Woodrow Wilson: Domestic Affairs Summary
The Miller Center
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.
Why did Wilson seek tariff reform? How did he propose making up for the difference in tax
income generated by the decrease in the tariff?
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.
Compare Wilson to Taft regarding domestic policy and active rigor in the presidency. How did
he differ from Taft? Which side did he support, workers or businesses? How are his ideas
similar/different to T. Roosevelt?
http://millercenter.org/president/biography/wilson-domestic-affairs