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Homework Help: Social Studies: U.S. History: Governmental Aid to Businesses in the Late 1800's
by Andrew Rolfe
The U.S. government was very important in the development of business in
the late 1800's. Before the Civil War, the government worked with the
concept of Laissez Faire. This concept meant that the government wouldn't
control business. During the Civil War, the government still followed this
approach Laissez Faire but they were starting to be more involved in
business. The U.S. government in the post Civil War period both aided
business as well as attempted to regulate it.
After the Civil War, the government aided business in many ways. It passed
the Morrill Tariff in 1861 to bring much needed revenue to help pay for the
war. The Morrill Tariff was a tax on imported goods. After the war, the
government kept the tariff going because it brought them so much money. The
government soon had so much money that it didn't have to tax the
corporations. This helped business because the corporations were protected
from competition from other countries. Not having to tax the corporations
was an aid to business because the corporations could then gain money and
not have to give it away for taxes. With this money the corporations could
invest or expand. The government also passed the National Banking act in
1863. This act created a system of federally licenced banks. Also, it
resulted in a national currency and wiped out state bank currencies. This
helped corporations because then they could do business across state lines
more easily.
Another thing that the government did to aid business was Postal Reform.
Congress began to reduce mail rates. Also, the mail started to be delivered
to each individual person?s house, instead of having them come to the post
office. People who lived in the country, like farmers, also had this
luxury. This luxury for the farmers was called Rural Free Delivery, or RFD.
The mail also became faster. Companies could send catalogs to buyers and
the buyers could send their order back much faster than before. When the
people would get their product they would be happy about the fast service
and buy from that company again. Also, another act was the Morrill Act that
was passed in 1862. This act helped to educate the people who would
eventually work in corporations. This benefitted business because
corporations would have a better educated work force. This act gave states
land and money so that they could build agricultural and mechanical
schools. The government also gave subsidies to corporations to help support
them. This aided business because the corporations would gain money and
land so that they could build on it.
Towards the end of the 19th century, the government started to regulate
business. They did this because many citizens were complaining about the
corporations doing illegal things to gain capital. Such as, fraud, high
prices, and no competition. Also, small businesses complained about the
illegal actions of people like Jay Gould. He illegally flooded the stock
market with thousands of shares of his Erie railroad stock after finding
out that Cornelius Vanderbilt was buying his stock. This made Vanderbilt
and other small investors' stock nearly worthless. One way the government
tried to regulate business was the Interstate Commerce Act, passed in
1887. This act established a commission whose job was to make sure that the
railroads charged reasonable and just rates. The Interstate Commerce Act
benefitted the passengers of the trains because it lowered the rates of the
trains so they were reasonable and just. It also benefitted the businesses
that shipped their products on the railraods. This act did not work very
well because the wording in it was very vague. Another way the government
tried to regulate business was the Sherman Antitrust Act passed in 1890.
This act tried to prevent monopolies. The penalty for an offender was jail
and the guilty company would have to pay three times the damage it had
caused to another corporation. Also, if the act was severe, the monopoly
could be broken up entirely. This act benefitted the small businesses
because they could now do business without the corporations stealing their
business through illegal procedures. Both of these acts did not work
because the wording in them was so vague.
After the Civil War, although the government aided and regulated business
they were very inconsistent. The Supreme Court wanted to limit power of the
states and regulate business, while the Congress was going entirely the
other way. On the one hand, they were helping business because they wanted
to become a rich and powerful country. On the other hand, they were
regulating business because they wanted their citizens who were not
involved in the corporations or who were being damaged by them to be happy.
Homework Help: Social Studies: U.S. History
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