During this time, the relationship between government and business changed largely because the Progressives felt that business was abusing its power. The Progressives felt businesses had too much power over their customers, their employees, and the government.
In the late 1800s, government had essentially let business do what it wanted. It was generally a time when laissez-faire prevailed. This led to such things as the creation of monopolies, bad working conditions and low wages for workers, and a system in which the big businesses could essentially “buy” members of the government. The middle class Progressives wanted all of these things to stop.
For this reason, they changed the relationship between government and business. Where government had once been neutral or friendly to business, it now started to act more as a regulator. The government now banned monopolies. It enacted various laws to protect workers and consumers by limiting what companies could do. The direct election of senators made it harder for the businesses to bribe members of the Senate. All of these things changed the relationship between business and government, making it so that government did more to regulate business than it ever had before.
During the Progressive Era, reformers redefined the purpose of government. They rejected smaller government for one which could mediate between diverse interests. Progressives fought for greater government regulation of industries in order to protect the rights of working citizens.
Due to technological innovation, the United States experienced an explosive growth in manufacturing output by the turn of the 20th century. Most significantly, the transportation revolution led to an expansion of business interests nationwide. The modern corporate structure was born during this period of unprecedented growth. At the same time, businesses neglected to protect both the consumer and the working class workers who formed the backbone of the industrial revolution. Employees worked long hours in hazardous conditions and at low wages. Businesses exploited child labor for material gain, and farmers found themselves at the mercy of railroad monopolies that threatened their livelihoods.
The industrial elite seemed oblivious to the suffering of the working masses, but many wanted to change the appalling conditions. Those who agitated for change called themselves progressives. They sought neither to return the United States to its agricultural past nor to dismantle big business. However, progressives believed that the government should be given a larger participatory role in ensuring the public welfare. During this time, President Roosevelt advocated the "Square Deal," the idea that a government should be instrumental in securing its nation's social and economic welfare.
Roosevelt felt that monopolies threatened the viability of the free market. To that end, he championed laws such as the Sherman Anti-Trust Act (which challenged monopolies) and the Pure Food and Drug and Meat Inspection Acts (which regulated the drug and food industries). Roosevelt believed that his "Square Deal" protected all interests. He supported workers' rights to unionize, the implementation of the eight-hour workday, and monetary compensation for those injured on the job.
So, the relationship between business and government changed during the Progressive Era because the role of the government changed. During this time, the government rejected its previously laissez-faire stance and grew in influence and power. Essentially, the government became an entity which could serve as a check against unfettered capitalism and one which could moderate the excesses of the industrial age.