The policies of the federal government from 1865 to 1900 violated the principles of laissez-faire in several ways. Laissez-faire, which advocates minimal government intervention in the economy, was not fully adhered to during this period due to various reasons. Here is a step-by-step breakdown of how and why the policies deviated from the principles of laissez-faire:
1. Post-Civil War Reconstruction: Following the Civil War, the federal government implemented policies aimed at rebuilding the South and protecting the civil rights of newly freed slaves. The Reconstruction Acts of 1867-1868 imposed military rule on the Southern states, which involved significant government intervention in local affairs and the economy. This violation of laissez-faire principles was justified by the need to secure the rights of African Americans and ensure a stable transition from slavery to freedom.
2. Subsidies and Land Grants: During this period, the federal government provided various subsidies and land grants to encourage western expansion and the development of industries. For instance, the Homestead Act of 1862 offered free land to settlers, while the Pacific Railway Act of 1862 provided land grants and loans to promote the construction of the transcontinental railroad. These actions involved government intervention in the form of financial support and land allocation, contradicting the principles of laissez-faire economics.
3. Regulation of Railroads: As industrialization expanded, the federal government began to regulate railroads due to concerns about monopolistic practices, price discrimination, and unsafe working conditions. The Interstate Commerce Act of 1887 established the first federal regulatory agency, the Interstate Commerce Commission (ICC), to oversee railroad rates and practices. This marked an interventionist approach by the government to ensure fair competition and protect consumer interests.
4. Antitrust Legislation: To address growing monopolistic practices, the federal government passed antitrust legislation during this period. The Sherman Antitrust Act of 1890 was aimed at promoting competition by prohibiting any agreements or actions that restrained trade or created monopolies. This legislation involved government intervention in the economy to prevent the concentration of power and maintain a level playing field, deviating from the laissez-faire philosophy.
5. Labor Regulations: The federal government also intervened in labor relations during this period. In response to labor unrest and concerns about unfair labor practices, the federal government implemented various regulations. For example, the Clayton Antitrust Act of 1914 exempted labor unions from certain antitrust laws and legalized strikes and peaceful picketing. This intervention aimed to protect workers' rights and create a more equitable balance of power between labor and management.
In summary, the policies of the federal government from 1865 to 1900 violated the principles of laissez-faire economics due to the need for post-war reconstruction, subsidies and land grants for westward expansion, regulation of railroads, antitrust legislation, and labor regulations. These interventions were justified by the government's desire to address social and economic challenges, protect civil rights, promote competition, and ensure fair labor practices.