The history of modern American economy traces its roots in the 16th century when migrants from Europe came to settle in the country. At that time, the nation was inhabited by Native Americans — indigenous peoples who were recognized according to tribes. Prior to the arrival of European settlers, tribes traded among themselves.
When the Europeans came they established economic interaction with the natives through the barter or trading of commodities. Such interaction increased tremendously over time – thus becoming the cornerstones of commerce and the foundation of a nation. From the early trading systems, business in America progressed to more complicated and more comprehensive levels. Tracing these roots, from the early barter practices through the Industrial Revolution up until the Internet Revolution can help us better appreciate why America is the most powerful economy in the world today.
The beginnings of business in America are closely intertwined with the early practice of barter. In its early history, the United States was a collection of colonies where the absence of a common currency led to the use of all sorts of substitutes, e.g. tobacco and wampum, as money.
Barter took many forms then. Among these were the potlatch ceremonies of Native Americans that had economic functions entwined with social and ceremonial significance. A potlatch is usually a ceremony involving music, dance, and spiritual rituals. The host gives away his resources gathered for the event, which in turn the guests give in return when they hold their own potlatches.
Barter also took the form of traditional native currencies such as furs and wampum which were essential for frontier trading with the indigenous population. Wampum, made out of the shells of a type of clam, was best known form of money among Native Americans. Wampum’s use as money came as a result of its desirability for ornamentation purposes.
Among the early documented use of wampum points to 1664 when colonist Peter Stuyvesant arranged a loan in wampum for the payment of the wages of workers constructing the New York citadel (page 458). Other commodities that were commonly traded included tobacco, rice, indigo, wheat, maize, etc.
III. From the Industrial Revolution to the Production Era
As colonies and settlements grew, industries became more developed. The introduction and use of machineries in production ushered in the Industrial Revolution. The Industrial Revolution changed the ways by how American businesses produced their goods. The introduction of much new technological advancement led to greater and faster production of goods. The onset of greater productivity led to unprecedented economic growth to a budding nation. The Industrial Revolution basically changed the country from a mainly agricultural society to one that in which industry and manufacturing was in control.
The biggest advancement in technology was the use of steam power. This revolutionized industries like textiles and manufacturing. Also, the invention of the telegraph made communication much faster. The onset of the production era signaled the end of the industrial revolution. The new era saw many companies looking at ways to reduce the cost of production. Companies thought then that lowering manufacturing costs would lead to lower prices of products. This concept was fueled by such milestones as the invention of the assembly line and more efficient work principles (Haber, 1964).
These two innovations made businesses aware that mass production resulted in lesser costs of production and greater profits. Unfortunately, unstable economic conditions brought about by the Great Depression caused many companies to fail even though they had adopted mass production techniques.
IV. From the Marketing Era to today’s business world
Contrary to the fears of the general public, the end of World War II saw pent-up consumer demand fueling strong economic growth in the postwar period. Several industries grew tremendously during this period – the automobile industry, aviation and electronics to name a few. A housing boom added to the expansion.
The postwar economic aid to European countries under the Marshall Plan also helped maintain markets for numerous U.S. goods. In the 1980s, rapid developments in technology impacted the economy. The personal computer, hand-held mobile phones, and new audio and data storage technologies greatly influenced business. But the greatest impact would come with the emergence of the Internet.
The impact of the Internet on business is as far reaching as its impact on an individual’s way of life. Today, the Internet is a fundamental component in determining both strategy and business design. This technology enables businesses to reach across and beyond traditional boundaries and create new sources of profit.
The history of business in the United States is a reflection of the country’s evolution from a simple economy to being the most powerful country in the world. To say that business had little or no influence in the attainment of that status would be to deny the very history of America. Indeed, the country was founded on democratic principles, but it grew and developed, no doubt, because of business.