Skip to main content Accessibility help
  • Print publication year: 2012
  • Online publication date: November 2012

Chapter 3 - The Progressive Era and a New Business–Government Relationship (1900–1918)


Theodore Roosevelt took the oath of office in a nation that was bitterly divided on the economy and big business. Although the Democratic-Populist challenge had failed, farm belt discontent was hardly over. Populists would run candidates for several more elections. Meanwhile, a growing socialist movement led by union organizer Eugene Debs was doing even better. Debs had run on a socialist ticket in 1900, receiving a scant 88,000 votes. His total grew in the next three presidential races, however, topping 900,000 votes in 1912, or 6 percent of the electorate. It wasn’t socialism or populism or any third-party challenge that changed the relationship of business to society. It was a new movement captained by mainstream figures such as Theodore Roosevelt. By the end of his first term in office, Roosevelt would define, at a national level, a new relationship between the state and private business. In this movement government would lead, and business would follow, though with numerous opportunities to cooperate across the public and private sectors.

In the decade after 1900, many of the existing ideas about the relationship between business and society were overturned. Defense of corporate autonomy through doctrines such as Social Darwinism and laissez-faire economics fell or were seriously pushed back in the wake of a social reform critique of corporate power. Although labor was still at the center of the social problems associated with industrialization, unions played only one part in this counteraction against corporate autonomy. Middle-class social workers, professionals such as lawyers, and a new breed of professional managers within big firms all were major contributors to the “progressive” corporation. Key political figures included Republican and Democratic presidents and congressmen, as well as a large number of state and local politicians who had a close-up view of the social costs of urban and industrial society. A new, more tamed, corporation with explicitly social goals emerged out of this era by 1920. The once clear lines between the public sector and the private sector blurred as it became harder to separate private decisions made by large-scale corporations from the public issues that those decisions affected. Businessmen, and indeed most Americans, did not choose to abandon markets, but came to see that a healthy market that was open and competitive, yet also promoted a good society, often needed government intervention to protect the public interest from being overwhelmed by private interests.