THE EVOLVING NATURE OF BUSINESS GOVERNMENT RELATIONS

1
THE EVOLVING NATURE OF BUSINESS - GOVERNMENT
RELATIONS
2
BUSINESS-GOVERNMENT RELATIONS

• PHASE 1 Developmental
• PHASE 2 Regulatory
• PHASE 3 New regulation

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THE DEVELOPMENTAL PHASE

• The Constitution
• Alexander Hamilton
• Assumption of state debts
• Bank of the United States
• Internal Improvements
• Army Corps of Engineers, 1802
• National Road, 1803
• National Survey Act, 1824
• Land rants to railroads, 1850-1877
• Permissive Legal Environment
• Supreme Court decisions
• State incorporation laws, NY (1811), 1870s

4
Federal Government Land Grants to Railroads,
1850-1877
5
Joseph Keppler, The Bosses of the Senate, Puck,
January 23, 1889
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BUSINESS-GOVERNMENT RELATIONS

• PHASE 1 Developmental
• PHASE 2 Regulatory
• PHASE 3 New regulation

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WHY REGULATION?

• Laissez faire capitalism?
• Infinite of buyers and sellers?
• No one controls the market?
• Perfect knowledge?
• Unlimited mobility?
• The visible hand vs. the invisible hand
• Capitalism vs. democracy
• Threats to public safety
• Other alternatives
• Socialism/communism-Karl Marx
• Social Darwinism (Herbert Spencer)
• Philanthropy
• Welfare capitalism
• Countervailing power

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REASONS FOR REGULATION

• Unfair Competition
• Long haul - short haul discrimination
• Rebates
• Health and Safety Issues
• Consumers
• Workers
• Natural Monopolies
• Theories of Regulation
• The life-cycle theory
• The capture theory

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THE REGULATORY PHASE, Pt. 1

• Weak, or Sunshine Commissions
• Rhode Island, 1839
• Massachusetts, 1869
• The Revere Disaster, 1871
• Charles Francis Adams
• Public utility commissions

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THE REGULATORY PHASE, Pt. 2

• Strong Commissions
• The Granger laws, 1871
• Illinois, Wisconsin, Minnesota, Iowa
• Wabash case, 1886
• Interstate Commerce Commission, 1887
• Rebates, long haul / short haul discrimination
• Elkins Act, 1903
• Hepburn Act, 1906
• Mann-Elkins Act, 1910
• Transportation Act of 1920
• Motor Carrier Act of 1935
• Transportation Act of 1940

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THE REGULATORY PHASE, Pt. 3

• The Antitrust Movement
• Less of an issue in Great Britain, Germany, Japan
• Fair competition, NOT workplace consumer
  safety
• Sherman Act, 1890 - Combinations in restraint of
  trade
• U.S. v. E.C. Knight, 1895
• American Sugar Refining Company
• Manufacturing vs. trade
• The irony greater consolidation through merger
• The trustbusters T.R. and William Howard Taft
• Northern Securities Case, 1904
• Standard Oil case, 1911 - the rule of reason
• Clayton Act, 1914
• Federal Trade Commission Act, 1914

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THE REGULATORY PHASE, Pt. 4

• Workplace and Consumer Safety
• Pure Food and Drug Act, 1906
• Meat Packing Inspection Act, 1906
• Child Labor Laws
• Workplace safety laws - Triangle Shirtwaist
  Company fire, 1911
• Workers Compensation - Maryland, 1902
• Greater Economic Efficiency
• The Anthracite Coal Strike, 1902
• The Department of Commerce and Labor, 1903
• The United States Chamber of Commerce, 1912
• The Federal Reserve System, 1913
• MONETARY policy

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INTO THE MODERN ERA, 1917-1929
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BUSINESS, GOVERNMENT, AND SOCIETY DURING WW I and
THE 1920s

• Resource Allocation During WW I
• The War Industries Board
• The United States Railroad Administration
• The Food Administration
• Herbert Hoover
• Business - Government Cooperation in the 1920s
• Associationalism
• Herbert Hoover, Secretary of Commerce

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THE BIRTH OF A CONSUMER SOCIETY

• Causes
• Growing middle class
• Greater leisure time
• Leveling off of the producer economy
• Products

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THE BIRTH OF A CONSUMER SOCIETY

• Products
• Refrigerators

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THE BIRTH OF A CONSUMER SOCIETY

• Products
• Refrigerators
• Radios

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THE BIRTH OF A CONSUMER SOCIETY

• Products
• Refrigerators
• Radios
• Automobiles

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THE AUTO INDUSTRY, VERSION 1.0

• The Early Car Industry
• Early pioneers
• The weeding out phase
• Henry Ford
• Assembly Line Production
• The Pope Manufacturing Co.
• Single-purpose machine tools
• Highland Park, 1913
• River Rouge,
• Welfare Capitalism Run Amok?
• The Sociological Department
• Nothing Lasts Forever

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STAGES IN THE DEVELOPMENT OF THE FIRM

• General (diversified) merchants
• Specialized merchants
• Functionally specialized (U-form) big business
• Diversified, decentralized (M-form) corporation

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THE AUTO INDUSTRY, VERSION 2.0

• General Motors
• William Durant
• No market forecasting
• Excess capacity production
• Intra-firm competition
• DuPont, ca. 1921
• Alfred P. Sloan, Jr.
• 1920-1924
• Flexible-purpose machine tools
• Annual model changes
• Four divisions
• Clearly delineated responsibilities
• Rigid reporting and control

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Picture Credits

• SLIDE 3 http//www.authentichistory.com/images/po
  stcivilwar/maps_and_charts/1860-1900_federal_railr
  oad_land_grants.jpg
• SLIDE 4, left http//www.landscouncil.org/transit
  ions/tr9812/P08b20.JPG
• SLIDE 4, right ttp//www.marxists.org/subject/art
  /visual_arts/satire/keppler/kepp2.htm
• SLIDE 6 http//www.landscouncil.org/transitions/t
  r9812/P0920.JPG
• SLIDE 7 http//www.americancivilwar.org.uk/images
  /cfdams.gif
• SLIDE 16 http//www.antiqueappliances.com/images/
  Two_door_GE_Monitor_Top_refrigerator_small.jpg
• SLIDE 17 http//www.grillecloth.com/radioart/feam
  epic72.jpg
• SLIDE 18 http//www.blackhawkcollection.com/image
  /cars/191420ford20mt1f.jpg
• SLIDE 19 http//www.americaslibrary.gov/assets/jb
  /civil/jb_civil_ford_1_m.jpg
• SLIDE 21 http//www.ishipress.com/al-sloan.jpg