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.