Laissez-faire: it emphasised the importance of market forces and free competition, with minimum regulations or state interference
The Consequences of laissez-faire
- In some areas of the economy such as the garment industry, small and medium sized firms did well in competitive markets. However main competing enterprises were taken over and formed into large scale monopolies.
- Vanderbilts consolidation of the New York Central and Hudson River railroad was an example of an integrated monopolistic network. Rockefellers Standard Oil trust was another example.
- The markets were rigged in favour for large scale enterprises. Additionally big business fought hard to avoid state regulation, but depended heavily on government support for business. State and federal governments set tariffs at the levels the business wanted and passed laws to railroad and banking schemes. Some even ignored the corruption that was happening in these businesses.
The reaction against laissez-faire
- The Granger movement, emerging trade unions and the Knights of Labor pushed several state governments into passing regulatory legislation. However the legalisation was rarely effective. In 1886 the Supreme Court ruled…