Governmental Involvement In The Business World Essay

, Research Paper

The government has played a role in business in our history. They have had

positive as well as negative effects on business in America. That is what I am going to be

looking at for this essay. The government has played a vital part in issues such as the

excessive power that businesses have had. The government has also helped get rid of

many kinds of prejudices against women, the elderly, the poor, the disabled, and against

many racial and ethnic minorities. These changes began with the New Deal being of

Roosevelt. After the implementation of the New Deal the wage gap began to gradually

close between the richest and the poorest of Americans. This can be credited to laws and

along with other government actions that were put into place during Roosevelt’s

presidency. Things such as Social Security, unemployment benefits, minimum wage all

these things and much more were introduced by the government to better the lives of the

working public.

Government supervision increased in the 1930s and several industries

became regulated by the government, such as trucking, airlines, electric utilities, and

interstate gas. Other industries as well were kept under government regulation until the

1970s and 80s when they realized that the New Deal ideas that were passed in an

emergency, were inappropriate in the long run for certain industries.

The Securities Act of 1933 and the Securities Exchange Act of 1934 required that

all companies that were traded on the stock exchanges as well as banking firms and

securities industries issue to stockholders and to the government detailed annual reports.

These would contain information essential to the consumers. Also railroads and utilities

were required to submit annual reports to regulatory commissions. The regulatory

commissions and the annual reports were created to make sure that laws would be

followed. The laws benefited the investment banking industry in the long run, because it

helped companies sell stocks and bonds by giving investors confidence in the decisions

they were making.

The early 1930s were a time of serious deflation and federal price supports were

put into place to attempt to stop the downward spiral. The plan was to use “codes of fair

competition” to steady prices for products make by different companies in similar

industries. The codes didn’t work well for many reasons. Organizing product lines was

difficult, the disparate cost structures of the big firms compared to small firms, and the

difficulty of setting prices that everyone would consider to be fair were all problems

faced. Even when agreements were made opportunities for evading the codes were

present.