Woodrow Wilson and Progressivism

Essential Facts

• Woodrow Wilson, a Democrat, won the 1912 Presidential Election.
• As President, Wilson used progressive reforms to break down the “triple wall of privilege” — tariffs, banking, and trusts.
• Economic reforms included the Underwood Tariff Act, Federal Reserve Act, Federal Trade Commission Act, and Clayton Anti-Trust Act.
• Labor reforms included the Adamson Act, the Workingmen’s Compensation Act, and the Seamen’s Act.
• Under Wilson, the Federal Reserve was established to serve as the nation’s central banking system.
• Wilson rejected the aggressive foreign policy strategies of previous administrations, seeking to maintain peace through diplomacy.
• World War I started in 1914, but Wilson kept the U.S. neutral, and he was reelected in 1916.
• Although he was a champion of progressive reforms, Wilson maintained segregation policies within the government.

Significance

Woodrow Wilson’s progressive domestic and international policies are important to American History because they helped create significant economic reforms while the world was engulfed by the Great War. Wilson took a diplomatic approach to the war and was able to keep the U.S. neutral. As the war carried on, American businesses prospered by doing business with the Allied Powers. This contributed to increasing tensions with Germany, which eventually pulled the U.S. into World War I.

The Rise of Woodrow Wilson

Woodrow Wilson was the 28th President of the United States (1913–1921) and a key figure in the Progressive Era. He pursued progressive reforms that led to the Federal Reserve Act, the Clayton Antitrust Act, and tariff reductions. His leadership during World War I included advocating for the League of Nations in his Fourteen Points. Domestically, his administration focused on economic reforms but faced criticism for upholding racial segregation.

• Republicans had dominated the government since 1897, but the party split during the 1912 Presidential Election, giving the Democrats a chance to regain power.
• Wilson, originally a mild conservative, transformed into a progressive reformer.
• He started his career as an academic lecturer on government and became President of Princeton University in 1902, where he implemented major educational reforms.
• Wilson entered politics in 1910 when New Jersey Political Bosses nominated him for Governor, expecting they could control him.
• However, he surprised them by leading a reform campaign, criticizing trusts, and promising to return government control to the people. 
• Wilson enacted progressive reforms in New Jersey and gained national attention for his success, which led Democratic Party leaders to discuss him as a potential presidential candidate.

Progressive Era — A period of reform from the 1890s to the 1920s when America sought to address social, political, and economic issues in the U.S. Progressives through government regulation of industries, improved working conditions, promotion of social welfare, and the expansion of democratic principles. Key achievements included Antitrust Laws, Woman Suffrage, and labor protections. This era marked significant government intervention in economic and social issues.

Political Bosses — Powerful leaders who controlled local or regional Political Machines during the late 19th and early 20th Centuries. They gained influence by securing votes through Patronage, favors, and sometimes corruption. One of the most well-known was William “Boss” Tweed of New York’s Tammany Hall. While Bosses provided help for immigrants and the poor, they often undermined the democratic processes and were involved in widespread corruption.

Presidential Election of 1912 — This election involved Theodore Roosevelt, William Howard Taft, Woodrow Wilson, and Eugene V. Debs. Roosevelt’s Progressive “Bull Moose” candidacy split Republican votes, allowing Wilson, a Democrat, to win. The election included debates over progressivism, government intervention, and social reforms.

Tariff Reform — Refers to efforts to adjust import taxes to address economic and political concerns. During the late 19th and early 20th Centuries, high protective tariffs, designed to shield domestic industries from foreign competition, became a contentious issue. Critics, including Progressives and Southern agrarians, argued that tariffs favored industrialists at the expense of consumers and farmers. Key reforms included the Wilson-Gorman Tariff (1894), which slightly reduced rates, and the Underwood Tariff (1913), which significantly lowered tariffs and implemented a federal income tax to offset revenue losses.

Antitrust Laws — Legislation designed to prevent Monopolies, promote competition, and restrict unfair business practices. Key laws include the Sherman Antitrust Act (1890), prohibiting monopolistic behavior, and the Clayton Antitrust Act (1914), targeting price discrimination and mergers that stifle competition. These laws aim to protect consumers, ensure market fairness, and prevent corporate dominance in the economy and are central to progressive economic reforms.

The “Bull Moose” Campaign of 1912

The Presidential Election of 1912 was a four-way contest between incumbent President William Howard Taft (Republican), former President Theodore Roosevelt (Progressive/Bull Moose Party), Woodrow Wilson (Democratic Party), and Eugene V. Debs (Socialist Party). The Election was affected by a division in the Republican Party between Taft and Roosevelt that led to Roosevelt forming the Progressive “Bull Moose” Party. Roosevelt’s candidacy split Republican votes, allowing Wilson to gain a decisive victory. Wilson’s victory opened the path for his New Freedom Program, which featured tariff reduction, banking reform, and antitrust laws.

Woodrow Wilson and the 1912 Democratic Nomination

• The Democratic National Convention took place in Baltimore in 1912.
• Wilson was nominated as the Presidential Candidate on the 46th ballot.
• William Jennings Bryan’s support helped secure the nomination.
• The Democrats created the “New Freedom” program for Wilson’s campaign.
• The platform emphasized stronger Antitrust Laws, banking reform, and tariff reductions.

New Freedom Program — Woodrow Wilson’s 1912 presidential campaign emphasized limited government and economic reform to restore competition in the marketplace. It intended to dismantle Monopolies, reduce tariffs, and regulate banking through measures like the Federal Reserve Act and Clayton Antitrust Act. The program sought to balance individual liberty with economic fairness. This was in contrast to Theodore Roosevelt’s more expansive view of federal power under the “New Nationalism” approach.

New Nationalism — Theodore Roosevelt’s progressive policy platform for the 1912 Presidential Campaign. He called for a strong Federal Government to regulate big businesses and promote equality. It called for labor rights, social welfare programs, Woman Suffrage, and the protection of Natural Resources. Roosevelt emphasized using government power to address economic inequality and ensure corporate interests served the public instead of dominating it.

Party Platform — A Party Platform is a formal statement of a political Party’s principles, policies, and goals, outlining its stance on key issues such as the economy, healthcare, foreign policy, and social programs. Platforms are typically adopted at National Party Conventions and serve as a guide for candidates and voters.

Roosevelt’s 1912 Campaign

• Roosevelt was the candidate for the new Progressive Party.
• In August 1912, the Party held its convention in Chicago with 2,000 delegates from 40 States.
• Jane Addams nominated Roosevelt to be the Party’s nominee..
• In his acceptance speech, Roosevelt declared, “We stand at Armageddon, and we battle for the Lord!”
• The Convention took on a revival-like atmosphere, with delegates singing “Onward Christian Soldiers” and “Battle Hymn of the Republic.”
• Kansas journalist William Allen White described Roosevelt’s influence as electrifying, saying, “Roosevelt bit me, and I went mad.”

Party Conventions — Party Conventions are formal gatherings where Delegates from across the country meet to nominate a Party’s candidates for the Presidency and Vice Presidency. Conventions also serve to establish Party Platforms and unify members. Historically dominated by party leaders, the rise of Primaries and Caucuses has shifted much of the decision-making to voters before the Convention occurs.

Jane Addams (1860–1935) — Jane Addams was a leading reformer and social activist during the Progressive Era. In 1889, she co-founded Hull House in Chicago to help support immigrants and the poor. She worked for labor rights, education reform, and public health initiatives, earning the Nobel Peace Prize in 1931 for her dedication to social justice and international peace efforts.

Roosevelt and Taft Attack Each Other

• The campaign gained energy, with Roosevelt declaring himself “as strong as a bull moose,” which became the party’s iconic symbol.
• Roosevelt’s and Taft’s rivalry divided Republican voters, and the two men criticized each other during the campaign.
• Taft accused Roosevelt of being a “dangerous egotist” and a “demagogue.”
• Roosevelt retaliated, calling Taft a “fathead” with the brain of a “guinea pig.”

New Nationalism vs. New Freedom

The 1912 campaign offered two platforms built on progressive ideas: Roosevelt’s New Nationalism and Wilson’s New Freedom. Both supported an active government role in economic and social matters but took different approaches.

Roosevelt’s New Nationalism Platform and Assassination Attempt

• Roosevelt’s New Nationalism was inspired by Herbert Croly’s book The Promise of American Life (1910).
• Roosevelt and Croly supported the consolidation of trusts and labor unions regulated by strong federal agencies.
• The Progressives supported Woman Suffrage and social welfare programs, including minimum wage laws and social insurance.
• Roosevelt’s vision anticipated the welfare state that was part of Franklin D. Roosevelt’s New Deal during the Great Depression.
• During the campaign, Roosevelt was shot in the chest by a fanatic in Milwaukee.
• Despite the injury, Roosevelt delivered his speech while bleeding.
• Afterward, he paused active campaigning for over two weeks while he recovered.

Trusts — Trusts were large business combinations that emerged during the Gilded Age. Multiple companies in the same industry merged to eliminate competition and control markets. They often created Monopolies, leading to public outcry over their economic and political influence. Trusts prompted government actions like the Sherman Antitrust Act of 1890. This law intended to reduce monopolistic practices and restore fair market competition.

Monopolies — Monopolies are businesses or entities that dominate a particular industry or market, eliminating competition and gaining significant control over prices and production. Monopolies like Standard Oil and U.S. Steel were powerful, prompting public backlash. Antitrust Laws, such as the Sherman Antitrust Act of 1890, were enacted to curb monopolistic practices, restore competition, and protect consumers from exploitation and unfair market control. Historians typically recognize the American Fur Company as the first true American Monopoly.

Labor Unions — Labor Unions are organizations formed by workers to collectively advocate for improved wages, working conditions, and benefits. They became significant during the Industrial Revolution and played a role in shaping labor rights. Unions used strategies like strikes, collective bargaining, and protests to challenge practices they felt were exploiting them. Major unions like the American Federation of Labor (AFL) and the Knights of Labor pushed for reforms such as the eight-hour workday, workplace safety, and restrictions on child labor.

Social Welfare Programs — Social Welfare Programs are government initiatives designed to provide support for individuals and families in need. These programs include financial aid, housing assistance, healthcare, and food security measures. They emerged prominently during the Progressive Era and the New Deal to address economic disparities and ensure a basic standard of living. Social welfare intends to reduce poverty and promote social stability.

Minimum Wage Laws — Minimum Wage Laws are legislation establishing the lowest hourly wage employers can legally pay workers. These laws emerged during the Progressive Era to combat exploitation and improve living standards for low-income workers. The Fair Labor Standards Act of 1938 set the first federal minimum wage in the U.S.

Social Insurance — Social Insurance refers to programs providing financial protection against risks such as unemployment, disability, illness, or old age. Funded by contributions from employers and employees, examples include Social Security and Unemployment Insurance. These programs are designed to ensure economic stability and reduce dependence on public assistance and are a key component of modern welfare policies.

Welfare State — The Welfare State is a system in which the government assumes responsibility for the economic and social well-being of its citizens through programs like healthcare, unemployment insurance, and social security. The concept expanded during the New Deal and post-World War II eras in an effort to reduce inequality, promote economic stability, and ensure basic living standards for all American citizens.

Wilson’s New Freedom Platform

• Wilson’s New Freedom Program emphasized small businesses, entrepreneurship, and free markets without Monopolies.
• The Democratic platform rejected Social Welfare Programs, focusing on economic competition and the “man on the make.”
• Wilson prioritized breaking up big industrial Monopolies through strict enforcement of antitrust laws rather than government regulation.

Results of the 1912 Presidential Election

• Wilson won the election with 435 electoral votes and 6,296,547 popular votes.
• Roosevelt came in second with 88 electoral votes and 4,118,571 popular votes.
• Taft finished third with eight electoral votes and 3,486,720 popular votes.
• Wilson received only 41% of the popular vote, making him a minority president.
• However, Democrats secured a majority in Congress.
• Combined, Taft and Roosevelt received over 1.25 million more votes than Wilson.
• Progressivism, rather than Wilson, was the clear winner.
• The Progressive votes for Wilson and Roosevelt surpassed Taft’s conservative votes.
• Socialist candidate Eugene V. Debs received 900,672 votes, more than twice his total from 1908.
• Socialists optimistically envisioned winning the Presidency within eight years.

Socialism — Socialism is an economic and political ideology advocating collective or government ownership of the means of production to reduce inequality and provide public welfare. Leaders like Eugene V. Debs promoted socialist policies, influencing labor reforms and calling for economic justice.

Eugene V. Debs (1855–1926) — Eugene V. Debs was a prominent labor leader, socialist, and political activist in the late 19th and early 20th Centuries. As a co-founder of the American Railway Union (ARU), he led labor actions, including the Pullman Strike (1894). Debs later became a leading figure in the Socialist Party, advocating for workers’ rights and running for President five times on economic and social reform platforms.

Progressive Party — The Progressive Party, also known as the Bull Moose Party, was formed in 1912 by Theodore Roosevelt after a split in the Republican Party. Advocating for Progressive reforms, it promoted government regulation of business, Woman Suffrage, labor protections, and Conservation. Roosevelt ran as the party’s candidate in the 1912 Presidential Election, finishing second to Woodrow Wilson but ahead of incumbent William Howard Taft.

The Decline of Roosevelt’s Progressive Party

• Roosevelt’s third-party run weakened both him and the Republicans.
• William Allen White suggested Roosevelt’s actions were self-destructive.
• The Progressive Party lacked longevity as it failed to elect many state or local officials.
• In contrast, the Socialist Party elected over 1,000 candidates.
• Without the ability to distribute patronage (rewards for political support), the Progressive Party faced a slow decline.
• Despite its short life, the party made a significant impact by pushing Wilsonian Democrats to adopt progressive reforms.

William Allen White (1868–1944) — A prominent journalist and editor of the Emporia Gazette, White was a key Progressive Era voice advocating for reform and social justice. Known for his editorial “What’s the Matter with Kansas?.” he critiqued populism and supported progressive policies like Trust-Busting and labor rights. His influence extended to national politics as he supported moderate reforms over radical change.

Socialist Party — The Socialist Party was a political party in the U.S. that called for the collective ownership of industries and wealth redistribution. Founded in 1901, it grew under leaders like Eugene V. Debs, promoting workers’ rights, public ownership, and opposition to Capitalism. While influential in early 20th-century labor movements, its support waned due to internal divisions and government suppression during World War I.

Wilsonian Democrats — Wilsonian Democrats were supporters of Woodrow Wilson’s Progressive-era policies, emphasizing limited government intervention, economic reform, and internationalism. They backed initiatives like the Federal Reserve Act and Antitrust legislation while supporting  Wilson’s vision of the League of Nations. Wilsonian Democrats prioritized economic fairness and diplomatic leadership, in contrast to more conservative or radical factions within the Democratic Party.

Republican Decline and Taft’s Later Years

• The Republican Party entered minority status in Congress for the next six years.
• Republicans were excluded from the White House for the next 8 years.
• Taft transitioned to a fulfilling professional career after leaving the White House.
• Taft taught law at Yale University for eight years.
• In 1921, Taft was appointed chief justice of the Supreme Court, a role better suited to his skills and temperament.

Wilson: The Idealist in Politics

Woodrow Wilson: Background and Presidency

• Thomas Woodrow Wilson became only the second Democratic president since 1861.
• He had a scholarly appearance, with clean-cut features, glasses, and a trim figure.
• Born in Virginia just before the Civil War, Wilson grew up in Georgia and the Carolinas.
• He was the first President to come from a seceded Southern State since Zachary Taylor, 64 years earlier.

The Influences on Woodrow Wilson’s Ideals and Leadership

• Wilson’s upbringing in the South made him sympathetic to the old Confederate States of America and inspired his belief in self-determination for nations.
• He was deeply influenced by Jeffersonian Democracy.
• As the son of a Presbyterian minister, Wilson grew up in a devoutly religious environment.
• He used the Presidency to deliver morally driven political messages.
• A skilled orator, he emphasized sincerity and moral appeal over theatrics.
• He was known for using memorable phrases and relying on eloquent, carefully chosen words.
• It was said Wilson was born “halfway between the Bible and the dictionary” and stayed close to both.

Jeffersonian Democracy — Jeffersonian Democracy is a political philosophy associated with Thomas Jefferson and the Democratic-Republican Party, emphasizing limited Federal Government, agrarianism, and individual liberty. It advocated for a decentralized government, the protection of States’ Rights, and the empowerment of Yeoman Farmers as the backbone of the Republic. Jeffersonian Democracy opposed concentrated power, both in government and industry, and favored a strict interpretation of the Constitution to safeguard democracy and personal freedoms.

Agrarians — Agrarians were farmers and rural advocates who often opposed industrialization and policies like high tariffs, which they believed favored urban industries over agricultural interests. They supported tariff reform, Free Silver, and other measures to improve farmers’ economic conditions.

Woodrow Wilson’s Leadership Philosophy and Personality

• Wilson believed the President should take an active role in guiding Congress, similar to a Prime Minister.
• He often bypassed legislators to appeal directly to the public, achieving significant success as both Governor and President.
• Although he privately displayed his intellect and wit, he appeared cold and distant in public.
• Unlike Theodore Roosevelt, Wilson lacked a “common touch” and struggled to connect with individuals personally.
• He preferred the company of scholars and intellectuals and felt uncomfortable among politicians.
• Known for his austere and occasionally arrogant demeanor, he looked down on “lesser minds,” including journalists.
• Wilson had little patience for Senators he deemed unintelligent, whom he described as having “bungalow” minds.

Prime Minister — The Prime Minister is the head of government in many Parliamentary Systems and is responsible for leading the Executive Branch and coordinating policies. The Prime Minister is typically the leader of the majority party or coalition in the legislature. Their duties include forming a Cabinet, setting legislative agendas, and representing the government domestically and internationally. This position differs from a Head of Sstate, as it is focused on governance and policy execution rather than ceremonial roles.

Wilson’s Idealism and Inflexibility

• Wilson’s idealism fueled his push for reforms against perceived wrongdoings.
• He viewed moral issues in absolutes: black was black, wrong was wrong, and compromise with wrong was unacceptable.
• His Scottish Presbyterian heritage instilled in him a rigid sense of moral righteousness and stubbornness.
• Unlike Theodore Roosevelt, who was willing to compromise, Wilson was unyielding and would rather break than bend when he was convinced he was right.

Scottish Presbyterian — Scottish Presbyterianism is a branch of Protestant Christianity rooted in the teachings of John Knox and influenced by Calvinist theology. It emphasizes Predestination, God’s sovereignty, and disciplined, structured church governance. Scottish Presbyterians played a significant role in the cultural and religious heritage of Scotland and its diaspora, promoting education, civic duty, and moral discipline.

Diaspora — Diaspora refers to the dispersion of a group of people from their original homeland to various regions across the globe, often due to migration, exile, or economic factors. Historically, examples include the Jewish Diaspora, the African Diaspora through the Transatlantic Slave Trade, and the Irish Diaspora following the Great Famine. Diasporas contribute to cultural exchange while maintaining elements of their original heritage in new communities.

Pragmatism — Pragmatism is an American philosophical movement that originated in the late 19th Century. It emphasizes practical consequences and real-world applications of ideas. Pioneered by thinkers like William James and John Dewey, it focuses on problem-solving and adaptability rather than abstract principles. It argues that truth is not fixed but evolves through experience, aligning closely with Progressive Era reform efforts to address societal issues.

Wilson Tackles the Tariff

Wilson’s Bold Start and the “Triple Wall of Privilege”

• Wilson entered the office with an ambitious reform agenda.
• His main targets were the “triple wall of privilege”: the tariff, the banks, and the trusts.
• He addressed the tariff first, calling a special session of Congress in early 1913.
• Wilson personally appeared before Congress to deliver his message rather than sending it to be read by a clerk.

Triple Wall of Privilege — A term used by Woodrow Wilson to describe the three key areas he sought to reform during his Presidency: Tariffs, banks, and Trusts. Wilson wanted to reduce protective tariffs with the Underwood Tariff Act, reform the banking system through the Federal Reserve Act, and regulate Monopolies with Antitrust legislation like the Clayton Antitrust Act. These reforms reflected his commitment to economic fairness and Progressive ideals.

Special Session of Congress — A Special Session of Congress is a meeting called by the President outside the regular legislative schedule to address urgent matters, such as national crises or pressing legislation. For example, President William Howard Taft convened a special session in 1909 to address tariff reform, leading to the Payne-Aldrich Tariff Act.

The Underwood Tariff and Income Tax Reform

• Wilson’s leadership drove the passage of the Underwood Tariff Bill in the House, reducing rates significantly.
• Lobbyists tried to weaken the bill in the Senate, prompting Wilson to rally public support against them.
• Public pressure, fueled by Wilson’s appeals, ensured the bill’s final approval in late 1913.
• The Underwood Tariff reduced import fees and was a turning point in tax legislation because it introduced the Graduated Income Tax.
• The Graduated Income Tax became law through the ratification of the 16th Amendment and started with a modest levy on incomes over $3,000.
• By 1917, income tax revenues surpassed tariff revenues, a trend that has greatly expanded over time and contributed to increased Federal spending.

Underwood Tariff (1913) — The Underwood Tariff, enacted under President Woodrow Wilson, significantly lowered tariff rates to encourage trade and reduce costs for consumers. It was a major victory for tariff reform advocates and introduced a graduated Federal Income Tax, authorized by the 16th Amendment, to replace lost tariff revenue.

Graduated Income Tax — A Graduated Income Tax is part of a tax system in which individuals and businesses are taxed at increasing rates as their income rises. It is based on the principle of ability to pay, with higher earners contributing a larger percentage of their income.

Federal Income Tax — The Federal Income Tax is a tax the U.S. government imposes on individuals’ and businesses’ earnings. Authorized by the 16th Amendment in 1913, it provided a consistent revenue stream, replacing tariffs as the primary source of federal funding. The Progressive Era’s push for income tax aimed to distribute tax burdens more equitably, with rates often graduating to place a more significant share on higher-income earners. This reform responded to growing concerns over income inequality and economic fairness.

Wilson Battles the Bankers

Reforming the Outdated Banking System

• Wilson’s second target was the outdated banking and currency system.
• The financial structure was still governed by the Civil War-era National Banking Act.
• Rapid economic growth exposed significant flaws in the system, including its inability to meet modern demands.
• The Panic of 1907 highlighted the inelasticity of currency as a critical issue.
• Banking reserves were concentrated in New York and a few large cities, making it difficult to distribute funds during financial crises.

Panic of 1907 — The Panic of 1907 was a severe economic crisis triggered by bank failures, stock market speculation, and a lack of financial regulation. A failed attempt to corner the copper market worsened the situation, leading to widespread bank runs and financial instability. J.P. Morgan coordinated private sector efforts to stabilize the economy, leading some to believe there was a need for a new central banking system, like the First Bank of the United States. The Panic of 1907 contributed to the creation of the Federal Reserve in 1913.

National Banking Act (1863) — Congress enacted the National Banking Act during the Civil War in 1863 and 1864. It established a system of Nationally Chartered Banks and created a Uniform National Currency. The Act was intended to stabilize the banking system, improve federal control over monetary policy, and help finance the war. It also introduced federal oversight of banks, reducing reliance on state-chartered institutions.

Uniform National Currency —The National Banking Act of 1863 introduced uniform national currency in the U.S. It replaced the inconsistent and often unreliable state banknotes with a single currency backed by the Federal Government. This system required National Banks to secure their banknotes with Government Bonds, ensuring stability and trust. The Uniform Currency facilitated trade, reduced financial chaos, and strengthened federal control over the monetary system.

U.S. Treasury Bonds — U.S. Treasury Bonds are long-term debt securities issued by the U.S. Treasury to finance government spending. These bonds are backed by the full faith and credit of the Federal Government, making them a secure investment. During the National Banking Act Era, National Banks were required to purchase Treasury Bonds to back the currency they issued, ensuring stability and trustworthiness in the Banking System.

State Banknotes — State banknotes were currency issued by state banks before the National Banking Act of 1863 was passed. These banknotes were often backed by the issuing bank’s assets, but their value varied widely, leading to a lack of trust and financial instability. The National Banking Act eliminated state banknotes by imposing taxes on them, replacing them with Uniform National Currency.

Nationally Chartered Banks — Nationally Chartered Banks are banks established under the National Banking Act of 1863 and regulated by the Federal Government. These banks issued a Uniform National Currency backed by U.S. Treasury Bonds and were subject to stricter oversight to ensure financial stability. They played a key role in standardizing banking practices and reducing the risks associated with state-chartered banks.

State Banks — State banks are banks created and regulated by state governments. They were prominent before the National Banking Act and issued their own banknotes, leading to inconsistency and instability. State banks remained important for local banking needs but were limited in their ability to issue currency after the Federal Government imposed taxes on their notes to promote national currency.

Inelasticity of Currency — Currency inelasticity is a condition in which the money supply cannot adjust quickly to meet changes in economic demand. This was a major issue in the U.S. before the establishment of the Federal Reserve in 1913, as the fixed supply of currency under the National Banking System led to financial instability and limited economic growth during periods of high demand.

Banking Reserves — Banking reserves refer to the portion of deposits that banks are required to hold and not lend out. They are typically kept as cash in vaults or on deposit with a central bank. Reserves ensure liquidity and financial stability, allowing banks to meet withdrawal demands. The Federal Reserve Act formalized reserve requirements, helping to regulate the money supply and reduce bank failures.

The Aldrich Commission’s Banking Reform Proposal

• In 1908, Congress launched an investigation into the banking system led by Senator Nelson W. Aldrich, a conservative Republican banker.
• By 1911, the Aldrich Commission proposed creating a large central bank with various branches.
• Conceptually, the plan resembled a Third Bank of the United States.

Nelson W. Aldrich (1841–1915) — Nelson W. Aldrich was a Republican Senator from Rhode Island (1881–1911) who helped shape U.S. financial policy during the Progressive Era. Aldrich led efforts to reform the banking system, culminating in the creation of the National Monetary Commission after the Panic of 1907. His work laid the groundwork for the Federal Reserve Act of 1913 despite criticism for his ties to wealthy industrialists.

First Bank of the United States — Established in 1791 under Alexander Hamilton’s leadership, the First Bank of the United States was the first Federal Bank aimed at stabilizing the U.S. economy. The bank managed public debt, provided a stable currency, and supported federal financial operations. It faced opposition from Jeffersonian Democrats, who viewed it as unconstitutional and a threat to States’ Rights, leading to its charter’s expiration in 1811.

Second Bank of the United States — The Second Bank of the United States was chartered in 1816 following the financial difficulties of the War of 1812. The bank sought to stabilize the economy and regulate state banks. Its role in controlling credit and currency led to opposition, especially from Andrew Jackson, who accused it of favoring elites. Jackson’s veto of its recharter in 1832 and subsequent actions caused the bank’s collapse, contributing to economic instability.

Democrats Push for Bank Reforms

• Democratic reformers focused on the findings of the House committee led by Congressman Arsène Pujo.
• The Pujo Committee exposed the concentration of financial power, dubbing it the “money monster.”
• Louis D. Brandeis, a progressive ally of Wilson, fueled reform efforts with his book Other People’s Money and How the Bankers Use It (1914).
• Brandeis’s work discussed abuses in the banking system and bolstered the case for change.

Arsène Pujo (1861–1939) — Arsène Pujo was a U.S. Representative from Louisiana (1903–1913) who chaired the “Pujo Committee” that was responsible for investigating the concentration of financial power among the nation’s leading banks and trusts. The committee’s findings revealed the existence of a “money trust,” leading to significant financial reforms, including the establishment of the Federal Reserve System in 1913.

Louis D. Brandeis (1856–1941) — Louis D. Brandeis was a prominent lawyer, reformer, and U.S. Supreme Court Justice (1916–1939). Known for championing Progressive causes, he argued Muller v. Oregon using the “Brandeis Brief,” which emphasized data and social research. As a Justice, Brandeis supported workers’ rights, free speech, and regulation of corporate power, earning a reputation as “the people’s lawyer.” In 1914, he published Other People’s Money and How the Bankers Use It (1914) to shed light on corruption in the banking system.

The Federal Reserve Act

• In June 1913, Wilson appealed to Congress for bank reforms by calling for a decentralized, government-controlled bank.
• He opposed the Republican plan, which was a large private bank with 15 branches.
• Following Wilson’s suggestion, Congress passed the Federal Reserve Act, a landmark piece of economic legislation.
• It created 12 regional districts, each with its own central bank, overseen by the Federal Reserve Board, which was appointed by the President.
• While the regional banks were owned by member financial institutions, public control was ensured through the Board.
• The Board was authorized to issue “federal reserve notes” backed by commercial paper, which gave it the flexibility to increase the money supply.
• The Federal Reserve Act helped the nation effectively navigate the financial challenges of World War I (1914–1918).
• While some believe it helped modernize the American banking system, others believe government control of the money supply is an overreach.

Federal Reserve Act (1913) — The Federal Reserve Act of 1913 established the Federal Reserve System as the central bank of the United States.

Federal Reserve — The Federal Reserve is the central banking system of the United States. Created in response to financial crises like the Panic of 1907, it sought to stabilize the economy by managing monetary policy, regulating banks, and serving as a Lender of Last Resort. The system consists of 12 regional banks and a central governing board.

Central Banking System — A Central Banking System is a national institution that manages a country’s monetary policy, regulates commercial banks, and provides financial stability. The Federal Reserve is the central bank in the United States, overseeing the money supply and interest rates and acting as a Lender of Last Resort during financial crises. It was established in the United States in 1913 to address economic volatility and create confidence in the banking system.

Lender of Last Resort — A Lender of Last Resort is a financial institution, typically a central bank, that provides emergency funding to banks or other institutions facing insolvency or liquidity crises. It helps prevent the collapse of financial systems during economic instability. In the United States, the Federal Reserve serves as the Lender of Last Resort, a function solidified after the Panic of 1907 to ensure confidence and stability in the banking sector.

Federal Reserve Board — The Federal Reserve Board is the central governing body of the Federal Reserve System. It was established by the Federal Reserve Act (1913) to oversee U.S. monetary policy, regulate member banks, and ensure financial stability. Composed of seven members appointed by the President and confirmed by the Senate, the Board is responsible for managing inflation, employment, and interest rates to promote economic growth.

Federal Reserve Notes — Federal Reserve Notes are the official paper currency of the United States, first issued in 1914 as part of the Federal Reserve System. Backed by the Federal Reserve, these notes replaced earlier forms of currency, such as state-issued banknotes, to create a uniform, stable medium of exchange. They are the primary form of U.S. paper money in circulation today.

Inflation — Inflation is the rate at which the general level of prices for goods and services rises over time, reducing purchasing power. It occurs when demand outpaces supply or production costs, such as wages and raw materials, increase. Moderate inflation is a natural part of economic growth, but excessive inflation can destabilize economies. Like the Federal Reserve, central banks manage inflation through monetary policies, including adjusting interest rates and controlling the money supply.

Interest Rates — Interest Rates represent the cost of borrowing money or the return on savings, expressed as a percentage. They are set by lenders or influenced by central banks, like the Federal Reserve, to manage economic activity. High interest rates reduce borrowing and inflation, while low rates encourage spending and investment. Interest rates are a key tool in monetary policy and financial regulation.

The President Tames the Trusts

Wilson’s Attack on Trusts: The Federal Trade Commission Act

• Wilson moved on to deal with the trusts and made an appeal to Congress in 1914.
• Congress passed the Federal Trade Commission Act (1914) after nine months of debate.
• It created a special commission appointed by the President to oversee industries involved in interstate commerce.
• The Commission was tasked with preventing the formation of monopolies by targeting unfair practices like unlawful competition, false advertising, mislabeling, and bribery.

Federal Trade Commission Act (1914) — The Federal Trade Commission Act established the Federal Trade Commission (FTC) to protect consumers and promote fair competition. The Act gave the FTC authority to investigate and prevent unfair business practices, including monopolistic activities and deceptive advertising. It was a cornerstone of Progressive Era reforms regulating corporate power and safeguarding the marketplace.

Interstate Commerce — Interstate Commerce refers to economic activity or trade that crosses state lines, making it subject to federal regulation under the U.S. Constitution. The Interstate Commerce Act of 1887 was the first federal effort to oversee this type of commerce, particularly targeting unfair practices by railroads. Interstate commerce remains a key area of government oversight to ensure consistent trade policies and prevent discriminatory practices.

Interstate Commerce Act (1887) — The Interstate Commerce Act was landmark legislation aimed at regulating the railroad industry and ensuring fair rates and practices for businesses and consumers. It established the Interstate Commerce Commission (ICC), the first federal regulatory agency to oversee interstate railroads and prevent monopolistic practices like rate discrimination. It was a critical step forward in federal efforts to control corporate power and promote economic fairness.

Interstate Commerce Commission — The Interstate Commerce Commission (ICC), established in 1887 by the Interstate Commerce Act, was the first federal regulatory agency in the United States. Lawmakers established the Commission to oversee and regulate the railroad industry, ensure fair rates, and prevent discriminatory practices like rebates for favored customers. Over time, its authority expanded to include other forms of transportation. The ICC is an example of early efforts to regulate big businesses and protect public interests.

The Clayton Antitrust Act of 1914

• The Clayton Antitrust Act expanded the Sherman Antitrust Act by banning practices like price discrimination and interlocking directorates.
• The Act provided protections for labor and agricultural organizations.
• It exempted trade unions like the Danbury Hatters from antitrust laws and legalized strikes and peaceful picketing.
• The Hatters were penalized under the Sherman Act in Loewe v. Lawlor (1908).
• Over time, the courts weakened union protections, diminishing the Act’s effectiveness.

Price Discrimination — Price discrimination is the practice of charging different prices for the same product or service to different buyers, often to harm competitors or gain an unfair advantage. Prohibited under the Clayton Antitrust Act of 1914, it aims to prevent Monopolies and protect consumers by ensuring fair pricing across markets.

Interlocking Directorates — Interlocking Directorates is a situation where the same people serve on the Boards of Directors for multiple competing companies, reducing competition and encouraging monopolistic practices. The Clayton Antitrust Act of 1914 outlawed this practice to promote market fairness and prevent conflicts of interest.

Antitrust Laws — Antitrust Laws prevent monopolies, promote competition, and restrict unfair business practices. Key laws include the Sherman Antitrust Act (1890), which prohibits monopolistic behavior, and the Clayton Antitrust Act (1914), which targets price discrimination and mergers that stifle competition. These laws aim to protect consumers, ensure market fairness, and prevent corporate dominance in the economy.

Trust-Busting — Trust-Busting refers to government efforts to break up Monopolies and Trusts that stifled competition and harmed consumers. Popularized during Theodore Roosevelt’s Presidency, it targeted companies like Standard Oil and Northern Securities. Trust-Busting relied on laws like the Sherman Antitrust Act to regulate big businesses and promote fair economic practices.

Sherman Antitrust Act (1890) — The Sherman Antitrust Act was the first federal law to prohibit monopolistic business practices and promote fair competition. It made any contract, combination, or conspiracy that restrained trade or commerce illegal. Underutilized initially, the Act gained prominence during the Progressive Era when lawmakers used it to break up trusts and regulate big businesses under presidents like Theodore Roosevelt and William Howard Taft.

Clayton Antitrust Act (1914) — Congress passed the Clayton Antitrust Act to strengthen Antitrust regulations and curb monopolistic practices. It expanded on the Sherman Antitrust Act by explicitly prohibiting price discrimination, exclusive contracts, and mergers that reduced competition. The Clayton Antitrust Act also protected labor unions by exempting them from being classified as Monopolies, allowing for peaceful strikes and collective bargaining. It was a key reform to promote fair competition and limit corporate power.

Danbury Hatters — The “Danbury Hatters” refers to a landmark U.S. labor law case, Loewe v. Lawlor (1908), involving the Danbury Hatters’ Union in Connecticut. The Supreme Court ruled that the Union’s nationwide boycott of a nonunion hat manufacturer violated the Sherman Antitrust Act. This decision held unions accountable for Antitrust violations, significantly limiting their ability to use boycotts as a tool for organizing and collective action.

Collective Bargaining — Collective Bargaining is the process through which Labor Unions negotiate with employers on behalf of workers to establish fair wages, working conditions, and benefits. It is a key mechanism for resolving labor disputes and ensuring workers’ rights and became a cornerstone of organized labor movements during the late 19th and early 20th Centuries.

Wilsonian Progressivism at High Tide

Wilson’s Leadership and More Reforms

Wilson effectively dismantled the Triple Wall of Privilege during his first 18 months in office as he worked to complete his progressive agenda. Progressives celebrated the series of victories, and Wilson implemented more reforms.

• The La Follette Seamen’s Act (1915) improved conditions for sailors, mandating fair treatment and a living wage on U.S. merchant ships. However, higher freight rates, which weakened the competitiveness of America’s Merchant Marine, were a downside of the Seamen’s Act.
• The Federal Farm Loan Act (1916) provided farmers with low-interest credit, a long-standing Populist demand.
• The Warehouse Act (1916) allowed loans secured by staple crops, another idea championed by the Populists.
• Additional laws supported rural development, including highway construction and agricultural extension programs at state colleges.

Seamen’s Act (1915) — Congress passed the Seamen’s Act in 1915 to improve working conditions and rights for sailors on U.S. merchant ships. It mandated fair wages, regulated working hours, improved safety standards, and allowed sailors to leave ships in foreign ports. It addressed exploitation and harsh conditions for seamen and was a victory for labor rights in the maritime industry.

Robert M. La Follette (1855–1925) — Robert M. La Follette, known as “Fighting Bob,” was a Progressive Era politician and reformer who served as Governor of Wisconsin (1901–1906) and U.S. Senator (1906–1925). He supported Progressive Reforms such as the regulation of railroads, the taxation of corporations, and direct democracy measures like the Initiative and Referendum. La Follette’s “Wisconsin Idea” emphasized government accountability and expertise, making his state a model for national reforms.

Merchant Marine — The Merchant Marine is a fleet of commercial ships owned by a nation. During peacetime, it transports goods and passengers. In times of war, it often supports military efforts by carrying troops, supplies, and equipment.

Wisconsin Idea — The “Wisconsin Idea” refers to a Progressive Era reform philosophy originating in Wisconsin under Governor Robert La Follette. It focused on using experts from universities to inform public policy, improve government efficiency, and address social and economic issues. Key aspects included regulation of railroads and utilities, tax reform, and labor protections. The Wisconsin Idea became a model for progressive governance, linking academic research with practical solutions to public problems.

Populists — Populists were supporters of “populism,” a political movement in the late 19th Century that represented farmers and working-class Americans who opposed industrial elites and economic inequality. The Populist Party, formed in 1892, advocated for policies such as Free Silver, government control of railroads, a progressive income tax, and the Direct Election of Senators. The movement declined after 1896 but influenced Progressive reforms.

Staple Crops — Crops that are consistently grown and form the basis of a country’s diet and economy. These crops are typically produced in large quantities and are essential for food security. Examples include wheat, rice, corn, and potatoes, which provide a significant portion of calories and nutrition worldwide. Staple Crops often serve as the foundation for both domestic consumption and export, shaping agricultural practices and trade policies.

Federal Farm Loan Act (1916) — Congress passed the Federal Farm Loan Act in 1916, establishing a system of twelve Federal Land Banks to provide low-interest loans to farmers. It was intended to alleviate rural poverty, support agricultural development, and improve access to credit for small farmers..

Warehouse Act (1916) — Congress passed the Warehouse Act in 1916, allowing farmers to use crops stored in warehouses as collateral for loans. It sought to improve credit access for farmers, stabilize agricultural markets, and reduce dependence on private lenders.

Progressive Reforms for Workers in 1916

• The Workingmen’s Compensation Act (1916) provided disability assistance to federal civil service employees.
• Wilson supported the Keating-Owen Child Labor Act, which restricted child labor on goods in interstate commerce, though the Supreme Court later struck it down.
• The Adamson Act (1916) created an eight-hour workday for 1.7 million railroad workers involved in interstate commerce and required extra pay for overtime work.

Workingmen’s Compensation Act (1916) —Congress passed the Workingmen’s Compensation Act in 1916, providing financial assistance to federal employees who were injured or disabled while performing their duties. It marked a significant step in Progressive-era labor reforms, offering workers protection and security in cases of workplace injuries.

Adamson Act (1916) — The Adamson Act established an eight-hour workday for railroad workers, with additional pay for overtime. It was the first federal law to regulate working hours in private industry, addressing labor unrest and improving conditions for railroad employees.

Keating-Owen Child Labor Act (1916) — Congress sought to ban the interstate sale of goods produced by child labor by enacting the Keating-Owen Child Labor Act. The Act targeted industries employing children under 14 or engaging in excessive work hours for minors. Declared unconstitutional in 1918, the Act was an early effort to regulate child labor and protect young workers.

Wilson’s Racial Policies

• In 1916, Wilson nominated Louis D. Brandeis for a position on the Supreme Court, making him the first Jewish justice. The nomination earned praise from Progressives.
• Some business leaders were concerned over Brandeis’s antibusiness reputation, while anti-Semites rejected him on ethnic grounds.
• Wilson’s liberal policies did not extend to improving racial equality for black Americans.
• During his administration, segregation in federal offices increased.
• When black leaders protested, Wilson dismissed their concerns and distanced himself from them.

Segregation — Segregation refers to the forced separation of racial or ethnic groups in public and private spaces, institutionalized in the United States after the Civil War, particularly in the South, under Jim Crow Laws. It applied to schools, transportation, housing, and public facilities, with the doctrine of “separate but equal” upheld by Plessy v. Ferguson (1896). Segregation reinforced racial inequality and discrimination and lasted until the Civil Rights Movement brought an end to it in the 20th Century.

Plessy v. Ferguson (1896) — Plessy v. Ferguson was a landmark Supreme Court case that upheld the constitutionality of racial segregation under the doctrine of “separate but equal.” The case arose when Homer Plessy, a Black man, challenged a Louisiana law requiring separate railway cars for Black and white passengers. The Court’s decision legitimized Segregation, reinforcing racial discrimination and Jim Crow Laws until it was overturned by Brown v. Board of Education in 1954.

Wilson’s Strategy for the 1916 Election

• Wilson decided to run for reelection in the 1916 Presidential Campaign.
• To ease the concerns of the business sector, he appointed conservatives to the Federal Reserve Board and the Federal Trade Commission.
• Wilson focused most of his efforts on gaining the support of Progressives.
• His victory in the 1912 Election was largely due to the Republican split between Taft and Roosevelt.
• To secure reelection in the 1916 Election, Wilson worked to earn the support of Roosevelt’s voters.

New Directions in Foreign Policy

Wilson’s Rejection of Big Stick and Dollar Diplomacy

• Wilson rejected the aggressive foreign policies of Roosevelt and Taft by opposing Imperialism, Big Stick Diplomacy, and Dollar Diplomacy.
• Just a week into his term, Wilson ended government support for American investors in Latin America and China, which was a key part of Dollar Diplomacy.
• Wilson withdrew from an agreement Taft had made with five other nations to provide a loan to China.
• Wilson’s foreign policy reflected his dislike for helping foreign nations for America’s benefit.

U.S. Imperialism — A policy of extending the United States’ power and influence through territorial acquisition, economic control, and military intervention. Prominent during the late 19th and early 20th Centuries, it involved annexing territories like Hawaii, the Philippines, and Puerto Rico following the Spanish-American War (1898). Driven by economic interests, strategic concerns, and a belief in spreading Democracy and civilization, Imperialism led to a significant expansion of U.S. influence.

Anti-Imperialists — A group of Americans in the late 19th and early 20th Centuries who opposed U.S. Imperialism and the annexation of foreign territories. They argued that Imperialism violated democratic principles and the nation’s founding ideals of self-determination. Prominent Anti-Imperialists included Mark Twain and Andrew Carnegie. Their opposition peaked during debates over the Philippines following the Spanish-American War but failed to prevent U.S. Imperialist policies.

Wilson’s Anti-Imperial Actions

• In 1914, Wilson convinced Congress to repeal the Panama Canal Tolls Act (1912), which had exempted U.S. coastwise shipping from paying tolls. This move eased tensions with Britain.
• Wilson aligned with the Anti-Imperialists by signing the Jones Act (1916), which granted the Philippines territorial status and promised independence once a stable government was established.
• Philippine independence was achieved 30 years later, on July 4, 1946.

Panama Canal Tolls Act (1912) — The Panama Canal Tolls Act exempted U.S. ships engaged in Coastwise Shipping from paying tolls to use the Panama Canal. It drew international criticism, particularly from Britain, for violating the canal’s neutrality. Under President Wilson, the Act was repealed in 1914 to maintain diplomatic relations and abide by treaty obligations.

Coastwise Shipping — Coastwise Shipping refers to the transport of goods and passengers between ports within the same country, typically along its coastline. This type of shipping is often protected by laws like the Jones Act, which regulates trade and ensures only domestic vessels operate over specific routes within U.S. waters.

Jones Act (1920) — The Jones Act regulates maritime commerce in U.S. waters and between U.S. ports. It mandates that goods transported between U.S. ports must be carried on American-built, American-owned, and American-crewed ships. The Act also grants U.S. citizenship to residents of Puerto Rico and provides protections for American seamen, reinforcing national control over domestic shipping and labor rights.

U.S. Waters — U.S. Waters refers to the territorial waters of the United States, including lakes, rivers, and coastal areas within 12 nautical miles of the country’s shoreline. These waters are under U.S. jurisdiction, governed by domestic laws for navigation, environmental protection, and commerce. U.S. Waters also includes the Exclusive Economic Zone (EEZ), extending up to 200 nautical miles from the coast, where the U.S. has rights to natural resources like fishing and offshore drilling.

Crisis Over the California Alien Land Law

• In 1913, California passed the Alien Land Law, prohibiting Japanese settlers from owning land, causing outrage in Japan and escalating tensions between the nations.
• American forces at Fortress Corregidor in the Philippines were placed on high alert.
• Wilson sent Secretary of State William Jennings Bryan to negotiate with California legislators, urging them to moderate their stance.
• Bryan’s efforts helped reduce tensions and partially defused the crisis.

California Alien Land Law (1913) — California passed the Alien Land Law in 1913, prohibiting “aliens ineligible for citizenship” from owning or leasing agricultural land in California. It was aimed primarily at Asian immigrants and limited economic opportunities for Japanese immigrants. The law was later expanded and remained in effect until it was declared unconstitutional in the mid-20th Century.

Battle of Corregidor (May 5–6, 1942) — The Battle of Corregidor was fought between Allied and Japanese forces during World War II. It was the final stand of Allied forces in the Philippines against invading Japanese forces. Corregidor, a fortified island at the entrance of Manila Bay, was heavily bombarded before Japanese forces launched an amphibious assault. Exhausted and outnumbered, U.S. and Filipino troops, led by General Jonathan Wainwright, surrendered on May 6. Corregidor was recaptured by Allied forces in February 1945.

William Jennings Bryan (1860–1925) — A prominent American politician, orator, and three-time Democratic nominee for President (1896, 1900, 1908). Known for his advocacy of Free Silver, he delivered the famous “Cross of Gold” speech, opposing the Gold Standard and promoting economic reforms for farmers and laborers. A leader of the Populist Movement, Bryan also championed causes associated with the Progressive Movement, like anti-imperialism and Social Reform. Later, he gained attention for his role in the 1925 Scopes Trial, defending his religious principles.

U.S. Invasion and Occupation of Haiti

• Political chaos in Haiti in 1914–1915 led Wilson to abandon some of his anti-imperialist principles.
• In 1914, Wilson sent U.S. Marines to Haiti to help protect American lives and property after the President of Haiti was killed.
• The Haitian-American Treaty (1915) placed Haitian finances and police under U.S. supervision, which aligned with the Roosevelt Corollary to the Monroe Doctrine.
• That same year, U.S. Marines were sent to suppress riots in the Dominican Republic, which remained under American control for 8 years.
• In 1917, Wilson purchased the Virgin Islands from Denmark, strengthening the U.S. presence in the Caribbean.
• These actions made the Caribbean a U.S.-dominated region, crucial to protecting the Panama Canal.

Monroe Doctrine — President James Monroe declared the Monroe Doctrine in 1823. It states that European powers should no longer colonize or interfere in the Americas. It asserts that the Western Hemisphere is under U.S. influence, warning against European intervention while promising non-interference in European affairs. The Doctrine became a cornerstone of U.S. foreign policy, shaping its role in regional affairs.

Roosevelt Corollary to the Monroe Doctrine — In 1904, President Theodore Roosevelt announced his extension of the Monroe Doctrine. He declared the U.S. had the right to intervene in Latin American nations to maintain stability and order for the good of the U.S. This justified U.S. involvement in the region to prevent European interference, marking a shift toward an assertive and interventionist U.S. foreign policy in the Western Hemisphere.

Haitian-American Treaty (1915) — A treaty signed between the United States and Haiti in the wake of U.S. intervention in Haiti. The treaty gave the U.S. significant control over Haitian finances and customs duties, effectively allowing the U.S. to manage Haiti’s debt and oversee its economic affairs. It also provided for the establishment of a U.S.-controlled “gendarmerie” to maintain order. The treaty laid the groundwork for the U.S. occupation of Haiti, which lasted from 1915 to 1934. The U.S. intervention was justified as a way to stabilize the Haitian government and prevent foreign influence in the region.

Haitian Gendarmerie — The Haitian Gendarmerie was a military and police force established during the U.S. occupation of Haiti (1915–1934). Created under U.S. supervision, it was designed to maintain order and enforce policies aligned with American interests. The gendarmerie combined military and civilian law enforcement functions and was trained and led by U.S. Marines. Its formation was part of efforts to control Haiti’s government and economy during the occupation, sparking resistance and criticism from Haitians. The U.S. withdrew in 1934 in accordance with President Franklin D. Roosevelt’s Good Neighbor Policy.

Moralistic Diplomacy in Mexico

Tensions in Mexico and U.S. Investments

• Instability in Mexico led to ongoing violence along the U.S.-Mexico border.
• For decades, Mexico was exploited by foreign investors in industries like oil, railroads, and mining.
• By 1913, American businesses had invested about $1 billion in Mexico’s natural resources and infrastructure.
• Despite being rich in natural resources, Mexico was still an underdeveloped nation.

Natural Resources — Natural resources include minerals, water, forests, land, and other natural materials essential for human survival and economic activity. During the Progressive Era, the Conservation Movement sought to regulate the use of these resources, balancing industrial demands with environmental protection to prevent overexploitation.

Underdeveloped Nation — The term “underdeveloped nation” historically refers to a country with low levels of industrialization, infrastructure, and economic development. These nations typically experience high poverty rates, limited access to education and healthcare, and dependence on agriculture or raw material exports.

Mexican Revolution and Migration to the United States

• Economic troubles in Mexico led to a revolution that turned violent in 1913.
• The revolutionary president was assassinated, and General Victoriano Huerta took power.
• Political and social turmoil led to the mass migration of over one million Mexicans to the U.S. during the early 20th century.
• Most Mexican immigrants settled in Texas, New Mexico, Arizona, and California, where they worked in construction or as fruit pickers during harvest seasons.
• Despite segregation into Spanish-speaking enclaves, Mexican immigrants contributed to a unique borderland culture blending Mexican and American traditions.

Mexican Revolution (1910–1920) — The Mexican Revolution was initiated to overthrow dictator Porfirio Díaz and led to social and political upheaval in Mexico. The Revolution was fueled by demands for land reform, labor rights, and political democracy. Key leaders included Francisco Madero, Emiliano Zapata, Pancho Villa, and Venustiano Carranza. The conflict led to significant reforms, including the 1917 Constitution, which established labor protections, land redistribution, and limits on foreign ownership of resources. The Revolution reshaped Mexico’s social and political landscape.

Victoriano Huerta (1850–1916) — A Mexican military officer and dictator who served as President of Mexico from 1913 to 1914. Huerta rose to power after a coup that ousted President Francisco I. Madero, whom he had been serving under as a General. His regime was known for its authoritarian rule and widespread repression, leading to significant opposition from revolutionary forces, including those led by Venustiano Carranza, Pancho Villa, and Emiliano Zapata. Huerta’s government was unstable, and he resigned in 1914 after facing pressure from both revolutionary forces and international intervention, including from the United States.

Pancho Villa (1878–1923) — Pancho Villa was a key military leader during the Mexican Revolution (1910–1920). Villa was known for his guerrilla tactics and support for land and labor reforms. Born Doroteo Arango in 1878, he led the Division of the North, gaining a reputation for both military brilliance and brutality. His forces fought against the regimes of Porfirio Díaz and later Venustiano Carranza. His 1916 raid on Columbus, New Mexico, prompted a U.S. military expedition to capture him, which failed. Villa retired in 1920 and was assassinated in 1923.

Ambrose Bierce (1842–c. 1914) — Ambrose Bierce was an American writer, journalist, and satirist born in 1842, known for his darkly humorous and cynical works. His most famous book, The Devil’s Dictionary (1906), includes definitions that harshly critique human nature and society. Bierce also wrote short stories about the Civil War, such as An Occurrence at Owl Creek Bridge, reflecting his own experience as a Union soldier. In 1913, he mysteriously disappeared while traveling in Mexico during the Mexican Revolution, and his fate remains unknown. According to legend, Bierce went to Mexico to join Pancho Villa, but Villa killed him.

U.S. Response to the Mexican Revolution

• Violence in Mexico endangered American lives and property, prompting calls for U.S. intervention.
• William Randolph Hearst, a newspaper mogul with personal interests in Mexico, was a prominent supporter of war with Mexico.
• President Wilson resisted intervention, rejecting foreign policy based solely on “material interest.”
• Wilson refused to officially recognize General Huerta’s regime, calling him a “brute,” but many foreign nations acknowledged his government.
• Wilson wanted to encourage democratic governance, famously declaring, “I am going to teach the South American Republics to elect good men.”
• In 1914, Wilson supported Huerta’s rivals, Venustiano Carranza and Pancho Villa, by allowing U.S. military supplies to reach them.

William Randolph Hearst (1863–1951) — William Randolph Hearst was an influential American newspaper publisher and media Mogul (1863–1951). Hearst built the nation’s largest newspaper chain and played a significant role in shaping modern journalism. Known for outrageous reporting, or “Yellow Journalism,” his papers were instrumental in swaying public opinion during events like the Spanish-American War. Hearst’s political ambitions included serving in Congress and an unsuccessful bid for the Presidency. His legacy is tied to his media empire and his estate, Hearst Castle.

Mogul — “Mogul” is a term referring to a powerful person who dominates an industry, often through wealth, influence, or control over significant enterprises. Originally derived from the Mughal Emperors of India, it is commonly used in contexts such as media, business, or entertainment to describe influential figures like William Randolph Hearst or modern-day tycoons.

Tycoons — “Tycoons” are wealthy and influential people who dominate specific industries through significant control, innovation, or strategic business practices. The term is often associated with industrialists and entrepreneurs of the late 19th and early 20th Centuries, such as Andrew Carnegie in steel, John D. Rockefeller in oil, and Cornelius Vanderbilt in railroads. Tycoons are known for their economic impact, philanthropy, and sometimes controversial methods of accumulating wealth and power.

Venustiano Carranza (1859–1920) — A Mexican revolutionary leader and politician who served as the President of Mexico (1917–1920). Carranza was a key figure in the Mexican Revolution, initially fighting against the dictatorship of Victoriano Huerta and later leading the Constitutionalists in the struggle for control of Mexico. He played a key role in drafting the 1917 Constitution, which established important social and labor reforms. However, his Presidency was plagued by internal conflict, and he was eventually overthrown by a military revolt led by Álvaro Obregón.

The Tampico Affair and Seizure of Vera Cruz

• In April 1914, American sailors were arrested at Tampico, a Mexican port.
• Mexico quickly released the sailors and apologized but refused a U.S. admiral’s demand for a 21-gun salute.
• President Wilson, seeking to oust President Huerta, used the incident to request Congress’ approval to use force against Mexico.
• Before Congress acted, Wilson ordered the U.S. Navy to seize the port of Vera Cruz.
• Both Huerta and his rival, Venustiano Carranza, protested the U.S. intervention as an overreach of American power.

Tampico Affair (1914) — The Tampico Affair was a 1914 diplomatic incident between the United States and Mexico during the Mexican Revolution. U.S. sailors were briefly detained by Mexican forces in Tampico, prompting demands for an apology and a 21-gun salute to the U.S. flag. When Mexico refused, President Woodrow Wilson used the incident to justify a military intervention, leading to the U.S. occupation of Veracruz and escalating tensions between the two nations.

Henry Thomas Mayo (1856–1937) — Henry Thomas Mayo was an Admiral in the U.S. Navy who played a key role in the Tampico Affair. As commander of the Atlantic Fleet, Mayo demanded a formal apology and ceremonial salute from the Mexican government following the detention of U.S. sailors in Tampico. His actions increased tensions between the U.S. and Mexico.

Mediation, Villa’s Raids, and U.S. Military Response

• Argentina, Brazil, and Chile (ABC Powers) mediated the situation, preventing a full-scale war between the U.S. and Mexico.
• Under pressure, President Huerta resigned in July 1914 and was succeeded by Venustiano Carranza, who resented Wilson’s intervention in Vera Cruz.
• Pancho Villa then became Carranza’s chief rival for control of Mexico and started targeting Americans.
• In January 1916, Villa’s men killed 16 American mining engineers in Northern Mexico.
• In March 1916, Villa’s forces crossed into Columbus, New Mexico, killing 19 Americans in hopes of inciting a war.
• General John J. Pershing led a U.S. military expedition into Mexico to capture Villa, clashing with Mexican forces and Villa’s forces.
• Despite extensive efforts, Pershing’s troops failed to capture Villa and withdrew in January 1917 as U.S.-German tensions increased.

ABC Powers — The term “ABC Powers” refers to Argentina, Brazil, and Chile, three South American nations that mediated during the U.S.-Mexico tensions following the Tampico Affair in 1914. These nations worked to resolve disputes diplomatically, preventing a larger conflict.

Battle of Columbus (1916) — The Battle of Columbus was a raid during the Mexican Revolution in which Pancho Villa and his forces attacked the town of Columbus, New Mexico, killing 18 Americans and burning much of the town. Villa wanted to retaliate against U.S. support for his rivals and provoke American intervention in Mexico. The raid led to the U.S. launching the Punitive Expedition under General John J. Pershing.

Punitive Expedition in Mexico (1916) — The Punitive Expedition was a 1916 U.S. military campaign led by General John J. Pershing, launched in response to Pancho Villa’s raid on Columbus, New Mexico. The goal was to capture Villa and neutralize his forces. Despite extensive operations in northern Mexico, the expedition failed to apprehend Villa, exacerbating tensions between the U.S. and Mexico. It marked a significant episode in U.S.-Mexican relations during the Mexican Revolution.

John J. Pershing (1860–1948) — John J. Pershing was a prominent U.S. Army officer (1860–1948) known for leading the American Expeditionary Forces (AEF) during World War I. Nicknamed “Black Jack,” he gained early military experience in the Indian Wars, the Spanish-American War, and the Philippine-American War. Pershing also commanded the 1916 Punitive Expedition into Mexico to capture Pancho Villa. During World War I, he insisted on maintaining independent U.S. forces, leading them to decisive victories in key battles. Pershing is viewed as one of America’s most accomplished military commanders.

George S. Patton (1885–1945) — George S. Patton was a renowned U.S. Army officer (1885–1945) known for his aggressive tactics and leadership during World War II. Patton gained recognition during the 1916 Punitive Expedition in Mexico, where he served under General John J. Pershing and conducted one of the first motorized military assaults. During World War II, he commanded forces in campaigns such as North Africa, Sicily, and the European Theater, including the Breakout at Normandy and the Battle of the Bulge. His bold strategies and leadership earned him fame, though his outspoken nature often led to controversy.

Thunder Across the Sea

The U.S., led by President Wilson, maintained a neutral position during the early years of the “Great War.” However, persistent agitation from Germany finally pulled America into the war in 1917. The American Expeditionary Forces (AEF), led by General John J. Pershing, played a key role in helping to end World War I and secure victory for the Allied Powers.

The Outbreak of World War I

• World War I started in the summer of 1914 with the assassination of Archduke Franz Ferdinand of Austria-Hungary and his wife, Sophie, Duchess of Hohenberg, in Sarajevo by a Serb nationalist, Gavrilo Princip.
• Austria-Hungary, with Germany’s support, escalated tensions by issuing the July Ultimatum to Serbia.
• Serbia, backed by Russia, refused to comply fully, leading Russia to mobilize against Germany.
• Germany, to preempt Russia and France, invaded Belgium to strike France, prompting Britain to join the war due to the Belgian assault.
• Europe quickly divided into two major alliances — the Central Powers and the Allied Powers.
• Americans initially celebrated their geographic separation from Europe, feeling secure and detached from the conflict.

The Assassination of Archduke Franz Ferdinand (1914) — The heir to the Austro-Hungarian throne was assassinated on June 28, 1914, in Sarajevo by Gavrilo Princip, a member of the Serbian nationalist group Black Hand. The killing was motivated by tensions over Austro-Hungarian rule in Bosnia. This event triggered a chain reaction of alliances and hostilities, leading to the outbreak of World War I as Austria-Hungary declared war on Serbia.

July Ultimatum (1914) — The July Ultimatum was a list of demands issued by Austria-Hungary to Serbia on July 23, 1914, following the assassination of Archduke Franz Ferdinand. It required Serbia to suppress anti-Austrian propaganda and accept Austro-Hungarian involvement in its internal affairs. Serbia’s partial rejection of the ultimatum led Austria-Hungary to declare war on July 28, escalating tensions into World War I through entangled alliances.

Central Powers — The Central Powers were Germany, Austria-Hungary, Turkey, and Bulgaria.

Allied Powers —  The Allied Powers were France, Britain, Russia, Japan, and later Italy.

A Precarious Neutrality

U.S. Neutrality at the Outbreak of World War I

• President Wilson declared U.S. neutrality after hostilities started and called on Americans to remain neutral in their thoughts and actions.
• Wilson was dealing with personal challenges, as his wife, Ellen Axson Wilson, had recently passed away.
• Remaining neutral was challenging for the U.S., as both the Allies and Central Powers sought American support.
• Britain, with cultural and economic ties to the U.S., controlled Transatlantic Cables and filtered war news to favor the Allies.
• Germans and Austro-Hungarians relied on sympathies from the 11 million Americans with hereditary connections to the Central Powers.
• Many recent immigrants from Central Power nations quietly supported their homelands.

Transatlantic Cables — Transatlantic Cables are underwater telegraph cables that were laid across the Atlantic Ocean in the 19th and early 20th Centuries. They enabled rapid communication between Europe and North America. The first successful cable was completed in 1866, transforming global communication by allowing messages that once took weeks to cross the ocean to be transmitted in minutes. These cables played critical roles in diplomacy, commerce, and military operations, especially during World War I, as nations sought to control or intercept communications.

American Anti-German Sentiment in the Early War Years

• Many Americans were anti-German from the start of World War I.
• Kaiser Wilhelm II, with his autocratic image and aggressive policies, symbolized the perception of German arrogance.
• Germany’s invasion of Belgium, a neutral nation, further damaged its reputation with Americans.
• German and Austrian agents conducted acts of industrial sabotage in U.S. factories and ports, increasing tensions.
• In 1915, a German operative’s abandoned briefcase revealed plans for sabotage, inflaming anti-German sentiment.
• Despite these tensions, most Americans strongly desired to avoid involvement in the war.

Anti-German Sentiment — Anti-German Sentiment refers to hostility and prejudice against Germans that intensified in the U.S. and Allied countries during World War I. Fueled by propaganda, wartime atrocities, and fears of espionage, it led to widespread discrimination, renaming German-associated items (e.g., “liberty cabbage” for sauerkraut), and suppression of German language and culture. The sentiment carried on after the war as fears of foreign influence lingered. Some German-Americans resorted to changing the spelling of their names to avoid harassment. For example, “Schmidt” became “Smith.”

Kaiser Wilhelm II (1859–1941) — Kaiser Wilhelm II was the last German Emperor and King of Prussia, reigning from 1888 to 1918. Known for his militaristic policies and aggressive diplomacy, Wilhelm played a central role in leading Germany during World War I. His erratic leadership and expansionist ambitions alienated other nations, contributing to the war’s outbreak. He abdicated in 1918 after Germany’s defeat and spent his remaining years in exile in the Netherlands.

Industrial Sabotage — Industrial Sabotage refers to the deliberate destruction or disruption of industrial production, often to undermine an enemy during wartime. In World War I, Germany was accused of orchestrating sabotage in the U.S., such as the 1916 Black Tom Explosion, targeting munitions destined for Allied forces. These acts heightened tensions and contributed to anti-German sentiment in neutral nations like the United States.

Black Tom Explosion (1916) — The Black Tom Explosion was a significant act of sabotage that occurred on July 30, 1916, in Jersey City, New Jersey, during World War I. German agents detonated munitions stored at the Black Tom terminal, which were intended for Allied forces. The explosion caused extensive damage, shattering windows in Manhattan and the Statue of Liberty and killing several people. The incident increased U.S. tensions with Germany, contributing to anti-German sentiment and influencing the U.S. decision to enter World War I in 1917.

America Earns Blood Money

Economic Boom and Neutral Trade during Early World War I

• The U.S. was in an economic recession when World War I started.
• British and French orders for products, including military supplies, boosted American industry, leading to economic prosperity.
• U.S. bankers, including J.P. Morgan & Co., loaned $2.3 billion to the Allies despite American neutrality, which Germany protested.
• The British Naval Blockade of the North Sea prevented Germany from trading with the U.S., despite protests from American shippers, farmers, and manufacturers.

British Blockade of the North Sea — The blockade was a naval strategy used by Britain during World War I to restrict supplies, food, and resources from reaching Germany and its allies. Starting in 1914, the Royal Navy established a Blockade by controlling shipping lanes and cutting off trade routes. It caused severe economic and civilian hardship in Germany, contributing to food shortages and weakening its war effort. While effective, the Blockade was controversial, as it affected German trade with Neutral Nations and was a factor in escalating tensions with the United States before its entry into the war.

Germany’s Submarine Warfare

• In February 1915, Germany retaliated against the British Blockade by declaring a Submarine War Zone around the British Isles.
• Submarines (or U-Boats) were a new weapon that defied traditional international laws requiring warships to stop and board merchant vessels before attacking.
• Submarine warfare was a danger to U.S. neutrality because submarines could not reliably distinguish between neutral and enemy ships.
• Germany pledged to avoid sinking neutral ships but admitted mistakes could occur.
• President Wilson warned Germany of “strict accountability” if harm was done to American ships or citizens.

Submarine War Zone — Germany declared the “Submarine War Zone” during World War I. It referred to areas, particularly around the British Isles, where German U-boats (submarines) would target and sink Allied and neutral ships without warning. Announced in February 1915, the policy intended to blockade Britain but violated traditional naval rules, causing significant civilian casualties, such as the sinking of the Lusitania. Unrestricted Submarine Warfare escalated tensions with nations like the U.S. and was a major factor leading to America’s entry into the war in 1917.

The Sinking of the Lusitania and U.S. Reactions

• German U-Boats started attacking in the Submarine Zone in early 1915, destroying about 90 ships.
• On May 7, 1915, the British passenger liner Lusitania was sunk off Ireland, killing 1,198 people, including 128 Americans.
• The Lusitania was carrying 4,200 cases of ammunition, which Germany pointed to as justification for the attack.
• Americans, particularly in the Eastern U.S., were outraged, viewing the event as “mass murder” and “piracy.”
• Many Americans living in the Western U.S. remained opposed to entering the war.
• President Wilson tried to use diplomacy with Germany, saying, “…there is such a thing as a man being too proud to fight.” 
• His response upset interventionists, including former President Theodore Roosevelt, who criticized Wilson.

Sinking of the Lusitania (1915) — The British ocean liner Lusitania was torpedoed by a German U-boat on May 7, 1915, off the coast of Ireland. The attack killed 1,198 people, including 128 Americans. Germany justified the attack, claiming the Lusitania was carrying munitions to arm its enemies. The incident caused international outrage, intensifying anti-German sentiment and pressuring the U.S. to reconsider its neutrality. The sinking became a key factor in the eventual U.S. entry into the war.

The Sussex Ultimatum and Temporary Diplomatic Victory

• In August 1915, Germany agreed not to sink unarmed passenger ships after the Arabic Incident, which killed two Americans.
• In March 1916, Germany torpedoed the French passenger ship Sussex, violating its pledge and infuriating President Wilson.
• Wilson warned Germany that Unrestricted Submarine Warfare would lead to the U.S. severing diplomatic ties — a likely prelude to war.
• Germany complied with the Sussex Ultimatum, pledging not to sink passenger or merchant ships without warning.
• Germany added a condition, demanding the U.S. pressure Britain to ease the Blockade, which Washington was unable to do.
• Wilson accepted Germany’s pledge, but the agreement was precarious, as Germany could revoke it at any time.

Arabic Incident (1915) — The British passenger liner SS Arabic was sunk by a German U-boat on August 19, 1915, killing 44 people, including some Americans. The attack intensified U.S. outrage over Germany’s Unrestricted Submarine Warfare. In response, Germany issued the “Arabic Pledge,” promising not to target passenger ships without warning, attempting to ease tensions with the United States and avoid further provoking its involvement in the war.

Sussex Ultimatum (1916) — The Sussex Ultimatum was a diplomatic warning issued by the United States to Germany in May 1916 following the torpedoing of the French passenger ship Sussex by a German U-boat. The attack injured several Americans and violated German promises to avoid targeting civilian vessels. President Wilson demanded that Germany end Unrestricted Submarine Warfare or face the possibility of U.S. entry into World War I. In response, Germany issued the Sussex Pledge, agreeing to limit submarine attacks, though this promise was later abandoned in early 1917.

Wilson Wins Reelection in 1916

In the Presidential Election of 1916, incumbent President Woodrow Wilson, the Democrat candidate, faced Republican challenger Charles Evans Hughes. The Election was shaped by debates over U.S. involvement in World War I, with Wilson campaigning on the slogan “He kept us out of war,” emphasizing his policy of neutrality. In contrast, Hughes called for a stronger military stance and preparedness for war. The election was close, with Wilson winning re-election by a narrow margin in both the Popular Vote and Electoral Vote.

1916 Presidential Election

• Both the Progressive and Republican Parties held conventions in Chicago for the 1916 Presidential Election.
• The Progressives nominated Theodore Roosevelt as their candidate.
• However, Roosevelt refused to run to avoid splitting the Republican vote like in the 1912 Election.
• This effectively ended the Progressive Party as a political force and cleared the way for a unified Republican challenge to Wilson.

Republican Nominee Charles Evans Hughes

• Supreme Court Justice Charles Evans Hughes was chosen as the Republican nominee.
• Although he was known for his progressive record as the Governor of New York, the Republican Platform criticized Wilson’s policies on tariffs, trusts, Mexico, and Germany.
• On the campaign trail, Hughes earned a reputation for being indecisive and the nickname “Charles Evasive Hughes.”
• He changed his message depending on the audience, taking a tough stance on Germany in anti-German regions and a softer tone in areas that supported Isolationism.
• Roosevelt hurt the Hughes campaign by giving speeches that criticized Wilson.
• Privately, Roosevelt claimed Hughes and Wilson were essentially the same, except Hughes had facial hair.

Charles Evans Hughes (1862–1948) — A prominent American statesman, lawyer, and politician (1862–1948), Hughes served as Governor of New York (1907–1910), Associate Justice of the U.S. Supreme Court (1910–1916), Secretary of State (1921–1925), and Chief Justice of the U.S. Supreme Court (1930–1941). He was the Republican candidate for President in 1916, narrowly losing to Woodrow Wilson. As Secretary of State, Hughes played a key role in post-World War I diplomacy, notably at the Washington Naval Conference, where he advocated for arms reduction and international cooperation. His judicial tenure was marked by efforts to balance New Deal reforms with the Constitution.

Isolationism — Isolationism refers to a foreign policy approach in which a nation seeks to minimize involvement in international conflicts, alliances, and political affairs, focusing instead on domestic priorities. In U.S. history, Isolationism was prominent after World War I, driven by disillusionment with global entanglements and a desire to avoid future wars. It influenced policies such as the rejection of the League of Nations and the passage of the Neutrality Acts in the 1930s. Isolationism was reduced as World War II intensified, especially after the attack on Pearl Harbor in 1941.

Wilson’s Slogan: “He Kept Us Out of War”

• Wilson was nominated by the Democrats at their convention in St. Louis.
• His campaign was built around the slogan, “He Kept Us Out of War.”
• Democrats warned that electing Hughes would lead to war, as Roosevelt called for intervention in Europe.
• Democrats targeted working-class voters, contrasting peace under Wilson with the potential for war under Hughes.

Wilson’s Narrow Victory

• Hughes swept the East and was prematurely declared the winner by some newspapers.
• Wilson, expecting defeat, went to bed while Hughes was hailed as “The President-Elect.”
• Midwestern and Western voters, drawn by Wilson’s progressive reforms and antiwar stance, shifted the outcome.
• The decisive state was California, which Wilson won by a slim margin of 3,800 votes out of nearly one million cast.
• Wilson narrowly won the Electoral College, 277 to 254, and the popular vote, 9,127,695 to 8,533,507.
• He gained support from labor groups and former Progressives, whom Republicans failed to reclaim.
• Many voters believed Wilson would avoid war, but he did not explicitly make that promise.
• Soon after, tensions with Germany reached a breaking point, and the U.S. entered World War I.

Struggling for Justice at Home and Abroad in the Progressive Era

The notes on this page are based on the 16th edition of The American Pageant. We have expanded on the source material with additional details, corrections, and links to Encyclopedia Entries that explain topics in more detail. For more information, including terms and definitions, see the following:

• AP US History — Units and Topics
• Chapter 28 — America on the World Stage
• Chapter 29 — Progressivism and the Republican Roosevelt
• Chapter 30 — Wilson Progressivism at Home and Abroad
• Chapter 31 — The War to End War
• Chapter 32 — American Life in the Roaring Twenties
• Chapter 33 — Politics of Boom and Bust
• Chapter 34 — Great Depression and the New Deal
• Chapter 35 — Franklin D. Roosevelt and the Shadow of War
• Chapter 36 — America in World War II