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Many early American capitalists built their fortunes by prying favors and subsidies out of the Government, including publicly financed roads and canals that were tailored to their needs, direct land grants and protective tariffs. The first steps toward Government regulation of industry were prompted not primarily by bureaucrats or muckrakers but by businessmen themselves. Around the turn of the century they persuaded the Government to referee ruinous competition, stabilize markets and guarantee a steady line of credit by creating the Interstate Commerce Commission, the Federal Trade Commission, the Federal Reserve System and other agencies of the Progressive era. Some businessmen urged the Government to go even further. As Judge Elbert Gary, first chairman of U.S. Steel Corp., told a somewhat startled congressional committee in 1911: "I believe we must come to enforced publicity and Government control, even as to prices."
As conservatives have never ceased grumbling. Franklin Roosevelt's New Deal pushed the Government even deeper into free-market restraints by creating the Securities and Exchange Commission (which regulates the securities business), expanding the Reconstruction Finance Corporation (which started the Government rescuing companies from bankruptcy), and introducing the minimum wage law (which set a precedent for some wage controls). During World War II and the Korean War, the Government imposed temporary wage and price controls.
The most important incursion of all came when Congress passed the Employment Act of 1946, which once and for all committed the Government to take all necessary steps "to promote maximum employment, production and purchasing power." Using that broad political charter and the economic principles of John Maynard Keynes, every President since 1946 has wielded the powers of Government in attempts to keep the level of jobs high and prices low. Richard Nixon's controls are by far the most drastic moves toward that goal in the past quarter-century. Yet in the Government's arsenal, controls are merely one form of economic weaponry, along with fiscal and monetary policy.
The Government's influence on the private economy will become even greater in the future. But the nation is not creeping toward a corporate state or outright socialism. Aside from the special case of railroads, for example, there is little popular support for having Washington take control of basic industries. Still, the Government will increasingly exert its great power in three ways: