Role of Government in Economy Essay Example | Topics and Well Written Essays - 2250 words

Role of Government in Economy - Essay Example This was done for the protection of the interests of the investors and capitalists of that time because the newly born country was not in a position to support its economy on its own and the confidence of the investors had to be built up. The strategy was successful and was the most significant factor behind the rapid economic growth of the country in the immediate years after the War of Independence. However such a strategy could not have lasted forever and therefore during the later part of the 19th century farmer and labour movements started to emerge in different parts of the country in protesting about the oppressive behaviors of the investors and capitalists. Under these circumstances, government had to change its strategy and with the emergence of the first labor union in 1820’s the government started intervening in the economic affairs of the country. The emergence and establishment of labor unions in the country was a significant factor in bringing about a revolution in the economic life of the country (Danny). These changing conditions resulted in the formulation of an educated middle class in the country which forced the government to introduce regulations in the business practices in order to ensure the provision of rights to the employees, establishment of free market economy and to ensure quality control. The Sherman Antitrust Act which ensured the presence of competition in the market by barring large enterprises from establishing a monoply in a single industry and the Interstate Commerce Act, a regulatory mechanism for the railroad industry which required the railroad fares to be kept within a reasonable range, are two of the very first pieces of legilation completed by the congress regarding the economy of the country. These acts were enforced as laws during the years of the progressive Republican President Theodore Roosevelt (1901-1909). President Roosevelt was of the opinion that the rapid economic progress of the country has made it m andatory for the government to introduce regulatory mechanisms regarding commerce, industry, finance, planning and economics. Therefore a number of regulatory bodies and institutions were formed during Roosevelt’s and President Wilson’s years in the office. These include Federal Trade Commission, Food and Drug Administration and Interstate Commerce Commission. In response to the Great Depression, the government of President Franklin D. Roosevelt came up with the idea of three Rs; Relief, Recovery and Reform. This strategy required the government to directly involve in the economy of the country and thus during the implementation of the New Deal, an era of rapid economic reforms in the country, government’s involvement in the economy of the country reached its peak (Fishback). The idea of public welfare was practically adopted by the government in the New Deal era and many important laws which govern the economy of the country today were formulated during this ti me. The government started patronizing labor unions and the standards for minimum salaries and fixed working hours were established during this tim