💵Growth of the American Economy Unit 11 – Progressive Era: Economic Regulation

Key Events and Timeline

• Panic of 1893 triggered a severe economic depression lasting until 1897
• Formation of the Interstate Commerce Commission (ICC) in 1887 marked the beginning of federal regulation of railroads
• Sherman Antitrust Act passed in 1890 to prevent monopolies and promote competition
• Progressive Era began in the 1890s and lasted until the 1920s, characterized by social activism and political reform
  • Muckraking journalism exposed corruption and social issues (Upton Sinclair's "The Jungle" published in 1906)
• Pure Food and Drug Act and Meat Inspection Act passed in 1906 to regulate food and drug industries
• Federal Reserve Act of 1913 created the Federal Reserve System to stabilize the banking system and regulate the money supply
• Clayton Antitrust Act of 1914 strengthened antitrust laws and exempted labor unions from antitrust prosecution

Major Economic Issues

• Concentration of wealth and power in the hands of a few large corporations and trusts (Standard Oil, U.S. Steel)
• Exploitation of workers through low wages, long hours, and dangerous working conditions
  • Child labor was common in factories and mines
• Lack of competition due to monopolistic practices and price fixing
• Inadequate regulation of railroads led to discriminatory pricing and unfair practices
• Unsafe and unsanitary conditions in the food and drug industries
  • Adulteration of food products and false advertising of patent medicines
• Frequent financial panics and economic instability caused by unregulated banking system
• Growing income inequality and poverty in urban areas

Key Figures and Their Contributions

• Theodore Roosevelt (President 1901-1909) known as the "trust buster" for his efforts to regulate big business and promote conservation
  • Supported the passage of the Meat Inspection Act and Pure Food and Drug Act
• Woodrow Wilson (President 1913-1921) implemented several progressive reforms, including the Federal Reserve Act and Clayton Antitrust Act
• Upton Sinclair, muckraking journalist whose novel "The Jungle" exposed unsanitary conditions in the meatpacking industry
• Ida Tarbell, investigative journalist who wrote a series of articles exposing the monopolistic practices of Standard Oil
• Jane Addams, social reformer and founder of Hull House, a settlement house in Chicago that provided services to immigrants and the poor
• Samuel Gompers, labor leader and founder of the American Federation of Labor (AFL), which advocated for better working conditions and higher wages

Legislative Reforms and Regulations

• Interstate Commerce Act (1887) regulated railroads and created the Interstate Commerce Commission (ICC) to oversee railroad practices
• Sherman Antitrust Act (1890) prohibited monopolies and restraints of trade, allowing the federal government to break up trusts
• Elkins Act (1903) strengthened the ICC's authority to regulate railroad rates and prohibited rebates and price discrimination
• Hepburn Act (1906) further expanded the ICC's power to regulate railroad rates and practices
• Pure Food and Drug Act (1906) prohibited the manufacture and sale of adulterated or misbranded food and drugs
  • Required proper labeling of ingredients and established standards for food quality
• Meat Inspection Act (1906) mandated federal inspection of meat products and improved sanitary conditions in meatpacking plants
• Federal Reserve Act (1913) created the Federal Reserve System to provide a more stable and flexible banking system
• Clayton Antitrust Act (1914) expanded the Sherman Act by prohibiting specific anticompetitive practices (price discrimination, exclusive dealing contracts) and exempting labor unions from antitrust laws

Impact on Business and Industry

• Increased government regulation and oversight of business practices led to more fair competition and consumer protection
  • Breakup of large trusts (Standard Oil, American Tobacco Company) reduced monopolistic power
• Improved working conditions and safety standards in factories and mines
  • Reduced accidents and health hazards for workers
• Higher wages and shorter working hours for some workers due to labor union activism
• Increased costs for businesses to comply with new regulations and standards
  • Some smaller businesses struggled to compete with larger, more established companies
• Shift towards scientific management and efficiency in production processes (Taylorism)
• Growth of new industries and technologies (automobiles, electricity) created new economic opportunities

Social and Labor Movements

• Labor unions, such as the American Federation of Labor (AFL) and the Industrial Workers of the World (IWW), fought for better working conditions, higher wages, and shorter hours
  • Supported strikes and collective bargaining to negotiate with employers
• Women's suffrage movement gained momentum, leading to the passage of the 19th Amendment in 1920, granting women the right to vote
• Progressive social reformers advocated for child labor laws, public health initiatives, and urban renewal projects
  • Settlement houses (Hull House) provided education, healthcare, and social services to immigrants and the poor
• Temperance movement, led by groups like the Women's Christian Temperance Union (WCTU), sought to prohibit the production and sale of alcohol
  • Culminated in the passage of the 18th Amendment (Prohibition) in 1919
• Civil rights activists, such as W.E.B. Du Bois and the NAACP, fought against racial discrimination and segregation

Economic Theories and Ideologies

• Progressivism emphasized the need for government intervention to address social and economic problems
  • Believed in using scientific expertise and rational planning to promote the common good
• Socialism gained popularity among some workers and intellectuals who criticized the excesses of capitalism
  • Called for public ownership of the means of production and a more equal distribution of wealth
• Keynesian economics, developed by John Maynard Keynes, argued for government intervention to stimulate demand during economic downturns
  • Influenced later New Deal policies during the Great Depression
• Laissez-faire capitalism, supported by business leaders and conservative politicians, opposed government regulation of the economy
  • Believed in the self-regulating nature of markets and the benefits of free competition

Legacy and Long-term Effects

• Established the principle of federal government intervention in the economy to protect consumers, workers, and promote fair competition
  • Set the stage for later New Deal policies and the growth of the regulatory state
• Increased public awareness of social and economic issues, leading to further reforms in areas such as labor rights, public health, and environmental protection
• Strengthened the role of labor unions in advocating for workers' rights and benefits
  • Collective bargaining became a key tool for negotiating wages and working conditions
• Laid the foundation for the modern welfare state, with government programs providing social insurance and assistance to the poor and elderly (Social Security Act of 1935)
• Contributed to the growth of the middle class and the expansion of consumer culture in the 20th century
  • Rising wages and improved living standards for many Americans
• Debate over the proper balance between government regulation and free market capitalism continues to shape economic policy and political discourse
  • Tension between progressive and conservative ideologies remains a defining feature of American politics