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Democrats, being out of office since 1897, needed an outstanding reformist leader
to take advantage of the Republican split, and Dr. Woodrow Wilson emerged as this
leader. As the governor of New Jersey, Wilson waged a passionate reform
campaign, in which he attacked predatory trusts and promised to return state
government, making New Jersey one of the more liberal states. Now, he was widely
mentioned for presidency.
• The heat of the campaign for Roosevelt cooled down when he was shot in the
chest by a frantic in Milwaukee. Active campaigning was suspended for more
than 2 weeks after delivering his scheduled speech
⇒ By 1917, federal revenue from the income tax exceeded the ones from the
tariff, and this gap has since been vastly widened
V) Wilson Battles the Bankers
• The country’s financial structure still under the Civil War National Banking Act
revealed significant defects
• The most serious shortcoming, as exposed by the panic of 1907, was the
inelasticity of the currency
⇒ Banking reserves were heavily concentrated in a handful of large cities and
could not be mobilized in time of depression
• Republican senator Aldrich was authorized to do a banking investigation for
Congress and his special commission recommended a gigantic bank with
numerous branches, like the third Bank of the U.S
• Democratic banking reformers investigating group was headed by Congressman
Arsene Pujo
• Wilson’s progressive-minded attorney Louis D. Brandeis boosted reform efforts
with his book Other People’s Money and How the Bankers Use It (1914)
• Wilson again personally appeared in both houses of the Congress in June 1913,
addressing his proposals for a decentralized bank
• Appealing again to the sovereign people, Wilson signed the Federal Reserve act
in 1913, the most important piece of economic legislation between the Civil War
and the New Deal
⇒ The Federal Reserve Board, appointed by the president, administrates a
national system of twelve regional reserve banks, each with its own central
bank
⇒ The regional banks are private owned, but under the authority of the Federal
Reserve Board
⇒ The Board was empowered to issue paper money, the Federal Reserve Notes,
backed up by commercial paper. Therefore, the amount of money in
circulation could be manipulated and increased if needed
⇒ This act carried the economic progress of the nation and the financial crises
of the First World War
VI) The President Tames the Trusts
• Early in 1914, The president again went to Congress in person for an address
• 9 month later, Congress responded with the Federal Trade Commission Act of
1914
⇒ Empowered a commission appointed by the president to regulate interstate
commerce, and the commission were to crush monopoly and unlawful
competition
• The Clayton Anti-Trust Act of 1914 defined more business practices that is
considered objectionable under the Sherman Anti-Trust Act, including price
discrimination and interlocking directorates; the Clayton Act also specifically
legalized strikes, unions, and peaceful picketing
⇒ This act lifted out labor as “a commodity or article of commerce”, and Union
leader Samuel Gompers hailed the act as the Magna Carta of labor, although
⇒ When an uprising of people revolted against the Haitian president, the Wilson
administration dispatched marines to protect American lives and properties in
1915 and remained there for 19 years
⇒ Troops were also sent to the Dominican Republic to quell riots, and they were
left there for the next 8 years
⇒ Wilson purchased the Virgin Islands in the West Indies from Denmark in 1917
to tighten up the grips of the Caribbean
IX) Moralistic Diplomacy in Mexico
• Mexico were highly invested by American investors
• The Mexican people revolted against their government
⇒ The revolution took an ugly turn in 1913 as the new revolutionary president
was murdered and General Victoriano Huerta, an Indian, was placed for
president
(a) Caused massive immigration to the U.S; often segregated into Spanish-
speaking societies, and formed a unique borderland culture
⇒ The revolution urged American jingoes to chant for intervention
(a) Yellow journalist William Randolph Hearst, having his ownership of a
Mexican Ranch, were among those chanting for war
• Wilson thought it was not justified to intervene with material interests
• Wilson also refused to recognize Huerta as president; he provided weapons to
Huerta’s rival, Venustiano Carranza and Francisco (“Pancho”) Villa
• When a small party of American sailors was arrested at the Atlantic seaport of
Tampico in April 1914, Wilson ordered the navy to seize the Mexican port of Vera
Cruz before asking Congress for the authority to use force against Mexico, after
the Mexicans failed to conform American admiral’s demand for a salute of 21
guns
• Huerta collapsed in July 1914 and Venustiano Carranza succeeded him
⇒ Pancho Villa turned on Carranza, whom Wilson now supported. After Villa’s
men brutally hunt down Americans to kill, General John J. Pershing’s forces
chased down Villa but failed to capture Villa himself
X) Thunder Across the Sea
• Followed by the assassination of Archduke Ferdinand, the heir to the throne of
Austria-Hungary, by a Serbian patriot in Sarajevo, an explosive chain reaction
was caused by the strong alliance system
⇒ Russia, the protectorate of Serbia menaced Germany on the east while
France confronted Germany on the west
⇒ Central Powers: Germany, Austria-Hungary, and later Turkey and Bulgaria
⇒ Allies: France Britain Russia, and later Japan and Italy
• America is not going to stay out of the war for long
XI) A Precarious Neutrality
• Wilson’s grief at the war in Europe was compounded by the death of his wife
• While the British fed America with their side of the war story, there were large
numbers of Germans and Austro-Hungarians in the U.S who had natural
sympathy for their country