Woodrow Wilson's Administration and Achievements

by Frank B. Lord; James William Bryan

Problems at Home, 1913-1914

One of the passages of President Wilson's inaugural address contained a list of "the things that ought to be altered," which included:

A tariff which cuts us off from our proper part in the commerce of the world, violates the just principles of taxation, and makes the Government a facile instrument in the hands of private interests; a banking and currency system based upon the necessity of the Government to sell its bonds fifty years ago and perfectly adapted to concentrating cash and restricting credits; an industrial system which, take it on all sides, financial as well as administrative, holds capital in leading strings, restricts the liberties and limits the opportunities of labor, and exploits without renewing or conserving the natural resources of the country; a body of agricultural activities never yet given the efficiency of great business undertakings or served as it should be through the instrumentality of science taken directly to the farm, or afforded the facilities of credit best suited to its practical needs.

The items had been set down in the order of their immediate importance. First came the tariff, for the tariff had come to be in the minds of many Americans a symbol of the struggle between the "plain people" and "the interests." The Payne-Aldrich tariff, enacted by a party pledged to tariff revision, had been not only an injury but an insult, and if any American Presidential election could ever be interpreted as a popular referendum on any specific policy the election of 1912 meant that the Payne-Aldrich tariff must be revised. At the time of the enactment of that bill Mr. Wilson had written a critical article in The North American Review which expressed a widespread popular sentiment in its criticism of "the policy of silence and secrecy" prevalent in the committee rooms when this and other tariffs had been drawn up and a demand for procedure in the open where the public could find out exactly who wanted what and why. Joined with this objection to the methods of tariff making were some observations by Mr. Wilson on the principles of tariff revision. He saw and said that a complete return to a purely revenue tariff was not then possible even if desirable, and that the immediate objective of tariff reform should be the adjustment of rates so as to permit competition and thereby necessitate efficiency of operation.

The ideas which in March, 1909, were merely the criticism of a college professor had become in March, 1913, the program of the President of the United States, the leader of the majority party, determined to get his program enacted into law. Congress was convened in special session on April 7, and the President delivered a message on the one topic of the tariff. Going back to the precedent of Washington and Adams, broken by Jefferson and never resumed again, he read his message in person to the Congress as if to emphasize the intimate connection between the Executive and legislation which was to be a feature of the new Administration. The principle of tariff reform laid down in that bill was a practical and not a theoretical consideration, the need of ending an industrial situation fostered by high tariffs wherein "nothing is obliged to stand the tests of efficiency and economy in our world of big business, but everything thrives by concerted agreement.... The object of the tariff duties henceforth laid must be effective competition, the whetting of American wits by contest with the wits of the world."

The measure which Democratic leaders had already prepared for that purpose and which eventually became known as the Underwood-Simmons Act was intended to accomplish its end only gradually. Notoriously outrageous schedules of the Payne-Aldrich Act, such as that dealing with wool, were heavily reduced, and the general purport of the bill is perhaps expressed in the phrase of Professor Taussig, that it was "the beginning of a policy of much moderated protection." It went through the House without much difficulty, passing on May 8, and then it struck the Senate committee rooms, from which no tariff bill had ever emerged quite as innocent as it entered. The usual expeditionary forces of lobbyists concentrated in Washington and the Senate talked it over, while Summer came on and Washington grew hotter and hotter. In course of time Senators began to come to the President and tell him that it was hopeless to get the bill through at that session and that Washington was getting pretty hot. The President replied that he knew it was hot, but that Congress would have to stay there till that bill was passed. Already he had given the lower house something to keep it busy while the Senate wrestled with the tariff.

As for the lobby, the President had his own method of dealing with that. On May 26 he issued a public statement calling attention to the "extraordinary exertions" of lobbyists in connection with the tariff. "The newspapers are being filled," he said, "with paid advertisements calculated to mislead not only the judgment of the public men, but also the public opinion of the country itself. There is every evidence that money without limit is being spent to maintain this lobby.... It is of serious interest to the country that the people at large should have no lobby and be voiceless in these matters, while the great bodies of astute men seek to create an artificial opinion and to overcome the interests of the public for their private profit." The outraged dignity of Senators and Representatives, not to mention lobbyists, rose to protest against this declaration. A Republican Senator even declared that the President, who had been actively urging his views on legislators just as he had done in New Jersey, was himself the chief lobbyist in connection with the Tariff Bill. A Senate Committee was appointed to find out if there had been any lobbying, and discovered that there had. Meanwhile the bill was being argued out in the Senate, and the President stood firm against any substantial modification. It was finally passed on Oct. 3.

It was a vindication of the platform promise and a fulfillment of the duty with which the party had been charged in the last election, and it was a notable triumph for the personal policy of the President-Premier, who more than anybody else had literally forced the bill through Congress. The tariff had taken such a prominent place in the fight against business influence in the Government that the passage of a bill which made a material reduction in rates was a moral victory for progressivism at large, and for President Wilson in particular.

The actual effect of the tariff, or rather the actual effect that it might have had, is something impossible to estimate at this time. Before it had been in operation a year, before the country had had a chance to study the new conditions brought in by the legislation of the first year of the Wilson Administration, the war broke out in Europe. The conditions which had prevailed through half a century of tariff making had ceased to exist. They have not yet returned. A subsidiary feature of the Underwood-Simmons Act, however, was to attain enormous importance in the course of the Wilson Administrations. To supply the deficiency in revenue which the lowered duties might be expected to produce there was added an income tax law, which had recently been permitted by constitutional amendment. Even the light duties of the first year, with their $3,000 exemption, were denounced by conservatives as a rich man's tax; but within four years more the exemption was to be lowered to $1,000, and the peak of the tax raised to tenfold its original height.

So long as the Wilson Administration was reducing the tariff, it was carrying out the traditional policy of the Democratic Party; but the next task which the President laid before Congress was much more delicate and much more important. As the event showed, the result was to be of infinitely greater benefit to the nation. Reform of the currency had long been an evident necessity, and the panic of 1907 had recently called attention to the dangers of the system based on emergency measures of the Civil War period. Mr. Wilson himself had said much of the necessity of freeing business from unnatural restrictions, among which the makeshift currency system was included. During the previous Administration Senator Aldrich's plan for a centralized reserve bank had been widely discussed, and innumerable modifications had been suggested. Democratic leaders were already working on plans for currency reform when the new Administration came in, and on June 26 a bill was introduced in the House by Carter Glass and in the Senate by Robert L. Owen.