Chapter 2

So the first efforts of the new Administration had to be a compromise between what Wilson wanted and what Bryan would permit. This was seen first of all in the composition of the Cabinet, which Bryan himself headed as Secretary of State. Josephus Daniels, who as Secretary of the Navy was to be one of the principal targets of criticism for the next eight years, was also a Bryan man. Of the "Wilson men" of the campaign, William G. McAdoo was chosen as Secretary of the Treasury, not without some grave misgivings as to his ability, which were not subsequently justified by his conduct of the office. The rest of the Cabinet was notable chiefly for the presence of three men from Texas, a State whose prominence reflected not only its growing importance and its fidelity to the party but also the influence of Colonel Edward Mandell House, a private citizen who had risen from making Governors at Austin to take a prominent part in the making of a President in 1912. At the beginning of the Administration and throughout almost all of President Wilson's tenure of office he was the President's most influential adviser, a sort of super-Minister and Ambassador in general; and his position from the first caused a certain amount of heartburning among the politicians who resented this prominence of an outsider who had never held office.

Perhaps because many of his official aids and assistants were more or less imposed upon him, the President showed from the first a tendency to rely on personal agents and unofficial advisers. And this was to become more prominent as the years passed, as new issues arose of which no one would have dreamed in the Spring of 1913, issues for which the ordinary machinery and practice of American Government were but little prepared.

For the eight years which began on March 4, 1913, were to be wholly unlike any previous period in American history. An Administration chosen wholly in view of domestic problems was to find itself chiefly engaged with foreign relations of unexampled complexity and importance. The passionate issues of 1912 were soon to be forgotten. Generally speaking, the dominant questions before the American people in 1912 and 1913 were about the same as in 1908, or 1904, or even earlier. But from 1914 on every year brought a changed situation in which the issues of the previous year had already been crowded out of attention by new and more pressing problems.

No American President except Lincoln had ever been concerned with matters of such vital importance to the nation; and not even Lincoln had had to deal with a world so complex and so closely interrelated with the United States. Washington, Jefferson and Madison had to guide the country through the complications caused by a great world war; but the nation which they led was small and obscure, concerned only in keeping out of trouble as long as it could. The nation which Wilson ruled was a powerful State whose attitude from the very first was of supreme importance to both sides. And the issues raised by the war pushed into the background questions which had seemed important in 1913--and which, when the war was over, became important once more.

None of this, of course, could have been predicted on March 4, 1913. A new man with a new method had been elected President and intrusted with the meeting of certain pressing domestic problems. At the moment the public was more interested in the man than in his method; and not till the crisis had been successfully passed did popular attention concentrate on the manner of accomplishment rather than on the things accomplished.

_Problems at Home, 1913-1914_

One of the passages of President Wilson's inaugural address contained a list of "the things that ought to be altered," which included:

A tariff which cuts us off from our proper part in the commerce of the world, violates the just principles of taxation, and makes the Government a facile instrument in the hands of private interests; a banking and currency system based upon the necessity of the Government to sell its bonds fifty years ago and perfectly adapted to concentrating cash and restricting credits; an industrial system which, take it on all sides, financial as well as administrative, holds capital in leading strings, restricts the liberties and limits the opportunities of labor, and exploits without renewing or conserving the natural resources of the country; a body of agricultural activities never yet given the efficiency of great business undertakings or served as it should be through the instrumentality of science taken directly to the farm, or afforded the facilities of credit best suited to its practical needs.

The items had been set down in the order of their immediate importance. First came the tariff, for the tariff had come to be in the minds of many Americans a symbol of the struggle between the "plain people" and "the interests." The Payne-Aldrich tariff, enacted by a party pledged to tariff revision, had been not only an injury but an insult, and if any American Presidential election could ever be interpreted as a popular referendum on any specific policy the election of 1912 meant that the Payne-Aldrich tariff must be revised. At the time of the enactment of that bill Mr. Wilson had written a critical article in _The North American Review_ which expressed a widespread popular sentiment in its criticism of "the policy of silence and secrecy" prevalent in the committee rooms when this and other tariffs had been drawn up and a demand for procedure in the open where the public could find out exactly who wanted what and why. Joined with this objection to the methods of tariff making were some observations by Mr. Wilson on the principles of tariff revision. He saw and said that a complete return to a purely revenue tariff was not then possible even if desirable, and that the immediate objective of tariff reform should be the adjustment of rates so as to permit competition and thereby necessitate efficiency of operation.

The ideas which in March, 1909, were merely the criticism of a college professor had become in March, 1913, the program of the President of the United States, the leader of the majority party, determined to get his program enacted into law. Congress was convened in special session on April 7, and the President delivered a message on the one topic of the tariff. Going back to the precedent of Washington and Adams, broken by Jefferson and never resumed again, he read his message in person to the Congress as if to emphasize the intimate connection between the Executive and legislation which was to be a feature of the new Administration. The principle of tariff reform laid down in that bill was a practical and not a theoretical consideration, the need of ending an industrial situation fostered by high tariffs wherein "nothing is obliged to stand the tests of efficiency and economy in our world of big business, but everything thrives by concerted agreement.... The object of the tariff duties henceforth laid must be effective competition, the whetting of American wits by contest with the wits of the world."

The measure which Democratic leaders had already prepared for that purpose and which eventually became known as the Underwood-Simmons Act was intended to accomplish its end only gradually. Notoriously outrageous schedules of the Payne-Aldrich Act, such as that dealing with wool, were heavily reduced, and the general purport of the bill is perhaps expressed in the phrase of Professor Taussig, that it was "the beginning of a policy of much moderated protection." It went through the House without much difficulty, passing on May 8, and then it struck the Senate committee rooms, from which no tariff bill had ever emerged quite as innocent as it entered. The usual expeditionary forces of lobbyists concentrated in Washington and the Senate talked it over, while Summer came on and Washington grew hotter and hotter. In course of time Senators began to come to the President and tell him that it was hopeless to get the bill through at that session and that Washington was getting pretty hot. The President replied that he knew it was hot, but that Congress would have to stay there till that bill was passed. Already he had given the lower house something to keep it busy while the Senate wrestled with the tariff.

As for the lobby, the President had his own method of dealing with that. On May 26 he issued a public statement calling attention to the "extraordinary exertions" of lobbyists in connection with the tariff. "The newspapers are being filled," he said, "with paid advertisements calculated to mislead not only the judgment of the public men, but also the public opinion of the country itself. There is every evidence that money without limit is being spent to maintain this lobby.... It is of serious interest to the country that the people at large should have no lobby and be voiceless in these matters, while the great bodies of astute men seek to create an artificial opinion and to overcome the interests of the public for their private profit." The outraged dignity of Senators and Representatives, not to mention lobbyists, rose to protest against this declaration. A Republican Senator even declared that the President, who had been actively urging his views on legislators just as he had done in New Jersey, was himself the chief lobbyist in connection with the Tariff Bill. A Senate Committee was appointed to find out if there had been any lobbying, and discovered that there had. Meanwhile the bill was being argued out in the Senate, and the President stood firm against any substantial modification. It was finally passed on Oct. 3.

It was a vindication of the platform promise and a fulfillment of the duty with which the party had been charged in the last election, and it was a notable triumph for the personal policy of the President-Premier, who more than anybody else had literally forced the bill through Congress. The tariff had taken such a prominent place in the fight against business influence in the Government that the passage of a bill which made a material reduction in rates was a moral victory for progressivism at large, and for President Wilson in particular.

The actual effect of the tariff, or rather the actual effect that it might have had, is something impossible to estimate at this time. Before it had been in operation a year, before the country had had a chance to study the new conditions brought in by the legislation of the first year of the Wilson Administration, the war broke out in Europe. The conditions which had prevailed through half a century of tariff making had ceased to exist. They have not yet returned. A subsidiary feature of the Underwood-Simmons Act, however, was to attain enormous importance in the course of the Wilson Administrations. To supply the deficiency in revenue which the lowered duties might be expected to produce there was added an income tax law, which had recently been permitted by constitutional amendment. Even the light duties of the first year, with their $3,000 exemption, were denounced by conservatives as a rich man's tax; but within four years more the exemption was to be lowered to $1,000, and the peak of the tax raised to tenfold its original height.

So long as the Wilson Administration was reducing the tariff, it was carrying out the traditional policy of the Democratic Party; but the next task which the President laid before Congress was much more delicate and much more important. As the event showed, the result was to be of infinitely greater benefit to the nation. Reform of the currency had long been an evident necessity, and the panic of 1907 had recently called attention to the dangers of the system based on emergency measures of the Civil War period. Mr. Wilson himself had said much of the necessity of freeing business from unnatural restrictions, among which the makeshift currency system was included. During the previous Administration Senator Aldrich's plan for a centralized reserve bank had been widely discussed, and innumerable modifications had been suggested. Democratic leaders were already working on plans for currency reform when the new Administration came in, and on June 26 a bill was introduced in the House by Carter Glass and in the Senate by Robert L. Owen.

It took six months of hard work to get this adopted, but it was a marvelous achievement to get it adopted at all. For a large faction of the Democratic Party, including its most influential leader, still represented the old hostility to the "money power," which regarded the overthrow of the United States Bank as the great triumph of the American Democracy. The Glass-Owen bill differed from Senator Aldrich's scheme largely in the direction of decentralization and giving more control to the Government and less to the banks, but, even so, it was a suspicious document to those numerous Democrats whose economic ideas were obtained from the Greenback and Populist Parties of former years. And it was not satisfactory to the majority of the articulate bankers of the country, who wanted a central bank instead of the regional division of the reserve functions, and who thought that the banks should have a good deal to say about appointments to the Federal Reserve Board.

As late as the beginning of December there were still three separate bills before Congress, but the party organization under the President-Premier held together, and on December 23 the Glass-Owen Bill, with some modifications acquired en route, was signed by the President. The pressure on the White House during that struggle was perhaps the hardest which President Wilson encountered during his entire eight years. Many an honest Democrat thought the fundamental principles of the party were being betrayed, and many a Senator or Representative who regarded the reserve banks with profound alarm felt, nevertheless, that if the iniquitous things were going to be established there ought to be one in his home town. When Paul M. Warburg, a Wall Street banker, was appointed as one of the members of the Federal Reserve Board, there were more protests from politicians who professed to believe that the nation was being delivered over to the money power, while the complaints of bankers who thought that the banks were being given over to politicians had not yet died down. But when the act once went into operation criticism almost disappeared; and in the course of a few months the unprecedented financial strain attendant on the outbreak of the European war made it plain to almost anybody that without this timely reform of the banking system 1914 would have seen a disaster far worse than that of 1907.

The work of "striking the shackles off business" was continued in 1914 by the introduction of bills to carry out the President's recommendations for prohibiting interlocking directorates, clarifying the anti-trust laws, establishing an Interstate Trade Commission, and supervising the issue of railroad securities. The chief results of this discussion were the creation of the Trade Commission, a body of which much more was expected at the time than it has accomplished, and the passage of the Clayton Anti-Trust Act, which exempted farmers' combinations and labor unions from the anti-trust laws, and wrote into the statutes the declaration that labor is not a commodity. The La Follette Seamen's Bill, drawn by Andrew Furuseth of the Seamen's Union, was introduced in 1913 and not enacted until much later. Its friends declared that it would at least establish decent living conditions for sailors, and its opponents, including nearly all the shipping interests, asserted that, so long as foreign ship owners were not under similar restrictions, the bill would ruin the American Merchant Marine. Of the actual workings of this law there has really been no fair test, as conditions which arose during the war unsettled the entire shipping situation.

The domestic program of the first year and a half of the Wilson Administration comprised, then a long-needed and immeasurably valuable reform of the banking and currency system, a revised tariff, which was at least a technical victory for Democratic principles, and a number of minor measures which seem less important in retrospect than they did at the time. The program neither completely unshackled business nor opened the door to a new era of coöperation and human brotherhood, but it was a large and on the whole decidedly creditable accomplishment, and it was above all the work of President Wilson, who had led the fight that carried the Administration measures through Congress, quite as any Prime Minister might have done. He had not done it without exposing himself to severe criticism. Ex-Senator Winthrop Murray Crane, for example, declared that he had "virtually obliterated Congress." But he had got most of what he wanted, and by the end of his first year in office Mr. Bryan was no longer the most powerful individual in the Democratic Party.

_Foreign Policies, 1913-1914_

In _The North American Review_ for March, 1913, edited by Colonel George Harvey, the original Wilson man, who had mentioned Wilson as a Presidential possibility back in 1904, when such a suggestion was regarded as only a playful eccentricity, who had begun to work hard for him in 1911, and who had finally been asked by Wilson himself to give up his activity because the connection of one of Harvey's magazines with J. P. Morgan & Co. was hurting Wilson in the West--there appeared an article entitled "Jefferson--Wilson: A Record and a Forecast." It consisted of eight pages of quotations from Wilson's "History of the American People," dealing with the beginning of Jefferson's Administration. The reader's attention was arrested by the startling parallel between the division in the Federalist Party and the quarrel between Hamilton and Adams that facilitated Jefferson's election, and the situation which led to Wilson's victory in November, 1912. Wilson, writing a dozen years before the fight between Taft and Roosevelt, had unconsciously drawn a parallel closer perhaps than the facts warranted; and the reader who had been attracted by this similarity read on into Wilson's characterization of Jefferson an introduction to the achievements of his Administration with a growing hope--if he happened to be a Wilson man--that after as before election Wilson's record would duplicate Jefferson's.

Colonel Harvey was as good a prophet in 1913 as in 1904. Wilson's achievement in domestic affairs in the first year of his Administration was not likely to suffer much by comparison with Jefferson's. But it could not have crossed anybody's mind in March, 1913, that complications of international politics such as had almost ruined the country under Jefferson would in the latter part of Wilson's first term expose him to as much criticism as Jefferson, and for the same reasons.

America was still new as a world power, but was beginning to feel more at home. In Taft's Administration, with Philander C. Knox as Secretary of State, there had been for the first time the beginnings of what might fairly be called a consistent foreign policy. True, it was not a very lofty policy, nor was it by any means generally approved in America. It was called by its friends "dollar diplomacy," meaning the promotion of American commercial interests by diplomatic agencies. It had been exemplified principally in Central America, where its operations had not always commanded admiration, and in China, where Knox had made a well-intentioned but not very skillful effort to prevent the absorption of Manchuria by Russia and Japan.

_Landmarks in Wilson's Mexican Policy_

_Program for armistice and elections to end civil war, August, 1913._

_"Watchful waiting," 1913-14._

_Capture of Vera Cruz, April 21, 1914._

_A B C mediation, April 25, 1914._

_Flight of Huerta, July, 1914._

_Recognition of Carranza, September, 1915._

_Villa's raid on Columbus and Pershing's expedition into Mexico, March, 1916._

_Flight and death of Carranza, May, 1920._

However primitive this organization of foreign policy, none the less Taft and Knox had taken a great step forward in the improvement of American diplomatic machinery. The diplomatic service and the State Department were beginning to be regarded as two parts of the same agency, and for the first time diplomacy had begun to be a career with possibilities. The practice of promoting able young secretaries to chiefs of legation, begun by Roosevelt, had been widely extended by Taft; and though the highest posts were still filled by wealthy amateurs it seemed that at last the American diplomatic service offered some attraction to an ambitious man. It was the general expectation in Europe and still more in America that President Wilson, who by training and inclination might be expected to approve of the elevation of standards in the diplomatic service, would continue and extend this work. Instead of that, he undid it, or rather permitted it to be undone.

Mr. Bryan had of necessity been made Secretary of State, and it may be supposed that there was equal necessity for opening up the diplomatic service as a happy hunting ground for the Bryan men--"deserving Democrats," as Mr. Bryan called them in a famous letter. The chief European posts, to which the Taft Administration had not begun to apply the merit system, were filled chiefly by Mr. Wilson's own nominees. These included several well-known men of letters, and with one or two exceptions the amateur diplomats serving as the heads of the missions in Europe did satisfactory and even brilliant service under the unprecedented strain which the war brought on them. The service in Latin America, however, which Knox had almost entirely professionalized, was given over bodily to personal followers of Bryan. In what was in 1913 perhaps the most important of our diplomatic posts, the embassy to Mexico, Mr. Wilson was compelled to rely provisionally on Henry Lane Wilson, a holdover appointee from the previous Administration.

It was soon made clear that there was to be no more dollar diplomacy. The Knox policies in Central America were dropped--although American troops continued to dominate Nicaragua--and in 1914 the Administration successfully discouraged American participation in a six-power loan to China. The Russo-Japanese absorption of Manchuria was to be treated as the accomplished fact that it was; and in general the policy of the new Administration was anything but aggressive. It would not use diplomacy to advance American commercial interests, nor was it prepared to accept the assistance of American financiers in promoting the policies of diplomacy.

But it was evident from the outset that the most quiescent foreign policy could not prevent foreign complications. Growing anti-Japanese sentiment in California led to the passage of a State law against Japanese land holdings. There was much resentment in Japan, and protest was made to the Federal Government. Mr. Bryan, as Secretary of State, had to make a personal trip to Sacramento to intercede with the Californians; and at one time (May, 1913) military men appeared to feel that the situation was extremely delicate. But the crisis passed over, the Californians modified the law, and though in its amended form it suited neither the Californians nor the Japanese, the issue remained in the background during the more urgent years of the war. Toward the very end of the Wilson Administration it was to come back into prominence.