American Experiment

by James Macgregor Burns

  The Engine of Democracy

  Woodrow Wilson looked down at the 50,000 persons massed in front of the Inaugural stand. It was March 4, 1913, a cold day but sunny. Shortly before, he had descended the east Capitol steps with William Howard Taft, followed by Vice-President Thomas Marshall and members of the new Cabinet. He had taken the oath of office before Chief Justice Edward D. White, and had kissed the Bible, his lips touching the 119th Psalm: “And I will walk at liberty: for I seek thy precepts…. And I will delight myself in thy commandments, which I have loved.” Turning to the crowd, he had observed a large cleared area just in front of the stand. “Let the people come forward,” he had commanded, and they did.

  “There has been a change of government,” Wilson began abruptly. “It began two years ago, when the House of Representatives became Democratic by a decisive majority.” The Senate also would be Democratic. “What does the change mean?

  “It means much more than the mere success of a party. The success of a party means little except when the nation is using that party for a large and definite purpose. No one can mistake the purpose for which the nation now seeks to use the Democratic party. It seeks to use it to interpret a change in its own plans and point of view….

  “We have been proud of our industrial achievements, but we have not hitherto stopped thoughtfully enough to count the human cost, the cost of lives snuffed out, of energies overtaxed and broken, the fearful physical and spiritual cost to the men and women and children upon whom the dead weight and burden of it all has fallen pitilessly the years through. The groans and agony of it all had not yet reached our ears, the solemn, moving undertone of our life, coming up out of the mines and factories and out of every home where the struggle had its intimate and familiar seat….

  “There has been something crude and heartless and unfeeling in our haste to succeed and be great. Our thought has been ‘Let every man look out for himself, let every generation look out for itself,’ while we reared giant machinery which made it impossible that any but those who stood at the levers of control should have a chance to look out for themselves…. There can be no equality or opportunity, the first essential of justice in the body politic, if men and women and children be not shielded in their lives, their very vitality, from the consequences of great industrial and social processes which they can not alter, control, or singly cope with….

  “The nation has been deeply stirred, stirred by a solemn passion, stirred by the knowledge of wrong, of ideals lost, of government too often debauched and made an instrument of evil….

  “This is not a day of triumph; it is a day of dedication. Here muster, not the forces of party, but the forces of humanity. Men’s hearts wait upon us; men’s lives hang in the balance; men’s hopes call upon us to say what we will do. Who shall live up to the great trust? Who dares fail to try? I summon all honest men, all patriotic, all forward-looking men, to my side. God helping me, I will not fail them, if they will but counsel and sustain me!”

  There began, during the next few days, a government that would become a textbook example of presidential leadership of party and Congress. Building both on his theory of governing and his practical experience in New Jersey, Wilson appeared in person before Congress to propose measures; conferred often with party and committee leaders in the White House and on the Hill; exploited the caucus to unify the congressional party behind his program; threatened to wield the veto power against obnoxious bills; mobilized the influence of Bryan and other party leaders against wavering Democrats. The President, he had said a few weeks before his inauguration, must act and serve as “prime minister,” directing and uniting party, legislative, and executive leadership. And that was how he governed.

  Wilson was not one to ignore the role of President as moral leader, however, especially when a swarm of Washington lobbyists opposing tariff revision gave him the perfect opportunity. A “brick couldn’t be thrown without hitting one of them,” he told the press at his semiweekly press conference. Then he made a public statement: “I think that the public ought to know the extraordinary exertions being made by the lobby in Washington” on the tariff bill. “Washington has seldom seen so numerous, so industrious, or so insidious a lobby. The newspapers are being filled with paid advertisements calculated to mislead the judgment of public men not only, but also the public opinion of the country itself.…” The public at large had no lobby, he added.

  Above all, Wilson demonstrated a remarkable flair for executive leadership. He chose able subordinates for his Cabinet: the now-veteran Bryan for Secretary of State; William Gibbs McAdoo, a Southerner turned Northerner like Wilson, and a master of the politics of economics, for the Treasury; Josephus Daniels, editor of the Raleigh News and Observer, for Navy; Lindley M. Garrison, a New Jersey attorney, for War. “I’ve got to have men in the cabinet who have passed the acid test of honesty,” he told his confidant, Colonel House. “Men who are brave. Men who are efficient. Men who have imagination.” There was a limit to Wilson’s own courage, however. Louis Brandeis of Boston fit all those criteria, and the President wanted him at his side as Attorney General. But Brandeis had fought the railroad interests of the Northeast, which, with the help of influential Wall Streeters, the conservative Massachusetts bar, and such bluebloods as President A. Lawrence Lowell of Harvard and Henry L. Higginson, warned Wilson off. House also opposed him. And when Wilson leaned instead toward picking Brandeis for Secretary of Commerce and Labor—then still one department—the united Democracy of Massachusetts, including Mayor John “Honey Fitz” Fitzgerald of Boston, and a number of other Irish Democrats, dissuaded the President. The rejection of Brandeis, said La Follette, “breaks all our hearts.”

  It was as commander of his party that Wilson proposed to exert central leadership, and this was an imposing task. Most of the important Senate committees, and fifteen of the seventeen key House committees, were chaired by Southerners, who also in sheer numbers dominated both houses and both Democratic caucuses. It was not surprising that Wilson chose half his Cabinet from the South, and it helped that Colonel House was a Texan. During Wilson’s early presidency, he “established a degree of personal control over his party rare in American presidential history,” in John Broesamle’s estimate. He took such a firm grip of the congressional party that he organized the whole legislative package. “He personally delivered messages to both houses, employed careful timing and constant pressure, haunted the president’s room in the Capitol, working continuously with members and advisers, wielded the patronage and the influence of powerful figures like Bryan, threatened vetoes, and, when the time came and other resources had failed, appealed to the public over the heads of Congress.” The man who thirty years before had warned of disintegrated rule in Congressional Government now enjoyed the heady experience of uniting it.

  Policy was the payoff. Even before he entered office, Wilson was helping to marshal the forces of the Democracy for a counterattack on the high-tariff legislation of the Grand Old Party. In his personal appearance before Congress—the first by any President since Jefferson—Wilson declared, “We must abolish everything that bears even the semblance of privilege or of any kind of artificial advantage, and put our business men and producers under the stimulation of a constant necessity to be efficient, economical, and enterprising, masters of competitive supremacy, better workers and merchants than any in the world.” Andrew Carnegie himself could not have said it better. The House enacted a moderate downward revision by a two-to-one vote early in May; the big test would come in the Senate, long the burying ground of tariff reduction. There the western sheep farming and beet sugar interests were overrepresented, and it took all Wilson’s leadership skills to persuade western Democrats in the Senate to accept his argument that sheep raisers and sugar growers could compete with foreign imports. Major tariff revision downward emerged from Congress by September—along with a hotly debated and momentous graduated federal income tax designed to compensate for anticipated revenue losses under the reduced
tariff.

  “Think of it—a tariff revision downwards after all—not dictated by the mfgs,” wrote Agriculture Secretary David Houston, “lower in the Senate than in the House! ... A progressive income tax! I did not much think we should live to see these things.”

  More challenging even than the tariff was the other key issue that dominated presidential-congressional politics during Wilson’s first year—the nation’s monetary system. Embracing the intertwined problems of currency, banking, the money supply, inflation, and the scope of corporate power over the economy, this issue had roiled the nation’s politics for almost a century and had come to a head during the later progressive years. “It is not like the tariff, about which opinion has been definitely forming long years through,” Wilson remarked in June 1913. “There are almost as many judgments as there are men. To form a single plan and a single intention about it seems at times a task so various and so elusive that it is hard to keep one’s heart from failing.” But forming a single plan and intention is precisely what Wilson accomplished.

  The way had been prepared by years of debate and, more recently, by the Pujo committee’s investigation of the “money trust,” by now viewed as a “spider web of interlocking Wall Street directorates,” in Arthur Ekirch’s words. The probe predictably found an intensive concentration of control over the nation’s credit supply by J. P. Morgan & Co. and associated investment firms. Two sharp issues reemerged in the ensuing debate: whether to maintain a centralized or decentralized monetary system, and whether it should be privately or publicly controlled. Unfortunately for Wilson, these sets of issues crosscut each other, producing a ‘ parallelogram of pressure. The old inflationist wing of the Democracy was exemplified particularly by Congressman Carter Glass of Virginia, head of the House Banking Committee, who favored a decentralized and privately controlled system. Populists and progressives, including Bryan, La Follette, and Brandeis, wanted public control.

  The President took the latter stand. “The control of the system of banking and of issue which our new laws are to set up,” he said in his second appearance before Congress, “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.” But how master Glass? Wilson won him over to a creative compromise through sheer patience and persuasiveness, while fending off Wall Street pressure for a central bank, European style. The compromise blossomed in the Owen-Glass Act, passed in December 1913, which combined centralization and decentralization, governmental and private control. A Federal Reserve Board in Washington, composed of public officials, had authority to raise or lower the rediscount rate, thus wielding direct control over the credit supply. Federal Reserve regions were established; in each a Federal Reserve bank, six of whose nine directors would be appointed by the Federal Reserve Board, served as depositories for the cash reserves of the national banks—which were required to join the system—and of state banks. But the regional reserve banks would remain in the ownership of private bankers, and hence in their control too—to the extent that La Follette and Representative Charles A. Lindbergh of Minnesota charged that the act legalized the “Money Trust.” The act, in Arthur Link’s view, was the greatest single piece of constructive legislation of the Wilson era.

  Once again Wilson had demonstrated his uncommon ability both to lead and to follow, to stand firm and to give way. This was the hallmark of his early years in the White House, in the teeth of expectations that he would be professorially rigid and dogmatic. He made a point of treating legislators with respect, as partners in a common cause. And he learned from them. When, shortly after his inauguration, he piously told his Postmaster General and chief patronage dispenser, Albert S. Burleson, that on appointments “I am not going to advise with reactionary or standpat Senators or Representatives,” Burleson reacted like the seasoned old party pro that he was.

  “Mr. President,” he exclaimed, “if you pursue this policy, it means that your administration is going to be a failure…. It doesn’t amount to a damn who is postmaster at Paducah, Kentucky. But these little offices mean a great deal to the Senators and Representatives in Congress.” He knew these congressmen and senators. “If they are turned down, they will hate you and will not vote for anything you want. It is human nature….” Wilson gave way.

  The President also gave way on a far more vital question of strategy. He had not only wanted to lead the Democratic party; he had planned to transform it into a more progressive party—indeed, to reconstruct the Democracy and align it with liberal-minded independents and Republicans. Patronage for progressives in Congress was to be only one element of this strategy; he planned to reconstruct the New York and other state and local political parties by granting or withholding White House recognition. He quickly encountered the powerful defenses of political gridlock. When McAdoo and others, with Wilson’s blessing, sought to revamp the New York Democracy, its man in the Senate, James A. O’Gorman, warned that he would invoke his personal privilege as a senator to hold up appointments of anti-Tammany Democrats and independents. Wilson backed off. He discovered, though, that if he traded with the regulars, they supported him more dependably than many progressive lawmakers.

  “What you told me about the old standpatters is true,” he told Burleson. “They will at least stand by the party and the administration.”

  The President’s flexibility helped him immeasurably in getting his big bills through Congress. But this was short-run politics against longer-run, pragmatic politics against principled. In the long run, he might need a more progressive vehicle than the boss-ridden, disorganized, rurally oriented, fractionated Democracy; he might need liberal-minded Democrats, independents, and internationalist Republicans. In the short run, he was pushing his bills through Congress. But there would be a price to pay for pragmatism.

  The Anatomy of Protest

  The commanding intellectual issue in Woodrow Wilson’s first term was not the tariff or even banking and currency. It was the issue of economic monopoly in a representative democracy. For almost a century Jeffersonians, Jacksonians, farmers’ and workers’ parties, Locofocos, Grangers, Populists, and reformist Democrats and Republicans had been calling for the curbing, in various ways, of the monopolistic tendencies of big business. For half a century—ever since the Civil War—trusts had come more and more to dominate the economic landscape. In the eyes of antimonopolists, nothing seemed to stop these behemoths. The Sherman Antitrust law had been fitfully enforced and judicially eroded. At century’s turn, ten years after the act was passed, business underwent “a burst of merger activity never exceeded in importance in our history.” Left holding the economic high ground were the new giants: U.S. Steel—the first billion-dollar company—American Tobacco, International Harvester, Du Pont, American Smelting & Refining, and scores of others.

  Now at last it seemed that the monsters could be tamed. Not only had business concentration been a dramatic and central issue in the 1912 campaigns; not only had all the four leading presidential candidates taken some kind of position “agin the trusts”; they had divided so contentiously over proposed solutions as to offer at least a rough guide to the voters’ minds and the new Administration’s mandate. During 1914, his second year in office, Wilson won from Congress the Federal Trade Commission Act as part of his trust regulation program. A new bipartisan commission was empowered to investigate and police corporations in order to prevent unfair business practices such as adulteration of goods, combinations for maintaining resale prices, and mislabeling. Congress also passed the Clayton Antitrust Act, which prohibited price-cutting that aimed at the destruction of competition, interlocking directorates in industrial entities capitalized at $1 million or more, and stock purchases by corporations of other corporations when these tended to lessen competition.

  The passage of these acts, however, seemed less to satisfy concern over monopoly than to intensify it. This apparent paradox was due in part to wi
despread doubt that any legislation, federal or state, could actually master private economic power. Even more, the skepticism stemmed from the view that the problem was a much broader one than mere monopoly, that the great popular and progressive mandates of 1904 and 1912 were in jeopardy, that American democracy itself was at stake.

  Fear of economic—and political—power in a few hands lay deep in the American psyche. During the progressive era, Hofstadter noted, the entire structure of business “became the object of a widespread hostility” as a result of belief that business was becoming “a closed system of authoritative action.” Wilson had touched the people’s nerve in 1912. He was engaged, he proclaimed in Denver at the height of the 1912 campaign, in a “crusade against powers that have governed us—that have limited our development—that have determined our lives—that have set us in a strait-jacket to do as they please.” Raising the stakes, he went on to call the fight a “second struggle for emancipation.”

  Yet Americans seemed to be as ambivalent about the “second emancipation” as they had been about the first one. For one thing, defenders of big business were putting up powerful arguments. Consolidation, they claimed, lowered prices. “We think our American petroleum” is “very cheap,” said John D. Rockefeller smoothly. “It is our pleasure to make it so.” Big business, the argument continued, was more efficient and economical because it could buy and sell in large quantities, hire the ablest people, experiment and innovate without undue risk, use the latest labor-saving machinery. Nor was big business undemocratic, because it was controlled by shareholders with voting power. Critics of business disputed all these points, especially the last. It was already becoming clear to perceptive observers that stockholders, if they had ever really had control, were yielding it to managers, executives, and insiders.