Adam Smith on the American Economy in the 1890-1920s
Referring to Adam Smith’s argument on the role of dealers and manufacturers in oppressing the public, it is possible to find analogies with the impact of corporations between 1890 and the New Deal. During the discussed period, the American economy has changed from focusing on agriculture and workshops to developing industries and corporations. Discussing these changes, Smith would say that the active growth of corporations made Americans economically dependent and oppressed employees who faced the threat of losing their resources during the Great Depression when companies and industries failed.
Smith said that the interests of manufacturers and the public differed in the 18th century because of manufacturers’ orientation toward benefits, revenue, and domination. Between 1890 and the New Deal, the situation became even more dramatic for Americans because, according to Woodrow Wilson, people began to work for large corporations as their “servants,” being dependent on them. The active development of industries in the 1890s led to the first economic crisis because of the gap between the poor and rich and the labor-capital conflict. The competition in the industries became “cutthroat,” and the merger movement started. Being oriented toward decreasing price competition, this movement led to further progress of corporations as business giants. The competition was narrowed, and this tendency did not contribute to the public’s interests.
The Progressive-era reforms tried to address industrialism and the gap between Americans in society, but further labor force immigration and WWI made factories and corporations the only source of financial resources for people. After WWI, being suppressed in the workplaces, employees started to demand improving working conditions. During the New Era, the economic situation developed significantly, providing Americans with opportunities to develop their business. However, the Great Depression was associated with the collapse of many corporations and businesses, leaving Americans unemployed.