Controversies Over the Role of Government During the Gilded Age

The Role of Government During the Gilded Age

Introduction

  • Unit 6 of the AP U.S. History curriculum focuses on the controversies surrounding the government's role during the Gilded Age.
  • The rise of industry significantly altered goods production, city demographics, and class structures.
  • A central debate during this time concerned the extent of government intervention in response to these changes.

Historical Context of Government Intervention Debate

  • The debate over the federal government's role in the economy dates back to the country's founding.
  • Examples:
    • Alexander Hamilton vs. Thomas Jefferson on the National Bank.
    • Henry Clay’s American System: debates over government-sponsored infrastructure (roads, canals).
  • Controversies over government's role in the economy are not new to this period.

Arguments Against Government Regulation

  • Previous discussions highlighted the need for government intervention due to unfair labor practices and the growing wealth gap.
  • This section focuses on arguments against government regulation.

Laissez-faire Economics

  • Dominant economic ideology of the Gilded Age.
  • Definition: "Leave alone" or "let alone;" advocates minimal government intervention.
  • The belief is that if everything is left alone, all will be well.

Adam Smith and "The Wealth of Nations"

  • Laissez-faire economics is rooted in Adam Smith's 1776 work, "The Wealth of Nations."
  • Smith argued that economies are best governed by supply and demand.
  • Allowing individuals to act in their self-interest leads to the flourishing of the market and society through the "invisible hand".

Reality vs. Ideal

  • Gilded Age politicians and tycoons invoked Adam Smith but failed to implement his vision.
  • Smith emphasized competition as vital for a healthy economy.
  • Business leaders consolidated power, eliminating competition.

Government Inaction and Hesitant Involvement

  • Advocates against government regulation persisted even during economic downturns.
  • Panic of 1893: President Grover Cleveland's limited response to the economic crisis, led to bread lines.
  • Government involvement was often half-hearted.

Interstate Commerce Commission (ICC)

  • 1886 Supreme Court decision limited states' ability to regulate railroads.
  • The federal government created the Interstate Commerce Commission (ICC) to prevent states from violating this ruling.
  • The ICC was underfunded and lacked real power to interfere in states’ affairs.

Government Involvement to Benefit Business

  • Laissez-faire was the prevailing approach during the Gilded Age for both enterprise and politics.
  • The government did intervene when it benefited business and the economy.
  • Business leaders collaborated with Republican politicians to expand markets overseas through diplomacy.

Examples of Government Intervention

  • Overthrow of the Hawaiian monarchy in 1893, leading to U.S. annexation in 1898 and new markets.
  • Open Door Policy (1899-1900) with China: advocated for equal trading rights in Chinese ports amid European encroachment.

Conclusion

  • During the Gilded Age, the government intervened in business when it anticipated economic benefits.
  • However, the government rarely regulated business in any meaningful way.