The American Economy

The American economy is best defined as a consumer based economy. In such an economy without the influence on the government, the consumers are left vulnerable to price instabilities by the produces. The roles of the Federal Government are many but there are three major roles it should provide.

Firstly, the Federal Government involvement in the economy is to collect taxes from all related parties. Consumers pay indirect tax since it is incorporated in the product they purchase while the producers pay direst tax from the total revenue they earn in a financial period. This is perhaps the most difficult role of the government. Taxation of all the different sectors of an already diverse and large economy is cumbersome and so is the conversion of the tax revenue to social amenities such as health care and infrastructure. However, through the well dispatch local government in form of states, the burden is reduced.

Secondly, the Federal Government needs to protect the consumers from extortion by the producers. This is often done by price control. In addition to this, they ensure that the products produced are of the standard quality and fit for human use. If they did not, they were to be removed from the market and they did not pass the requirements.

Thirdly, the Federal government in line with the local governments ensures all the businesses in operation are registered under the law and their activities monitored. This is to ensure all institutions have a license and are deemed fit for operations. This also serves to provide the government with valuable data as to how the economy is balanced. For instance, there are certain sectors that may not be deemed fit to be left to the private sector like the oil industry due to its high capital investment nature and sensitivity. The government who hold the lion share of the industry while the private investors take up the rest takes up such areas.

In those earlier days, the government roles were not clear. It was summed up by the two French words, laissez faire, which meant leave it alone. Adam Smith who believed that the interests of the private sector should be left free from government involvement introduced this concept. . He further added that for as long as the markets are competitive and free, it will lead to the greater good of the society in general. On the turn of the new decade, beginning in 1820s, the government began taking tax seriously, as it provided them with revenue to maintain its activities and to improve on social amenities.

In the beginning, the south was seen as inferior by the west, east and the north therefore disputes normally arose. This was because a considerable portion of the by the black slaves settled in the south. To ensure that the conflicts that have elevated to become civil wars were ended, the Federal Government needed to sort out some contentious issues. These issues included land, transport and the tariff.

Land policy

There was always trouble on how land was allocated in the region by the Federal government in those times. Their plan was to issues large tracks of land to the white people to farm but the black family who could be issued with a small portion of land could provide family labor.  These meant that the white could retake the south and in turn bring back slavery. Moreover, an act called the Homestead Act sought to provide 160 acres of land for the individuals who wanted it to settle and farm. The bill was passed but the President at the time, Buchman vetoed it (Bensel 72).

Transportation Enhancement

The transport system was heavily improved from the earlier construction of the Erie Canal in 1823. This was particularly done to link the north and the south of America that were miles apart in terms of development. Also in the Great Lakes Region needed the government intervention for its improvement (Egnal 50). The railway construction proved to be a tough nut to crack as the southerners were viewed as people of no economic benefit therefore agreements were struck between the north, east and west. Such entailed in the Pacific Railway Bill in 1860. The bill failed to pass congress as it received no votes. By the 1880s, the railway system was reorganized in such a way that the north and the south were linked that is it facilitated in the distribution of resources.

The Tariffs

The southerners were known to be producers of food stuffs therefore needed to get other goods that they did not produce. However, they were strongly against the imposition of duty fee on the goods they purchased. The main aim of high duty fees was to offer protection from the cheap goods that originated from Britain. This had led to conflicts between the respective parties as high duty fees translated to high import costs. It was claimed that the duty being levied was to facilitate in the improvement of the transport system. Fortunately, the west and the east came to a compromise in 1857 by setting a standard tariff. The tariff served to not only protect them but increases their revenue. This harmonization brought about cooperation among the stakeholders.

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