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The Growth Of American Government From The End Of Reconstruction And The End Of World War Ii

2153 words - 9 pages

In the past, the nation’s government took the “laissez-faire” approach to dealing with the economy and/or free market affairs. The government intervened as little as possible, asserting the belief felt that if left alone, economic problems would be resolved without government interference. However, this approach was not guaranteed, and at times, the government had to put aside the “laissez-faire” approach of the past. The government had no other choice but to intervene in these instances to return balance to the economy and protect its citizens it served. The government changed both its approach and its size through programs initiated by the Industrial Revolution, New Deal programs during and following the Great Depression, and World War II, forever changing the relationship between Americans and their Government.

During the Industrial Revolution with the massive railroad production across the country, the railroad executives were clever, strong-minded, mostly dishonest men who bribed congressmen, and conducted crooked financial deals who became known as “robber barons”. 1 As railroads expanded transportation across the country, it opened up a vast market for competition and over production of farm products. The railroad executives took advantage of the fact that the railroad was the only transportation that some farmers had to ship their products. Since the railroads had formed monopolies, they were free to charge whatever rates they saw fit and took full advantage of this by price discrimination. They offered discounts and rebates to big corporations with large loads which the individual farmer did not have. Nor did farmers have the political influence to fight the railroads on these matters.2 Therefore, in 1877, the government’s economic “lassiez-faire” philosophy was tested with the enactment of the Interstate Commerce Commission. Its purpose was to address the problem of the railroad monopolies by setting guidelines on how they were to conduct business: by charging just and reasonable rates for shipping and passengers, banning discounts and rebates, illegalizing price discrimination against small markets, and most importantly, it established a five member panel to investigate and hold the railroad executives accountable for breaking the laws of the act.3

During the building of the Transcontinental Railroad, the railroads themselves created a large market for the steel and iron industries.4 The steel and oil industries were booming and corruption was rampant. Andrew Carnegie had cornered the market in the steel industry and John D. Rockefeller had cornered the oil market. Rockefeller bought up his competition after essentially putting them out of business by flooding the market with refined oil bringing down prices and profits. He was determined to pay no one a profit because he wanted it all for himself. He created a plan called vertical integration which consolidated his businesses into one by creating The Standard...

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