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History of the United States by Charles A. Beard and Mary R. Beard

«·PRESIDENT WILSON AND THE WORLD WAR · Colonial and Foreign Policies·»

Domestic Legislation

Financial Measures.—Under this spirited leadership Congress went to work, passing first the Underwood tariff act of 1913, which made a downward revision in the rates of duty, fixing them on the average about twenty-six per cent lower than the figures of 1907. The protective principle was retained, but an effort was made to permit a moderate element of foreign competition. As a part of the revenue act Congress levied a tax on incomes as authorized by the sixteenth amendment to the Constitution. The tax which roused such party passions twenty years before was now accepted as a matter of course.

Having disposed of the tariff, Congress took up the old and vexatious currency question and offered a new solution in the form of the federal reserve law of December, 1913. This measure, one of the most interesting in the history of federal finance, embraced four leading features. In the first place, it continued the prohibition on the issuance of notes by state banks and provided for a national currency. In the second place, it put the new banking system under the control of a federal reserve board composed entirely of government officials. To prevent the growth of a “central money power,” it provided, in the third place, for the creation of twelve federal reserve banks, one in each of twelve great districts into which the country is divided. All local national banks were required and certain other banks permitted to become members of the new system and share in its control. Finally, with a view to expanding the currency, a step which the Democrats had long urged upon the country, the issuance of paper money, under definite safeguards, was authorized.

Mindful of the agricultural interest, ever dear to the heart of Jefferson’s followers, the Democrats supplemented the reserve law by the Farm Loan Act of 1916, creating federal agencies to lend money on farm mortgages at moderate rates of interest. Within a year $20,000,000 had been lent to farmers, the heaviest borrowing being in nine Western and Southern states, with Texas in the lead.

Anti-trust Legislation.—The tariff and currency laws were followed by three significant measures relative to trusts. Rejecting utterly the Progressive doctrine of government regulation, President Wilson announced that it was the purpose of the Democrats “to destroy monopoly and maintain competition as the only effective instrument of business liberty.” The first step in this direction, the Clayton Anti-trust Act, carried into great detail the Sherman law of 1890 forbidding and penalizing combinations in restraint of interstate and foreign trade. In every line it revealed a determined effort to tear apart the great trusts and to put all business on a competitive basis. Its terms were reinforced in the same year by a law creating a Federal Trade Commission empowered to inquire into the methods of corporations and lodge complaints against concerns “using any unfair method of competition.” In only one respect was the severity of the Democratic policy relaxed. An act of 1918 provided that the Sherman law should not apply to companies engaged in export trade, the purpose being to encourage large corporations to enter foreign commerce.

The effect of this whole body of anti-trust legislation, in spite of much labor on it, remained problematical. Very few combinations were dissolved as a result of it. Startling investigations were made into alleged abuses on the part of trusts; but it could hardly be said that huge business concerns had lost any of their predominance in American industry.

Labor Legislation.—By no mere coincidence, the Clayton Anti-trust law of 1914 made many concessions to organized labor. It declared that “the labor of a human being is not a commodity or an article of commerce,” and it exempted unions from prosecution as “combinations in restraint of trade.” It likewise defined and limited the uses which the federal courts might make of injunctions in labor disputes and guaranteed trial by jury to those guilty of disobedience (see p. 581).

The Clayton law was followed the next year by the Seamen’s Act giving greater liberty of contract to American sailors and requiring an improvement of living conditions on shipboard. This was such a drastic law that shipowners declared themselves unable to meet foreign competition under its terms, owing to the low labor standards of other countries.

Still more extraordinary than the Seamen’s Act was the Adamson law of 1916 fixing a standard eight-hour work-day for trainmen on railroads—a measure wrung from Congress under a threat of a great strike by the four Railway Brotherhoods. This act, viewed by union leaders as a triumph, called forth a bitter denunciation of “trade union domination,” but it was easier to criticize than to find another solution of the problem.

Three other laws enacted during President Wilson’s administration were popular in the labor world. One of them provided compensation for federal employees injured in the discharge of their duties. Another prohibited the labor of children under a certain age in the industries of the nation. A third prescribed for coal miners in Alaska an eight-hour day and modern safeguards for life and health. There were positive proofs that organized labor had obtained a large share of power in the councils of the country.

Federal and State Relations.—If the interference of the government with business and labor represented a departure from the old idea of “the less government the better,” what can be said of a large body of laws affecting the rights of states? The prohibition of child labor everywhere was one indication of the new tendency. Mr. Wilson had once declared such legislation unconstitutional; the Supreme Court declared it unconstitutional; but Congress, undaunted, carried it into effect under the guise of a tax on goods made by children below the age limit. There were other indications of the drift. Large sums of money were appropriated by Congress in 1916 to assist the states in building and maintaining highways. The same year the Farm Loan Act projected the federal government into the sphere of local money lending. In 1917 millions of dollars were granted to states in aid of vocational education, incidentally imposing uniform standards throughout the country. Evidently the government was no longer limited to the duties of the policeman.

The Prohibition Amendment.—A still more significant form of intervention in state affairs was the passage, in December, 1917, of an amendment to the federal Constitution establishing national prohibition of the manufacture and sale of intoxicating liquors as beverages. This was the climax of a historical movement extending over half a century. In 1872, a National Prohibition party, launched three years before, nominated its first presidential candidate and inaugurated a campaign of agitation. Though its vote was never large, the cause for which it stood found increasing favor among the people. State after state by popular referendum abolished the liquor traffic within its borders. By 1917 at least thirty-two of the forty-eight were “dry.” When the federal amendment was submitted for approval, the ratification was surprisingly swift. In a little more than a year, namely, on January 16, 1919, it was proclaimed. Twelve months later the amendment went into effect.

«·PRESIDENT WILSON AND THE WORLD WAR · Colonial and Foreign Policies·»