Miller Center

American President

A Reference Resource

Domestic Affairs

Woodrow Wilson's presidency fulfilled the progressive reform agenda and laid the foundations of the modern activist presidency. Although he built upon the example of Theodore Roosevelt, and while his immediate successors would return to the caretaker model of the presidency, Wilson's administration fundamentally altered the nature and character of the presidency. He changed it from an equal or lesser partner with Congress to its superior—the dominant branch of government. This is exactly what Wilson had in mind upon his assumption of office. He intended to lead his party and the nation much as the prime minister of England leads Parliament. Before setting forth his program, Wilson consulted extensively with congressional leaders to ensure that his programs would be dealt with sympathetically when Congress considered them. In April 1913, at the opening of a special session of Congress called by the President to consider tariff reform, Wilson appeared personally before a joint session of the House and Senate to explain his program. His speech made headlines because no President had addressed Congress personally since John Adams, and it demonstrated that Wilson intended to play a dominant role in policy making.

Crusade for Reform: Tariffs, Banking and Anti-Trust Regulations

Wilson came into the White House like a "priestly visionary," intent on expanding economic opportunity for people at the bottom of society and eliminating special privileges enjoyed by the richest and most powerful members of society. For him, his New Freedom was a crusade. He focused first on tariff reform, pushing through Congress the Underwood-Simmons Act, which achieved the most significant reductions in rates since the Civil War. He argued that high tariffs created monopolies and hurt consumers, and his lower tariffs were especially popular in the South and West. The act offset lost revenue by providing for a small, graduated income tax as authorized by the Sixteenth Amendment to the Constitution, which was adopted on February 25, 1913, before Wilson took office.

Next, Wilson tackled the currency problem and banking reform. Since the Civil War, Democrats and agrarians had wanted a more flexible money supply and system of banking that would allow adjustments in the amount of money and credit available in times of economic expansion or crisis. By the early twentieth century, bankers and businessmen had also begun to demand reform. After the Panic of 1907, a special congressional investigating committee (the Pujo Committee) demonstrated to the American public the extent to which a handful of banks (J. P. Morgan, for example) and corporations controlled the nation's wealth. Reformers wanted a strong federal system that would regulate credit and oversee the nation's currency.

In response to the demand for reform, Wilson pushed for the Federal Reserve Act of 1913, which established twelve regional reserve banks controlled by the Federal Reserve Board, a new federal agency whose members were appointed by the President. This new federal system could adjust interest rates and the nation's money supply. Because it was authorized to issue currency based on government securities and "commercial paper" (the loans made to businesses by banks), the amount of money in circulation would expand or contract with the business cycle. Additionally, the Federal Reserve was empowered to adjust the interest rates, or the discount rate, charged to its member banks for money deposited in the branch reserve banks, which would indirectly control the interest rates that banks charged their borrowers. The new system could also set the amount of money banks would have to hold as an offset against deposits (the reserve requirement), thus establishing a reserve fund for times of economic crisis. This act, probably the most important domestic achievement of the Wilson administration, still provides the framework for regulating the nation's banks, credit, and money supply.

Wilson's support of the Clayton Antitrust Act, which Congress passed in 1914, endeared him to labor and farmers because it excluded their organizations from antitrust prosecution under the Sherman Antitrust Act. It also fulfilled a 1912 campaign promise by prohibiting some anti-competitive business practices, such as price-fixing and interlocking directorates (in which the same people sit on the executive boards of competing companies in one industry). This act complemented the Federal Trade Commission law passed the same year, which created a new government board appointed by the President and empowered to investigate and publicize corrupt, unfair, or anti-competitive business practices. When Congress created a separate cabinet-level Department of Labor on March 4, 1913, Wilson strengthened his support among progressives by appointing a former union official, William Wilson, as secretary of labor.

In 1916, Wilson nominated Louis Brandeis, a staunch progressive who had fought in court against the exploitation of women and children workers, to the Supreme Court. His confirmation, in a close vote, put the first Jewish justice on the Court. Following Brandeis's nomination, Wilson supported improved credit for farmers and workers' compensation for federal employees. He then pushed through a law to eliminate child labor, but the Supreme Court ruled it unconstitutional in 1918. When American railroad unions threatened to strike in 1916, Wilson supported and signed into law a bill securing an eight-hour workday for railroad employees—the Adamson Act, which paved the way to shortened workdays for all industrial workers.

Federal Wartime Authority

Historians describe World War I as the first "total war" because it demanded the mobilization of belligerents' entire societies and economies, but because the United States entered the war three years after it began and fought for just over a year, the effects on the United States were less severe than for the other participants. Nevertheless, the war forced Wilson to set aside much of his reform agenda and encouraged at least the temporary centralization of power in Washington.

On the whole, the administration was able to manage mobilization by creating special agencies that were staffed largely by volunteers and functioned only for the duration of the war. For example, Wilson established a War Industries Board in 1917 under the direction of Bernard Baruch, a wealthy New York stock market investor, to coordinate industrial production. Baruch had little legal authority but was so skillful at persuasion that industrial production increased by 20 percent. Wilson also appointed Herbert Hoover, a prominent mining engineer famous for his success in coordinating a massive relief program for German-occupied Belgium in the early years of the war, as national Food Administrator. Hoover, who later became the thirty-first President of the United States, promoted voluntary conservation of food with "Meatless Mondays," "Wheatless Wednesdays," and "war gardens," but his most important achievement was in persuading farmers to expand production so rapidly that the United States was able, not only to feed its own civilian and military populations, but to supply much of the food for the European Allies as well. Included under the Food Administration was a Fuel Administration, which encouraged fuel conservation by such methods as the introduction of daylight saving time. Similar special agencies and boards supervised aircraft and ship building, acquired and operated merchant vessels to ship men and supplies to Europe, and ran a massive labor exchange program that matched workers and jobs around the country. The labor system achieved nearly full employment and good wages, and the unions cooperated by promising not to strike during the emergency. Union membership increased from 2.7 million to more than 4 million by 1919.

Not everything went smoothly, of course. Ship and aircraft construction programs never really got going before the end of the war, and both were plagued with inefficiency and minor financial scandals. The antiquated railroad system, upon which the country was almost completely dependent for moving people and goods, broke down completely in the winter of 1917-1918 and had to be nationalized for the duration of the war. The armed services drafted nearly four million men, but weapons, uniforms, and transportation for the two million sent to Europe had to be provided mostly by the British and French because American factories were unable to get into full production quickly enough. Still, considering that little preparation for war had been made before 1917 and given the voluntary method of organization that Wilson insisted upon, the American economy achieved miracles during 1917 and 1918. Perhaps the most amazing achievement of all was that when the war ended, the wartime agencies disbanded, and the government was reduced nearly to its prewar size and expenditure level.

To pay for the war, Wilson levied a new income tax, which accounted for about half of the $33 billion spent on the war. The rest of the cost was met through Liberty Loan drives, which rallied the population to invest in America by buying Liberty Bonds. In a personal touch, Wilson donated the wool from the sheep that grazed on the White House lawn to a Red Cross fundraising auction—the sheep had replaced gardeners drafted into the military.

Civil Liberties during the War Years

A minority of Americans bitterly opposed U.S. entry into World War I. Even such notables as the Speaker of the House and the president of Columbia University were skeptical about intervening beforehand, but most Americans supported Wilson's decision. Some German Americans and Irish Americans, however, led antiwar rallies and joined with the American Socialist Party in denouncing the war. Socialists greatly increased their share of the vote in several cities in 1917, winning 22 percent of the vote in New York City and 34 percent in Chicago.

To mobilize public opinion in support of the war, Wilson created the Committee on Public Information headed by George Creel, a muckraking journalist. Creel launched a campaign to sell the war to the American people by sponsoring 150,000 lecturers, writers, artists, actors, and scholars to champion the cause. His "Four-Minute-Men," meaning that they were prepared to make a four-minute speech anytime and anywhere a crowd gathered, made 755,190 speeches in theaters, lecture halls, churches, and social clubs and on street corners all over the nation. In the resulting patriotic fervor, opponents to the war were painted as slackers and even traitors. "Americanization" drives pressured immigrants to abandon their native cultures. Some states prohibited the use of foreign languages in public. New York State required voters to demonstrate literacy in English. Libraries publicly burned German books. Some communities banned playing the music of Bach and Beethoven, and schools dropped German courses from their curriculum. Sauerkraut became "liberty cabbage," and German measles was renamed "liberty measles." Some Americans with German names were beaten in the streets and even lynched. To avoid such violence, others anglicized their names.

Wilson sponsored the Espionage and Sedition Acts, prohibiting interference with the draft and outlawing criticism of the government, the armed forces, or the war effort. Violators were imprisoned or fined. Some 1,500 people were arrested for violating these laws, including Eugene V. Debs, leader of the Socialist Party. The Post Office was empowered to censor the mail, and over 400 periodicals were deprived of mailing privileges for greater or lesser periods of time. The Supreme Court upheld the Espionage and Sedition Acts as constitutional. Leaders and members of the Industrial Workers of the World (IWW), known as "Wobblies," were especially singled out for attack. In one incident, Justice Department agents raided IWW offices nationwide, arresting union leaders who were sentenced to jail terms of up to twenty-five years. The IWW never recovered from this persecution.