During the Gilded Age and rapid economic growth, the US government needed to step up to the mark and create an efficient economic system in the United States. How did they try to create economic harmony? What role did they play in its enforcement? And what committee was responsible for economic legislation?
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Jetzt kostenlos anmeldenDuring the Gilded Age and rapid economic growth, the US government needed to step up to the mark and create an efficient economic system in the United States. How did they try to create economic harmony? What role did they play in its enforcement? And what committee was responsible for economic legislation?
During the Gilded Age, government intervention in economics was opposed by laissez-faire policies. Liberals who supported this idea of laissez-faire, meaning 'let them do what they will argue against government involvement as they believed that the free market was the best way to create a sound economic system.
Free Market
In the free market, prices of goods are set by buyers and sellers rather than by the government.
So while the economy of the United States was built on free market principles, the government still played an important role. The United States operates as a free market, with the government stepping in at critical times to ensure stability, prevent misuse, and promote growth. In particular, the US government's role in the economy is to provide public goods and services, redistribute income, protect private property, resolve market failures, and regulate business.
Did you know?
In a command economy, the government controls the economy, including what commodities are available and their prices.
After the war, the nation's economy grew and became quickly dominated by influential individuals. With the American economy almost doubling in size during the Gilded Age, the markets became a battling ground for prices. There was a dire need for economic legislation as those unable to offer the lowest prices were forced into bankruptcy.
The legislation became an essential economic tool used by the government to regulate the activities of producers and consumers, preventing prominent figures such as John D. Rockefeller of Standard Oil, who had risen alongside the economy to a position of control over the oil market.
Economic legislation
Includes any bill passed by Congress that impacts the economy. This includes business regulations, trade regulations, taxes, tariffs, government debt, etc.
Economic Legislation Examples
The Great Depression
For example, during the Great Depression, the government increased federal funding for public works projects, provided jobs for unemployed people, and reduced income tax rates.
Government regulations of business practices and the goods provided by the business. For example, the government regulates the vehicle industry by imposing requirements about safety, the impact on the environment, and more. It also oversees business practices and steps in if a business engages in unethical or unlawful business practices.
Federal Trade Commission
For example, the Federal Trade Commission monitors businesses to prevent company fraud or money laundering. They also step in if there are signs that a monopoly is forming (see the Sherman Anti-Trust Act below for more information).
At the beginning of the United States' history, the government exercised very little control over the economy. For the most part, businesses created and sold goods, and people made purchases without much oversight. However, as the 19thcentury progressed, the government found it necessary to step in on a few key economic issues, particularly related to the trade of enslaved people and the Industrial Revolution.
The Gilded Age of the late 19th Century brought about many changes to the economy of the United States and the world. Below are some examples of major legislative initiatives that passed during this time:
Congress passed the Interstate Commerce Act in 1887 to regulate the railroad business. During the 19th century, railroad companies became extraordinarily wealthy and powerful. Because people and businesses relied on the railroad system, railroad companies raised prices significantly to increase their profits. The law required railroad companies to keep their prices "fair and just," to make them public, and to halt pricing discrimination against certain regions.
Congress passed the Sherman Anti-Trust Act in 1890 to address concerns over businesses' ability to concentrate trade and power and preserve competition. It prohibits things like cartels, price fixing, and monopolies. A monopoly is formed when one company or business controls an entire commodity, which violates the principles of fair prices and competition in the free market. For example, if one company owned all power plants, they could charge consumers extremely high electricity prices without worrying about losing business.
Did you know?
A significant reason for the Sherman Anti-Trust Act was the Standard Oil Trust in 1882. Nine executives of oil companies joined together to share the profits from the various oil companies they represented. This concentrated all of the profits from oil essentially in the United States in the hands of nine people and functioned as a monopoly on a critical commodity.
The government also stepped in during the Industrial Revolution towards the end of the 19th century. The government created guidelines and regulations to help US businesses thrive and increase competition with other countries. When workers banded together to protest their dangerous and unhealthy working conditions, the government stepped into creating standards for how employees should be treated. Massachusetts passed the first health and safety law in 1877, which laid out factory safety requirements like guards for belts, shafts, and gears, and fire safety exits.
Major economic reform took place under President Barack Obama. In 2008 the US experienced the worst recession since the Great Depression. To help stabilize the economy, Congress passed the American Recovery and Reinvestment Act in 2009. The cost of the bill was around $800 billion and focused on preserving jobs and creating new ones. It also focused on pouring money into infrastructure, education, health, and renewable energy. Based on Keynesian economics, the theory was to make up for the lack of private spending by increasing government spending to help put money in people's pockets and stimulate the economy.
Today, Congress takes an active role in helping to manage the US economy. The economy is one of only four policy areas where the House and Senate create a joint committee. The Senate and House typically develop committees that coordinate to pass legislation. Because of the critical nature of working together on the economy, under the Employment Act of 1946, Congress created the Joint Economic Committee (JEC). Together with the President's Council of Economic Advisors, the two groups monitor the state of the nation's economy and develop recommendations.
Economic Legislation means the measures that are taken by a government to regulate economics.
Some examples of economic laws that are government-made to regulate economic activity are the following:
To date, there are 38 Economic Laws.
Economic laws and policy is made by the Council of Economic advisers in the US. The CEA is made up of three members, one of these is called the Chair, this member is appointed by the President.
Law is important to the economy as it creates stability and security in its practice.
What was the main outcome of the Sherman Antitrust Act of 1890?
It prohibited formation of trusts, cartels, and monopolies
What was the purpose of the Insterstate Commerce Act of 1887?
To prevent powerful railroad companies from joining together to control prices
Which of the following historical events did NOT have a major impact on the government's oversight of the economy?
The Oregon Trail
Which of the following is true of the government's role in the economy?
The government regulates businesses to ensure ethical practices
What legislative committee oversees the economy?
The Joint Economic Committee
Taxes are an example of government's responsibility to...
Redistribute income
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