The relationship of war to economic policy has been a twoway street throughout American history. The dynamics of
wars have greatly affected the country’s economic policy, and
scholars often see at least some of the causes of America’s
wars as related to its economic policy. At first, the colonies
that would become the United States were bound by the mercantilist economic policies of the British Empire, which frequently led the British to war with rival European empires.
That situation eventually proved unbearable, resulting in the
War of American Independence and a new set of economic
policies. During the antebellum period, war and economic
policy were almost always geared toward establishing American dominance and control over Native American land and
turning it into surplus-producing farmland. As the Industrial
Revolution progressed in the latter part of the nineteenth
century, economic policies to aid industrialization came to
drive American military action. By the end of the century,
America was involved in wars to increase its share of the
world’s markets, not to expand the amount of the North
American mainland that it settled. Eventually, the goal of increasing America’s share of world markets gave way to a desire to restructure the basis upon which the global economy
operated. Both these policies caused conflict, but slowly,
America’s preferred economic policies for the world economy triumphed. Despite this success, the United States still
uses—and must use—military means to maintain the hegemony of its vision of appropriate economic policy.
From Colony to Republic, 1580s through the1780s
As noted, economic policy dominated America’s history from
the beginning. The very settlement of North America and the
Caribbean by the English began as part of England’s adoption of a mercantilist economic policy. Settling North America contributed to that policy by providing the markets and
raw materials that England needed to achieve the mercantilist
goal of trade surpluses. The process of settlement produced
frequent conflicts. Native peoples resisted the loss of land and
resources to settlers, sparking countless wars between the
groups. And rival European powers tried to control the same
areas that England did, leading to a series of wars between the
major European countries.
As time wore on, these wars between the British and the
Native Americans and the British and their European rivals
merged. This outcome was most apparent in the aptly named
French and Indian War, a conflict that proved to be a critical
turning point in British policy toward what would ultimately
become the United States. Both sides made extensive use of
Native Americans during the war. The British and their
American colonists prevailed in the war, giving the British
Empire authority over all of mainland North America east of
the Mississippi River except for Florida. Britain was now free
from the interference of European rivals in its development
and exploitation of its North American colonies.
Britain’s colonists, however, proved to be a new obstacle to
the Crown’s plan, for their vision of the future of North
America was increasingly divergent from that of the home
country after the French and Indian War. The colonists supported an economic policy of expansion and settlement on
Native American lands. The primary goal of the British, by
contrast, was to ensure that North America play its role in the
trade patterns of the empire. Settlement on Native American
land interfered with this plan by creating potential conflicts
that could easily disrupt the established trade patterns between Britain and either its colonies or its Native American
allies. To prevent that outcome, the British government issued the Proclamation of 1763, which prohibited the
colonists from settling on much of the land over which
Britain recently had gained control, directly contradicting the
desires and expectations of the colonists.
As if that were not galling enough to the colonists, the
British began tightening up enforcement of the mercantilist
policies that ensured that the trading relationship between
the colonies and Britain worked in Britain’s favor. Earlier
British governments had created a series of laws known as
the Navigation Acts to accomplish this; however, enforcement of these laws had been lax because previous generations of British officials held an attitude of salutary neglect
toward their New World possessions. This attitude changed
dramatically after the French and Indian War, and the British
government began to enforce laws such as the Navigation
Acts more vigorously. These measures were designed to limit
the types of products that the colonists could produce, forcing them to provide surplus raw materials for export and to
import manufactured goods and agricultural products that
could not be grown in British North America. The linchpin
of the system was the requirement that all this trade had to
pass through ports in Britain. These policies limited the diversity of the colonial economic structure and ensured that
all trade throughout the British Empire passed through the
hands of British-based merchants.
Resentment over these new policies was one of the issues
that led 13 of Britain’s North American colonies to declare independence from the Crown in 1776 and form the United
States. Even while mired in its War of Independence, the government of the new country made dramatic reversals of
British economic policy. States began giving citizens who
were willing to help in the war grants of land that had been
put off-limits by the Proclamation of 1763. People who took
the land grants now had a vested interest in the success of the
war. If it failed, their land grants would be worthless.
Instead of all trade having to go through Britain, the new
government allowed direct trade with any country except
Britain. This exception was a foreshadowing of a common
American policy during times of war and conflict—embargoing trade against the country’s foes. When the dust settled
after the chaos of the War of Independence and early attempts at forming a government, a new United States of
America emerged; its Constitution gave the central government the power to determine economic policy and make decisions regarding war.
The Early Republic, 1790s through the 1830s
Almost immediately, the new government of the United
States found itself faced with wars on multiple fronts. In
1793 the French Revolution and the Napoleonic Wars broke
out, engulfing the major states of Europe. Both sides engaged
in activities bordering on piracy, which many Americans saw
as provocation for war. Although President George Washington tried to pursue a policy of neutrality, how to respond
to these conflicts became a contentious issue for the emerging factions of American politics, the Federalists and the
Democratic-Republicans.
The Federalists hoped to make America the junior partner
in a British-dominated global economy, and going to war
against Britain was obviously not conducive to achieving that
goal. The first step toward bringing about the Federalist policy was the negotiation of Jay’s Treaty. This treaty put American trade with Britain on a most-favored-nation status,
closely tying together British and American trade. It also contained promises from Britain to refrain from the types of
provocative acts that had led to calls for war. With the country’s trade tied to Britain and the reasons for war against that
nation muted, the Federalists next tried to further cement the
Anglo-American alliance by leading the country to war with
Britain’s enemy, France. Highlighting provocative French actions, Federalists tried to scare up war hysteria in what became known as the quasi-war with France. Their attempt
failed, and they lost power to the Democratic-Republicans in
the election of 1800.
The Democratic-Republicans felt that American policy
should be based on the ideas of freedom of the seas and the
right of neutral countries to carry on trade without harassment by belligerent countries. Ironically, to bring this about,
they pursued a policy of setting up embargoes against belligerent countries, thereby denying American merchants the
freedom to work out trade arrangements with their counterparts in warring countries. The embargoes were poorly and
inconsistently implemented and incredibly unpopular.
Worse, they proved economically devastating. Despite this
failure, the policy of embargoing countries to accomplish
foreign policy objectives became a mainstay of American
diplomacy.
To obtain support for the embargoes, the DemocraticRepublicans whipped up war hysteria, particularly against
Britain. This hysteria, combined with continued British
provocation, led President James Madison to declare war
against Britain in 1812. America’s motives and aims in the
War of 1812 illustrate important points about DemocraticRepublican economic policy. Geographic expansion to get
more farmland so that future generations could live as yeoman farmers was the primary concern of the DemocraticRepublicans. They believed a successful war with Britain
would solidify American control over areas such as the
Louisiana Purchase (which the Democratic-Republicans had
obtained for the United States peacefully) and perhaps lead to
the addition of British-held territory to the United States.
The war ended in a stalemate in December 1814, although
many historians conclude that America’s respectable showing
in it ensured that European powers would not seize the unsettled American lands west of the Mississippi River.
Wars with European powers were not the only conflicts
that Americans faced in this period. The policy of allowing
settlement on Native American land led to a series of smallscale frontier wars. The Native Americans were often aided by
Britain and Spain, the two countries that claimed the North
American mainland outside the United States. Despite these
conflicts and the deaths of thousands of settlers and tens of
thousands of Native Americans, the U.S. government continued unabated to pursue its policy of conquest and expansion
in Native American lands. Although it took until the 1830s
before the last Native American tribes were moved west of the
Mississippi River, the policy of turning their land into American settlements, through warfare if necessary, continued
with great success throughout the period. This process would
be repeated after the Civil War, when widespread interest in
the settlement of the Louisiana Purchase area began. Changes
in warfare technology made it even easier then for the U.S.
government to push the Native Americans aside.
Be Careful What You Ask For: Manifest Destiny and
Civil War, 1830s through the 1860s
By the 1830s many American political leaders spoke of the
United States having a “Manifest Destiny” to expand, by force
if necessary, across the continent to the Pacific Ocean. This
ethic was an intensification of the previous policy of taking
land and opening it up for settlement. Control of the West
Coast was also seen as important by the merchant class,
which was trying to gain markets and products in East Asia.
Fulfilling this destiny would bring the United States into
armed conflict not only with Native Americans but also with
the new country of Mexico. Ultimately, the success in those
conflicts would leave America with new, internal conflicts to
address, which were only resolved by the most damaging war
the United States ever fought—the American Civil War.
In an attempt to dilute the Native American population
with Anglos, the Mexican government began a policy of encouraging American citizens to settle in its northern frontier
areas, especially Texas. Soon, the number of Americans in
much of the Mexican northern frontier greatly exceeded the
number of Mexicans. Conflict arose when the Mexican government began to enforce its prohibition of slavery in Texas.
In 1836 the Americans successfully revolted and established
an independent Texas, which sought admission to the
United States. Although domestic political considerations
prevented the Texans’ request from being accepted until
1845, many U.S. citizens felt that the controversy between
American Texans and Mexico would be the catalyst that
would allow the nation to complete its Manifest Destiny
mission.
This belief was well founded. As soon as the United States
annexed Texas, Mexico, which had never fully accepted the
independence of Texas, began mobilizing troops and sending them to a disputed border region. The United States responded by dispatching troops there as well. Inevitably, this
led to skirmishes and casualties, which the administration of
President James Polk used as justification for war. The
United States won the war and added much of Mexico’s
northern frontier to its holdings, completing the southern
part of its Manifest Destiny project. A treaty with Britain
in1845 divided the Oregon Territory between the United
States and Britain, giving America control over the areas
needed to complete its Manifest Destiny goals in the more
northern latitudes.
The Polk administration’s acquisition of such large
amounts of territory created a serious problem for the American political system. The expansion of slavery had become
an increasingly controversial issue since the Missouri Compromise, which allowed Missouri to enter the Union as a slave
state and Maine as a free state and established 36º30’ as the
northern boundary for slavery in the United States. The addition of new territory opened this issue up once again. Generally speaking, Americans’ positions on the expansion of
slavery fell along regional and economic lines, with Southerners supportive of it and Northerners opposed.
The country’s economic development had led to regional
economic specialization, which also caused people in different regions to support different economic policies. Northerners, increasingly reliant on manufacturing as their economic base, favored high tariffs to protect the domestic
market from foreign competition. They also felt the revenue
generated from those tariffs should be used to fund public
works and infrastructure projects, known as “internal improvements,” that would facilitate the movement of goods
within the United States. Southerners generally held opposing views on economic policy. They believed tariffs should be
low and that the federal government should not fund internal improvements. Those living in the western frontier areas
often leaned toward the Northerners’ position. The issue of
expanding slavery clearly tipped the balance in the western
frontier toward that position in this sectional conflict. A local
economy dominated by large plantations worked by slaves
was generally incompatible with the lifestyle of the yeoman
family farmer, a way of life that was sought by many on the
frontier.
These regional cleavages about the country’s economic
policies deepened throughout the 1850s. After the election of
1860 showed that the North and the western frontier had
firmly lined up against the South, the South attempted to secede from the rest of the nation and establish its own country in which it could follow the economic policies it favored.
This precipitated the American Civil War. And just as the divisions that led to the Civil War were, in large measure, about
economic policy, the war’s outcome radically changed the direction of American economic policy.
In terms of economic policy, the primary winners of the
American Civil War were the emerging industrialists of the
North. The scale of the war and the mobilization efforts
dwarfed previous American military endeavors. Congress
gave generous subsidies to railroads to ensure that the transportation infrastructure needed to coordinate and prosecute
the war would be available. Furthermore, contracts with the
Union army greatly enriched several Northern industries. Although the American military’s consumption had always had
economic benefits, the Civil War brought such consumption
to unprecedented heights.
The Civil War also settled the regional conflicts over the
direction of American economic policy. The federal government laid the groundwork to continue its subsidization of
railroad construction after the war through the Pacific Railroad Act. Slavery was abolished, forcing a redefinition of
labor practices in large-scale agricultural enterprises. The
Morrill Tariff, passed during the Civil War, began a policy of
high tariffs to protect domestic manufacturers—an approach
that would persist for over 50 years. In short, economic policy, which had previously operated largely in accord with the
wishes of Southerners by condoning slavery and opposing
high tariffs and internal improvements, underwent a dramatic reversal to favor those policies desired by Northern industrialists.
Empire Versus Free Trade, 1870s through the 1930s
The generation after the Civil War had only minimal experience with military conflicts, none of which touched the Civil
War in terms of its sheer horror and intensity. There were, to
be sure, campaigns to subdue the last remaining Native
Americans west of the Mississippi River. But these campaigns, though devastating to the Native Americans, involved
little mobilization effort on the part of U.S. government. And
unlike previous conflicts in which state militias had to be activated, the post-1865 Indian wars were handled entirely by
the very small permanent, professional army that the United
States maintained. Although the goal of these campaigns was
the same as that embodied in the pre–Civil War policy of
conquering land and expanding settlement, they were more
about finishing up unfinished business rather than a resurgent domination of proagrarian economic policy.
The first major initiative spawned by the post–Civil War,
proindustrialist economic policy that led to conflict was the
attempt to gain an empire. Although Americans were busy
putting down the last Native American resistance to white
settlement, many other industrial countries were dividing the
world’s markets into formal and informal empires in an era
known as the age of imperialism. Americans seemed oblivious to this subjugation of the world’s markets until the depression of 1893, when some of them saw increased exports
as a way to revive declining American industrial production
and reduce price-crippling agricultural surpluses. America’s
tariffs had provoked retaliatory tariffs from other industrial
countries, and the age of imperialism had closed off almost
all the markets of the nonindustrial world, leaving the United
States with few opportunities to export its surpluses.
American policymakers came up with two contradictory
solutions to this problem. One was to ask the other industrial
countries to abandon their empires and allow international
trade to operate along the free trade principles first articulated in Secretary of State John Hay’s Open Door notes. Although other countries politely paid lip service to Hay’s
principles, they made no fundamental change in how international economic relations were conducted.
At the same time, the U.S. government asked other countries to give up the economic privileges of their empires even
as it was establishing an empire of its own. Citing the human
rights abuses perpetrated by the Spanish colonial administration against the Cubans it governed, American media and
policymakers whipped up anti-Spanish war fervor. When an
American battleship, provocatively sent to Cuba to intimidate
the Spanish, mysteriously blew up in the waters of Havana’s
harbor, the public demanded war, and the administration of
President William McKinley quickly complied, asking for a
declaration of war in April 1898. The United States easily won
the Spanish-American War, and Spain ceded control of all its
remaining overseas possessions outside of Africa to the
United States.
The taking of Spain’s colonial empire represented a fundamental change in America’s economic goals in warfare. Previously, lands acquired by the United States were more or less
cleared of the native populations and opened to settlement.
This was not the case with the lands obtained from Spain. In
fact, the way in which the United States established its rule
over these areas was designed to discourage large-scale American migration and settlement. Cuba was made a nominally
independent country, although with the Platt Amendment,
the United States claimed the right to overthrow and replace
any Cuban government with which it disagreed. The Philippines were made a direct colony of the United States. In regard to Puerto Rico, the Foraker Act created a new category
(the unincorporated territory) that explicitly prohibited the
process of territorial self-government and opportunity for
statehood that had traditionally been observed. These policies suggest that America’s desire was not to settle these areas;
rather, it was to establish control of the economic activity and
markets in them. To grow, an agrarian economy needs to
bring more land under cultivation, but an industrial economy needs access to raw materials and markets. The policies
practiced during and after the Spanish-American War suggest that American policymakers were shaping war policy to
meet the needs of the country’s changing economy.
American policymakers found ample opportunity to create economic policies to further economic growth during
World War I. Much like the situation during the French Revolution and the Napoleonic Wars, the United States first followed a policy of neutrality and trade, and combatants on
both sides again engaged in aggressive acts to disrupt American trade with their enemies. Eventually, again as in the earlier conflicts, these acts led America to enter into the war.
The U.S. government encouraged American businesses to
take advantage of the increased opportunities for trade
brought about by the war. As a neutral nation with an impressive productive capacity, the United States began supplying belligerent countries with many of the goods their wardiminished economies could not provide. Soon, both sides
laid mines in shipping lanes, the British imposed a blockade
around their enemies, and Germany announced a policy of
unrestricted submarine warfare. Although the U.S. government protested these actions, it came down much harder on
Germany, and American economic interaction increasingly
favored the Allies. When the Allies no longer had the foreign
exchange to buy American goods, the U.S. government allowed American banks to loan Allied governments money so
they could continue their purchases. By 1917 the U.S. economy and many private banks and businesses had a vested interest in an Allied victory because of these economic ties.
This vested interest, created by American economic policy,
appeared to be threatened in early 1917 by the Central Powers’ increasing dominance over Russia, one of the Allies. Also,
the Germans became more aggressive with their unrestricted
submarine warfare, sinking three American ships in less than
a week in March 1917. These developments led President
Woodrow Wilson to seek a war declaration from Congress,
which he received in April 1917.
The ideas of the Progressive movement heavily influenced
wartime domestic economic policy in the United States. An
expanded income tax was used to finance a sizable amount of
the war effort. The Progressive notion of civic participation
imbued the government’s efforts to get the public to limit
consumption of scarce resources and to buy bonds to finance
the portion of the war that tax revenues could not. Using the
regulatory boards established by the Progressives as a model,
the government established the War Industries Board, which
basically had the power to make all production, resource allocation, pricing, and labor decisions for industries critical to
the war effort. Although the power was used only sporadically and for short periods of time, this was an important new
development in wartime economic policy. For the first time
in American history, the government claimed the right to run
private-sector industry in times of national emergency.
Wilson devised a set of policies called the Fourteen Points
of Peace to convince the public to support the war. These policies were to be a blueprint for how countries should conduct
relations with one another after the war. Economic policy was
very prominent in Wilson’s plan. The Fourteen Points reiterated American economic policies such as the Open Door and
the right of neutrals to trade unmolested in times of war.
The war ended favorably for the Allies, and in 1919, they
drew up the Treaty of Versailles to reestablish peaceful and
cooperative patterns of international relations. Wilson had
hoped his Fourteen Points would be the basis for the treaty.
Although the other industrial countries still largely paid only
lip service to the Open Door policy, they did agree to accept
Wilson’s idea of the League of Nations, an organization that
pledged to defend the rights of countries to carry out commerce in international waters. The league also set up a mechanism, the mandate system, that was designed to move nonindustrial countries from being ruled directly as colonies to
formal independence. Ironically, although the league was
Wilson’s idea, the U.S. Congress chose not to join it, depriving the organization of the primary voice that sought to liberalize the world economy.
Despite these moves toward realizing the American vision
of an international economy increasingly run by free trade
principles, the United States itself followed policies that contradicted that aim during the 1920s and 1930s. As a result of
the disruption of international trade patterns during World
War I, Americans picked up a substantial market share in
Latin America, which had been under the informal economic
control of Britain since the early 1800s. To maintain control
of these markets, the United States engaged in a series of
small military interventions to remove Latin American governments that were practicing policies counter to that control. So, even as the United States was urging other countries
to surrender economic control of their empires, it was unwilling to participate in the vehicle it had established to facilitate that end and it was creating its own informal empire in
Latin America.
The outbreak of World War II led to substantial change in
American economic policy. During the mid-1930s, a series of
laws called the Neutrality Acts were passed, designed to cut
off economic interaction between the United States and warring countries. The hope was that this move would prevent
situations like those that contributed to America’s entry into
World War I. When World War II actually started in the late
1930s, the United States not only ignored or changed these
laws but also clearly used economic policy to favor one side
in the conflict. The most obvious examples of this are the
Lend-Lease program and the embargo against Japan. Under
the Lend-Lease program, the United States gave Germany’s
enemies surplus military equipment to use in the war effort.
America had just started a massive military buildup, so it now
had a great deal of “surplus” military equipment. America’s
policy was intended to make the country, as President
Franklin D. Roosevelt described it, the “arsenal of democracy.” The United States would use its economic might to
equip other countries, which would do the actual fighting
against the tyrannical forces around the world.
The United States began to use economic coercion against
Japan to get it to end its war against China. By the summer of
1941, Washington had cut off all trade with Japan. Americans
thought this economic pressure would force Japanese leaders
to do as the U.S. government wished, since America was
Japan’s primary source of petroleum. Instead, the pressure
led the Japanese to devise a plan to seize the oil-rich Dutch
East Indies. To prevent American interference with that plan,
the Japanese military felt it was necessary to destroy the U.S.
Pacific Fleet and seize the American colony of the Philippines. The attack on Pearl Harbor was the first step in the
plan, and with it came American entry into the war.
The war effort resulted in a wide range of radical economic changes. The policies followed during World War I
were revived and expanded. Government agencies such as the
War Production Board and the Office of War Mobilization
took near complete control of the economy. By the end of the
war, government spending accounted for almost half of the
country’s gross national product (GNP). Wages and prices
were controlled by the government, as was the consumption
of many goods through rationing. Many New Deal policies
found expression in the war. Executive Order 8802 prohibited
employment discrimination by firms with war contracts, and
other regulations virtually required union membership for
those in war-related industries. As a result, union membership rose by over 50 percent to almost 15 million by the war’s
end. The Commodity Credit Corporation became the model
for a U.S. policy dubbed the “warehouse war,” which sought
to corner the global market in strategic commodities in order
to deprive the enemy of them. Although these policies proved
to be temporary, they demonstrate how vital economic policy is in situations of total war.
Creating and Maintaining a Liberal Global Economy
As World War II drew to a close, American policymakers
turned their energies toward finding an economic policy that
would help prevent future worldwide conflicts. Not surprisingly, their solution called for the world to embrace free market capitalism and the free trade principles of the Open Door
system. Much of the world, however, had little interest in such
policies. The stiffest resistance came from the communist Soviet Union, which was able to help spread communism to
several places in Europe and Asia in the years after World War
II. A new type of war, the cold war, erupted as a consequence.
The cold war was often described as fundamentally being a
clash of economic ideologies—U.S. capitalism versus Soviet
communism. Each side devoted its foreign policy to making
its economic policies the basis for the world economy.
Economic policy provided many tactics employed in waging the cold war. The United States used economic aid to
shore up anticommunist governments. The most famous example of that was the Marshall Plan, by which Congress authorized the expenditure of several billion dollars to rebuild
the war-ravaged economic infrastructure of Western Europe.
This tactic established economic aid to foreign countries as a
permanent tool of American diplomacy. However, the United
States was quick to use military and economic coercion
against those countries that did not support its economic
vision in the cold war. Some leaders who pursued economic
policies contrary to America’s wishes were overthrown, such
as Mohammed Mossadeq of Iran and Salvador Allende of
Chile. Others faced embargoes, such as Gamal Abdel Nasser
in Egypt and Fidel Castro in Cuba.
Using economic policy to win the cold war sometimes led
to policies that seemed counterintuitive to America’s overall
goal of making the world economy run along the lines of free
trade and capitalism. The General Agreement on Tariffs and
Trade (GATT), an institution designed to bring freer trade to
the global economy, became a vehicle for economically tying
countries to the United States through trade agreements.
Global free trade gave way to trade bound to America.
The cold war had important influences on the domestic
economic policy of the United States. For instance, the Keynesian revolution in economic policy was essentially completed by the cold war as governments accepted the theory
that deficit spending was necessary to offset business cycles
that included high unemployment and slow business growth.
Government spending increased to fund the military necessary to fight the war, including an enormously expensive
arms race with the Soviet Union and large-scale American
military interventions in Korea and Vietnam. President Lyndon B. Johnson’s decision not to raise taxes to pay for involvement in Vietnam led to serious economic difficulties by
the early 1970s, prompting his successor to try to impose
government controls over the economy (most notably, a temporary wage-and-price freeze). The cold war also provided
some justification for expanding and maintaining the Keynesian welfare state that began with the New Deal. Keeping the
population stable and prosperous took on greater saliency
with the dynamics of the cold war, and a larger welfare state
aided that process.
The cold war began to fizzle out in 1989 as the Communist governments of the Soviet Union and Eastern Europe
collapsed. Even in the war’s latter days, it was increasingly apparent that the next likely battlefield, both for combat and
economic policy, would be the oil fields of the Middle East.
Middle Eastern countries flexed their economic muscle during the 1970s, spearheading huge price increases that drove
crude oil prices from $2 per barrel to $32 per barrel. Such
dramatic price increases on this vital commodity wreaked
havoc on the economies of the industrial countries of the
world, America’s cold war allies. This scenario foreshadowed
the importance of the oil-rich Middle East in the post–cold
war era.
The bulk of America’s warfare and military operations in
the 1990s were devoted to maintaining control of and stability in those oil-rich Middle Eastern areas. Unfortunately,
these aims were somewhat contradictory. The post–cold war
problems of the Middle East began with the 1990 Iraqi invasion of Kuwait. In what became known as the Gulf War, the
United States obtained a UN sanction to lead a military operation designed to drive out Iraq and restore Kuwait’s independence. The United States was concerned that Iraq would
control too much of the world’s oil supply if it kept control
of Kuwait and that it might be tempted to seize Kuwait’s oilrich neighbors. After forcing the Iraqis out, the United States
maintained tens of thousands of troops in the oil kingdoms
of the Persian Gulf to prevent an Iraqi attack. The presence
of these troops, however, offended religious extremists in the
Arab world, who responded by forming a terrorist network
called Al Qaeda. Al Qaeda launched a series of attacks
against the United States, culminating in the assaults on the
World Trade Center and the Pentagon on September 11,
2001. These attacks, which killed over 3,000 Americans, led
President George W. Bush to declare the War on Terrorism.
The War on Terrorism led to a revival of many cold war
economic policies, especially in regard to military spending
and increased deployments of U.S. forces overseas. It was necessitated by America’s economic policy of keeping the oilrich countries of the Persian Gulf separate and independent.
This policy was, in turn, the product of economic policy
choices that created both an increasingly integrated world
economy and an American economic structure that is heavily dependent on imported petroleum.
As America moves into its third century, it finds itself still
pursuing economic policies that lead to war. Overall, the
drive to make the world’s markets work along free market
and free trade principles has seen great success, reflected in
the almost universal acceptance of the World Trade Organization. The only part of America’s economic vision for the
world that seems to require sustained military effort is the
policy of ensuring the separateness of the oil-rich Persian
Gulf states.
—G. David Price
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