Education Central Newsletter - Sept/Oct 2021

Sept./Oct. 2021

INSIDE THIS ISSUE:

P1 Depression of 1857

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P2 The Financial Corner

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P3 What is Christianity (Part 3)

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P4 Book Review

EDUCATION CENTRAL (Facts on America's Business, History, and Religion)

Message from the editor...

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Welcome to the third edition of our educational newsletter, Education Central. As I was reading James L. Huston's book, The Panic of 1857 and the Coming of the Civil War, there were times it felt like a discussion of today's economic turmoil. There is one word that describes both: panic. From an editorial in the New York Tribune, dated October 1, 1857: "That it is panic, and panic alone, that has thrown things into the present confusion - that has almost annihilated for the moment all stock values......that all this disorder, confusion and loss has its origin in panic and nothing but panic..." I began looking into the numerous panics, recessions, and depressions the United States has had to endure since its independence in 1776. Four key words seem to be prevalent in all: banks, government, panic, and speculators.

Stay safe!

The Panic of 1857

History of the United States Flag

"It was a fast panic, and therefore in entire keeping with this fast age."

William W. Holden Editor, North Carolina The recession that occurred in late 1857 and on into 1858 crippled the United States, especially in the north. It was considered to be the first global financial crisis. As with other financial debacles, there were a number of cascading events that would eventually impact both individuals as well as businesses: - Further expansion to the West in the 1850s, with railroad companies leading the way.

One reason for the expansion was the California Gold Rush in the late 1840s on into the 1850s. However, immigration westward would slow beginning in mid-1857. Railroad passenger traffic dropped precipitously, i.e. the Western Railroad saw passenger traffic going east and west decrease approximately 25 percent from 1856 to 1858. Land values decreased causing the value of railroad companies' securities to fall.

- Land speculators; banks and other financial entities had invested in land that sat along the railroad lines land they expected would increase in value.

However, land values declined, increasing the number of foreclosures on mortgages. As a result, there were numerous business failures.

- The collapse of the Ohio Life Insurance and Trust Company on August 24, 1857, was another event that sparked the third financial depression in the young country's history, and just twenty years removed from the Panic of 1837. The head of the company's New York office, Edward Ludlow, had heavily invested in the railroads. According to a report

by Charles Calomiris and Larry Schweikart, the bank had "invested $3 million in the railroad industry" of its $4.8 million in assets. Ohio Life would be the first bank to fail during the Panic of 1837.

- The end of the Crimean War in 1856, while not considered by some to have been a major instigator of the panic, impacted grain prices, causing economic downturn in areas across the western United States.

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Below are a few historical dates associated with the flag of the United States: June 14, 1777 - the design of the flag representing the United States of America was put forth via a resolution by the Continental Congress. Instead of the Grand Union flag, which had in its upper left corner the Union Jack, the first United States' flag was to have thirteen white five-point stars with a blue backdrop in the upper-left corner with thirteen red and white horizontal stripes on its field. Why the number thirteen? For the thirteen states/colonies that, in 1777, made up the United States.

The thirteen states/colonies were: Connecticut, Delaware, Georgia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, and Virginia.

September 14, 1814 - Francis Scott Key would pen the national anthem, the "Star-Spangled Banner," after witnessing the U.S. flag still standing at Fort McHenry following a bombardment from the British during the War of 1812.

We honor June 14th as Flag Day as the resolution passed by the Continental Congress gave birth to our Stars and Stripes, to the flag of the United States of America.

The flag of the United States would gain its 50th star on July 4, 1960 when Hawaii was admitted to the union.

P1

TRADE INFOGRAPHIC USA in 1850 Map

Regional Economic Specializations MAINE

OREGON TERRITORY

MINNESOTA TERRITORY

VERMONT NEW YORK

WISCONSIN MICHIGAN

PENNSYLVANIA

IOWA

UNORGANIZED TERRITORY

UTAH TERRITORY

INDIANA

OHIO

D.C.

ILLINOIS

NEW HAMPSHIRE MASSACHUSETTS RHODE ISLAND CONNECTICUT NEW JERSEY DELAWARE MARYLAND

VIRGINIA MISSOURI

CALIFORNIA

KENTUCKY

NEUTRAL STRIP

NORTH CAROLINA

TENNESSEE

NEW MEXICO TERRITORY

ARKANSAS

SOUTH CAROLINA

MEXICO

ALABAMA

GEORGIA

MISSISSIPPI TEXAS

LOUISIANA

KINGDOM OF HAWAII

FLORIDA RUSSIAN AMERICA Southern States; had agricultural crops of cotton, tobacco, rice, and sugar.

West and Great Lakes Region; agricultural crops consisted of wheat and corn; processed pork.

Sources:

New England and Mid-Atlantic states of Pennsylvania, New Jersey, and New York; centers of industrialization, mercantilism, and financial services.

Huston, James L. 1987. The Panic of 1857 and the Coming of the Civil War. Louisiana State University Press. Baton Rouge, LA Olmstead Alan L. And Paul W. Rhode. “The Evolution of California Agriculture 1850-2000.” Obtained from www.citeseerx.ist.psu.edu/viewdoc.

Federal Banking: The Second Bank of the United States

The Financial/Economic Corner

The War of 1812 ended with a declared American victory over England in 1815. However, for America, it was a costly war. The country incurred heavy debt.

Exports decreased nearly 89 percent between 1811 and 1814. During the same time period, imports also declined - down approximately 75 percent. The country was dependent on revenue coming from customs duties applied to imports. With imports down, a decline in customs duties meant further difficulties in America financing the war with Great Britain. It was determined a national bank was needed again in America.

We hear about inflation quite frequently when economists and business people talk about the state of our economy. Just what is inflation?

The Second Bank of the United States (SBUS) was agreed to by President James Madison on April 10, 1816. The establishment of the SBUS did not occur without much debate.

Facts about the Bank: - Was opened in January 1817 in Philadelphia.

Inflation Inflation is, by definition, the diminishing amount of goods and services that can be purchased with currency. Why? When the price of a product or service goes up, it

The Causes and Effect of Inflation Causes Effect Definition

Inflation is defined as the depreciation in the alue of, in this case, the U.S. dollar, resulting in more dollars needed to be spent in order to bu a good or ser ice.

Cost-Push Effect: the increased cost of production for a product ill dri e up prices to consumer

The primar cause of inflation is the increase in countr 's mone suppl

Consumers ha e fe er dollars to spend, impacting businesses, emplo ment, and the o erall econom .

- Had a twenty year charter - Chartered with capital of $35 million; one-fifth of which was funded by the U.S. government; the remaining 80 percent would be underwritten by private investors.

Demand-Pull Effect: hen there is an aggregate demand for a product, a compan ma raise its price of product to a le el the consumer can bear.

- Charter was not renewed; closed in 1836.

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P2

Religion What is Christianity? (Part 3) In part 1 of What is Christianity, we briefly discussed its beginnings - Jesus Christ and His teachings, along with His resurrection. In part 2, we pull the Old Testament into the discussion of Christianity. In part 3, we continue to discuss how the Gospel is found in the Old Testament, beginning with Ruth.

Ruth is a short, but wonderful book that gives us insight into both God's mercy as well as His goodness toward those He loves.

We also get more glimpses of Christ in this book. Ruth and her mother-in-law would travel back to Bethlehem after losing their husbands. Bethlehem is the birthplace of Jesus. Bethlehem means "house of bread" Jesus tells us in John 6:35 that "I am the bread of life." Joseph Farah mentions that Boaz is a "Jesus-type" person. Boaz did not hesitate to take on the role as kinsmanredeemer: a relative to Naomi's dead husband, Boaz was willing to pay the price for the woman he loved (Ruth). Jesus was the ultimate kinsman-redeemer - He not only identified with us (understanding our struggles), but also redeemed our sins by dying for us on the cross. Ruth and Boaz's son, Obed, was part of the lineage of King David and eventually Christ.

His Heart Following the book of Ruth are 1 and 2 Samuel. It is in these books that we become acquainted with and get to know the life of David - he was a shepherd at a young age, , he was a musician (played the lyre), he killed the Philistine giant Goliath, he was a poet (having written or assisted in the writing of most of the chapters in the book of Psalm), and he would eventually be made King of all of Israel. His importance to Israel cannot be emphasized enough along with being linked to the One greater than him, Jesus Christ.

Sixty-six chapters are dedicated to David.

He is referenced fifty-nine times in the New

Inflation (cont.)

Testament. In 2 Samuel 7 we read about the Davidic Covenant, which is considered an extension of the Abrahamic Covenant.

Meaning what? God promised Abraham that he would be "the father of many nations," and "will make nations and kings come from" him. We see this fulfilled in David who becomes king of Israel and, ultimately, in Jesus Christ, of whom Matthew 1:1 states is "the Son of David, the Son of Abraham."

In Robert Royal's book, The God That Did Not Fail, we sense the importance of religion, specifically, Christianity, in the years leading up to and after the independence of America. Peter A. Lillback wrote a thorough, enlightening book, George Washington's Sacred Fire, in which he made a case for Washington's Christian faith. On page 723 of the his book, Lillback wrote "George Washington's 'sacred fire of liberty' was sacred, precisely because of his ardent Christian faith." In 1816, there were an estimated 2,700 Methodist churches in the United States. Nearly 45 years later, at the start of the Civil War, an estimated 20,000 Methodist churches were scattered across America. The Baptists enjoyed similar experiences with approximately 12,000 churches across the land in 1861.

Last month, the Barna Group released a study, "Signs of Decline & Hope Among Key Metrics of Faith," in which it pointed out that we, as Americans are becoming soft in our practice of Christianity. Now more than ever we do not want to take our eyes off of God! The goodness of God, who gave us Jesus Christ, should be glorified forever. following:

- Expansionary takes more of the currency (the dollar, in this - Contractionary case) to buy the good or service. Therefore, the dollar isn't worth as much when the cost of An expansionary monetary policy has the goods and services goes up. following characteristics: lower interest rates and an increase in the money supply. The Monetary Policy purpose is to get the economy Why should anyone need to know what the growing,leading to a decrease in monetary policy is for the United States or for unemployment, and the devaluation of a that matter, any country? How does the country's currency. There is a risk of inflation monetary policy of the United States impact rising due to the increase in the money you? supply First of all, what is a monetary policy trying to A contractionary monetary policy occurs achieve? Two things: when the inflation rate rises due to the - Full employment - Stable prices (inflation target is 2 percent) A monetary policy will look like one of the

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increase in the money supply. Two things will result: interest rates will go up and there will be a tightening up of the money supply. The purpose is to bring down the rate of inflation.

Ruth The book before Ruth: Judges The book after Ruth: 1 Samuel There are two books in the Bible whose main character is a woman - the book of Ruth and the book of Esther. Though they lived in different periods of time, they were both heroines.

Ruth was the daughter-in-law to a woman named Naomi. Now, Naomi went through a very difficult period of time. A famine (little to no food for the people) had hit Bethlehem, which was located in the province of Judah. What were she, her husband Elimelech, and their sons going to do? There is no mention of praying to God for direction. No consideration whatsoever.

They decided to pack everything up and head to a place called Moab where Naomi was originally from. Moab was a pagan nation, which was hated

by Israel. There they worshipped many gods.

Once settled in Moab, despair would set in for Naomi. Her husband passed away. Their sons, Mahlon and Chilion, married Moabite women Orpah and Ruth. Both Mahlon and Chilion would then die, leaving Naomi with just her daughters-inlaw. The ironic thing is that God had provided food for His people in Canaan. Hearing this, Naomi decided to return to Bethlehem. Although Orpah decided to return to her mother's home, Ruth would go back with Naomi: "For wherever you go, I will go, and wherever you live, I will live; and your people will be my people, and your God will be my God." Ruth 1:16 Upon return to Bethlehem, Naomi changed her name to Mara, which means "bitter." She was in despair with her personal losses. However, in the town of Bethlehem was a prominent man from Elimelech's family. His name was Boaz.

Ruth decided one day that she would go and gather up the fallen grain in a field whose owner would allow such a task. She would soon find herself in fields that belonged to Boaz. When Boaz came out to the fields from Bethlehem, he met with the harvesters. He told them "the LORD be with you."

This gives you insight as to the type of person he was. The men would respond back with "The LORD bless you."

After being informed of Ruth's courteousness and

P3

RUTH (continued)

Book Review: Elevate

hard work by Boaz's foreman, Boaz became even more interested in her. He rewarded her by allowing her to glean his fields along with the other girls (telling the men to leave her alone. She could also "drink from the jars the young men have filled." (Ruth 2:9)

I had a hard time putting this book down. It's a little book in size and pages, but a big book in the message the author, Robert Glazer, is conveying: Push Beyond Your Limits and Unlock Success in Yourself and Others.

Boaz admired Ruth for the kindness she showed Naomi. After blessing her, he had her eat with the harvesters. Following her meal, Boaz told his young men that she could "gather grain among the bundles." (Genesis 2:15) When Ruth got home, she told Naomi about her day - the men she worked with and, in particular, Boaz. She then showed her the amount of grain she had gathered that day - enough to last them a long time.

After learning that Boaz, a family relative (and Naomi's kinsman-redeemer), had provided such favor to Ruth, Naomi offered a blessing on Boaz and recognized that the LORD continued to show his love and kindness to the living and the dead.

Naomi told Ruth to go to where Boaz was sleeping.

When he asked who was there as it was dark, Ruth acknowledged it was her. He felt honored that she wanted to marry him, but there was another person another redeemer - that was closer in line to Ruth than Boaz. The next day, however, Boaz and this other redeemer worked it out that Boaz would marry Ruth. After Boaz and Ruth were married they would become parents of a son whom they named Obed.

The Eighth Commandment Identity Theft The eighth commandment of the ten that God spoke in Exodus 20 says "Do not steal." Stealing isn't just taking something that doesn't belong to you. It can be cheating someone out of something, like identity theft.

Identity theft continues to be an issue. Below are data from a Lifelock report from 2018: - 60 million Americans affected by identity theft in 2018 (data from a 2018 survey conducted

by The Harris Poll).

- According to the Federal Trade Commission (FTC), the six categories of identity theft are (in order): - Employment- or tax-related fraud - Credit card fraud - Phone or utilities fraud - Bank fraud - Loan or lease fraud - Government documents or benefits fraud The Consumer Information page of the Federal Trade Commission (www.consumer.ftc.gov) gives you "Warning Signs" and steps to take right away should someone be using your information. Protect yourself and your credit! It's not a question of "if" it happens, but "when" it happens.

This book is focused on capacity building. Glazer points out that capacity building doesn't equate to just doing more; it is, instead, "doing more of the right things." In order for a business to successfully meet it's mission or goals in the near future, capacity building involves strengthening or improving within an organization. It's an ongoing process.

Our book review in the last edition of this newsletter was on Change is Good...You Go First. Let's face it - change is hard.

However, status quo is not an option for sustainability in today's turbulent times. Glazer, in his book, discusses the need for leaders to provide both encouragement and inspiration that will not only uplift them but their employees as well. On page 10, Glazer states: "A leader's goal should be to inspire and elevate expectations so that team members can simultaneously improve all areas of their lives."

in

Today, as corporate and small business leaders look to economically recover from the pandemic, this book is a must read. As businesses enter the recovery mode, Glazer reminds leaders that "failure and struggle are the paths to success, not obstacles." Chapter 5 Building Your Emotional Capacity, is perhaps more vital to read now than ever. In this chapter, Glazer offers insight as to how to be that effective leader; how to elevate yourself and others in order to achieve.

"No one should be living up to less than their full potential." Robert Glazer

As future leaders, you should buy the book!

1700s: British Taxes Nothing contributed more to the angst of the colonists in America than the taxes the British imposed on them.

The Molasses Act of 1733: - The American colonies were importing molasses not just from British-owned sugar plantations in the West Indies but also from nonBritish plantations located in Santa Domingo and Martinique.

- The tax on molasses was imposed by the British on the thirteen American colonies.

- The British were determined to protect their sugar plantations in the West Indies.

- Therefore, if colonists in America were determined to get their molasses from any non-British plantation, they were going to pay a heavy tax.

According to the Tax Foundation, by 1763, nearly 80 percent of the molasses coming into the colonies was smuggled in.

The Seven Years' War concluded in 1763 with Britain saddled with heavy debt. How did the British address their lack of revenue?

Well....

The Sugar Act of 1764: In an effort to curb smuggling, the British government installed stronger customs enforcement and placed a tax on sugar and molasses. Also, imposed a tax on coffee, indigo, and wine.

The Currency Act of 1764 Under this act, colonies were banned from using their paper currency for transactions.

What about taxes? Well, the colonists could use paper money to make payments on public debt.

The act was revised in 1770, allowing New York (America's capital at the time) to print and issue legal tender for any kind of debt.

The Stamp Act of 1765 Colonists had to buy officially stamped paper for anything printed in the colonies.

Thus, if you were printing almanacs, newspapers, etc., you were going to have to use the paper mandated by Parliament.

The Tea Act of 1773 Parliament passed this act that was designed to help the East India Company with its financial woes. On December 16, 1773, the colonists revolted dumping three cargoes of tea into the sea.

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