Roosevelt’s Square Deal
At the dawn of the twentieth century, America was at a crossroads. Presented with abundant opportunity, but also hindered by significant internal and external problems, the country was seeking leaders who could provide a new direction. The political climate was ripe for reform, and the stage was set for the era of the Progressive Presidents, beginning with Republican Theodore Roosevelt.
Teddy Roosevelt was widely popular due to his status as a hero of the Spanish-American War and his belief in “speaking softly and carrying a big stick.” Taking over the presidency in 1901 after the assassination of William McKinley, he quickly assured America that he would not take any drastic measures. He then demanded a “Square Deal” that would address his primary concerns for the era—the three C’s: control of corporations, consumer protection, and conservation.
The ownership of corporations and the relationship between owners and laborers, as well as government’s role in the relationship, were the contentious topics of the period. Workers were demanding greater rights and protection, while corporations expected labor to remain cheap and plentiful. This conflict came to a head in 1902, with the anthracite coal strike in Pennsylvania. Coal mining was dirty and dangerous work, and 140,000 miners went on strike and demanded a 20 percent pay increase and a reduction in the workday from ten to nine hours. The mine owners were unsympathetic and refused to negotiate with labor representatives. With the approach of winter the dwindling coal supply began to cause concern throughout the nation.
Roosevelt, going against established precedent, decided to step in. He summoned the mine owners and union representatives to meet with him in Washington. Roosevelt was partly moved by strong public support and took the side of the miners. Still, the mine owners were reluctant to negotiate until Roosevelt, threatening to use his “big stick,” declared that he would seize the mines and operate them with federal troops. Owners reluctantly agreed to arbitration, where the striking workers received a 10 percent pay increase and a nine-hour working day. This was the first time a president sided with unions in a labor dispute, and it helped cement Roosevelt’s reputation as a friend of the common people and gave his administration the nickname “The Square Deal.”
Emboldened by this success and in pursuit of the first element of his Square Deal, Roosevelt began to attack large, monopolistic corporations. Some trusts were effective and legitimate, but many of these companies engaged in corrupt and preferential business practices. In 1902, the Northern Securities Company, owned by J.P. Morgan and James J. Hill, controlled most of the railroads in the northwestern United States and intended to create a total monopoly. Roosevelt initiated legal proceedings against Northern Securities and eventually the Supreme Court ordered that the company be dissolved. Roosevelt’s radical actions angered big business and earned him the reputation of a “trust buster,” despite the fact that his successors Taft and Wilson actually dissolved more trusts.
In 1903, with urging from Roosevelt, Congress created the Department of Commerce and Labor (DOCL). This cabinet-level department was designed to monitor corporations and ensure that they engaged in fair business practices. The Bureau of Corporations was created under the DOCL to benefit consumers by monitoring interstate commerce, helping dissolve monopolies, and promoting fair competition between companies. In 1913, the DOCL was split into two separate entities, the Department of Commerce and the Department of Labor, both of which continue to play an important role in regulating business today.
The railroad business continued to be one of the most powerful and influential industries. Like many companies of the time, railroad companies engaged in corrupt business practices such as rebating and price fixing. Roosevelt encouraged Congress to take action to address these abuses, and in 1903 they passed the Elkins Act, which levied heavy fines on companies that engaged in illegal rebating. In 1906, they passed the Hepburn Act, which greatly strengthened the Interstate Commerce Commission. This law allowed the Commission to set maximum rates, inspect a company’s books, and investigate railroads, sleeping car companies, oil pipelines, and other transportation firms. This was a bold action by Roosevelt and Congress given the transportation industry was a powerful lobbyist and a significant political contributor.
The second element of Roosevelt’s Square Deal was consumer protection. In the early 1900s, there was little regulation of the food or drugs that were available to the public. In 1906, Upton Sinclair published a book called The Jungle that described in graphic detail the Chicago slaughterhouse industry. Sinclair intended for his book to expose the plight of immigrant workers and possibly bring readers to the Socialist movement, but people were instead shocked and sickened by the practices of the meat industry.
Roosevelt had the power to do something about the horrors described in The Jungle. He immediately appointed a special investigating committee to look into food handling practices in Chicago. Their report confirmed much of what Sinclair had written. Roosevelt was shocked by the report and predicted that it could have a devastating effect on American meat exports. He agreed to keep it quiet on the condition that Congress would take action to address the issues.
After much pressure from Roosevelt, Congress reluctantly agreed to pass the Meat Inspection Act and the Pure Food and Drug Act of 1906. Many members of Congress were reluctant to pass these laws, as the meat industry was a powerful lobbying force. However, the passage of this legislation helped prevent the adulteration and mislabeling of food, alcohol, and drugs. It was an important first step toward ensuring that Americans were buying safe and healthy products. Eventually, the meatpacking industry welcomed these reforms, as they found that a government seal of approval would help increase their export revenues.
The final element of Roosevelt’s Square Deal was conservation. Roosevelt was widely known as a sportsman, hunter, and outdoorsman, and he had a genuine love and respect for nature. However, many Americans of the time viewed the country’s natural resources as limitless. For example, many farmers, ranchers, and timber companies in the west were consuming a huge portion of the available resources at an alarming rate. Their primary obsession was profit, and they had little concern for the damage they were causing. However, there was a small but vocal population who had a great deal of concern for the environment. Fortunately for them and for future Americans, the environmentalists had a friend in Teddy Roosevelt.
Environmentalism and conservation were not new ideas, but most had not been concerned with ecological issues. While a number of laws had been passed to prevent or limit the destruction of natural resources, the majority of this legislation was not enforced or lacked the teeth necessary to make a significant difference.
With Roosevelt’s urging, Congress passed the Newlands Act of 1902. This legislation allowed the federal government to sell public lands in the arid, desert western states and devote the proceeds to irrigation projects. Landowners would then repay part of the irrigation costs from the proceeds they received from their newly fertile land, and this money was earmarked for more irrigation projects. Eventually, dozens of dams were created in the desert including the massive Roosevelt Dam on Arizona’s Salt River.
Another major concern of environmentalists was the devastation of the nation’s timberlands. By 1900, only about 25 percent of the huge timber preserves were still standing. Roosevelt set aside 125 million acres of timberlands as federal reserves, over three times the amount preserved by all of his predecessors combined. He also performed similar actions with coal and water reserves, thus guaranteeing the preservation of some natural resources for future generations. Environmentalists such as John Muir, Gifford Pinchot, and the upstart Sierra Club aided Roosevelt in his efforts. Preserving America’s natural resources and calling attention to the desperate need for conservation may well have been Teddy Roosevelt’s greatest achievement as President, and his most enduring legacy.
In 1908, President Teddy Roosevelt could have easily carried his burgeoning popularity to a sweeping victory in the presidential election, but in 1904 he made an impulsive promise not to seek a second elected term. However, he did not intend to completely relinquish control, so he handpicked a successor. Howard Taft, the 350-pound Secretary of War, was chosen as the Republican candidate for 1908. Taft was a mild progressive and an easygoing man that Roosevelt and other Republican leaders felt they could control. Taft easily defeated the Democratic candidate, William Jennings Bryan, and the Socialist candidate, Eugene Debs, in what can be construed as continued public endorsement of Roosevelt.
Unfortunately, from the onset of his administration Taft did not live up to Roosevelt’s standards or the expectations of other Progressives. He lacked Roosevelt’s strength of personality and was more passive in his dealings with Congress. Many politicians were surprised to learn that Taft did not share some of the Progressive ideas and policies that Roosevelt endorsed. In fact, many people felt that Taft lacked the mental and physical stamina necessary to be an effective President.
The first major blow to the Progressives during Taft’s administration was the Payne-Aldrich Tariff of 1909. Taft called a special session of Congress to address what many people felt were excessive tariffs. After this session, the House of Representatives passed a bill that moderately restricted tariffs, but their legislation was severely modified when it reached the Senate. Radical Senators, led by Nelson W. Aldrich of Rhode Island, tacked on hundreds of revisions that effectively raised tariffs on almost all products. Taft eventually signed the bill and declared it “the best bill that the Republican Party ever passed.” This action dumbfounded Progressives and marked the beginning of an internal struggle for control of the Republican Party.
Another issue that caused dissension among Republicans was Taft’s handling of conservation issues. Taft was a dedicated conservationist and he devoted extensive resources to the protection of the environment. However, most of his progress was undone by his handling of the Ballinger-Pinchot dispute. Pinchot, the leader of the Department of Forestry and a well-liked ally of Roosevelt, attacked Secretary of the Interior Richard Ballinger for how he handled public lands.
Ballinger opened up thousands of acres of public lands in Wyoming, Montana, and Alaska for private use, and this angered many Progressives. Pinchot was openly critical of Ballinger, and in 1910 Taft responded by firing Pinchot for insubordination. This infuriated much of the public as well as the legions of political players who were still fiercely loyal to Roosevelt.
A major rift occurred in the Republican Party as a result of Taft’s straying from Progressive policy. The party was split down the middle between the “Old Guard” Republicans who supported Taft and the Progressive Republicans who backed Roosevelt. This division in the Republican Party allowed Democrats to regain control of the House of Representatives in a landslide victory in the congressional elections of 1910.
In early 1912, Roosevelt triumphantly returned and announced himself as a challenger for the Republican presidential nomination. Roosevelt and his followers, embracing “New Nationalism,” began to furiously campaign for the nomination. However, as a result of their late start and Taft’s ability as incumbent to control the convention, they were unable to secure the delegates necessary to win the Republican candidacy. Not one to admit defeat, Roosevelt formed the “Bull Moose” Party and vowed to enter the race as a third-party candidate.
The split in the Republican Party made the Democrats optimistic about regaining the White House for the first time since 1897. They sought a reformist candidate to challenge the Republicans, and decided on Woodrow Wilson, a career academic and the current progressive governor of New Jersey. Wilson’s “New Freedom” platform sought reduced tariffs, banking reform, and stronger antitrust legislation. The Socialists again nominated Eugene V. Debs whose platform sought public ownership of resources and industries. As expected, Roosevelt and Taft split the Republican vote, and Wilson easily won a majority of the electoral votes. Having received only 41 percent of the popular vote, Wilson was a minority president.
Wilson’s New Freedom
Upon taking office, Woodrow Wilson became only the second Democratic president since 1861. Wilson was a trim figure with clean-cut features and pince-nez glasses clipped to the bridge of his nose, giving him an academic look. Partly due to his academic background and limited political experience, Wilson was very much an idealist. He was intelligent and calculating, but the public perception was that he was emotionally cold and distant. Wilson arrived in the White House with a clear agenda and the drive to achieve all of his goals. In addition, the Democratic majority in both houses of Congress was eager to show the public that their support was not misdirected.
Wilson’s platform called for an assault on “the triple wall of privilege,” which consisted of tariffs, banks, and trusts, and rarely has a president set to work so quickly. His first objective was to reduce the prohibitive tariffs that hurt American businesses and consumers. In an unprecedented move, Wilson personally appeared before Congress to call a special session to discuss tariffs in early 1913. Moved and stunned by Wilson’s eloquence and force of character, Congress immediately designed the Underwood Tariff Bill, which significantly reduced import fees.
The Underwood Tariff Bill brought the first significant reduction of duties since before the Civil War. In order to make up for the loss in revenues caused by the lower tariffs, the Underwood Bill introduced a graduated income tax. This new tax was introduced under the authority of the recently ratified Sixteenth Amendment. Initially, the tax was levied on incomes over $3,000, which was significantly higher than the national average. However, by 1917 the revenue from income taxes greatly exceeded receipts from the tariff. This margin has continued to grow exponentially over the years.
After tackling the tariff, Wilson turned his attention to the nation’s banks. The country’s financial structure was woefully outdated, and its inefficiencies had been exposed by the Republican’s economic expansion and the Panic of 1907. The currency system was very inelastic, with most reserves concentrated in New York and a few other large cities. These resources could not be mobilized quickly in the event of a financial crisis in a different area. Wilson considered two proposals: one calling for a third Bank of the United States, the other seeking a decentralized bank under government control.
Siding with public opinion, Wilson called another special session of Congress in June of 1913. He overwhelmingly endorsed the idea of a decentralized bank, and asked Congress to radically change the banking system. Congress passed the Federal Reserve Act, which was arguably the greatest piece of legislation between the Civil War and Franklin Roosevelt’s New Deal. The Act created a Federal Reserve Board, which oversaw a system of 12 regional reserve districts, each with its own central bank. This new system also issued Federal Reserve Notes, paper currency that quickly allowed the government to adjust the flow of money, which are still in use today. The Federal Reserve Act was instrumental in allowing America to meet the financial challenges of World War I and emerge from the war as one of the world’s financial powers.
Emboldened by his successes, President Wilson turned his attention to the trusts. Although legislation designed to address the issue of trusts had existed for many years, they were still very much a problem. Again, Wilson appeared before Congress and delivered an emotional and dramatic address. He asked Congress to create legislation that would finally address trusts and tame the rampant monopolies. After several months of discussion, Congress presented Wilson with the Federal Trade Commission Act of 1914. This act allowed the government to closely inspect companies engaged in interstate commerce, such as meatpackers and railroads. The Commission investigated unfair trading practices such as false advertising, monopolistic practices, bribery, and misrepresentation.
Following closely behind the Federal Trade Commission Act of 1914, was the Clayton Act of 1914. It served to strengthen the Sherman Anti-Trust Act of 1890 (the first measure passed by the U.S. Congress to prohibit trusts) and redefine the practices that were considered monopolistic and illegal. The Clayton Act provided support for labor unions by exempting labor from antitrust prosecution and legalizing strikes and peaceful picketing, which were not part of the Sherman Act. Renowned American Federation of Labor union leader, Samuel Gompers, declared the Clayton Act the “Magna Carta” of labor. Unfortunately, labor’s triumph was short-lived, as conservative judges continued to curtail union power in controversial decisions.
The era of the Progressive presidents produced a number of notable achievements. Trust-busting forced industrialists and monopolistic corporations to consider public opinion when making business decisions. This benefited the consumer and helped grow the economy. The Progressive presidents also increased consumers’ rights by limiting corporate abuses and trying to ensure the safe labeling of food and drugs. The creation of a federal income tax system lowered tariffs and increased America’s presence as a global trading partner. It also raised additional revenues, some of which were used for beneficial programs such as conservation. The Progressive presidents served to strengthen the office of the president and the public began to expect more from the executive branch. Progressivism as a concept helped challenge traditional thinking about government’s relationship to the people and sparked new ideas that stimulated thought for decades to come.
Along with these significant accomplishments, the Progressive movement also had a number of notable shortcomings. Due to several contrary schools of thought within the movement, goals were often confusing and contradictory. Although most Progressives had good intentions, their conflicting goals helped detract from the overall objectives of the movement. Despite the numerous successes and lofty goals and ideals of the Progressive movement, the federal government was still too greatly influenced by industry and big business. The Progressive movement was not a complete success, but it did serve to spark new ideas and new ways of thinking about business and government. It created a new school of thought that challenged traditional ideas and allowed several new politicians to break the mold and lead the country in a new direction. This new way of thinking proved vital for the United States as the First World War loomed on the horizon.