Chapter 4/6

• RED TAPE - Idiom, refers to regulations or conformity to formal rules or standards which are claimed to be excessive, or to bureaucracy claimed to hinder or prevent action or decision making. Usually applied to governments, corporations and other large organizations. 
• Classical Liberals gradually came to see the merits of some of their opponents’ views and modified the practical application of some of their values and beliefs. 
• Welfare Capitalism at work in Britain: PAssed a series of factory acts in starting in 1810. Each act gradually improved working conditions in factories
• How did working conditions improve in factories?

  Decreased working hours

  Regulated ages at which children could be employed

  Regulated the number of hours women and children could be required to work
• Capitalists did not gladly or easily give way to new ways of thinking about society’s responsibilities.
• Welfare Capitalism: A classical liberal economic system combined with a government that used legislation to give workers protection 
• Rather grudgingly, classical liberals began to recognize that some changes were necessary. 

  • The basic premise for these modifications  was an acceptance of the fact that those who believed in the pursuit of industrial efficiency (laissez-faire capitalists) needed to develop a social conscience and more concern for the equality rights of workers. 
• The Gilded Age (1870-late 1890s): Americans feel they are the vanguard of civilization and progress. Period of opportunity, possibility and hope. Clear divide between the rich and the poor. Gilded -> golden shiny exterior, rotten underneath
• In the Gilded Age there was an expensive ball whose evening price tag was enough to feed thousand working class families for a year. Defenders say that this ball would benefit the entire city.
• IN the gilded age, the rich use industrialization, new technology and mass production to secure enormous personal wealth.
• Robber Barons Vs. Captains of Industry

  Robber Baron: Wealthy person who tries to get land, money or someone else's land through dishonest methods. Money oriented. Not good to their workers.
• Robber Barons vs Captains of INdustry

  Captain of Industry: COntributed to the growth of America through their vision, creativity and innovation. Make life better for everyone and advance society. Generous and gives back to the community. Good to their workers.
• The IDeas of Adam Smith were being followed to the fullest extent in the USA in the Early 1900's
• (US:EARLY 1900s) Upton Sinclair: American socialist, wrote "The Jungle" after touring a meat-packing factory. Horrified by what he saw (poor labour and sanitation). No government regulation (meat was being sold as top of the line). Abuse of workers. No support, if they fall ill someone else comes and takes their job.
• Due to Sinclair's writing, and attention to the poor sanitation of meat, the Meat inspection act was passed. A regulation by the government.
• President Theodore Roosevelt: Reformer who recognized some of the problems associated with classical liberalism. Created government agencies which would set standards for regulation standards of food production.
• Roosevelt created the FDA (food and drug administration). In these government agencies, the government gets involved to protect consumers from harmful products.
• Originally the government would back businesses during disputes between labourers and businesses. Would ensure that the laborers are working/would break up strikes. But in the pennsylvania case, the government backed the workers. Brought the idea that government should act as a mediator.
• The "Square Deal" Roosevelt. The idiom square dea. means an honest and fair transaction. In this case, labour and capital should both be treated fairly.
• Arbitration: form of alternative dispute resolution that resolves disputes outside the judiciary courts.
• Progressivism: New kind of liberalism
• 3 principles of the National progressive Party

  1. Equality rights, no discrimination and moves towards universal suffrage
  2. Building new labour laws for the future, looking forward - conservation of human resources (labour).
  3. Centralizing and standardizing health care. Formation of national health service.
• President Taft: Progressive (Like Roosevelt). Worked to break up large business monopolies.
• Sherman AntiTrust Act: Legislation introduced in 1890 to prevent collusion and monopolies between competing companies in industry.
• The goal of the Sherman Antitrust act was to prevent anti-competitive behaviour among companies. EX. competing companies can't be owned by a separate business entity, called a "trust". This was a limit to classical freedoms, but prevented the powerful from controlling key industries in society.
• Alphonse Desjardins and Credit Unions: Banking was another industry that needed reform.
• Alphonse Desjardins and Credit Unions: Credit unions began to form in north America. They are small financial institutions own by their members, where products are used to offer members better lending rates or lower feeds Alternative to commercial banks.
• Caisee d’epargne Desjardins - first credit union founded in Quebec in 1900. 1930s Credit unions were popular among farmers on the prairies because they were more willing to provide financing than traditional banks. Group ownership and profit-sharing is against classical liberal ideals 
• The Roaring Twenties: After the war the Us became wealthy by mass producing consumer goods like radios and cars. The US also became the breadbasket for Europe during WWI. United States was the richest country in the world in terms of resources and population. Factory workers were paid well which meant they spend money on consumer goods. US following classical liberalism - very little government involvement in the economy
• The First Red Scare (1917-1920): Public fear of communism, red associated with the Bolshevik Red Army in the Russian Revolution. Public fear in the Us against communism. Many did not want the US to go into WWI, labor unrest moved the US from progressivism back to conservatism  
• Harding Coolidge (Found more right): Conservative Republican - campaigned on “return to Normalcy”. Focused on:

  • Isolationism: a retreat from involvement in other countries’, affairs, especially European countries 
  • Nativism - the promotion of policies that favor the existing dominant culture in a country and reduce immigration 
  • A reduction of government involvement in the lives of citizens (lowe taxes, less regulation) 
• The beginning of the end: Disposable income → spent on consumer goods → increase in borrowing $$ (limited regulations for bank) → increases demand → Increase Supply → oversupply  
• The beginning of the End: As the 20s progressed, more people were buying shares of companies “On margin” or “on time” (credit) and these shares rose in price. Factores produced more goods than people could buy; therefore, the supply of goods was much more than the demand. After the war ended, America continued to produce large amounts of grain. When France began producing grain again, the market became flooded and the price of grain plummeted. People began selling their stocks. 
• The Wall Street Crash: In 1929 share prices were rising but profits for companies began to decline. By September and October, the market was fluctuating wildly. October 24th, 1929, panic selling of shares forced the value of shares to drop drastically. By october 29th the market crashed. The stock market crash brought an end to this period of prosperity in the USA 
• Other Causes of the great Depression 

  • Demand for goods could not keep up with supply 
  • Droughts 
  • Wages did not increase to match inflation 
  • Farmers went bankrupt 
  • Banks failed (worker (who invested borrowed money in the stock market) laid off, can’t pay back the bank, bank goes bankrupt) 
  • Factories closed 
  • Increase in unemployment 
  • High rate of corporate fraud 
  • Policy of Protectionism (cut off international trade) 
• THe Great Depression: By 1931, unemployed people were lining up in breadlines since there was no employment insurance. Countries used protective tariffs in an attempt to protect domestic industry, so global trade declines. By 1932, 12 million people were unemployed (23% unemployment rate)
• The great Depression: President Herbert Hoover feared that assistance from the government would make citizens reliant and unable to stand on their own two feet. In 1932, the American people voted for Franklin D. Roosevelt as president on a platform of government intervention to get the USA out of the Depression 
• The Summary of the Great Depression: Stock market crash was the main cause with the free market having no government intervention to regulate the economy. Insider trading, companies were keeping info about their companies secret from investors.
• Summary of The Great Depression:

  • Stocks bought on credit/on the margin 
  • Bank Runs - money was taken out of the bank rapidly which caused the banks to go into bankruptcy 
  • Low Wages - consumer could nots pend to turn around the depressions 
  • No social Safety Net - Pensions, employment insurance (social programs/welfare state) 
  • Investment in the Stock Market stopped - companies had no new source of income 
  • Protectionism - countries began to place high tariffs on producing coming into the country 
  • Dust bowl - drought, crops didn’t grow, food was very expensive
• The Emergence of the Welfare State: The move from welfare capitalism to the welfare state was motivated by the Great Depression. The problems that arose during this period made it obvious that the existing political, economic and social order had failed. Modern liberalism began to emerge