This face-off between dreamy idealist and the hard-bitten politico makes a nice story, and some elements of it ring true. Wilson did dislike his party’s conservatives, and he had flaunted his progressivism repeatedly since the election. But it is wrong to think that a man who had lauded party government for more than thirty years would need to be tutored about the leaders in Congress. The presence of Bryan and Burleson in the cabinet testified to Wilson’s undiminished regard for party affairs. Burleson acknowledged this when he told Ray Stannard Baker that “he felt he had been appointed in some degree as an intermediary between Wilson and Congress.” At all events, the two men came to work so well together on party matters that the president and other cabinet members took to calling Burleson “the Cardinal.”4
The president’s newfound coziness with the postmaster general and party barons on Capitol Hill did not mean that he had abandoned his intentions to make the Democrats more progressive. Wilson believed he could have it both ways. He resumed his rhetorical campaign to set out his ideological direction. In one speech, he maintained that anyone who claims special privileges “forfeits the title of Americanism,” and in another he gloried in paying attention to “the cool large spaces of the United States” rather than the sound and fury of Washington. Wilson did not use the term, but he was mounting Roosevelt’s bully pulpit. Yet he knew it would take more than preaching to make good on his progressive promises. Before the inauguration, he had conferred with committee chairmen and party leaders in both houses of Congress, and he met with them frequently during his first months in the White House. By all accounts, he came across in those meetings as friendly but firm. On their part, his congressional visitors often felt, an English observer noted, “conscious of an intellectual inferiority, of a narrower point of view, of limitations in their knowledge, of less elevated purposes and motives.”5 The following year, the English caricaturist Max Beerbohm captured this contrast in a drawing titled “Professor Wilson Visiting Congress,” which shows a slender, bespectacled Wilson in academic garb lecturing to a bunch of large, paunchy, mainly walrus-mustached men. Political cartoonists in American newspapers likewise often depicted the president in a cap and gown or as a schoolmaster with congressmen and senators as squirming schoolboys.
Charges soon arose in the press that he was dictating to Congress. Wilson resented such allegations. “I do not know how to wield a big stick,” he protested, “but I do know how to put my mind at the service of others for the accomplishment of a common purpose. They are using me; I am not driving them.” The gentleman again protested too much, but he did engage in genuine consultation with congressional leaders. As a result of those consultations and his own inclinations, Wilson decided to push the tariff as the lead item on the agenda, but he staked out his position in general terms and remained flexible. In that initial speech before Congress, he addressed the tariff but kept his remarks brief, referring only to the goal of altering the present system and stating that remedies might “at some points seem heroic.”6
Choosing to lead off with tariff revision brought several advantages. The Democrats were largely united in wanting to lower rates, and the tariff promised to be the easiest measure on Wilson’s agenda to enact. Likewise, tariff making was a long-practiced legislative art, so that the men on Capitol Hill could presumably handle the item much on their own, with little pressure and interference from the White House. Moreover, although the tariff contained a host of intricate schedules, it did not present the legal, technical, and philosophical challenges inherent in the other major items on the president’s agenda: banking reform and anti-trust legislation. Finally, the tariff presented this Democratic president and his majorities in Congress with an unparalleled opportunity to prove their strength and effectiveness.
Twice before in the last two decades, presidents and congresses of both parties had tried and failed to lower the tariff. Grover Cleveland and the Democrats had fumbled in 1894 with the Wilson-Gorman tariff, and in 1909, Taft and the Republicans had similarly failed, with the Payne-Aldrich tariff. Both of those efforts had followed the same pattern: the House, where, constitutionally, revenue bills had to originate, passed a version that lowered rates. Then protectionist senators, aided by a swarm of lobbyists, passed a version loaded down with amendments that wiped out or, in the case of the Payne-Aldrich tariff, even reversed most of the downward revisions. The Senate version largely prevailed, and the president ultimately caved in, either allowing the bill to become law without his signature, as Cleveland did, or pretending that it was satisfactory, as with Taft. If President Wilson could break this pattern, he would win a big personal victory and establish his and his party’s governing credentials.
At first, history seemed to be repeating itself in 1913. In the House, Underwood served as both majority leader and chairman of the Ways and Means Committee, and he speedily produced a bill that reduced the average tariff rate by 10 percent and removed protection altogether from a large number of products. In addition, the bill contained a provision to levy income taxes: 1 percent on income over $4,000 (substantial earnings at the time) and in steps to a maximum of 4 percent over $100,000. On May 8, just one month after Wilson’s appearance before Congress, the House passed the Underwood bill without amendment, by a vote of 281 to 139. Just five Democrats, four of them from sugar-dominated Louisiana districts, broke ranks; four Progressives, two Republicans, and one independent supported the bill.
Then repetition of history seemed to show its sour side. The Senate presented Wilson and other tariff reformers with a veritable minefield. There, the Democrats held only a small majority—six seats—and Louisiana’s two Democratic senators were almost certain to oppose any downward revision. Several Democrats who represented western states with mineral, beet sugar, and wool interests also seemed likely to defect. Ominously, too, the chairman of the Finance Committee was Furnifold Simmons of North Carolina, a conservative who had earlier helped Republicans gut tariff-revision bills. As matters transpired, the chairman bore out Cardinal Burleson’s prediction that old-line Democrats would stand by the party: Simmons stuck to a pledge to follow the president’s leadership. Still, like any good historian, Wilson could see what might happen, and he acted quickly to avert looming dangers. Even before the Underwood bill passed, he started meeting with and writing to individual Democratic senators, particularly westerners, turning on his charm and power of persuasion. Despite those efforts, one of the westerners, Thomas J. Walsh of Montana, announced that he might have to vote against parts of the bill. Meanwhile, as in earlier tariff fights, lobbyists were pulling out all the stops in their efforts to influence senators. Trying to attract public attention, Wilson told the press that the people were “voiceless in these matters, while great bodies of astute men seek to create an artificial opinion and to overcome the interests of the public for their private profit. … Only public opinion can check and destroy it.”7
That statement was vintage Wilson. He was once more appealing directly to constituents, and as before, the appeal at first appeared to backfire. Usually supportive newspapers such as The New York Times and Democratic senators objected to the allegations. Republican senators thought they saw an opportunity to make mischief by demanding an investigation. Wilson called their bluff by urging Democrats to support the investigation, which the Senate quickly approved, along with a requirement that senators disclose any of their own interests that might be affected by changes in the tariff. During the first week of June, the Judiciary Committee witnessed a parade of senators revealing stock- and land-holdings and confessing to previous efforts to protect those interests. Then the committee delved into the lobbyists themselves and discovered that during the past twenty years, sugar interests had spent $5 million to influence legislation and had contributed to the Democratic campaign in 1912. Wilson seemed vindicated. “The country is indebted to President Wilson for exploding the bomb that blew the lid off the congressional lobby,” declared the Senate’s arch-progressive, Robert La Follette. “
Congress sneered. The interests cried demagogue. The public believed. The case is proved.”8 Denouncing the lobbyists played much the same role for Wilson’s presidency as the fight with Sugar Jim Smith had played for his governorship.
After those hearings, Senate debate on the tariff turned into a slow grind. The Finance Committee reduced rates further, and the Democratic caucus held firm in support of the measure, with only the two Louisianians in dissent. Republicans attacked on two fronts. Conservatives, joined by some insurgents, trotted out their party’s well-worn justifications of protection, such as its supposed benefits for jobs and wages. They recognized that they did not have the votes to stop the tariff revision, but the maneuvering was delaying consideration of banking-reform legislation, which was making its way through the House. Meanwhile, insurgent Republicans attacked the income tax provision for not going far enough. In late August, La Follette persuaded four Democrats to demand that their caucus adopt his amendment to raise rates to 10 percent on the highest income. The Finance Committee countered with a compromise that raised the rate on income of more than $100,000 to 7 percent. Simmons appealed to Bryan and Wilson for help, and the president, who was on a short visit to his family’s summer quarters in New Hampshire, wrote back to support the committee’s proposals as “reasonable and well considered. I should think that they would commend themselves to the caucus.”9 Wilson’s letter, together with Bryan’s arm-twisting, sufficed to unite the Democrats behind the committee compromise.
Final passage came fairly soon. Republicans made a last-ditch effort to save the duties on wool, and insurgents tried to tack on an inheritance tax. On September 9, the Senate passed the Simmons bill by a vote of 44 to 37. Among the Democrats, only the Louisiana senators voted no; one Republican insurgent, La Follette, voted yes, as did the lone Progressive senator, Miles Poindexter of Washington. A conference committee ironed out differences between the versions, mainly keeping the lower rates in the Simmons bill, and both chambers passed the final version on an almost straight party-line vote. On October 3, the president staged a ceremony at the White House to sign the Underwood-Simmons tariff. He used two gold pens, which he presented to the respective chairmen, and he lauded their work and expressed gratitude for having played a part himself, quoting Shakespeare: “If it be a sin to covet honor, then I am the most offending soul alive.”10
Only one thing kept the ceremony from being perfect: Ellen and the Wilson daughters were not there. They were still vacationing in New Hampshire, and on October 3, Ellen made a brief trip to New York to shop for Jessie’s wedding, which was to take place at the White House in November. When Ellen read newspaper reports of the ceremony, she exulted, “[N]ow at last everybody in the civilized world knows that you are a great man[,] a great leader of men.”11 Her husband had won a great victory, succeeding where his predecessors had failed and doing so as a party leader. The theorist of party government had become the practitioner of party government. Hardly any Republicans voted for the tariff despite the inclusion of the income tax. Insurgents had a ready excuse in their claim that the tax did not go far enough; some of their lack of support also stemmed from their being ignored by the president. Conversely, it was a sign of future trouble that the insurgents made little effort to reach across party lines, as they had done in the past. Another sign of trouble was that the easiest item on Wilson’s legislative agenda had taken so much time and effort to pass. At the time, however, all signs looked good. Tariff reform gave the new president a big boost toward his goal of seeing the rest of his reform program enacted.
The item that was now second on Wilson’s agenda, banking reform, presented different and tougher challenges. A near consensus favored doing something to strengthen the country’s financial structure, but that consensus presented the biggest challenge. If just about everybody agreed that something needed to be achieved, few agreed on exactly what that something should be. Broadly speaking, the divergent approaches to the problem attracted support from different constituencies and their political representatives.
The first approach, supported by big investment firms on Wall Street and in other metropolitan centers of the Northeast and Midwest, favored a privately controlled central bank that would hold government deposits and act as a reserve for smaller banks. Such central banks operated in Britain, France, and Germany; one had functioned in the United States before Andrew Jackson smashed it in the “Bank War” of the 1830s. In recent years, J. P. Morgan had acted informally as a central banker, particularly during financial panics in 1893 and 1907. Conservative Republicans supported this approach to reform and had taken a step in this direction in 1908 by passing the Aldrich-Vreeland Act, which provided for moves toward a single private reserve bank with fifteen branches. That move had angered Democrats and progressive Republicans.
Apart from rejecting a private central bank, those opponents of the Aldrich-Vreeland Act agreed on little else. Bankers and larger business interests in the South and West had long resented domination by Wall Street and other big financial centers. They, too, wanted privately controlled reserves, but they favored a second approach—namely, a system of regional banks. More conservative southern Democrats supported this approach, and Congressman Glass had begun to discuss ideas along those lines with Wilson soon after the election. His Banking Committee had recently drawn up a bill that embodied a decentralized version of the Aldrich-Vreeland system.
Farmers and smaller business interests in the South and West supported a third approach, which also favored a regional system, but they did not want access to credit controlled by local bankers and big operators. Other southern and western Democrats, mainly Bryan and his followers, took their party’s Jacksonian anti-bank heritage seriously, and they favored government-controlled regional reserve banks. Some insurgent Republicans also supported this approach. Finally, urban intellectuals and reform-inclined lawyers and economists believed that only a national approach could slay the “money trust” and constructively address the country’s credit and financial needs. More sophisticated Republican insurgents, such as La Follette, and some of Roosevelt’s Progressives were calling for a single government institution to provide reserves and oversee banking. In short, two conflicting principles—private versus public control and decentralization versus centralization—created a veritable Gordian knot that a successful program of banking reform would have to cut.
Wilson not only had to put together a congressional majority, but he also had to wrestle with thorny technical problems in seeking to reform a diverse, complex array of institutions spread throughout a vast nation. In June, he described the difficulty to Mary Hulbert this way: “It is not like the tariff, about which opinion has been forming long years through. There are almost as many judgments as there are men. To form a single plan and a single intention about it seems at times a task so various and so elusive that it is hard to keep one’s heart from failing.”12 By the time he wrote those words, Wilson had been struggling for weeks to reconcile Glass’s plan for decentralized private banks with Bryan’s demand for public control.
Bryan had a friend and powerful ally in the chairman of the Senate Banking and Currency Committee, Robert Owen of Oklahoma, who resented having been left out of the talks before the inauguration and adamantly opposed the Glass bill. Secretary of the Treasury McAdoo had stepped in with a plan that, like Aldrich-Vreeland, called for a central bank with fifteen branches but would be part of his department and administered by a board of political appointees. Glass had counterattacked by enlisting support for his bill from prominent New York bankers. Meanwhile, House was passing along criticisms of public control by some of those same financiers, with murmurs of his own agreement with them. Buckling under this onslaught, McAdoo had withdrawn his plan and said he favored the Glass bill. On June 17, Wilson brought the congressman, the senator, and the secretary together for a meeting at the White House. In a long, heated discussion, Glass and Owen stuck to their guns, but McAdoo shifted again, this time back to public control
, or, as he told House, “the right measure … which puts the Government in the saddle.” Faced with an impasse and the secretary’s shifting stands, Wilson ended the meeting without a decision and said he would think the matter over.13
Again he leaned on his most valued adviser on economic issues—Brandeis. The president had asked the Boston attorney to come to the White House on June 11 and thrash out the issues with him. As he had done earlier, Brandeis afterward wrote a memorandum that summarized their discussion and reiterated his advice. He urged balancing speed with “full and free discussion” and assurance that “limiting the power of the money trust” would make money available to businesses throughout the country. He also warned, “The conflict between the policies of the Administration and the desires of the financiers and of big business, is an irreconcilable one. Concessions to big business interests must in the end prove futile.” As earlier, Brandeis appears to have been pushing Wilson down a path he already wanted to take. The president insisted to reporters that he had not decided on specifics but added, “About the main lines, I have had a considerable opinion.”14 Although he did not say so, the opinion was that bankers should not be on the central board of the new system.
On June 18, Wilson summoned Glass, Owen, and McAdoo back to the White House and told them that he wanted the board to be an exclusively governmental agency, with money issued by the regional banks to be backed as a government obligation. Two days later, he met with the Democrats on the House Banking Committee and made it clear to them that he was committed to passing a banking bill that contained those provisions. On June 23, he underlined his commitment to publicly controlled banking reform by going to the Capitol to deliver his second address to a joint session of Congress. Following the model of his tariff speech, Wilson kept his message brief and general and again struck notes that appealed to different sides in the debate. “We are about to set them [businessmen] free,” he proclaimed but hastened to add, “It is not enough to strike the shackles from business.” Government had a strong role to play in preventing “the concentration anywhere in a few hands of the monetary resources of the country,” and it must control the new reserve system.15
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