by Hugh Brogan
Wilson had all the right credentials. Initially a Cleveland Democrat, he had been moving leftward for ten years or so. He had acquired national fame as a reforming President of Princeton. In 1910 he accepted the Democratic nomination for the governorship of New Jersey. Winning election, he had shown himself to be a strong reforming leader: he had broken with the bosses who had nominated him, and that in itself was enough to commend him to the progressives, who were nearly as strong a force among the Democrats as they had become among the Republicans. There was an eloquence, an elevation in Wilson’s speeches that stirred men’s hearts. He was the man; as candidate he held the Democracy together, preaching of a ‘New Freedom’ (against the New Nationalism) in terms that were reassuringly old-fashioned: ‘As to the monopolies, which Mr Roosevelt proposes to legalize and to welcome, I know that they are so many cars of juggernaut, and I do not look forward with pleasure to the time when the juggernauts are licensed and driven by commissioners of the United States.’ ‘If America is not to have free enterprise, then she can have freedom of no sort whatever.’ He ran against finance capitalism like Jackson running against the Bank of the United States. (His inaugural address, too, was to sound very Jacksonian.) Taft, who soon despaired of re-election, stayed in the race just to spoil things for Roosevelt; and in due course Wilson was elected President with 6,296,547 votes to Roosevelt’s 4,118,571. Poor fat Taft was a dismal third, with 3,484,956 votes; and Eugene V. Debs, the Socialist candidate for the fourth (but not the last) time, surprised everybody by more than doubling his 1908 vote to 900,672. The Democrats captured both houses of Congress. For a moment it seemed that everyone was a progressive. The reforming tide was at its peak.
Woodrow Wilson was perhaps luckier in the moment of his first election than any President since Andrew Jackson. Not a cloud was in the sky; his party colleagues in Congress were eager to respond to his wishes; the country was expectant; and twelve years of progressive turmoil had established a fairly comprehensive agenda for action, if the President chose to adopt it. It was a great opportunity which a quietist such as Taft might have deliberately forgone; but Wilson was an activist.
His personality embodied many of the sources of the progressive impulse. For one thing, he was an educated professional. He had no private means, but his family had been able to send him to Princeton, to law school in Virginia and to Johns Hopkins University in Baltimore, where he attended the graduate seminar in history – the first of its kind in America. As President of Princeton he had shown himself to be a better educational reformer than he was a scholar; but he always knew himself to be a politician and orator by temperament. He had imbibed from his father, a distinguished Presbyterian minister, the tendency to do-goodism and to over-confident idealism which was so marked a feature of the era. He was intensely ambitious, and excited by the thought of getting power into his hands; perhaps he was tempted to think, like Lincoln, that the best thing about the American political system was the scope it offered for men like himself to rise to the top. As events were to show, he was also like Lincoln in having an instinct for great issues; there was a prophetic touch in him and, as events were to show, a deep emotionalism: the sorrows of the world were real to him. Persons near at hand were perhaps less so. He was courteous enough, but he was a poor judge of character, rather too disdainful of less able or upright mortals, and, in the end, with his thin frame, false teeth and professorial eyeglasses, definitely not one of the boys. His eloquence, vision, sincerity and intelligence could dazzle, charm and fascinate the most unlikely mortals, even hardbitten party bosses, who did not at once realize what a ruthless and realistic politician he was; but he was difficult to love. Some found him easy to hate, notably Theodore Roosevelt, whom he had defeated, and Roosevelt’s closest political ally, Senator Henry Cabot Lodge of Massachusetts. He relied more on intuition, when it came to decision making, than on logic, and was absolutely stubborn in defending his intuitive conclusions. He demanded unquestioning loyalty from his family, friends, colleagues and subordinates; those who opposed him too persistently he regarded as personal enemies. Women were attracted to him.
In 1913 such a man, determined to leave a great mark on history, could not fail. He was helped by the fact that although he had made his career in the North he had been born and bred in Georgia and the Carolinas; as he once said, ‘the South is the only place where nothing ever has to be explained to me’. The Democrats in Congress, dominated by Southerners, were naturally anxious to help the first President from Dixie since Andrew Johnson. Their new-found ascendancy had one evil consequence: Southern practices of racial discrimination, which the Republicans had hitherto kept at bay, now entered the federal government, where Jim Crow would prevail for the next twenty years and more. Wilson seems scarcely to have noticed, or to have noticed that he was disappointing the numerous blacks who had voted for him. He was much too busy pushing through the Underwood tariff, which fulfilled an old Democratic dream by lowering the schedules significantly for the first time since the Civil War; the Clayton Act, which strengthened the anti-trust laws; and the Federal Reserve System, which went some way to fill the gap in America’s financial institutions resulting from the absence of a central bank. He developed new techniques of leadership, or perhaps it should rather be said that he revived old ones. Realizing, as befitted the author of Congressional Government, that it was essential to collaborate with Congress, he spent long hours on the Hill, cajoling and reasoning with Congressmen and Senators; and he revived the practice, discontinued since the time of Thomas Jefferson (who was no orator), of reading his messages to Congress in person, especially the annual State of the Union addresses. It worked wonderfully well. Even when the economy slid into a recession in 1914, leading to the loss of many Democratic seats in Congress (and to the slaughter of the Progressive party which thereafter, abandoned by Theodore Roosevelt, more or less ceased to count), he was able, by appropriating several leading ideas of Roosevelt’s New Nationalism – by accepting, above all, that the powers and activities of the federal government must be increased and therefore feeling free to propose further legislation, for instance, a law forbidding child labour in factories and sweatshops – to find new work for the legislature and enhanced authority for himself. By the elections of 1916 he had compiled the most impressive record of legislation proposed and passed of any President since George Washington, and in so doing had confirmed the insights of Herbert Croly. Wilson, with the great liberal lawyer Louis D. Brandeis at his elbow, might orate of the New Freedom and the delights of small-scale government as well as small-scale business; in fact the spirit of Alexander Hamilton was more potent. Wilson’s actions strengthened the capitalist order by reforming it; they increased the functions and size of the federal bureaucracy; and they gave added power and authority to the Presidency. In a word, whether he admitted it to himself or not, Wilson’s mission was the same as Theodore Roosevelt’s: it was to give the United States an economic and political government adequate to the demands of the modern world, and the nostrums of the venerated Jefferson seemed to be of very little use to him in the task.
Yet, even if we concede that his goal was the right one, it cannot be said that he really attained it. By comparison with the past, even the recent past, his achievements were impressive; measured against what needed to be done, they were almost trivial. The story of the Federal Reserve Act illustrates the point to admiration.
The panic of 1907 may in retrospect be seen as the turning-point of the Age of Gold. For a week in October a team of New York bankers, led by Pierpont Morgan, struggled heroically against a crisis which threatened to bring down the whole American financial and economic structure; and they prevailed. But it had been a close-run thing, and victory would probably have eluded them had it not been for Morgan’s unique personal authority (at one moment he locked a couple of dozen of America’s richest men into his library on Madison Avenue and then forced them to pledge their millions to the salvation of Wall Street). As he himself remarked later
, it was not healthy that economic security should rely so much on one man. But the panic also demonstrated, to those with eyes to see, three even more important points.
First, it had been brought on by an all-too-familiar combination of speculative greed and dishonest or incompetent financial management. In other words, the conditions which had led to panics in the past – in 1837, for instance, or 1873 – were not correcting themselves as American capitalism matured: they were getting worse.
Second, the general economic effect of panics and crashes was getting greater all the time. Even though the 1907 panic was quickly brought under control and then halted in its course, it plunged America into depression for the next year, and the smooth and rapid growth of the years since 1897 was not renewed, even after confidence was restored. Prosperity was at best patchy and uncertain until the outbreak of the First World War.
Finally, it was apparent that the only agency big enough to control events in future was the federal government. The Secretary of the Treasury had come to Morgan’s aid in 1907 with deposits of thirty-five million dollars from the federal surplus, which was fortunately just then a healthy one; on another occasion a much larger operation might be necessary, since the government’s obligation to protect American prosperity was now acknowledged. Clearly it would be better if another crisis could be prevented by a steady application of government policy; ad hoc contrivances like those adopted in 1907 were not enough; in short, a federal law was necessary – perhaps more than one.
This was the reason for the Federal Reserve Act. It was the first episode in the process by which Washington has since become the determining factor in the US economy; but it was a very modest first step. The problem which the business world saw as a result of 1907 was the unsatisfactory state of the currency. Even allowing for the increased production of gold and the fantastic profitability of the American economy, there was simply not enough money available to the national banks for use in emergency – such an emergency as that in 1907 when the failure of two leading finance houses, for lack of ready cash, nearly brought the whole structure of finance capitalism tumbling. New forms of credit would have to be devised, and they would have to be backed by the federal government, precisely as Alexander Hamilton had argued when he founded the First Bank of the United States.
Popular hostility to Wall Street was so deep, and the dissensions among the bankers themselves were so sharp, that it proved impossible to get a new bank law through Congress under either Roosevelt or Taft; but it soon became one of the Wilson administration’s chief projects, and was duly achieved in the autumn of 1913. The Bank of the United States was not revived: the ghost of Andrew Jackson was still powerful enough to prevent it; but an effective substitute was devised, acceptable both to Wall Street and to the present leaders of Jackson’s party – Woodrow Wilson and William Jennings Bryan (now Wilson’s Secretary of State). The reserve system reflected political and geographical realities by being a federation of twelve districts or regions, the two most important being those centred on New York and Chicago; but it was directed from Washington by a Federal Reserve Board, consisting of the Secretary of the Treasury, the Comptroller of the Currency and five other members, all appointed by the President. (This arrangement was not particularly welcome to the bankers, who would rather have appointed the board themselves; but Wilson saw no reason for allowing the poachers to elect the gamekeepers.) The Board was and is substantially independent of the President, but by placing its headquarters in Washington and by controlling appointments to it the authors of the Act (Congressman Carter Glass of Virginia chief among them) made sure that it would be a national body, with a strong sense of its political obligations as well as its commercial ones. In return for conceding this measure of political interference the capitalists got a flexible and dependable currency administered by the equivalent of a central bank. The conditions of 1907 therefore ought not to recur.
Nor did they. But no two financial crises have exactly the same occasions: the Federal Reserve Act of 1913 tackled only one sort of weakness and left the United States vulnerable to a dozen others. Nothing was done to bring the stock exchanges under control or to regulate the flow of funds in and out of the country. No one (except the handful of American Socialists) saw the necessity of regulating wages and profits so that consumer spending power could grow with the economy and wealth be dispersed widely, instead of concentrating in the hands of a comparatively small group of irresponsible millionaires. Above all, nobody saw that even as a banking reform the Act did not go far enough. It was, after all, the New York bankers who had so grossly over-capitalized so many enterprises that even the gigantic earnings of American industrialism might prove to be insufficient to pay the interest due to all the savers who had bought stocks and bonds. Nothing was done to strengthen the tens of thousands of small state banks, where a large part of the nation’s capital was deposited. These conditions were signs of trouble for the future. And the Reserve Board, even though appointed by the President, soon fell under the dominance of Wall Street and remained thus enthralled until 1929. The gamekeepers surrendered to the poachers. Greed, dishonesty and folly had as large a scope for their operations as ever.
Reservations of this kind apply to most of Wilson’s other reforms. The Underwood tariff (1913), for instance, was a serious move in the direction of free trade, but the sudden outbreak of the First World War made it nugatory almost as soon as it came into operation. In twenty years’ time Franklin Roosevelt would have to reform the tariff all over again.
In other respects too the times were less propitious for great achievement at the federal level than they seemed. It is anyway arguable that the energy of the progressive middle class was most effectively expended at state and city level, where, for example, able young women like Frances Perkins – horrified at the Triangle fire of 1911, when 146 young women died in a New York sweatshop disaster – could make themselves felt by lobbying successfully for a state law to prevent such a thing happening again. In city after city, state after state, the revolt against the corrupt and by now intolerably inefficient old machines swept reform administrations into power (such as those of ‘Golden Rule’ Jones in Toledo, Ohio, or E. H. Crump, later to be a notorious boss himself, in Memphis, Tennessee). Some good was achieved. But Washington lacked the money, the expertise and the authority to be of much help in these local efforts. It did not even do much to advance such a cause as women’s suffrage: the breakthrough came in the West, where between 1910 and 1914 nine states gave the vote to women. This proved a significant lever: the suffragists organized against the Democrats in those states in the 1914 election, since the majority party had not endorsed the Anthony Amendment to the US Constitution;7 fewer Democrats than had been expected were returned to Congress, which frightened the party leaders so much that they instantly converted to support of the Amendment. In the 1916 election both main parties said they were in favour of women’s suffrage, disagreeing only about the means to achieve it; in 1917 New York state gave women the vote, after an effective campaign by the leading suffragist, Carrie Cart. It was clearly only a matter of time before the Anthony Amendment was passed, and in fact (helped by the patriotic contribution women made to victory in the world war) it became part of the Constitution in 1920, in good time for the elections of that year. It was one of the most triumphant and characteristic victories of the progressive years, being a cause behind which East and West, working and middle classes, town and country, had eventually been able to unite; and perhaps most of all in that it was a reform brought about from below. The national politicians, including the President, had been little more than the playthings of a great tide.
Two other issues illustrate the same point, and a further one, that although adjustment to a new age was necessary, many Americans were most unwilling to adjust. This was especially so in the rural areas of the West and South. There, even as the triumph of progressivism vindicated the Populists, much of whose programme the new movement realized, the energies
that had inspired Populism turned sour. Progressivism owed its success to the combined forces of half a dozen groups; but that did not redeem the new cities in the eyes of the farmers. They remembered the words of Bryan; they remembered his defeats; they could hardly take Roosevelt and Wilson to themselves in the same way, and they felt America slipping out of their hands. The country must be redeemed and purified. At the very least the wicked lure of alcohol must be rooted out. This Bible Belt zeal received reinforcement from two unlikely sources. First, many urban progressives had been born on farms in the Mid-West and shared rural intolerance and provincialisms: when they discovered that the working classes in the cities were untrustworthy, frequently wanting more than the middle classes were prepared to concede, they too fell back on proposals which might restore order. Secondly, many businessmen and social workers were well aware that drunkenness was a real problem, entailing, among other things, much loss of working time and much violence in the home. They lent their support to temperance proposals, overlooking the point that temperance could often be the stalking horse for prohibition. By 1914 the anti-drink crusade was much nearer to victory than anyone suspected, though it would take a war to carry it to its goal. Even had they known as much the progressives might not have worried. They were still naive in a great many respects, and found it possible to dream that prohibitionists might be right and that a teetotal America might be possible and desirable; a clean bright place giving an example of sober virtue to the human race.