Taft and Wilson

United States History

Roosevelt's popularity was at its peak as the campaign of 1908 neared, but he was unwilling to break the tradition by which no president had held office for more than two terms. Instead, he supported William Howard Taft, who won the election and sought to continue his predecessor's programs of reform. Taft, a former judge, governor of the Philippines and administrator of the Panama Canal, made some progress. He continued the prosecution of trusts, further strengthened the Interstate Commerce Commission, established a postal savings bank and a parcel post system, expanded the civil service and sponsored the enactment of two amendments to the Constitution.

The 16th Amendment authorized a federal income tax; the 17th Amendment, ratified in 1913, mandated the direct election of senators by the people, replacing the system whereby they were selected by state legislatures. Yet balanced against these achievements was Taft's acceptance of a tariff with protective schedules that outraged liberal opinion; his opposition to the entry of the state of Arizona into the Union because of its liberal constitution; and his growing reliance on the conservative wing of his party.

By 1910 Taft's party was divided, and an overwhelming vote swept the Democrats back into control of Congress. Two years later, Woodrow Wilson, the Democratic, progressive governor of the state of New Jersey, campaigned against Taft, the Republican candidate, and against Roosevelt who, rejected as a candidate by the Republican convention, had organized a third party, the Progressives.

Wilson, in a spirited campaign, defeated both rivals. Under his leadership, the new Congress enacted one of the most notable legislative programs in American history. Its first task was tariff revision. "The tariff duties must be altered," Wilson said. "We must abolish everything that bears any semblance of privilege." The Underwood Tariff, signed on October 3, 1913, provided substantial rate reductions on imported raw materials and foodstuffs, cotton and woolen goods, iron and steel, and removed the duties from more than a hundred other items. Although the act retained many protective features, it was a genuine attempt to lower the cost of living.

The second item on the Democratic program was a long overdue, thorough reorganization of the inflexible banking and currency system. "Control," said Wilson, "must be public, not private, must be vested in the government itself, so that the banks may be the instruments, not the masters, of business and of individual enterprise and initiative."

The Federal Reserve Act of December 23, 1913, was one of Wilson's most enduring legislative accomplishments. It imposed upon the existing banking system a new organization that divided the country into 12 districts, with a Federal Reserve Bank in each, all supervised by a Federal Reserve Board. These banks were to serve as depositories for the cash reserves of those banks that joined the system. Until the Federal Reserve Act, the U.S. government had left control of its money supply largely to unregulated private banks. While the official medium of exchange was gold coins, most loans and payments were carried out with bank notes, backed by the promise of redemption in gold. The trouble with this system was that the banks were tempted to reach beyond their cash reserves, prompting periodic panics during which fearful depositors raced to turn their bank paper into coin. With the passage of the act, greater flexibility in the money supply was assured, and provision was made for issuing federal reserve notes to meet business demands.

The next important task was trust regulation and investigation of corporate abuses. Congress authorized a Federal Trade Commission to issue orders prohibiting "unfair methods of competition" by business concerns in interstate trade. A second law, the Clayton Antitrust Act, forbade many corporate practices that had thus far escaped specific condemnation -- interlocking directorates, price discrimination among purchasers, use of the injunction in labor disputes and ownership by one corporation of stock in similar enterprises.

Farmers and other workers were not forgotten. A federal loan act made credit available to farmers at low rates of interest. The Seamen's Act of 1915, improved living and working conditions on board ships. The Federal Workingman's Compensation Act in 1916 authorized allowances to civil service employees for disabilities incurred at work. The Adamson Act of the same year established an eight-hour day for railroad labor.

The record of achievement won Wilson a firm place in American history as one of the nation's foremost political reformers. However, his domestic reputation would soon be overshadowed by his record as a wartime president who led his country to victory but could not hold the support of his people for the peace that followed.

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Source: U.S. Department of State