Progressive Presidents Background

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The Northern Securities Case (1904), which established President Theodore Roosevelt’s reputation as a “trust buster,” reached the Supreme Court in 1904. It was the first example of

Roosevelt’s use of anti-trust legislation to dismantle a monopoly, in this case a holding company controlling the principal railroad lines from Chicago to the Pacific Northwest.

In 1901, railroad builder James J. Hill of St. Paul, Minnesota, fought off an attempt by his arch rival Edward H. Harriman for control of the Chicago, Burlington, and Quincy Railroad. Hill, who controlled the Great Northern and the Northern Pacific railroads, wanted to gain access to

Chicago for his lines from the Twin Cities. After a protracted and potentially disastrous bidding war for the CB&Q, Hill and Harriman cooperated with banker J. P. Morgan and financier John

D. Rockefeller to create the Northern Securities Company. Established in the state of New Jersey

(which had laws favorable to this type of arrangement), Northern Securities held the majority of shares in the CB&Q, the Northern Pacific, and the Great Northern railroads, along with smaller roads associated with these three.

In 1902, President Theodore Roosevelt instructed his Justice Department to break up this holding company on the grounds that it was an illegal combination acting in restraint of trade. Using the Sherman Anti-Trust Act , the federal government did so and the Northern Securities

Company sued to appeal the ruling. The case worked its way up to the Supreme Court, where the justices ruled 5-4 in favor of the federal government. Roosevelt’s action had ignored the advice of leading conservatives in the Republican Party and demonstrated his independence from party elders. It also increased his popular support and helped in his election campaign in 1904.

The Anthracite Coal Strike (May-October 1902) began after mine operators refused to meet with representatives of the United Mine Workers of America. Anthracite—or hard coal—was solid and rich in carbon, ideal for industrial and domestic use. The strike began in eastern

Pennsylvania, where almost all anthracite coal was mined at the time, on May 12, 1902, after the railroad companies which owned the mines refused to meet with representatives of the union.

Workers’ requests for better wages, a shorter work week, and recognition of their union had also been denied. Coal prices doubled as production dropped. As the autumn began and negotiations between the owners and the miners were ineffective, President Theodore Roosevelt feared that a coal shortage would result in hardship to Americans during the winter.

With the conflict unresolved, Henry Cabot Lodge, a senior Republican and close friend of

Theodore Roosevelt, warned the president of the potentially disastrous consequences for the party if the anthracite strike dragged into November, when elections were to be held. Heeding

Lodge's advice, Roosevelt worked behind the scenes to gather information and propose ways to settle the strike. In Washington on October 3, 1902, he met with presidents of the mine-owning railroads and union leaders. At that meeting the union president, John Mitchell , outlined the union's case while the railroad bosses asserted the impossibility of compromise. The conference disbanded without resolving the crisis and Roosevelt formed a commission to investigate the strike. Secretary of War Elihu Root and banker J. P. Morgan convinced railroad leaders to abide by the findings of the presidentially appointed commission. The union also accepted the commission and, on October 20, voted to end the anthracite strike.

The anthracite-coal commission recommended in March 1903 increasing miners' pay by ten percent (one-half of their demand), reducing the working day from ten to nine hours, and other concessions. By negotiating with organized labor Roosevelt championed a new approach to relations between capital and labor, often cited as an example of his Square Deal.

From: http://www.theodorerooseveltcenter.org/

Excerpts from Plessy v. Ferguson

US Supreme Court (1896)

“…that all railway companies carrying passengers in their coaches in this State shall provide equal but separate accommodations for the white and colored races by providing two or more passenger coaches for each passenger train, or by dividing the passenger coaches by a partition so as to secure separate accommodations:…”

“A statute which implies merely a legal distinction between the white and colored races -- a distinction which is founded in the color of the two races and which must always exist so long as white men are distinguished from the other race by color -- has no tendency to destroy the legal equality of the two races, or reestablish a state of involuntary servitude.”

From: http://chnm.gmu.edu/tah-loudoun/wp-content/lessons/mcgrady/plessy-v-ferguson.pdf

Woodrow Wilson’s “New Freedom:”

Woodrow Wilson's presidency fulfilled the progressive reform agenda and laid the foundations of the modern activist presidency. Although he built upon the example of Theodore

Roosevelt, and while his immediate successors would return to the caretaker model of the presidency, Wilson's administration fundamentally altered the nature and character of the presidency. He changed it from an equal or lesser partner with Congress to its superior—the dominant branch of government. This is exactly what Wilson had in mind upon his assumption of office. He intended to lead his party and the nation much as the prime minister of England leads Parliament. Before setting forth his program, Wilson consulted extensively with congressional leaders to ensure that his programs would be dealt with sympathetically when

Congress considered them. In April 1913, at the opening of a special session of Congress called by the President to consider tariff reform, Wilson appeared personally before a joint session of the House and Senate to explain his program. His speech made headlines because no President had addressed Congress personally since John Adams, and it demonstrated that Wilson intended to play a dominant role in policy making.

Crusade for Reform: Tariffs, Banking and Anti-Trust Regulations

Wilson came into the White House like a "priestly visionary," intent on expanding economic opportunity for people at the bottom of society and eliminating special privileges enjoyed by the richest and most powerful members of society. For him, his New Freedom was a crusade. He focused first on tariff reform, pushing through Congress the Underwood-Simmons Act, which achieved the most significant reductions in rates since the Civil War. He argued that high tariffs created monopolies and hurt consumers, and his lower tariffs were especially popular in the

South and West. The act offset lost revenue by providing for a small, graduated income tax as authorized by the Sixteenth Amendment to the Constitution, which was adopted on February 25,

1913, before Wilson took office.

Next, Wilson tackled the currency problem and banking reform. Since the Civil War,

Democrats and agrarians had wanted a more flexible money supply and system of banking that would allow adjustments in the amount of money and credit available in times of economic expansion or crisis. By the early twentieth century, bankers and businessmen had also begun to demand reform. After the Panic of 1907, a special congressional investigating committee (the

Pujo Committee) demonstrated to the American public the extent to which a handful of banks (J.

P. Morgan, for example) and corporations controlled the nation's wealth. Reformers wanted a strong federal system that would regulate credit and oversee the nation's currency.

In response to the demand for reform, Wilson pushed for the Federal Reserve Act of 1913, which established twelve regional reserve banks controlled by the Federal Reserve Board, a new federal agency whose members were appointed by the President. This new federal system could adjust interest rates and the nation's money supply. Because it was authorized to issue currency based on government securities and "commercial paper" (the loans made to businesses by banks), the amount of money in circulation would expand or contract with the business cycle.

Additionally, the Federal Reserve was empowered to adjust the interest rates, or the discount rate, charged to its member banks for money deposited in the branch reserve banks, which would indirectly control the interest rates that banks charged their borrowers. The new system could also set the amount of money banks would have to hold as an offset against deposits (the reserve requirement), thus establishing a reserve fund for times of economic crisis. This act, probably the most important domestic achievement of the Wilson administration, still provides the framework for regulating the nation's banks, credit, and money supply.

Wilson's support of the Clayton Antitrust Act, which Congress passed in 1914, endeared him to labor and farmers because it excluded their organizations from antitrust prosecution under the

Sherman Antitrust Act. It also fulfilled a 1912 campaign promise by prohibiting some anticompetitive business practices, such as price-fixing and interlocking directorates (in which the

same people sit on the executive boards of competing companies in one industry). This act complemented the Federal Trade Commission law passed the same year, which created a new government board appointed by the President and empowered to investigate and publicize corrupt, unfair, or anti-competitive business practices. When Congress created a separate cabinet-level Department of Labor on March 4, 1913, Wilson strengthened his support among progressives by appointing a former union official, William Wilson, as secretary of labor.

In 1916, Wilson nominated Louis Brandeis, a staunch progressive who had fought in court against the exploitation of women and children workers, to the Supreme Court. His confirmation, in a close vote, put the first Jewish justice on the Court. Following Brandeis's nomination,

Wilson supported improved credit for farmers and workers' compensation for federal employees.

He then pushed through a law to eliminate child labor, but the Supreme Court ruled it unconstitutional in 1918. When American railroad unions threatened to strike in 1916, Wilson supported and signed into law a bill securing an eight-hour workday for railroad employees—the

Adamson Act, which paved the way to shortened workdays for all industrial workers.

From: http://millercenter.org/president/wilson/essays/biography/4

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