Homework Help: Social Studies: U.S. History: Governmental Aid to Businesses in the Late 1800's

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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