The next true progressive president after Teddy Roosevelt was Woodrow Wilson. He was the son of a Presbyterian minister and the grandson of a Scottish immigrant. He grew up under Reconstruction in North Carolina. He was very religious and a pacifist. He worked as a lawyer and a university professor who received a doctorate in political science (remember that this was a new field of study brought about by progressives). He determined that big business was exploitative of the common man, and he made it a goal in life to bring about a New Freedom for the American people.
He won the presidency in a similar manner that Bill Clinton did in 1992. A third party (Progressive Bull Moose) split the Republican electorate the way Ross Perot did with his third party bid.
Domestic Policy
Until the passage of the 16th Amendment, Income Tax, the main source of income for the government was from tariffs. Many items imported into the nation were taxed in excess of 40% which gave a competitive edge to American corporations and earned them tremendous profits. The Underwood-Simmons Tariff lowered and eliminated these tariffs which gave foreign countries the ability to compete with American businesses and bring prices down.
After the ratification of the 16th Amendment, congress passed a graduated income tax that ranged from 1% - 6% depending on income. This rate was raised in 1916 as an emergency measure in anticipation of the Great War. In 1917 revenues from the income tax exceeded revenues from trade tariffs. (This left no motivation for the government to lower or end the income tax.)
The Federal Reserve System was also founded under Wilson. Until that time the banks were centralized in the East, and it was difficult to get currency to the western states. Under the Federal Reserve the banking system was decentralized into twelve districts and managed by a board of directors appointed by the President. National banks were required to join and keep a percentage of their assets in reserve at the district bank. Money for the Federal Reserve was raised from loans from businesses. (This means that every Federal Reserve Note is a debt to someone.)
The Federal Trade Commission Act empowered the President to investigate businesses who participated in "unfair business practices," break up trusts and monopolies. Wilson enforced this law until it became inconvenient for him, especially when we entered into WWI. (More on this tomorrow)
Another law that regulated big business was the Clayton Anti-Trust Act of 1914. This law forbade practices that interfered with competition, created monopolies, or resulted in price discrimination. It also restricted interlocking directorates and holding companies. These were practices where the same person could serve on the board of directors of several corporations at the same time and thus direct policy and price fixing. Basically keeping the power of these large corporations in the hands of a few people.
The LaFollette Seaman's Act of 1915 looked fantastic on paper. It required the American merchant marine to pay decent wages, provide humane treatment, and decent food for sailors. The problem was that it raised the standards so high that American merchant companies could not compete with the tramp steamers of other nations.
Two other progressive laws that were enacted in 1916 which led to the devastation of the agriculture industry in the 1930s were the Federal Farm Loan Act and the Warehouse Act. These laws enabled farmers to borrow money from the federal government at very low interest rates and borrow against their crop futures. This became a problem in the late 20s and early 30s because farmers borrowed so much money that after WWI there was not the same demand for their wheat and could not pay back their loans.
Also in 1916 the Workingmen's Compensation Act and Adamson Act were passed. The Workingmen's Compensation Act provided disability assurance for government workers. (The beginnings of the overwhelming benefit packages that government workers have that are supported by taxpayer monies.) The Adamson Act required interstate rail operators to have an eight-hour work day and to pay overtime to their workers.
Since Wilson was from the South, he limited his reforms to industries who employed mostly white workers. He also re-segregated government agencies. He also worked against women's suffrage. Two of my sources relegated these problems to one paragraph in otherwise glowing praise for his progressive reforms. (Bailey and Mulder)
Foreign Policy
In what was becoming now a tradition of U.S. presidents Wilson changed his mind about who the United States' friends were. Roosevelt and Taft (the preceding president before Wilson) had allowed U.S. businesses to invest in Latin America and China, which was known as "Dollar Diplomacy." Soon after he came into office in 1913, he forbade businesses to invest in these countries.
He made a treaty with Haiti in 1916 which made it a protectorate of the United States. The Haitian people did not like this because they wanted to have an independent government. On the other hand, Wilson signed the Jones Act of 1916 which would give independence to the Philippines once they established a stable government.
In 1917 Wilson changed his mind about investment in China and began to allow U.S. businesses to invest in that country again.
Also in 1917 Wilson purchased the Virgin Islands from Denmark for $25 million. The reasoning behind this was to prevent Germany from establishing submarine bases in the Caribbean.
Mexico
It turns out that Mexico has been a thorn in the side of the United States for quite some time. In 1913 President Madero was assassinated by Huerta who established himself as General-President of Mexico. Wilson refused to recognize the new government of Mexico because of the way Huerta came into power. Wilson also worked to arm Herta's opponents, Carranza and Pancho Villa. After an incident with the arrest of several U.S. sailors, Wilson asked Congress to allow him to use force in Mexico. His request was granted on April 22, 1914. The United States captured the port city of Vera Cruz in an attempt to capture a German vessel. A meeting of five American countries including Mexico and the United States quelled tension between the two countries and resulted in the resignation of Huerta from office. In January of 1916, Pancho Villa murdered 18 Americans which prompted an invasion of U.S. forces by General Pershing. Villa evaded capture.
This is another example where the United States should have just left well enough alone. If Wilson had not worked toward overthrowing Huerta, then Villa may not have been able to use the arms we gave him against U.S. citizens.
Next time I will focus on the United States' involvement in WWI and the influence of Wilson's idealism on world affairs. If you have any questions or need me to go into more detail about any of my posts, please leave a comment, and I will answer you as soon as I can.
Sources Cited
Bailey, Thomas A., and David M. Kennedy. The American Pageant, 7th edition. D.C. Heath and Company, Lexington, Mass. 1983.
Brinkley, Alan. American History: A Survey, Vol. II: Since 1865, 10th edition. McGraw Hill College, Boston, Mass. 1999.
Mulder, John M. "Woodrow Wilson," World Book Encyclopedia, Vol. 21. World Book, Inc., Chicago, Il. 1995.
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