Wilson

by A. Scott Berg

  Sugar, for example, cost less to produce in Puerto Rico or Cuba than it did in the United States, and the Louisiana planters claimed they would be ruined without tariff protection. The President, the only elected official with a national constituency, had to convince each Representative to look beyond the borders of his district and to consider the nation at large. The “whole art of statesmanship is the art of bringing the several parts of government into effective cooperation for the accomplishment of particular common objects,” he had noted back when he was just a political scientist. And in order to turn theory into practice, Wilson had told one Congressman, he intended to play the part of the President as though he were a Prime Minister—“as much concerned with the guidance of legislation as with the just and orderly execution of the law.” Wilson’s appearance in the Capitol two days in a row expressed not only his belief that the two branches could more effectively run the government when harnessed together but also that he intended to return to the President’s Room often. Not ten weeks after Wilson had taken his oath, the tariff bill sailed through the House, where the Democrats enjoyed a 291–134 majority. Of the five Democrats who opposed the bill, four came from Louisiana.

  The Senate would be another matter, what with its fifty-one Democrats to forty-four Republicans (and one Progressive). To secure passage, Wilson realized he would need sticks and carrots. Furnifold McLendel Simmons was the ranking Democrat on the Finance Committee, an outspoken white supremacist and the powerful third-term Senator from North Carolina. He was the presumed chair apparent of the committee—until President Wilson questioned his ability to push through the Underwood bill that would lower tariffs. Simmons represented the conservative wing of their party and was long opposed to the Progressive. With his power threatened, Simmons changed his position, assuring Wilson that he would support the reforms.

  Wilson lured with patronage those Senators who staunchly defended their state’s crops and industries. After he spoke to his new friends in the press corps of the disturbing power of lobbyists—what he called the “invisible government”—editorials and news reports incited public outcry across the country. He regularly invited Senators to the White House; and during one of his visits to the President’s Room, he held twenty-three separate conferences. He asked that a special telephone be installed, linking the Senate and the White House. Because the American Woolen Company had become the only significant purchaser of wool in the country, he called upon Attorney General McReynolds to investigate the legality of their operations, to see that anti-trust laws were not being violated. The “college professor” had obviously learned the lessons of politics he had taught for so many years.

  Summer descended upon Washington as the Senate tariff debate heated up, turning into a partisan fight. “The last thing I ever think of doing is giving up,” Wilson wrote Mary Hulbert on June 22, 1913. “But, among other things, this business means that I am to have no vacation.” The President called upon Congress to remain in session and sweat through the summer with him. During several months of testimony and debate, the Underwood-Simmons bill whittled down the basic tariff rates in the United States from 40 percent to 25 percent. Many items would get reduced to 0. The 56 percent tariff on woolens would be shrunk to one-third that amount, and the tariff on raw wool would go from 44 percent to 0; the President granted that the sugar tariff should not be immediately eliminated but reduced to 1 percent for a period of three years, after which there would be “free sugar.”

  In the fiscal year ending on June 30, 1913, the United States Treasury would have received $318 million from customs duties. With the new rates, that would drop to $270 million. The Administration, having to compensate for that shortfall, turned to the recently ratified Sixteenth Amendment to the Constitution, which provided Congress the “power to lay and collect taxes on incomes, from whatever source derived . . .”

  The income tax was not new to America. Lincoln first imposed it in order to pay the Union army. It was, in fact, a redistribution of wealth, with the rich paying more than the poor. Congress had repealed it after the Civil War, but the tax reappeared in 1894 to deal with the nation’s financial crisis. It provided relief to the agrarian West and South, where incomes lagged behind those in the industrial Northeast, until the Supreme Court declared it unconstitutional because it was not apportioned according to the states’ populations. The new amendment overrode that stipulation, thus allowing for a progressive tax structure—with the lowest earners paying no tax while the highest would pay as much as 7 percent. That would affect less than 1 percent of the population but would, in fact, yield $71 million in its first year, more than offsetting losses from the reduced tariffs. The implementation of this new income tax was bundled into the Underwood-Simmons Revenue Act.

  So long as the lawmakers were a captive audience that summer, Wilson took advantage of his momentum. On June 23, he returned to address another joint session of Congress—because of what he considered “a clear and imperative duty.” Despite the oppressive summer heat, he insisted that “there are occasions of public duty when . . . the work to be done is so pressing and so fraught with big consequence that we know that we are not at liberty to weigh against it any point of personal sacrifice.” The need for a new banking and currency system, he said, presented such an occasion. “We must have a currency . . . elastically responsive to sound credit . . . the normal ebb and flow of personal and corporate dealings,” he said. “Our banking laws must mobilize reserves; must not permit the concentration anywhere in a few hands of the monetary resources of the country or their use for speculative purposes in such volume as to hinder or impede or stand in the way of other more legitimate, more fruitful uses.” Wilson called for a national institution to keep those reserves of money flowing—an archipelago of Federal Reserve Banks.

  Because of the inflexibility of the existing banking system, one in which banks across the country were beholden to the trust on Wall Street, the national economy had clogged five times since the Civil War, producing panics. Small rural banks and even the United States Treasury had found themselves at Wall Street’s mercy, and a Congressional committee chaired by Representative Arsène Pujo was investigating the power of the bank trust. The Wilson Administration’s philosophy was to decentralize the reserves by creating a government-supervised national bank for banks, with twelve branches scattered across the country.

  Republicans especially fought this Federal Reserve legislation. As Secretary McAdoo recalled, “They said it was populistic, socialistic, half-baked, destructive, infantile, badly conceived, and unworkable.” As the name-callers became educated to the intricacies of the bill, many realized the national economy would be strengthened because there would be more local control of credit and debt. As McAdoo analogized, “The country as a whole was like a town of wooden houses, where the only water for fighting fire was in barrels in back yards, except for one gigantic reservoir many miles away—too far away to be effective.” Under the Wilson plan, there would be “twelve large and efficient reservoirs located at strategic points in the community itself,” and there would be no need for the “ineffective water barrels in the back yards; the reservoirs are so near, and they are always full.” Debate raged about the management of this bucket brigade.

  In fact, a similar plan had been devised in 1910 at a secret meeting of the nation’s most powerful bankers at the exclusive Jekyll Island Club, a Morgan playground off the coast of Georgia. These members of the trust had proposed a pre-emptive solution to the very problems Wilson now sought to fix—a central bank with regional branches, but one that was privately owned and under their control. John D. Rockefeller’s son-in-law, Senator Nelson Aldrich, had presented the bill, and it faced crushing Democratic opposition. Now the President hoped to employ the solid structure of the concept but place it more under the authority of the people, by providing quasi-governmental oversight.

  Wilson had discussed the problem for months with Treasury Sec
retary McAdoo; Congressman Carter Glass, who was chairman of the House Committee on Banking and Currency; Dr. H. Parker Willis, a University of Chicago economist and adviser to that committee; and longtime advocate of reform Secretary Bryan. During one conversation, McAdoo ironed out a plan regarding interest on the money the government would advance to the Federal Reserve Banks: “What we ought to do,” he suggested, “is to give the Federal Reserve Board the power to impose, from time to time, such rates of interest as in its judgment may be wise, or to charge no interest or circulation tax at all. This will make the arrangement flexible and responsive to the needs of the country.” Wilson called upon his former Princeton colleague Professor Royal Meeker to poll the nation’s leading economists on the state of banking.

  After finding a mostly positive consensus, two bones of contention remained—one regarding the backing of the currency issued by the banks, the other regarding the composition of the central board of control. Wilson consulted Louis Brandeis. As he had done in helping forge the basics of the New Freedom, Brandeis articulated what he considered the basic principles of the plan, thus bolstering Wilson’s proposals and confidence. First, he said, it was best to enact a “confidence-inspiring” currency bill at an early date, as a watered-down proposal would serve nobody. He said the “power to issue currency should be vested exclusively in Government officials,” and that bankers needed government oversight. He told Wilson that whatever bill got passed would have little effect “unless we are able to curb the money trust, and to remove the uneasiness among business men due to its power.” Finally, he said the “conflict between the policies of the Administration and the desires of the financiers and of big business, is an irreconcilable one. Concession to the big business interests must in the end prove futile.” While the Administration had to consider carefully the recommendations of the banking trust, it was dangerous to heed its advice despite its technical proficiency. This bill was meant to win the public trust, not woo the banking trust. Two days after conferring with Brandeis, Wilson began drafting his speech to Congress, incorporating all the lawyer’s ideas.

  Brandeis’s arguments boiled down to the need for federal supervision. Representative Carter Glass disagreed, believing the banks should have representation; Senator Robert L. Owen of Oklahoma, the chairman of the Committee on Banking and Finance and a longtime Bryan supporter, felt otherwise. McAdoo sought a compromise, but the President had made up his mind. This chronic problem demanded a bold remedy of “public participation and direction”—government control.

  When a number of liberal Midwestern bankers protested, their supporter Carter Glass could envision only one unlikely means of turning the President around. He arranged an audience for the financiers to sit directly across from Wilson at his desk. Each banker made his best argument regarding representation on the governing board of the Federal Reserve, after which Wilson turned toward the most vehement of them and quietly asked, “Will one of you gentlemen tell me in what civilized country of the earth there are important government boards of control on which private interests are represented?” The question hung there in silence until Wilson posed a second question: “Which of you gentlemen thinks the railroads should select members of the Interstate Commerce Commission?” The bankers were struck dumb. Carter Glass converted to Wilson’s position before they had even exited the office.

  One last obstruction threatened passage of the bill, with the Bryan liberals withholding their support unless this condition was met. It involved the Federal Reserve notes—the actual issuance of currency—as being the “obligations of the United States” instead of the regional reserve banks issuing them. Without the United States Treasury standing behind the currency, Bryan felt this bill should not even be presented to Congress, for fear that its omission might antagonize their own party members and even jeopardize the tariff bill. In a meeting with Wilson, the former standard-bearer of the party went even farther. “I called his attention to the fact that our party had been committed by Jefferson and Jackson and by recent platforms to the doctrine that the issue of money is a function of government and should not be surrendered to banks,” Bryan recalled. Wilson considered all the opposition—including that of Carter Glass, who felt the government’s issuing currency was an unnecessary obligation. The next time Bryan saw Wilson, he learned that “the two difficulties which had seemed insurmountable had been removed.”

  In the end, Wilson had confected this bill by melding idealism with pragmatism, and nobody questioned that its success or failure should redound upon him. Wilson himself only questioned the timing. “Shall we hasten to change the tariff laws and then be laggards about making it possible and easy for the country to take advantage of the change?” he asked the joint session of Congress. “There can be only one answer to that question. We must act now, at whatever sacrifices to ourselves,” he said, landing hard on the word “now” and clenching his jaw. “I should be recreant to my deepest convictions of public obligation did I not press it upon you with solemn and urgent insistence.” Opposition sprang: House Minority Leader James Robert Mann criticized Wilson for showing no interest in reaching out for bipartisan support and, just as bad, for addressing the Congress as though he were “a schoolmaster telling fourth-grade school children to be good.” A hard fight lay ahead.

  • • •

  After only four months in office, Wilson was already feeling the pressures. With the President’s having set such an accelerated pace out of the gate, Colonel House cautioned him to conserve his strength. Wilson would not slacken, and he was already speaking of “the loneliness of his position” in a way that House found “saddening.” Having worked behind the scenes on all the President’s major initiatives, House deserted Washington for a long vacation. Wilson had no such luxury.

  He had intended to spend the summer with his family in Cornish, New Hampshire, a charming village on the Connecticut River, with an active colony of artists for Ellen—chief among them sculptor Augustus Saint-Gaudens, painter Maxfield Parrish, and Impressionist Robert Vonnoh, whose work had greatly influenced hers. Based on little more than photographs, Wilson signed a two-summer lease on Harlakenden, a stately Georgian house that belonged to American writer Winston Churchill. Surrounded by two hundred acres, it offered spacious but simple living and a view of the river and Mount Ascutney. Work in Congress demanded Wilson’s presence in Washington—“I can’t be cool and comfortable at Cornish while Congress perspires here all summer at my request,” he said. He would have to vacation around the legislators’ schedule; but he insisted upon his family’s leaving him behind—especially his wife, who had been drawn into a maelstrom from the moment she had arrived in Washington.

  In addition to the endless succession of afternoon receptions for one hundred and evening banquets for fifty, over which she had to preside, Ellen Wilson imposed additional demands upon herself, the only way she could justify her new role. Unlike many of her predecessors, she had no interest in the frills of being First Lady. A true disciple of the Social Gospel, however, she became the first President’s wife to embrace the humanitarian potential of her position, the ability to draw attention to social injustices. “I wonder how anyone who reaches middle age can bear it,” she once told a cousin, “if she cannot feel . . . that whatever mistakes she may have made, she has on the whole lived for others and not for herself.” And so, Ellen Wilson promptly made it her mission to inspect government buildings, including the Post Office Department and the Government Printing Office, where she found working conditions for women substandard—unsanitary lavatories and insufficient light and fresh air. She also took it upon herself to visit the city’s slums, leading members of Congress through squalid alleys right outside their office doors and then urging remedial legislation for the Negroes who lived there.

  And Ellen made the White House a home for her husband. She catered to all his needs, still serving as his most discriminating editor and adviser, and encouraging the profess
orial evenings of old, during which he might study and write and then recite poetry or sing around the piano with his daughters. She maintained Sunday as his day of observance, filled only with family and a restorative ride by automobile or on horseback. In accordance with Dr. Grayson’s advice, she kept his meals simple—plain fish and meat courses, a vegetable and potatoes, a salad, and ice cream—served at seven, he in black tie, as was the custom of the house. Never much of a wine drinker, he occasionally allowed himself a “wee dram”—a shot of Scotch whisky. Congress allotted almost $10,000 for the conversion of the third floor of the White House—formerly attic space—for family use, which she spent creating more guest rooms and baths. She took down from the second-floor walls the dark green burlap and animal heads of the Roosevelt era and substituted light pastels and “craft” fabrics. She decorated the master suite in Delft blue and white, its furniture in chintz. The adjoining sitting room housed the Lincoln Bed. Ellen was able to obtain a further appropriation from Congress to remodel the gardens flanking the South Portico. She asked Princeton’s landscape architect Beatrix Farrand to design the East Garden—which would feature low hedges and a rectangular lily pond in the center. For the West Garden, she maintained her initial concept of long rows of rosebushes, which not only afforded a pleasant view from her bedroom window but also provided Woodrow with a more becoming “President’s walk” from the residence to his office. It became a permanent feature of the White House.

  Even though Ellen wanted to spend the summer by her husband’s side, Woodrow insisted his worry over her health in the Washington heat would distract him more than her absence. On the train to New Hampshire, Ellen went to her berth and cried. She was hardly gone before Woodrow wrote the first of that summer’s many lachrymose letters to her, explaining his growing understanding of his life in the highest office in the land, where duty superseded all other considerations. “I cannot choose as an individual what I shall do,” he wrote on June 29; “I must always choose as President, ready to guard at every turn and in every possible way the success of what I have to do for the people. Apparently the little things count quite as much as the big in this strange business of leading opinion and securing action.” Indeed, he found, “The President is a superior kind of slave,” and somebody was always watching his every move, analyzing his every gesture, resenting his ever enjoying a holiday.