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Progressive Era Economic
Policy Issues
How did the relationship between
the federal government and private
business change from the 1870s to
1920?
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CHANGING RELATIONSHIP
BETWEEN THE FEDERAL
GOVERNMENT AND PRIVATE
BUSINESS
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Laissez-faire government
-A doctrine that opposes government intervention into
business practices and the marketplace
Cost
• May allow business
practices that could take
advantage of the
consumer
Benefit
• Allows the market to
govern itself
• Based on supply and
demand
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Anti-Trust Acts
Cost
• Law had been in place
since the 1890s but was
not used to regulate
corporations
• Laissez-faire principles
believed in allowing the
business to work out its
own destiny
Benefit
• Giant corporations were
no longer allowed to
monopolize the market to
set prices or control
industries
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Interstate Commerce Commission
Cost
• Regulatory commissions
were created to
determine if trusts were
“bad” or “good” trusts
• Commissions were not
very effective
Benefit
• Even though the
commissions were
somewhat ineffective, the
idea that public good was
prioritized over private
greed became more
apparent
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Pure Food and Drug Act
Cost
• Prevented the
manufacture, sale, or
transportation of
adulterated or
misbranded or poisonous
or deleterious foods,
drugs, medicines, and
liquors, and for regulating
traffic , etc.
Benefit
• Protected the public
consumption of these
goods
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FOREIGN POLICIES IMPACT
ECONOMIC ISSUES
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Chinese Exclusion Act, 1882
• First major law that restricted immigration
in the U.S.
• Extended in 1902, 1904 – and until the
1940s
• Enacted in reaction to West coast fears
that Chinese workers were undercutting
American labor and wages
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Open Door Policy
• Sec. of State John Hay’s economic policy
in China
• Gave imperial powers equal trading rights
in the country in 1899-1900
• Policy spurred the Boxer Rebellion –
Chinese nationalists revolted against
foreign invasion
• U.S. had to suppress the rebellion
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Dollar Diplomacy
• Taft encouraged U.S. investment in Latin
America and Far East
• Promised military protection abroad
• As priorities shifted in global relations, U.S
foreign policymakers returned to a goal of
isolationism prior to World War I
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Immigration Quotas
• 1880s – growing concern about
immigration
• As a result of World War I, National
Origins Quota Act, 1921 was passed – set
the quota of legal immigrants to 3% of
their current ethnic makeup in the U.S.
(law changed 3 years later)
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MONETARY POLICY
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Federal Reserve Act, 1913
• Created the central banking system
• Granted legal authority to issue legal
tender
• Charged with regulating U.S. monetary
policy
• Eventually, in 1971, America moves from
the gold standard to fiat money
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Between 1870 and 1920
• Progressive reforms moved away from the
laissez-faire government to offer regulations
in business and industries to protect the
consumer.
• Anti-trust acts, regulatory commissions, and
multiple regulatory pieces of legislation were
enacted to protect the consumer – Federal
Reserve, Sherman Anti-Trust Act, etc.
• American foreign policy emerged on the
global stage and retreated to a policy of
isolationism
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