Activist State: The Myth of Laissez-Faire Economics in American History, Part I

There are much more glaring examples throughout history of government intervention in the economy. Recall the New England textile industry during the early- to mid-1800s. The United States government imposed very high protective tariffs to support the production of textiles in New England, with nearly all of its raw materials coming from the slaveholding south. Within large-scale manufacturing in New England during the 1830s, for instance, cotton textiles comprised nearly two-thirds of the value added. Without American protectionism through the tariff, it is estimated that the value added would have been reduced by three-quarters, if not more. Over half of the industrial sector in New England would have gone bankrupt as a result.³ Southern critics of the time were indeed correct: The national government was intervening through the tariff to directly aid Northern industry.

Continuing through history, the Civil War era is replete with actions inconsistent with laissez-faire ideology. Unbeknownst to many a Civil War enthusiast too caught up in their fascination with battles and leaders, there was considerable labor unrest during the War Between the States. By 1864 over 200,000 workers had formed local unions and published newspapers addressing their issues. Hard-hit by wartime inflation (not high in comparison to that in the South, but still outstripping wages), workers across the country went on strike for better working conditions, higher wages, and shorter workdays. Umbrella makers, seamstresses, dock workers, store clerks in what was called the Early Closing Movement, and many others all struck for their respective causes. But labor unions and strikes were not desirable during this war. While a few strikes were successful, the majority fell at the hands of the importation of strikebreakers or with the intervention of federal troops. Troops were sent in to break strikes in Cold Springs, New York, St. Louis, Tennessee, Tioga County, Pennsylvania, and many others.⁴

Wartime legislation also proved to contradict laissez-faire principles. The Morrill Tariff, passed in 1861 and designed to boost revenue for the war, imposed new duties on foreign goods, thus allowing American companies to monopolize competition and raise prices. In 1862 Congress passed and Lincoln signed the Homestead Act. This legislation offered free lands to settlers on the public domain. The act allowed over 25 thousand settlers to stake claims to more than three million acres of land by 1865. However, the great majority of those benefiting from the Homestead Act were wealthy land speculators and railroad companies in

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