Laissez-faire policies in the Gilded Age

Overview

• During the Gilded Age, proponents of laissez-faire policies opposed government intervention in society or the market.

• Laissez-faire ideology influenced government policies toward labor relations and Reconstruction.

Laissez-faire

One of the most influential ideas of the Gilded Age was laissez-faire (pronounced LAY-zay FAIR). From the French for “let them do [what they will],” proponents of laissez-faire policies, known as liberals, believed that the free market would naturally produce the best and most efficient solutions to economic and social problems. In other words, it was best to allow businesses to do what they wanted: trade freely, set their own prices, and determine workers’ wages and working conditions.

Liberalism, as it was known in the late nineteenth century, had a very different definition than it does today: instead of advocating for government intervention to solve social problems as today’s liberals do, liberals in the Gilded Age opposed most government intervention in the economy or labor relations. Libertarians are the closest equivalent to Gilded Age liberals in US politics today.

Laissez-faire combined the principles of limited government and the free market with some of the ideas of Social Darwinism. Applying Charles Darwin’s theory of evolution to human institutions, liberals believed that competition was necessary for progress. Any measures that interfered with complete freedom—defined as the freedom to buy and sell your labor and property any way you chose—were contrary to natural selection and impeded the march of civilization.

During the Gilded Age, this belief that laissez-faire capitalism produced optimal results for society came into conflict with the efforts of reformers and labor unions to rein in the influence of big businesses.

Laissez-faire principles in practice during the Gilded Age

Laissez-faire ideology influenced many aspects of politics, society, and economics in the Gilded Age. In general, liberals argued against anything they perceived as interference in the individual’s ability to compete freely.

In politics, liberals worked to curb corruption in government, which ran rampant during the Gilded Age. A splinter faction of the Republican Party, the Liberal Republicans, were so frustrated with the corruption in Ulysses S. Grant’s administration—and with his approach to Reconstruction, discussed below—that they ran a separate candidate for president (Horace Greeley) in the election of 1872. Liberals also worried about the political influence of immigrants, particularly Catholics, and formerly-enslaved African Americans. Some even advocated returning to a system of property qualifications for voting.

Liberals viewed attempts to improve social conditions through government initiatives as counterproductive. Arguing that federal assistance prevented African Americans in the South from achieving their potential through free competition, liberals played a key role in the Republican Party’s abandonment of Reconstruction in the late 1870s.

Proponents of laissez-faire were especially concerned with “liberty of contract,” or the rights of businesses and workers to agree to a labor contract under any terms. The Supreme Court adopted this reasoning to overturn state laws that instituted minimum wages, maximum working hours, or safe working conditions. State regulations, as well as labor unions, according to the Court, interfered with the rights of citizens to negotiate their own labor contracts. The relative power of individuals and businesses to determine wages and working conditions did not factor into the Court’s rulings.

Questions?

1. What is an example of a laissez-faire policy?

2. In what ways was laissez-faire ideology similar to Social Darwinism? In what ways was it different?