Introduction
Progressive Era refers to a period of social and political reforms that took place in America between 1890s and 1920s (Henretta & Brody, 596). The period was characterized by major progressive transformation and reforms.
During that period, people sought to have a corrupt free society and stable economy hence the reason they sought intervention from the government. Federal government enacted various laws and acts that were meant to address these issues. This paper will focus on federal acts that were enacted to regulate the railroads, manufacturers and financial industry.
The paper will also discuss why the laws were enacted. Under federal laws enacted to regulate railroads, the Interstate Commerce Commission will be discussed and a light touch on Interstate Commerce Act. Pure Food and Drugs Act and Meat Inspection Act will be discussed under federal laws enacted to regulate manufacturers. Finally, the paper will discuss the Federal Reserve Act which was enacted to regulate the financial industry.
Federal Government Regulation on Railroads, Manufacturers and Financial Industry from Progressive Era to New Deal
In 1887, federal congress formed the Interstate Commerce Commission (ICC) with the main intention of regulating the railroads (Henretta & Brody, 596). Freight rates had become unbearable to farmers and the business people.
This regulation regulated the rail roads through determining the rates that were to be charged in both long and short distances. Interstate commerce commission regulated the railroads by allowing formation of cartels between existing rail companies. ICC’s power was interfered with by the Supreme Court when it took away the commissions power to determine the rates.
The court went ahead and banned formation of cartels between rail companies since they discouraged healthy competition and instead encouraged exploitation. In 1903, the Elkins Act was enacted with the motive of reducing discrimination between rates charged to the farmers and the big companies over the same distance. Rail companies were required to publish their rates which were to be strictly followed failure to which the company and the shippers would be charged in the court (Henretta & Brody, 596 – 601).
In 1906, the Hepburn Act was enacted and it strengthened the ICC through allowing the commission to set maximum rates, standardized accounting practices adopted by all common carriers and shifted the burden of proof from the ICC to the Shipper incase of appeals (Henretta & Brody, 596-600).
Interstate Commerce Commission was enacted because the previous act-Interstate Commercial Act –had failed as it was inadequate in its making administration. Interstate commerce act allowed required rail roads to charge just and reasonable rates. The act was faulty in that it could decide on what an unreasonable rate was but it could not prescribe what a reasonable rate was.
The act also discouraged any form of discrimination and succeeded through allowing higher charges for shorter distances as opposed to longer distances exposed to similar conditions and circumstances. ICA did not allow formation of cartels or agreements since it assumed that they would be a barrier to competition in the industry. Generally, it can be said that ICC was enacted to deal with the rail rates and various forms of discrimination that existed in the industry (Henretta & Brody, 596 – 600).
Federal government made an attempt to regulate the manufacturers in 1906 when it enacted the Pure Food and Drugs Act (Henretta & Brod, 596 – 600). Manufacturer’s reacted to this regulation in a divided way. Some favored it while others were against it. The act sought to regulate the industry by requiring all the manufacturer’s to label the ingredients of their products.
Manufacturers were also required to indicate whether their products contained any harmful or poisonous ingredients. The act applied to both food and drugs as opposed to the previous Pure Food laws that addressed food only. It was also a requirement for drugs to meet the standards of United States Pharmacopoeia (USP).
Meat Inspection Act was enacted at the same time with the Pure Food And Drugs Act. This act empowered the United States Department of Agriculture (USDA) to carry out inspection in all meat processing plants (Henretta & Brody, 596 – 598).The act required inspection of slaughter animals before and after slaughter. It also laid down the standard requirements for meat processing plants.
Both Pure Food and Drugs Act and Meat Inspection Act were enacted to improve the quality and safety of food. Pure Food Ad Drugs Act was enacted to curb malpractices of food adulteration and branding. There was a general outcry from the public requesting the government to tighten the rules and legislations on food. In December 1905, President Theodore Roosevelt’s reacted to the outcry and allowed the congress to proceed with pure food legislation (Henretta & Brody, 596 – 598).
The United States had suffered several financial panics before and after the onset of the progressive moment. In 1907, there was another financial panic which led to the formation of the 1913 Federal Reserve Act (Henretta & Brody, 596-599).
The act led to the establishment of Federal Reserve banks which acted as a link between the central bank, the government and other depository institutions. The reserve banks were charged with the responsibility of maintaining currency strength and stability, provision of payment system and supervision of other banks.
The act permitted the reserve banks to conduct open market operations as another tool for regulating the financial sector. Federal Reserve Act allowed participation by the private sectors and acknowledged that they could be of help in terms of advice and minimizing political influence. It also led to the formation of Federal Reserve Body as a superior body to control the reserve bank which was a purely public body (Henretta & Brody, 596 -599). The act was enacted in response to currency issues which had persisted for a long time.
New York financial community had failed in its role to manage the banking structure and this became more pronounced in 1907 leading to financial panic. The situation became worse when Knickerbockers Trust Company failed in 1907 and this aroused the need for currency reform. New York financial community was particularly concerned and initiated the process of currency reform but stopped in 1908 when most of its members were incorporated in making the Federal Reserve requirement of 1913 (Henretta & Brody, 596 – 598)
Conclusion
During the progressive Era, federal government enacted several laws that were meant to regulate various sectors such as railway transport, manufacturing sector and financial sector. In 1887, there was a public outcry from the public and especially farmers and other small shippers over the high rates charged and discrimination that existed in the rail companies.
In response to the same, Interstate Commerce Commission was enacted to monitor the rates and watch over discrimination. This act was not very effective and as a result, subsequent acts such as the Elkins and Hepburn’s were enacted to strengthen the ICC. In 1906, Pure Food and Drugs Act and Meat inspection Act were enacted to curb manufacturer’s malpractices of food adulteration and misbranding.
The act required manufacturers label and disclose all the information about their products ingredients. The Meat Inspection Act authorized U.S department of Agriculture to inspect all processing plants and animals prior to and after slaughter. Feral Reserve Act was enacted in 1913 to regulate the financial industry and the main motive was to strengthen and stabilize the currency.
Works Cited
Henretta, James, and David Brody. America: A Concise History. 4th. 2. Bedford/St. Martin’s, 2010. 596-599.