiatic savages.” Others favoured a missionary approach. American control was necessary because Filipinos are “children utterly incapable of self-government.” The US role in the Philippines was a “divine mission” to establish a “system where chaos currently reigns.” Imperialists doubted the capacity of the Philippine people for self-government; they would “need the training of fifty or a hundred years before they shall even realize what Anglo-Saxon liberty is.”
Although the US economy expanded throughout the 19th century, it did not do so in a steady and harmonious way. The boom and bust cycle of capitalist accumulation operated, engendering a long depression from 1883-97 (note in the graph below the stagnant growth in the 1880s).
Even as late as 1880, nearly half of all American workers were still farmers, with only about 15% working in manufacturing. But in the next 40 years that ratio was reversed. By the 1920s, the US was the world’s manufacturing powerhouse and financial centre. The American working class was now the largest in the world. But as ‘going West’ was no longer an option if you were unemployed or on low wages, trade unions were formed and class struggles intensified in the cities.
The weakening and destruction of large parts of Europe and Asia during WW1 and WW2 put the US firmly in the driving seat of global capital. In 1945, the US was dominant in manufacturing, finance and military power (only the Soviet Union could rival the latter). The US controlled the post-war institutions set up at the Bretton Woods meeting in the US that established the UN, the World Bnk and the IMF. The world entered a period of ‘Pax Americana’.
‘Pax America’ was world peace only on America’s terms: the ‘cold war’ continued against the Soviet Union; and the US intervened to stop leftist governments gaining power, not only across South America, but also in the Middle East and in Asia – but not always with success as the war in Vietnam proved.
Indeed, that ignominious defeat coincided with the beginning of an underlying decline in America’s economic power, first with the rise of European industry from the ashes of war; and then with Japan’s meteoric industrial revival in the 1970s. The dollar began to lose its almost total dominance in world markets and was devalued in 1971 as US manufacturing declined and was forced to shift overseas to find cheaper labour. The Vietnam disaster led to the economy running trade deficits and the US government running budget deficits for the first time since WW2. The profitability of capital had began to fall and the Golden Age of US investment was over.
The fall of the Soviet Union in the early 1990s was supposed to give US imperialism complete control forever. It would be ‘the end of history’. Ironically, it was just the start of US decline in the face of an even stronger new economic rival: China.
In the third part of this story, I shall cover the current threat to the US global empire, generated first, by weakness within the domestlc economy and second, by emergent rivals without – not unlike the ancient Roman empire’s decline after the 2nd century AD.
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