In the early phase of the 20th century despite the economic growth across Europe and America little changed among the vast majority as masses remained poverty ridden.
America faced the exploitation of child labor, corruption, lynching, and the ruthless business practices by various businessmen. The economists predicted that small businesses would be closed soon; as it was believed that they are not capable to compete with the larger companies. The large companies had advantage as they could make mass production and sell products at lower price.
Another issue for the small businesses was the lack of support from the government. Governments were interested more in large companies, as they were able to create vast amounts of new jobs, serving solution for large number of people whom were recent immigrants from the Southern and Eastern Europe.
This phase was known as the Progressive Era (1890’s-1920). Progressivism was a label for a wide range of economic, political, social and moral reforms.
The movement was an effort to dismiss the illness in American society that had developed during the Gilded Era (1890’s-1901). The progressives worked to overcome the politic, social and economy problems, (economic progressive, such Richard Ely, the noted Wisconsin economist who emphasized the need to prevent great concentrations of economic power), and to make American society a better place to live. In economy aspect, they make big businesses more responsible and trustable, by proposing new regulations upon it.
As the business prospered for bigger organisation; many indulged in welfare works. Extensive efforts were made to suppress red-light districts, building schools, constructing playgrounds for the deprived and poor elements of society.
The state also intervened as it enacted laws for minimum wages especially for women workers. Hours of work was also reduced to allow workers have a better life rather than living for work.
Due to government pressure organization also addressed workers issues related to industrial accident, restricted child labor and improved factory regulation. Congress passed laws establishing federal regulation of meatpacking, drug and railroad industries, and anti-trust laws strengthen were conducted in the national level.
The Management system was also modernized by Managers; such as Henry. Towne, Frank and Lillian Gilbreth, and Henry L. Gantt. The Master of Business Administration degree (MBA) was founded in 1921; where principles of psychology and sociology were applied in management that helped the managers and organizations to solve business and management issues scientifically..
Many special organizations came into being; such as The National Civic Federation, National Association of Manufacturers and American Anti-Trust League were founded to create rationalization and stabilization of the American industry. Both large and small capitalists were manifested into organizations to provide them greater understanding of eachother and the business environment.