6.12 Controversies over the Role of Government in the Gilded Age

Laissez-faire is French for 'let it be'. Supporters argued that free markets and competition produced growth, that government interference was unnatural or unconstitutional, and that the poor should rely on themselves and charity. Social Darwinism (6.9) gave the idea extra support.

Presidents generally agreed. When Congress passed a small bill in 1887 to buy seed for drought-stricken Texas farmers, President Grover Cleveland vetoed it, arguing that people should support the government, not the reverse. During the depression of 1893, the federal government offered almost no relief, and in 1894 a march of unemployed men to Washington known as Coxey's Army was met with arrests.

But government was not neutral. It gave railroads land grants, kept high protective tariffs that helped manufacturers, and sent troops and court injunctions against strikers. Critics said laissez-faire really meant government help for business but not for workers or farmers.

The Supreme Court often protected corporations. Through the 1880s and 1890s it began treating corporations as 'persons' protected by the 14th Amendment's due process clause, and used that to strike down some state regulations. In 1895 it struck down a federal income tax in Pollock v. Farmers' Loan and Trust Co. (an income tax returned with the 16th Amendment in 1913).

• Interstate Commerce Act (1887): passed after Wabash v. Illinois (1886) blocked states from regulating interstate rail rates. It required railroad rates to be 'reasonable and just' and published, banned pools and rebates, and created the Interstate Commerce Commission, the first federal regulatory agency. But the commission had little power to set rates, and courts usually sided with railroads.
• Sherman Antitrust Act (1890): outlawed contracts, combinations and conspiracies 'in restraint of trade' across state lines. Its vague language let courts narrow it. In United States v. E.C. Knight Co. (1895) the Court ruled that manufacturing was not commerce, so a sugar monopoly was legal, while courts used the act against labor unions. Real enforcement came in the Progressive Era (7.4).

Even before the 1898 war with Spain, Americans looked outward for markets, naval bases and raw materials.

In 1867 Secretary of State William Seward bought Alaska from Russia for $7.2 million. Critics mocked it as 'Seward's Folly', but Alaska later proved rich in fish, timber, gold and oil. The U.S. also took the Midway Islands that year.

In Hawaii, American sugar planters gained great economic and political power. A treaty renewal in 1887 gave the U.S. rights to Pearl Harbor. In 1893 planters overthrew Queen Liliuokalani with help from U.S. Marines. President Cleveland opposed annexation as wrongful, but Congress annexed Hawaii by joint resolution in 1898 during the Spanish–American War.

Secretary of State James G. Blaine organized the first Pan-American Conference (1889) to expand trade with Latin America, and the U.S. gained naval rights at Pago Pago in Samoa (1878).