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

The video introduces the central debate of the Gilded Age: the appropriate role of government in response to industrialization, changing demographics, and class structures. This debate is framed as a long-standing one in American history, recalling earlier conflicts between figures like Alexander Hamilton and Thomas Jefferson, and debates over Henry Clay's American System regarding infrastructure.

While previous discussions highlighted reasons for government intervention, this video focuses on arguments against regulation. The dominant economic ideology of the Gilded Age was laissez-faire economics, meaning "leave alone." This concept, traced back to Adam Smith's 1776 work, "The Wealth of Nations," posits that economies function best when guided by supply and demand, and individuals pursuing self-interest contribute to societal flourishing through an "invisible hand."

The video points out that Gilded Age politicians and tycoons, while citing Adam Smith, overlooked a crucial element of his vision: competition. Business leaders consolidated power, eliminating the competition Smith believed was vital for a healthy economy. This led to a situation far removed from Smith's ideal, yet arguments against government regulation persisted.

Even during economic downturns, like the Panic of 1893, President Grover Cleveland largely avoided intervention. When the federal government did get involved, its actions were often half-hearted. An example is the 1886 Supreme Court decision preventing states from regulating railroads, which led to the creation of the Interstate Commerce Commission (ICC). However, the ICC was underfunded and lacked real power to enforce regulations effectively.

Despite the general laissez-faire approach, the government did intervene when it aligned with business interests and promised economic gains. Business leaders collaborated with Republican politicians to expand overseas markets through diplomacy. Examples include supporting the overthrow of the Hawaiian monarchy in 1893, leading to annexation in 1898 and new markets, and the 1899-1900 Open Door Policy with China, advocating for equal trading rights. Thus, while avoiding regulation, the government actively participated in expanding economic opportunities.