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A. Wilson’s “New Freedom” vs.
Roosevelt’s “New Nationalism”
I. The election of 1912 was a decisive turning
point in the direction of Progressive reform.
II. Roosevelt, a known reformer, proposed a new
approach he billed as “New Nationalism.” Woodrow Wilson called his
approach the “New Freedom.”
a. The New Nationalism was an extension of Roosevelt’s earlier
beliefs—
i. Roosevelt accepted the
idea of trusts and economic concentration—but he wanted to control
their impact on society and
the economy through regulation
ii. The government,
Roosevelt believed, should be the great “centralizing force”—he
envisioned a centrally organized economy and a forceful federal
government
iii. Roosevelt’s vision
was a “melting pot” vision of America’s future and he was
committed to “100% Americanism.”
iv. In his later years,
Roosevelt wanted to put limits on immigration and displayed irrational
fear of “foreign” radicalism.
b. The New Freedom
represented a very different view of reform and of the future of
American society.
i. Wilson, unlike
Roosevelt, believed that trusts and monopolies of any kind were
inherently inefficient and unjust—they stifled competition and slowed
economic progress.
ii. The New Freedom
promised not to regulate the trusts but to destroy them—to break them
up.
iii. Wilson believed that
Roosevelt’s approach would simply license big corporations to continue
their dominance and offered no hope for the small entrepreneur. The New
Freedom, in contrast, meant that government should work to destroy
economic privilege and ensure opportunities for entrepreneurs and small
business.
iv. The New Freedom was
also an alternative view of American society—where Roosevelt believed
that unity had to be at the core of American society, Wilson was among
the first to embrace diversity—he wanted to use the power of
government not to control economic activity but to unleash the
talent’s and energies of all Americans.
v. Wilson was not a
champion of ethnic minorities by any means. He was, however, a person
who recognized that the US was a diverse, pluralistic society and could
no longer be viewed as a society of transplanted Englishmen.
II. In the election of 1912, ¾ of Americans voted
for reform. Wilson received 42% of the vote, Roosevelt 27%, and Taft
only 23%. In the electoral college, the Wilson plurality turned out to
be a landslide—Wilson carried all but 8 states and received 435 of 531
electoral college votes.
III. As President, Wilson’s first triumph was the
fulfillment of a long-time Progressive/Democratic goal—a significant
reduction in tariffs.
a. On the first day of
office, Wilson called a special session of Congress and when it met, he
did what no President since Jefferson had done—he appeared before it
in person and delivered an address.
b. Working with Republican
Progressives and using the powers of the presidency to keep the
Democrats unified, Wilson guided the bill through the House of
Representatives and fought off conservative attempts to weaken it in the
Senate.
c. The Underwood-Simmons
Tariff lowered tariff rates by an average of 8% and added many imports
to the tariff-free list.
IV. To compensate for the revenue lost to the
government from tariff reductions, Cordell Hull (Tennessee) proposed the
creation of an income tax (Made possible by the earlier passage of the
16th Amendment to the US Constitution.). It passed, and was
the first step in a totally reformed system that would, over time, shift
the burden of supporting the government much more to the wealthy.
V. Wilson did not want to lose momentum in his
reform agenda, so he immediately pushed forward with significant banking
reform—to attack what he called “the money monopoly.”
a. The US banking system
was viewed by many as being to centralized, with too much power in the
hands of too few men.
i. Small banks were
depositing their surpluses into larger banks, which were depositing
their surpluses into a small number of Wall Street banks.
ii. Thus, a very small
group of men on Wall Street were able to control the aggregate savings
of millions—and control financing for America’s corporate and
business sectors.
iii. A Congressional
study reported, for example, that the Morgan-Rockefeller banking empire
held 341 directorships in 112 corporations representing 10% of the
national wealth ($22 billion).
b. Others, however, saw
the banking system as too decentralized. There were many small,
independent banks that didn’t have access to adequate financial
resources—so that in the event of local economic downturns, banks in
many regions could do nothing.
i. Banks in rural areas
lacked the ability to extend credit to farmers, for example, who were
facing short=term difficulties such as a drought or pest-ravaged crop.
ii. There was no way to
expand the currency supply in regions hit by hard times or to shift
assets to where they were needed.
c. Wilson dealt with both of these problems simultaneously by accepting
a
complex plan for banking reform and pushing hard for its passage by the
Congress.
d. The Federal Reserve Act
(23 December 1913) created 12 regional banks, each to serve and to be
owned by the individual banks in its district.
i. The Reserve bank would
hold a certain percentage of the assets of the member banks, holding
them in reserve and using the reserves to support loans to private banks
at a discounted interest rate.
ii. The Reserve bank
would issue currency and have total control over the currency supply,
both regionally and nationally.
iii. Despite initial
resistance by the banking community, the Federal Reserve System proved
to be a flexible and very stable mechanism, and by the 1920’s most
banks in the US had signed on.
VI. The heart and soul of Wilson’s first term
were his efforts to break up economic concentrations.
a. Busting up the large trusts had been a key campaign promise
that Wilson had made.
b. Wilson began changing his position after his first year in
office, moving in the direction of Roosevelt’s New Nationalism
position—trusts, where not clearly harmful, should be allowed to
continue to exist.
c. In 1914, Wilson proposed two pieces of legislation that
reflected this view—The Federal Trade Commission Act and the Clayton
Anti-trust Act.
d. The Federal Trade Commission Act was a proposal to strengthen
the government’s power to regulate industry and to look for and
mitigate “unfair trade practices.” The FTC was a powerful new weapon
against abusive corporations, but it reflected Roosevelt’s ideas about
their management than Wilson’s original ideas.
e. The Clayton Anti-Trust Act was basically an updated,
strengthened version of the Sherman Anti-Trust Act. It was weakened
significantly in Congress before reaching Wilson’s desk and in the
end, had many of the same flaws as the earlier legislation
VII. By the end of 1914, Wilson viewed the goals of
the New Freedom as largely accomplished. He retreated somewhat from his
reform urgency—refusing to support Women’s Suffrage and rescinding
Roosevelt’s executive order that had eliminated segregation in the
agencies of the federal government.
a. Wilson would suffer politically from this—the Congressional
elections of 1914 showed that the Democrats had lost considerable
popularity and that the Progressives that had voted for Roosevelt in
1912 were returning to the Republican Party rather than supporting
Wilson and the Democrats.
VIII. In 1915, Wilson became more assertive ion his
reform efforts once again.
a. Roosevelt appointed Louis Brandeis, a Jew, to the Supreme
Court in 1916, supported and pushed for the Keating-Owen Act (regulating
child labor), and undertook numerous efforts use the powers of the
federal government to improve the well being of farmers, small town
communities, and undertook a major national highway construction
program.
IX. In his first term. Wilson had accomplished a
lot, and in the process had transformed the role of the federal
government in American society.
The Wilson Scoreboard:
1. Corporations: Had been forced to change their
most egregious abuses, but basic power had not been assaulted.
2. Labor—had received some additional
protections, but continued to lack bargaining power relative to
corporations.
3. Farmers—had received some additional security,
but were still vulnerable to market fluctuations.
4. Blacks had been largely ignored and their
position had actually deteriorated.
5. Urban immigrants had not gained much either.
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