Only a few months after Woodrow Wilson took office in March of 1913, he began passing a series of reform legislation that would have a lasting impact on modern America.
Although personally rather conservative, Wilson was truly a Progressive Democrat. He felt strongly that the government, businesses and the financial sector all needed restructuring, and that power should be returned to the people.
Having earned a reputation as a reformer before the presidency, in his posts as President of Princeton and Governor of New Jersey, Wilson chose to keep up the momentum by passing several ground-breaking acts within his first two years as President.
The Revenue Act of 1913
In October of 1913, President Wilson signed the Revenue Act into law, also known as the Underwood Tariff.
Tariffs had long been a topic of political interest, and Wilson had written on the subject several times. He had also made his position on tariff reduction part of his campaigning platform in 1912. Wilson was a proponent of Free Trade and low tariffs, and in order to lower tariffs but not lose government revenue, some other means of recouping it were necessary.
Income tax was not new in 1913. The practice had been implemented twice before, once in 1862 and again in 1894. The popular misconception that Wilson was the architect of modern income tax is false. The 16th Amendment to the U.S. Constitution, which makes individual income tax possible, was actually passed by Congress in 1909, predating Wilson's first term by four years, under President Taft. However, the 16th Amendment was not ratified until 1913.
The Federal Reserve Act
In December of 1913, Wilson followed up on the controversial income tax law with the Federal Reserve Act, which is still debated today. Chief among the debates are whether or not Congress can legally delegate its currency generating powers, whether or not the Act caused or worsened the Great Depression, and that the Federal Reserve does not successfully stop inflation or maintain price stability.
It is a commonly held myth that Wilson regretted this piece of legislation, but approximately 30 years before even running for political office, Wilson had already written about his ideas on central banking. On page 135 of his doctoral thesis, Congressional Government: A Study in American Politics, written in 1885, he stated: "...when revenue is scant and economy imperative, it is absolutely necessary to have financial administration in the hands of a few highly-trained and skillful men acting subject to a very strict responsibility, and this is just what our committee system [in Congress] does not allow."
A child of the tumultuous post-Civil War era, Wilson had seen the financial crises of the 1890s, and the Panic of 1907. Those factors allowed him, as a former professor of Political Economy at Princeton, to decide that currency reform was a key to stabilizing the country.
The Clayton Antitrust Act and the Federal Trade Commission
Antitrust measures were a common feature of early 20th century politics, and both Theodore Roosevelt and William H. Taft were enthusiastic trust-busters. Each man went to great lengths to 'bust' corporate monopolies while in office, passing legislation to prevent too much power in the hands of businesses.
The 1912 election, which saw Roosevelt and Taft pitted against Wilson, involved much debate about trusts.
In 1914, Wilson followed the antitrust path of his predecessors and signed into law the Clayton Act. The purpose of the Clayton Act was to help clarify the language of its parent Sherman Act (1890), which had left some legal loopholes, allowing large companies to continue constructing monopolies.
The Federal Trade Commission Act, in turn, created the Federal Trade Commission (FTC), which is an independent agency intended to uphold the Clayton Act, among other laws, and to foster consumer protection. The FTC is still active today, and is responsible for the United States National Do Not Call Registry, and investigating gasoline price gouging.
Sources:
Encyclopedia Britannica. (2009).
Library of Congress. (2004).
Livingston, J. (1986). Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890 - 1913. Ithaca, NY: Cornell University Press.
Wilson, W. (1893). Epochs of American History: Division and Reunion, 1829 - 1889. New York: Longmans, Green, and Co..
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