## The Role of Government in the Gilded Age (1870s-1890s) This period saw a "do-little" government largely influenced by laissez-faire economics and Social Darwinism. This meant minimal government intervention in the economy, even during downturns. However, this wasn't a complete absence of government involvement; rather, it was a selective involvement favoring certain interests. The Gilded Age is characterized by rapid industrialization, economic growth, and significant social and political change, but also by widespread inequality and corruption. ### Government Actions: Promoting Growth, Not Regulation While reluctant to regulate, the government actively promoted business growth through several key actions: #### Federal Land Grants * **The Problem:** Railroad expansion was crucial for westward expansion and economic growth, but private investment wasn't sufficient. * **The Solution:** The government provided massive land grants (over 170 million acres!) and loans to railroad companies. Imagine giving a company an area larger than Texas to build a railroad! * **The Consequences:** This led to hasty construction, corruption (Crédit Mobilier scandal), and ultimately, railroad control over vast tracts of western land, sparking public outrage. A common misconception is that these land grants were purely altruistic. They were intended to stimulate economic growth, but the process was rife with corruption and unintended consequences. #### Interstate Commerce Act (1887) * **The Background:** State regulations on railroad rates were deemed unconstitutional by the Supreme Court in *Wabash v. Illinois* (1886), leaving farmers and shippers vulnerable to unfair practices. * **The Act:** Established the Interstate Commerce Commission (ICC) to regulate railroad rates and investigate discriminatory practices. * **The Reality:** Initially, the ICC was largely ineffective, often siding with the railroads rather than farmers and shippers. Its power was significantly strengthened later. The ICC's initial weakness highlights the limitations of even well-intentioned legislation without sufficient enforcement mechanisms. #### Antitrust Movement and the Sherman Antitrust Act (1890) * **The Problem:** The rise of powerful trusts, like Standard Oil, sparked public concern over monopolies and concentrated power. * **The Act:** Aimed to prohibit "restraint of trade," but its vague wording and the Supreme Court's narrow interpretation in *United States v. E. C. Knight Co.* (1895) limited its effectiveness. The Sherman Antitrust Act's initial failure demonstrates the difficulty of regulating powerful economic interests through legislation alone. #### Foreign Policy and Economic Influence * The government actively pursued expansionist policies, such as purchasing Alaska and annexing Hawaii, to promote trade and economic interests. ### Political Issues: Civil Service, Currency, and Tariffs Beyond economic policy, the government grappled with significant political issues: #### Civil Service Reform and the Pendleton Act (1881) * **The Catalyst:** President Garfield's assassination by a disgruntled office seeker highlighted the dangers of the spoils system (patronage). * **The Act:** Created the Civil Service Commission, introducing merit-based hiring for federal jobs and reducing political influence. While a step towards a more professional and less corrupt government, the Pendleton Act initially only covered a small percentage of federal employees. #### The "Money Question": Hard Money vs. Soft Money * **The Debate:** Centered on the expansion of the money supply. Debtors and farmers favored "soft money" (increased paper money and silver coinage) to ease debt burdens, while creditors and bankers preferred "hard money" (gold standard) to maintain currency stability. * **Key Events:** The Panic of 1873, the Greenback Party's rise and fall, the Bland-Allison Act (limited silver coinage), and ongoing debates over the gold standard. Imagine the impact of inflation on farmers who had borrowed money at a fixed interest rate. Increased money supply would make their debt easier to repay, but it could also lead to price instability. #### Tariff Issue * **High Tariffs:** Protected U.S. industries but raised prices for consumers and hurt farmers by reducing export opportunities due to retaliatory tariffs from other countries. * **Political Divide:** Southern Democrats and some Northern Democrats opposed high tariffs, creating a significant political divide. ### Conclusion The Gilded Age government's role was complex. While ostensibly committed to laissez-faire principles, it actively intervened to promote certain industries (railroads) while largely ignoring the needs of farmers and workers. The period saw significant legislative efforts (Interstate Commerce Act, Sherman Antitrust Act, Pendleton Act), but their effectiveness was often hampered by weak enforcement, judicial interpretations, and the powerful influence of vested interests. The unresolved issues of the Gilded Age – economic inequality, corruption, and the need for greater government regulation – would fuel the Progressive Era reforms of the early 20th century.