Well hey there and welcome back to Heimler’s
History. So we’ve been going through Unit 6 of the AP U.S. History curriculum and in
this video it’s time to talk about the controversies over the role of government
during the Gilded Age, and that means it’s about to get saucy. So if you’re ready to get
them brain cows milked, then let's get to it. So all through this unit we’ve been talking
about the rise of industry in America and how that changed the production of goods and
the demographics of cities and the structure of classes. Long story short, the rise of
industry was a big deal during the Gilded Age. And one of the most pointed and fierce
debates that occurred in this time was with respect to the role government should take in
relationship to all these changing realities. And the truth is, this debate about the role
of the federal government in the economy is one that stretches back to the founding
of the country. That was one of the main fights between Alexander Hamilton and Thomas
Jefferson with respect to the National Bank. It reared its head again when debates over Henry
Clay’s American System erupted in Congress, and they argued fiercely about whether the
government ought to sponsor infrastructure improvements like roads and canals. And I could
name many other examples, but the point is, controversies over the role of government in
the economy is not a new thing in this period. So in the last few videos I’ve mentioned a
lot of realities that argued FOR government intervention in business, things like unfair
labor practices and the growing gap between the rich and the poor. So in this video I’m
going to focus on the other side of the debate, namely, the arguments that were being
made against government regulation. So in order to get into this, let’s remind
ourselves about the dominant economic ideology during this period, namely, laissez-faire
economics. Now laissez-faire is French for “leave alone,” or “let alone,” or whatever, some
French speaker always corrects me in the comments. [Call Matt, what does laissez faire mean?] Anyway
this way of understanding economics is this: just leave everything alone and
eventually all shall be well. Now the industrialists and the politicians
who supported them didn’t make up this way of thinking. It actually goes back to 1776 when
Adam Smith published The Wealth of Nations. His argument was that economies are best governed by
the laws of supply and demand, and that if you just let people make decisions in their own best
interest then the invisible hand of the market will always flourish best under those conditions
and therefore lead to the flourishing of society. Now the problem is that while Gilded Age
politicians and tycoons were spouting off about Adam Smith and the invisible hand,
they apparently forgot that the scenario they created was nothing like what Adam Smith
envisioned. One vital ingredient for a healthy economy in Smith’s view is competition, but
these business leaders had so consolidated power in their respective industries that
competition vanished like a fart in the wind. But that didn’t keep these folks from arguing
against government regulation in business or the economy as a whole. And that was true
even during economic downturns. During the severe Panic of 1893 President Grover Cleveland
largely did nothing to alleviate the economic disaster for many Americans who ended up
standing in bread lines to feed themselves. And even when the federal government did get
involved, they did so half-heartedly. For example, in 1886 the Supreme Court handed down
a decision in a case whose name you don’t really need to know, but the decision
basically said that states couldn’t regulate railroads. And so the government created
a federal agency called the Interstate Commerce Commission to ensure that states
didn’t violate this law. But the ICC was deeply underfunded and therefore had no
real power to meddle in states’ affairs. So all that to say, laissez faire was the
rule of the game during the Gilded Age, both for enterprise and for
politics. However, the government DID get involved when gains for business
and the economy could be made. For example, business leaders worked with Republican
politicians to expand markets overseas by means of diplomacy. Now this will come into focus
very clearly at the start of the next period, so here I’ll just mention a couple
of examples of how this played out. First, laissez-faire capitalists strongly
supported the overthrow of the Hawaiian monarchy in 1893. Eventually that would lead to
the U.S. annexing the islands in 1898 and that meant new markets were opened. Second, was the
Open Door Policy established between China and the United States in 1899-1900. Essentially
it just advocated for equal trading rights in all the ports in China which were being
rapidly consumed by European powers. Again, we’ll get way more into that in
the next period, but for now, you just need to understand that during the
Gilded Age the government DID get involved in business when the outcome looked to be good
economically for them. However, the government almost never got involved in any meaningful
way when it came to regulating business. OKay, that’s what you need to know about Unit
6 Topic 12 of the AP US History Curriculum. If you need help getting an A in your
class and a five on your exam in May, then you might want to click here and
let the invisible hand guide you towards my Ultimate Review Packet. If you want
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subscribing, and I shall oblige. Heimler out.