Just as the Protestant Revolt during the sixteenth century was followed by a counter-reformation in the Catholic Church which swept away many abuses, while retaining and fortifying the essential principles of the faith, so the widespread and radical discontent of the working classes with the capitalist system hitherto obtaining produced a counter-reformation on the part of those who wish to preserve its essentials while curtailing some of its excesses. This counter-reformation made a deep impress upon American political thinking and legislation at the turning of the new century. More than once during his presidency Mr. Roosevelt warned the capitalists that a reform of abuses was the price which they would have to pay in order to save themselves from a socialist revolution. Eminent economists turned aside from free trade and laissez faire to consider some of the grievances of the working class, and many abandoned the time-honored discussions of "economic theories," in favor of legislative programs embracing the principles of state socialism, to which countries like Germany and Great Britain were already committed.
Charity workers whose function had been hitherto to gather up the wrecks of civilization and smooth their dying days began to talk of "a war for the prevention of poverty," and an examination of their concrete legislation proposals revealed the acceptance of some of the principles of state socialism. Unrestricted competition and private property had produced a mass of poverty and wretchedness in the great cities which constituted a growing menace to society, and furnished themes for socialist orators. Social workers of every kind began the detailed analysis of the causes of specific cases of poverty and arrived at the conclusion that elaborate programs of "social legislation" were necessary to the elimination of a vast mass of undeserved poverty.
Under the stimulus of these and other forces, state legislatures in the more industrially advanced commonwealths began to pour out a stream of laws dealing with social problems. These measures included employers' liability and workmen's compensation laws, the prohibition of child labor, minimum hours for dangerous trades like mining and railroading, minimum wages for women and girls, employment bureaus, and pensions for widows with children to support. While none of the states went so far as to establish old-age pensions and general sickness and accident insurance, it was apparent from an examination of the legislation of the first decade of the twentieth century that they were well in the paths of nations like Germany, England, and Australia.
Criticism of the Federal System
All this unsettlement in economics and politics could not fail to bring about a reconsideration of the fundamentals in the American constitutional system—particularly the distribution of powers between the Federal and state governments, which is made by a constitution drafted when economic conditions were totally different from what they are to-day. In fact, during the closing years of the nineteenth century there appeared, here and there in American political literature, evidence of a discontent with the Federal system scarcely less keen and critical than that which was manifested with the Articles of Confederation during those years of our history which John Fiske has denominated "The Critical Period."
Manufacturing interests which, at the time the Federal Constitution was framed, were so local in character as to be excluded entirely from the control of the Federal government had now become national or at all events sectional, having absolutely no relation to state lines. As Professor Leacock remarks, "The central fact of the situation is that economically and industrially the United States is one country or at best one country with four or five great subdivisions, while politically it is broken into a division of jurisdictions holding sway to a great extent over its economic life, but corresponding to no real division either of race, of history, of unity, of settlement, or of commercial interest."[76] For example, in 1900 the boot and shoe industry, instead of being liberally distributed among the several states, was so concentrated, that out of the total product 44.9 per cent was produced by Massachusetts; nearly one half of the agricultural implements for that year were made in Illinois; two thirds of the glass of the whole country was made in Pennsylvania and Indiana; while Pennsylvania alone produced 54 per cent of the iron and steel manufactured. The political significance of this situation was simply this: the nation on which each of these specialized industries depended for its existence had practically no power through the national government to legislate relative to them; but in each case a single legislature representing a small fraction of the people connected with the industry in question possesses the power of control.
The tendency of manufacturers to centralize was accompanied, as has been pointed out above, by a similar centralization in railways. At the close of the nineteenth century, the Vanderbilt system operated "some 20,000 miles reaching from New York City to Casper, Wyoming, and covering the lake states and the area of the upper Mississippi; the Pennsylvania system with 14,000 miles covers a portion of the same territory, centering particularly in Ohio and Indiana; the Morgan system, operating 12,000 miles, covers the Atlantic seaboard and the interior of the Southern States from New York to New Orleans; the Morgan-Hill system operates 20,000 miles from Chicago and St. Louis to the state of Washington; the Harriman system with 19,000 miles runs from Chicago southward to the Gulf and westward to San Francisco, including a Southern route from New Orleans to Los Angeles; the Gould system with 14,000 miles operates chiefly in the center of the middle west extending southward to the Gulf; in addition to these great systems are a group of minor combinations such as the Atchinson with 7,500 or the Boston and Maine with 3,300 miles of road."
Corresponding to this centralization in industries and railways there was, as we have pointed out, a centralization in the control of capital, particularly in two large groups, the Standard Oil and the Morgan interests. As an expert financier, Mr. Moody wrote in 1904: "Viewed as a whole, we find the dominating influences in the trusts to be made up of an intricate network of large and small groups of capitalists, many allied to one another by ties of more or less importance, but all being appendages to, or parties of the greater groups which are themselves dependent on and allied with the two mammoth or Rockefeller and Morgan groups."
Facing this centralized national economy was a Federal system made for wholly different conditions—a national system of manufacturing, transportation, capital, and organized labor, with a national government empowered, expressly, at least, to regulate only one of those interests, transportation—the other fundamental national interests being referred to the mercy of forty-six separate and independent state legislatures. But it is to be noted, these several legislatures were by no means free to work out their own program of legislation; all of them were, at every point, subjected to Federal judicial control under the general phrases of the Fourteenth Amendment relative to due process of law and the equal protection of the laws.[77] To state it in another way, the national government was powerless to act freely with regard to nearly all of the great national interests, but it was all powerful through its judiciary in striking down state legislation.