Unit 6: Topic 12 - Controversies over the Role of Government in the Gilded Age Flashcards
What is Laissez-faire economics?
Laissez-faire (french for “leave alone”) is a political philosophy that supports free market capitalism and opposes government intervention in the economy.
During the gilded age, the government practiced this philosophy. This gave businesses free reign, from setting their own prices to determining their wages and working conditions. Eventually it resulted in monopolies and unfair business practices, foreshadowing the problems of the industrial revolution.
What is the “Wealth of Nations”?
The “Wealth of Nations”, published by Adam Smith in 1776, argues that the economy is best governed by the laws of supply and demand. It also states that the government should leave the economy alone because the Invisible Hand (self-interest of individuals) will eventually result in prosperity. This ideology is what developed into laissez-faire economics.
What is the Interstate Commerce Commission?
The Interstate Commerce Commission (1887) was created to regulate railroads and fair prices. However, it was underfunded and had no real power to carry out its job.
It demonstrates an attempt by the U.S. government to challenge laissez-faire economics because it was supposed to have the power to regulate private corporations that control interstate commerce.
What was the Panic of 1893?
The Panic of 1893 was an economic depression in the U.S. that lasted until 1897. President Grover Cleveland did nothing to correct the economic crisis, showing the continued implementation of laissez-faire economics.
How did the U.S. expand its markets overseas during the Guilded Age?
One example of expanding U.S. markets in the Gilded Age was when laissez-faire capitalists strongly supported the overthrow of the monarchy of Hawaii in 1893.
Hawaii had a strong sugar industry and was a checkpoint in the Pacific. When Queen Liliuokalani took over, she refused to accept the Constitution of 1887, which decreased much of Hawaii’s monarchal power, and replaced it with a constitution. This eventually led to a revolution by American sugar planters in 1893. The U.S. annexed the islands in 1898, opening up new trading opportunities and markets.
What is the Open Door Policy?
The Open Door Policy was established in China in 1899 and 1900, and demanded equal trading rights to all the ports in China being used by European powers. The reason why the U.S. implemented this was because it expanded markets for industrialized goods and increased economic prosperity from trade. In addittion, it was an attempt to restrict Chinese immigration and display American military power. It demonstrates how the government got involved in business when the economic outcomes were largely beneficial, but still didn’t directly regulate them, continuing laissez-faire.
