The Progressives (1901-1921)
The Age of Active Government and Presidents
I. Roots of the Progressives
A. Key Muckrakers' writings that affected the Progressives' goals and methods (Describe
three major areas of focus and name key authors and/or works in each area.) - Muckrakers were
set on revealing the evils of American society. One of their main focuses was exposing the
corrupt relationship between big business and government. Lincoln Steffens, a New York
journalist, wrote a series of articles on this topic called "The Shame of the Cities," which was
soon followed by Ida M. Tarbell's article on Standard Oil and the oil trusts. Thomas W. Lawson,
a speculator who made millions of dollars off of the stock market, exposed the practices of his
accomplices in a series of articles entitled "Frenzied Finances." In another series of articles, “The
Treason of the Senate," David G. Phillips accused a majority of U.S. senators of representing the
trusts and railroads.
Another focus of Muckraker literature was unveiling the evils of society. Ray Stannard
Baker's Following the Color Line revealed that almost all black Americans still lived in the
South and about a third of them were illiterate. In John Spargo's The Bitter Cry of the Children,
harsh child labor was exposed.
The third area Muckrakers focused on was dirty medicine. They published their attacks in
Collier's and were supported by the Department of Agriculture's chief chemist, Dr. Harvey W.
Wiley.
II. Political Reforms and Events
A. Impact of William McKinley’s death (1901) – In September 1901, six months into
William McKinley’s second term as President, he was assassinated. McKinley’s vice-president,
Theodore Roosevelt, became president and at forty-two, was the youngest president the country
had had so far. Roosevelt, known to be radical and impulsive, attempted to comfort the people by
saying that he would continue to fulfill McKinley’s policies. However, many believed that he
would completely disregard the policies of the previous president.
The differences between McKinley and Roosevelt were significant and greatly impacted
the country. The country prospered during the first term of McKinley’s presidency, he was a
cautious and dignified leader. Roosevelt, on the other hand, was outspoken, energetic, an
actionist, and a reformer. With Roosevelt came a time of reform and a desire to fix the problems
within the country. He sought to help the economy and the consumer, and wanted to end the
control of big business and corporations. McKinley’s assassination impacted the country because
what would have been three more years of conservative, safe presidential policy became an era
of reform and progress under Theodore Roosevelt.
B. State Affairs
1. Robert LaFollette's actions - Fighting the established monopoly in Wisconsin,
La Follette became the governor and reformed the state. He took power away from corrupt
railroad and lumber companies and returned it to the people. Working with the staff at the state
university, he also created a way to regulate public utilities. Through La Follette's actions,
Wisconsin became one of the first and most notable Progressive reform states.
2. Hiram Johnson’s actions- Hiram Johnson, a progressive, was elected to be the
Republican governor of California in 1910. With the help of Johnson, California made great
strides towards progressivism. As governor, he worked towards reform and ending corruption.
Johnson regulated railroads and trusts in California. He worked to prosecute dishonest
businessmen which resulted in the Southern Pacific Railroad losing their control over politics in
California. Johnson then created his own political machine, similar to that set up by La Follette.
Later, in 1917, Hiram Johnson was elected to the U.S. Senate. As a senator, Johnson kept
his progressive views, but held “isolationist” views on foreign affair. He opposed President
Woodrow Wilson and worked with other senators to stop Wilson’s League of Nations. Johnson,
himself, ran for the Republican presidential nomination, but lost to Warren Harding. Hiram
Johnson ended up serving almost thirty years as a United States Senator.
C. 17th Amendment (1913) - After muckrakers unveiled the scandals occurring between
the greedy "interests" and Congress, Progressives decided that the senators were not paying
enough attention to what the people wanted. Progressives pushed for the direct election of U.S.
senators because they wanted to give the power of the "interests" back to the people.
The proposed Amendment to popularly elect senators received opposition from many
senators happy with the current election format. However, state and local legislatures practiced
popular election, and because of these pressures, the Seventeenth Amendment to directly elect
U.S. senators was passed. Although the amendment was passed, the progress of change still took
a long time.
III. Social Reforms
A. Explain the new concept of “city-management” experts- As corruption and
inefficiency plagued city governments, the Progressives looked to reform and fix these machinerun governments. They made the most progress in cities who adopted the “city-manager” system.
Cities would appoint experts at managing city affairs to help remove “politics from municipal
administration”. Since efficiency was a priority to these “city-managers”, democracy was
overshadowed and it was harder for the people to control civic affairs. Reformers also attacked
other city corruption, such as bribed police-officers and juvenile delinquency. Soon,
Progressivism grew from the city level to the state level.
B. Public Health
1. Upton Sinclair's The Jungle (1906) - At the same time American meat on the
European market was found to be tainted, Upton Sinclair exposed the unfortunate state of
canning factory workers. However, his description of the unsanitary food products in the
factories caught the public's attention more than the plight of the workers. The book specifically
detailed the dirt and disease of Chicago slaughterhouses, which disgusted President Roosevelt
enough to have the situation investigated. Both the public and President sickened by the truth of
Sinclair's novel led Roosevelt to pass the Meat Inspection Act of 1906.
2. Meat Inspection and Pure Food and Drug Act (1906) - In 1906, both foreign
and American consumers were unhappy and disgusted by the quality and sanitation of meat in
the U.S. Foreign governments threatened to stop meat imports from America after receiving
contaminated meat, and in the U.S., The Jungle, by Upton Sinclair, had turned Americans off to
meat. All of the sickening stories that the American’s became exposed to, caused President
Roosevelt, who was equally disgusted, to ask congress to pass the Meat Inspection Act of 1906.
This Act said that any meat brought over state lines would undergo federal inspection. Some
large packing companies opposed the Act, but followed it in order to put smaller business out of
business. With the Meat Inspection Act of 1906, the Pure Food and Drug Act was also passed.
This act stopped food from being tainted and mislabeled, as well as medication.
C. Prohibition
1. Methods and ideas of Prohibition Party, Frances E. Willard and Carrie Nation:
Why was alcohol viewed as a problem? - Alcohol was viewed as a problem because it was
linked with prostitution, drunken voters, and corrupt city officials.
Frances E. Willard and Carrie Nation helped to organize the Women's Christian
Temperance Union, or WCTU, as a part of the antiliquor campaign. Along with the Anti-Saloon
League, they pushed for national prohibition of alcohol. States soon began to pass "dry" laws
banning liquor, but most big cities continued to allow liquor to be served because of their large
immigrant populations.
2. 18th Amendment (1919): Why did it finally pass? Look in WWI section tooThe eighteenth amendment, passed in 1919, banned alcohol from the country. Prohibition was
one of the last huge ripples caused by the progressive movement. The progressives worked to
reform many social ills, alcohol, being one of many. They saw alcohol directly connected with
prostitution, corrupt city officials, and problems with elections and ballots.
The progressives received much support from different groups in the country. Many
women, especially those who were a part of the Woman’s Christian Temperance Union,
supported and fought for prohibition. The Anti-Saloon League was another aggressive protemperance group. Several people in the Midwest and South also pushed for prohibition. Whites
in the South did not want alcohol to be available to blacks, fearing that it would cause them to
“burst out of their place”. Churches contributed to the fight for prohibition as well. Many states
and counties began passing their own laws prohibiting alcohol and in 1919, the eighteenth
amendment was passed.
However, it was impossible for the government to prohibit a drink and a majority of
people, especially in eastern cities, strongly opposed the amendment. Enforcement of the law
proved to be extremely hard and most people found a way to drink anyway. Eventually, the
eighteenth amendment was repealed by the twenty-first amendment in 1933.
IV. Labor Reform
A. Theodore Roosevelt’s Role
1. The Square Deal (1901-08) - Inspired by the progressive wave and afraid that
the public interest was being ignored, President Roosevelt demanded a "Square Deal" for capital,
labor, and the public. Known as the three C's, it called for the control of corporations, consumer
protection, and conservation of natural resources.
The Square Deal for labor was tested in 1902 when Pennsylvania coal miners went on
strike. They demanded a pay raise and a shorter workday, however, the coal mine owners
squarely refused to negotiate, assuming that the public would support them. President Roosevelt
forced them to negotiate and a compromise was made. This, along with other growing problems
between capital and labor led Roosevelt to create the Department of Commerce and Labor in
1903. The Bureau of Corporations, a branch of the Dept., was created to examine companies
involved in interstate commerce and helped to get rid of monopolies.
Legislation was passed to help control corporate corruption. The Elkins Act of 1903
imposed fines on companies giving and receiving rebates. In 1906, the Hepburn Act was passed
which curbed bribery by requiring maximum rates from the Interstate Commerce Commission.
To protect the consumer, the President passed the Meat Inspection and Pure Food and
Drug Acts of 1906. The Meat Act subjected meat being shipped across state lines to inspection.
The Food Act was passed in order to prevent food and pharmaceuticals from being altered and
mislabeled.
2. The Anthracite Coal Strike (1902): Why was the strike a major shift in labor
relations? - Roosevelt’s Square Deal for labor met its first test when workers in the Anthracite
coal mines in Pennsylvania went on strike. The workers, who were mostly immigrants, were
tired of their long hours and low pay and demanded improvements. After the mine owners
refused to talk about a compromise, the strike continued on eventually forcing other factories and
even schools to shut down. Roosevelt, looking to end the strike, actually brought the minors and
mine owners in to the White House to come to a compromise. Annoyed at the mine owners,
Roosevelt turned to threatening to take the mines which finally brought around a compromise.
The miners were given a slight pay raise and an hour shorter work day. The miner’s Union,
however, was not recognized as being involved in the negotiation.
A major shift in labor relations resulted from the Anthracite Coal Strike. It was the first
time that a president had directly intervened in a labor strike, and seeing the attitudes of the mine
owners raised the public’s support for workers and unions. Roosevelt also became greatly aware
of the hostility between labor and capital which prompted him to suggest the creation of the
Department of Commerce and Labor. A year later Congress did create the Department and it
helped break the hold of monopolies, as well as led to the “trust-busting” era.
B. The Supreme Court and Labor (1900-1920)
1. Muller vs. Oregon (1908) - In this Supreme Court case, attorney Louis D.
Brandeis argued that factory labor was harmful to females because of their weaker bodies. He
convinced the Court that laws protecting women workers were constitutional. At the time,
Progressives celebrated his win as a triumph over employers' legal control of the workplace, but
it was later seen as discriminatory and many women were denied "male" jobs.
2. Keating-Owen Act (1916)* and Hammer vs. Dagenhart- In 1916, Woodrow
Wilson signed the Keating-Owen Act into law. This was the first act created to try to stem the
injustices of child labor. Since Congress could not regulate child labor laws within a state, the
bill regulated child labor though interstate commerce. This act banned the sale and transportation
of products made by children under fourteen years old and by children who worked more than
eight hours a day among states. Public sentiment had been building against harsh working
conditions and long hours of working children, however the Act would quickly be overturned.
The Supreme Court struck down the Keating-Owen Act in 1918 with the Hammer v.
Dagenhart decision. The court ruled that the act was unfair to states that had child labor
regulations by giving unfair advantage to states that had no such laws. They ruled that Congress
did not have jurisdiction over the interstate commerce of these products and that it was not
possible to distinguish on “moral grounds” between products manufactured by children or adults.
Despite the Supreme Courts ruling, Congress continued to try and pass child labor laws.
3. Lochner vs. New York (1905) - Progressive reformers were set back in 1905
when the Supreme Court nullified a New York law setting the maximum amount of daily labor
for bakers. However, years later, progressive reform reached the judiciary, and the Court
supported a law establishing the same maximum amount of daily labor of factory workers.
C. Triangle Shirtwaist Fire (1911) - One of the social problems that Progressives tried to
reform was the safety and cleanliness of industry. The fact that sweatshops were unsanitary and
unsafe was commonly pushed under the rug and hidden from the public. However, when a fire
broke out at the Triangle Shirtwaist Company in 1911, killing over one hundred young female
workers, the issue was brought to the public’s attention. As a result of the public’s loud cry for a
change, the New York legislature passed new laws that controlled the hours and conditions of
work in such fire-hazardous places. Similar laws were later adopted by other legislatures as well.
D. The Radicals
1. The Socialist Party: detail the major ideas and public's view of the Socialists
(1900-1921) - Socialists were involved in the labor movement as well as antiwar campaigns.
They wanted America to remain neutral and not get involved in wars. Socialists wanted to give
laborers control of the industries, putting the money in their hands. They were also supporters of
labor unions. Along with these ideas, the Socialists supported giving everyone the right to vote.
Through this, they thought, the working class would gain political power. Many of their ideas
reflected the ideas of the progressive era.
The Socialists gained a lot of new support in the beginning of the twentieth century.
Many miners, railroad workers, and Populists looking for improvements in their working
conditions joined the Socialist campaign.
2. The I.W.W. (the Wobblies): Detail the major ideas and public’s view of the
union (1900-1921) - During World War I, work became increasingly important. Not only was the
demand for the supplies greater because of the war, but a “work or fight” rule drafted any
unemployed man to fight. Workers were encouraged not to go on strike and measures such as
higher wages were granted to entice workers, although the right to form unions was not among
those granted. While some labor groups like the American Federation of Labor supported the
war, more radical labor groups, like the Industrial Workers of the World, did not. The workers in
the IWW, also known as the Wobblies, usually worked in the worst conditions, and therefore
worked towards damaging industry. The IWW’s goals were to unite all workers as their own
class and overthrow the employing class. They supported industrial unionism which would bring
all industry workers into the same union giving them more strength to fight for their cause.
Greatly influenced by the government, the public was not sympathetic to the Industrial
Workers of the World. Whenever the IWW protested, the workers were beaten and arrested.
Most people viewed the union as a threat, especially because they did not support the war. These
fears were showed in the Espionage Act and Sedition Act which both lead to the prosecution of
many IWW members for being anti-American.
V. T.R. and the “Taming” of the Trusts
A. Explain the motives for Teddy Roosevelt's "trust-busting" - One of the reasons
Roosevelt wanted to get rid of the trusts was because they were monopolizing the railroad
industry. Roosevelt felt the bad trusts were too powerful and he wanted to help the public who
was opposed to the trusts.
Successfully suppressing the railroad trusts gave Roosevelt more motives to "trustbust."
He went after other monopolies on beef, sugar, fertilizer, and harvesters.
Although Roosevelt had a reputation for "trustbusting," he didn't think all big business
was bad. His real purpose for "trustbusting" was to show that the country was run by the
government, not private businesses.
B. Railroads
1. What long-time problems did the Elkins Act (1903), Hepburn Act (1906) and
the Mann-Elkins Act (1909) address? Why were they more effective than past government
efforts?- In the beginning of the 1900s, several pieces of legislation were passed to help control
the long-time hold that railroads had on the country. First, in 1903, the Elkins Act was passed
which allowed railroads who gave rebates, as well as the shippers that accepted them, to be
fined. Then, the Hepburn Act was passed in 1906, expanding the Interstate Commerce
Commission to include sleeping-car and express companies and restricting free passes resulting
from bribery. Under the Hepburn Act, the Interstate Commerce Commission was actually given
some authority and was able to specify the maximum rates for shippers. Lastly, in 1909, the
Mann-Elkins Act was passed which even further expanded the Interstate Commerce Commission
to include communication like the telephone and telegraph.
The Elkins, Hepburn, and Mann-Elkins Acts proved to be much more effective in
regulating the railroads than previous government efforts. When the Interstate Commerce
Commission was first created, it had little authority or enforcement. However, the Hepburn Act
and Mann-Elkins Act greatly expanded the Commission and gave it “teeth”. The Elkins Act not
only claimed to prohibit rebates, but also imposed a punishment. Acts were not just created, but
they were also enforced and given substance to restrain the railroads.
C. The Supreme Court: Whom did the court “protect”? How much did they follow a
Progressive agenda? Big Business?
1. Northern Securities Case (1904) - This case came about when President
Roosevelt attacked the Northern Securities Company, a railroad holding company, for trying to
achieve a monopoly on Northwestern Railroads. Railroad promoters appealed the case and it
went to the Supreme Court. The Court ruled in favor of Roosevelt and antitrust, and dismissed
the company.
The result of the case shocked Wall Street and angered big business. Roosevelt's victory
enlarged his "trustbuster" reputation and led him to crack down on trusts in other industries.
2. Standard Oil Case (1911) - As president, William Howard Taft brought double
the amount of lawsuits against trusts and monopolies than Roosevelt. One suit was brought
against the Standard Oil Company in 1911. The Supreme Court called for the Oil Company to be
broken up because it violated the Sherman Anti-trust Act of 1890, but also said that only the
“unreasonable” controlling of trade by combined companies was illegal. This fine print created a
loophole for big businesses and created a problem for government’s use of antitrust suits.
In this case, the Supreme Court, on the surface, appears to be protecting an anti-big
business agenda. They broke up the Standard Oil Company which was a huge monopoly, but at
the same time, they left a significant loophole that was beneficial to big business and trusts.
While breaking up the Standard Oil Company, the Supreme Court also made it a lot harder for
the government to prove a business or trust was illegal since they would have to show how the
businesses actions were unreasonable.
D. Causes and impact of the Panic of 1907- The financial world said that Roosevelt
caused the Panic of 1907. They accused him of meddling in and disrupting industry with his
tactics. However, Roosevelt countered that the wealthy trusts created the panic on purpose to get
the government to ease up their attacks on them.
The Panic allowed for much needed fiscal reforms to occur. The U.S. was on the verge of
a currency shortage, and the Panic revealed the need for a more flexible currency. However,
banks could not increase the amount of money in circulation. In 1908, Congress passed the
Aldrich-Vreeland Act, which gave national banks the right to issue emergency money back by
collateral. This cleared the way for the Federal Reserve Act of 1913.
VI. Conservation
A. Assess the government’s land management efforts prior to T.R. - Prior to Theodore
Roosevelt’s presidency, the US government had no structured plan in regards to land
management. There was not a cohesive effort with a vision to preserve our natural resources or
for conservation. Government, big business, railroads and land owners could exploit nature in
any way they saw fit without worry. Forest lands were stripped down with no plan for the future
and with no regard for replanting or preservation of the natural resources. Lumberjacks would
exhaust one area and move on to another.
Roosevelt had a strong vision and a respect for the land that made up the United States.
He devised a plan for acquiring huge parcels of the most precious land in America and setting it
aside to be preserved for future generations. He used the executive powers of the presidency to
mandate that government would oversee the management of all federal lands and construction of
dams and major irrigation projects especially in the west.
B. Who were two non-governmental forces promoting conservation? - Two
organizations, the Sierra Club and the Boy Scouts of America, emerged, promoting conservation.
The Sierra Club devoted its time to preserving the western wilderness. Members, as
conservationists, felt that nature should not be spoiled by civilization. The Boy Scouts of
America became the largest outdoor youth organization.
C. Newlands Act (1902) - In response to the dry desert in the West, Congress passed the
Newlands Act of 1902. Under this act, the government used the money that was made off of
selling western public land to develop irrigation. Then the people who bought the land used the
newly productive soil to pay for the revival of the land, thus starting a cycle of funds to finance
more projects. Due to this legislation several dams, like the Roosevelt Dam, were built as a part
of the irrigation system.
D. the Hetch Hetchy controversy (1913) - The national government gave the city of San
Francisco permission to build a damn for their municipal water supply in Yosemite National
Park's Hetch Hetchy Valley. This angered preservationists and conservationists who viewed the
valley as a holy piece of nature. However, other conservationists saw wilderness as a waste of
space and wanted to work the land to its maximum potential.
President Roosevelt allowed professional foresters and engineers to create a policy on
how to manage natural resources. It called for recreation, logging, watershed protection, and
grazing, all on the same portion of federal land.
VII. Wilson Era (1912-1920)
A. Explain how each event played a role in Taft’s rise and fall, T.R.’s reappearance and
Wilson’s triumph
1. Election of 1908- While Theodore Roosevelt could have run for president and
won again in 1908, he had earlier made a promise not to run and kept that promise. Looking to
find someone who would continue to follow his own policies, Roosevelt chose William Howard
Taft to be his successor. Taft was currently the secretary of war and was a progressive. Using his
power over the party, Roosevelt pushed Taft’s nomination through at the Republican
Convention. The Democrats nominated William Jennings Bryan once again, who also tried to
take on Roosevelt’s progressive front. After a dry campaign, Taft not surprisingly, won the
election. However, most voters chose Taft simply because he was endorsed by Roosevelt, so
without Roosevelt, Taft would not have been able to reach the position of president.
2. Ballinger-Pinchot controversy (1910) - A dispute began between Secretary of
the Interior Richard Ballinger and chief of the Division of Forestry Gifford Pinchot when
Ballinger allowed corporations to develop public lands in Wyoming, Montana, and Alaska. The
angered Pinchot spoke out against Ballinger, but was quickly removed by President Taft for
insubordination. His dismissal was protested by conservationists and friends of former President
Roosevelt.
The quarrel had many negative effects. The rift between Roosevelt and Taft opened up
further, and it was a partial cause for riling up Republican reformists. Taft was also being pushed
toward the Old Guard, and when he left the progressives in their attack on the Old Guard, the
Republican split was completed.
3. U.S. Steel case (1911)*- In 1911, the U.S. Steel Corporation had an antitrust
suit brought against it by William Howard Taft. This greatly angered Theodore Roosevelt who
had helped arrange one joining that lead to the suit. While Roosevelt previously took Taft under
his wing, now, Taft was becoming more and more of an enemy. The U.S. Steel case began the
conflict between Taft and Roosevelt, which would eventually lead to the fall of Taft since he
would not be supported by Roosevelt anymore, the reappearance of Roosevelt, and a split within
the Republican Party.
4. Payne-Aldrich Tariff (1909) - In May of 1909, newly elected President Taft
called Congress into a special session to create a bill for reducing tariffs. The House passed a bill
that was moderately reductive, but it didn't satisfy some senators. Led by Senator Nelson W.
Aldrich, these reactionaries added numerous revisions to further lower tariffs. Taft eventually
signed the bill into law, in the process betraying his campaign promises and angering progressive
Republicans.
With the Republican Party split over the tariff, Taft ensured a full split by deserting
Republicans when they attacked the Old Guard. This left room for Roosevelt to sneak back onto
the party's good side. He gave a moving speech on fixing the nation's economic and social
abuses. However, the party was still split and this weakness cost them the 1910 congressional
elections.
5. Election of 1912- With the Election of 1912 approaching, the Democrats hoped
to get back in the White House. They felt that a finding a good reformist leader would guarantee
to put them back in the White House. Democrats found this is Woodrow Wilson who was
nominated to their ballot. Wilson’s platform was centered on progressivism and had a “New
Freedom” plan which called for antitrust laws, lowered tariff, and banking reform.
Both Theodore Roosevelt and William Howard Taft sought the Republican nomination.
Roosevelt, unhappy that Taft disregarded his policies, changed his mind about running for a third
term and took on the Progressive title for the campaign. However, at the Republican Convention,
Taft showed that he now held most of the party’s support and he was chosen to be the
Republican nominee. Roosevelt, who could not face defeat, decided to run on a third-party, the
Progressive Republicans. Many enthusiastic progressives quickly joined his campaign.
A major factor in the Election of 1912 was the division in the Republican Party.
Roosevelt and Taft ruthlessly attacked each other trying to gain support. Since the party was
split, it almost guaranteed a win for the Democrats. However, this was overshadowed by the
question of whose form or progressivism would win; Roosevelt’s or Wilson’s. They both agreed
that government should be more active in economic and social affairs, but disagreed on how to
achieve that. Roosevelt’s New Nationalism favored more powerful regulatory agencies, the
consolidation of trusts, women suffrage, and social welfare. Wilson’s New Freedom, on the other
hand, supported small businesses, and unregulated, unmonopolized market, and did not favor
social welfare. The choices that the voter had to make gave them a chance to vote on
philosophies as well as policies.
Woodrow Wilson ended up getting the presidential nomination despite being a minority
president. Roosevelt came in second, and Taft came in third. The Progressive Party faded away
since it had no future, and the Republican Party was blocked from the White House for eight
years.
B. The Triple Wall of Privilege
1. 16th Amendment (1913) - This amendment helped the Underwood tariff
become a landmark in tax legislation. Under it, Congress authorized a graduated income tax,
starting with reasonable rates on a higher-than-average income. The revenue the income tax
brought in quickly surpassed the receipts of the Underwood Tariff, securing the gap to increase.
2. Underwood Tariff (1913) - Out of Wilson’s “triple wall of privilege”, he
decided to work on the tariff first. In 1913, Wilson called a special session for Congress and
presented his bill on his own, breaking all previous precedent. The House quickly passed the
Underwood Tariff Bill after being inspired by Wilson’s aggressiveness. The final version of the
Bill lowered import fees considerably, and imposed an income tax which was a newly given
power under the sixteenth amendment. The revenue from the income tax has grown to greatly
overshadow the revenue from the tariff.
3. Pujo Committee vs. Nelson Aldrich (1910s) - The Panic of 1907 revealed the
inelasticity of American currency. The banking reserves were located exclusively in large cities
and were unable to mobilize into areas of need during times of financial stress.
Congress authorized an investigation of the reserves in 1908, before Wilson's presidency.
It was led by Republican Senator Aldrich, who found that the solution to the problem was,
essentially, a third Bank of the U.S., or a large bank with many smaller branches.
Democratic Congressman Arsene Pujo led a House committee that discovered the root of
the money problem was in the unseen vaults of American banking and business. Along with the
Democratic banking reformers, Massachusetts lawyer Louis D. Brandeis expressed his desire for
reform in his book Other People's Money and How the Bankers Use It.
In June of 1913, President Wilson spoke to Congress for a second time to persuade them
into reforming the American banking system. He urged Congress to adopt the Democratic idea
of a decentralized federal bank, as opposed to the Republican idea of a large private bank with a
number of branches.
The result of Wilson's pleadings was the landmark Federal Reserve Act. He signed the
bill in 1913, creating the most important piece of economic legislation since the Civil War
4. Federal Reserve Act (1913) - In 1913, Woodrow Wilson signed the Federal
Reserve Act in to law. The Act had the president appoint a Federal Reserve Board that would
watch over twelve regional banks across the country. While these regional banks would be
owned by financial institutions, the Federal Reserve Board had final power and controlled the
amount of public control there was. The Federal Reserve Board could also issue paper money
which meant that the money in circulation could be increased as it was needed. The Federal
Reserve Act brought the country through financial crises during the World War and it proved to
be the most important economic legislation passed between the Civil War and the New Deal.
5. Clayton Anti-Trust (1914) - Along with the Federal Trade Commission, this act
helped to get rid of monopolies. It added to the Sherman Act's list of unacceptable business
practices. The new practices included price discrimination and interlocking directorates, or
people who are the directors or competing businesses. The act also protected labor and
agricultural groups from antitrust prosecution, but gave them the right to strike and picket
peacefully.
To labor unions, it was the Magna Carta of labor for legally changing human labor from a
product to a service. However, future conservative judges continued to hold the union movement
back.
6. Federal Trade Commission (1914) - The trusts were the last part of Wilson’s
triple wall plan. After speaking to Congress once again, they eventually responded with the
Federal Trade Commission Act of 1914. This Act allowed a commission, appointed by the
president, to investigate industries that were involved with interstate commerce. The commission
would crush monopolies by finding the root practices that were unfair such as bribery,
mislabeling, illegal competition, and corruption. This Act helped control big business and trusts.