CONTROVERSIES Over the Role of GOVERNMENT in the Gilded Age [APUSH Review 6.12] Period 6: 1865-1898

Summary

In this video from Heimler's History, the focus is on the controversies surrounding the role of government during the Gilded Age in the United States. The debate over government intervention in the economy has historical roots, dating back to disagreements between Alexander Hamilton and Thomas Jefferson. The video discusses the laissez-faire economic ideology, which was dominant during this period and advocated for minimal government interference in the economy. Despite this ideology, industrialists and politicians often called for government action when it was beneficial for business expansion, such as in the cases of the Hawaiian monarchy's overthrow and the Open Door Policy with China. However, meaningful government regulation of business was largely absent, even in times of economic crisis, as illustrated by President Grover Cleveland's inaction during the Panic of 1893 and the limited power of the Interstate Commerce Commission. The video concludes by noting the selective nature of government involvement in business affairs during the Gilded Age.

Takeaways

• 🏭 The rise of industry in America during the Gilded Age significantly changed the production of goods, city demographics, and class structures.
• 🇺🇸 The debate over the role of government in the economy dates back to the founding of the United States, with early disagreements between figures like Alexander Hamilton and Thomas Jefferson.
• 💼 Laissez-faire economics, rooted in Adam Smith's 'The Wealth of Nations,' was the dominant ideology, advocating for minimal government intervention in the economy.
• 📉 Despite the ideology, Gilded Age industrialists and politicians often acted contrary to the principles of competition that Smith advocated for a healthy economy.
• 🔍 The government was largely hands-off during economic downturns, such as the Panic of 1893, with President Grover Cleveland taking a passive approach.
• 🛠️ The Interstate Commerce Commission (ICC) was established to regulate railroads, but it was underfunded and lacked real power to enforce regulations.
• 🌎 The government did intervene in business when it saw potential for economic gain, such as through overseas market expansion and diplomacy.
• 👑 Laissez-faire capitalists supported the overthrow of the Hawaiian monarchy, which later facilitated the U.S. annexation and opening of new markets.
• 🚪 The Open Door Policy with China in 1899-1900 was an example of the U.S. government promoting equal trading rights, countering European dominance in Chinese ports.
• ❌ The Gilded Age was characterized by minimal meaningful government involvement in regulating business practices.
• 📚 The video script is part of a series discussing Unit 6 of the AP U.S. History curriculum, focusing on the controversies over government's role during the Gilded Age.

Q & A

What was the main debate during the Gilded Age regarding the role of government?

The main debate during the Gilded Age was about the role government should take in relation to the changing realities of industrialization, such as the production of goods, city demographics, and class structures.

What is the historical context of the debate on the role of the federal government in the economy?

The debate on the role of the federal government in the economy dates back to the founding of the United States, with key figures like Alexander Hamilton and Thomas Jefferson disagreeing on issues such as the National Bank.

What economic ideology was dominant during the Gilded Age?

Laissez-faire economics was the dominant economic ideology during the Gilded Age, advocating for minimal government intervention in the economy.

Who is Adam Smith and what is his contribution to economic thought?

Adam Smith was an economist who published 'The Wealth of Nations' in 1776. He argued that economies are best governed by the laws of supply and demand and that the 'invisible hand' of the market would lead to the flourishing of society if left to operate freely.

How did the industrialists and politicians of the Gilded Age misinterpret Adam Smith's economic theories?

While advocating for laissez-faire economics, the industrialists and politicians of the Gilded Age consolidated power in their industries, reducing competition, which was an essential element of a healthy economy according to Smith's theories.

What was the stance of President Grover Cleveland during the Panic of 1893?

President Grover Cleveland largely did nothing to alleviate the economic disaster during the Panic of 1893, adhering to the laissez-faire approach of non-intervention by the government.

What was the Interstate Commerce Commission (ICC) and why was it created?

The Interstate Commerce Commission (ICC) was a federal agency created in response to a Supreme Court decision in 1886 that prevented states from regulating railroads. The ICC was intended to ensure compliance with this law, but it was underfunded and lacked real power.

When did the U.S. government get involved in business during the Gilded Age?

The U.S. government got involved in business during the Gilded Age when it saw potential for economic gains, such as through diplomacy to expand markets overseas, as seen with the overthrow of the Hawaiian monarchy and the Open Door Policy with China.

What was the Open Door Policy between China and the United States?

The Open Door Policy, established in 1899-1900, was an agreement that advocated for equal trading rights in all the ports in China, which were being dominated by European powers at the time.

Why did the government's involvement in business during the Gilded Age often lack meaningful regulation?

The government's involvement often lacked meaningful regulation because the dominant laissez-faire ideology favored minimal government intervention in the economy, except when it could lead to clear economic benefits.

What was the presenter's suggestion for students who want to excel in their AP U.S. History class?

The presenter suggested that students who want to excel might consider using his Ultimate Review Packet and encouraged them to subscribe for more content.

Outlines

00:00

😀 Introduction to Gilded Age Government Controversies

The video begins by welcoming viewers back to Heimler's History and introducing the topic of government's role during the Gilded Age. It highlights the rise of industry and how it changed American society, leading to fierce debates over the government's role. The video sets the stage for discussing both sides of the debate - those arguing for and against government intervention in business. It also touches on the historical context of this debate, dating back to the founding of the country and key figures like Alexander Hamilton and Thomas Jefferson.

Keywords

💡Gilded Age

The Gilded Age refers to a period of rapid economic growth and industrialization in the United States during the late 19th century. It is characterized by the rise of industry, changes in urban demographics, and the widening gap between the rich and the poor. The video discusses the controversies over the role of government during this era, particularly concerning government intervention in business and industry.

💡Laissez-faire economics

Laissez-faire economics is an economic system in which transactions between private parties are free from government intervention such as regulation, privileges, or subsidies. It is rooted in the belief that the economy functions best when individuals are free to pursue their own interests without government interference. The video explains how this ideology was dominant during the Gilded Age, influencing the debate over government's role in the economy.

💡Adam Smith

Adam Smith was an 18th-century economist and philosopher who is often considered the father of modern economics. His seminal work, 'The Wealth of Nations,' introduced the concept of the 'invisible hand' of the market, which argues that the self-interest of individuals in a free-market economy leads to a beneficial outcome for society as a whole. The video discusses how Smith's ideas influenced the economic policies of the Gilded Age, despite a deviation from his emphasis on competition.

💡Industrialists

Industrialists are individuals who own or control industries, particularly during the period of industrialization. In the context of the video, industrialists are depicted as influential figures who often argued against government regulation, despite having significant control over their respective industries, which contradicts the principles of laissez-faire economics.

💡Government intervention

Government intervention refers to the actions taken by the government to influence the economy or to regulate certain aspects of business and industry. The video discusses the debate over whether the government should intervene in business practices during the Gilded Age, highlighting arguments both for and against such intervention.

💡Unfair labor practices

Unfair labor practices are actions by employers that exploit workers or violate their rights. The video mentions these practices as one of the realities that argued for government intervention in business during the Gilded Age, pointing to the need for regulation to protect workers from exploitation.

💡Wealth gap

The wealth gap refers to the disparity in the distribution of income or wealth among different social or economic groups. The video discusses the growing wealth gap between the rich and the poor as a significant issue during the Gilded Age, which was one of the factors that fueled debates over government's role in addressing economic inequality.

💡Panic of 1893

The Panic of 1893 was a severe economic depression that occurred in the United States. The video highlights the government's limited response to this crisis under President Grover Cleveland, which is used as an example of the prevailing laissez-faire approach to economics at the time.

💡Interstate Commerce Commission (ICC)

The Interstate Commerce Commission was a U.S. federal agency created to regulate the railroad industry. The video describes the ICC as being underfunded and lacking real power, illustrating the government's half-hearted approach to regulation during the Gilded Age.

💡Open Door Policy

The Open Door Policy was a foreign policy of the United States in the late 19th and early 20th centuries that aimed to ensure equal trading rights in China for all nations. The video mentions this policy as an example of government involvement in business to expand markets overseas, which was more common when there was a clear economic benefit.

💡Diplomacy

Diplomacy refers to the practice of conducting negotiations between representatives of groups or states. In the video, diplomacy is discussed in the context of business leaders and politicians working together to expand markets overseas, which is an example of government involvement when it was seen as beneficial for the economy.

Highlights

Introduction to the controversies over the role of government during the Gilded Age.

Discussion on the rise of industry in America and its impact on production, cities, and class structure.

Historical context of the debate on government's role in the economy, dating back to the founding of the U.S.

Mention of the debate between Alexander Hamilton and Thomas Jefferson regarding the National Bank.

Argument over Henry Clay’s American System and government-sponsored infrastructure improvements.

Examples of realities that argued for government intervention, such as unfair labor practices and wealth disparity.

Focus on arguments against government regulation, contrasting with previous discussions.

Explanation of laissez-faire economics and its influence on the dominant economic ideology of the Gilded Age.

Origin of laissez-faire economics in Adam Smith's 'The Wealth of Nations' and the concept of the 'invisible hand'.

Critique of Gilded Age industrialists and politicians for misapplying Smith's economic principles.

President Grover Cleveland's lack of action during the Panic of 1893 as an example of government non-intervention.

The creation of the Interstate Commerce Commission (ICC) and its limited power due to underfunding.

Contrast between laissez-faire practices and government involvement in expanding markets overseas.

Support for the overthrow of the Hawaiian monarchy and the U.S. annexation for new markets.

Open Door Policy between China and the U.S. as a means to secure equal trading rights.

Government's selective involvement in business based on potential economic gains.

Lack of meaningful government intervention in regulating business during the Gilded Age.

Promotion of the Ultimate Review Packet for AP U.S. History exam preparation.

Encouragement for viewers to subscribe for more educational content.

Transcripts

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  me to keep making these videos for you,  

then the way you can let me know that is by  subscribing, and I shall oblige. Heimler out.