Woodrow Wilson, as the 28th President of the United States, enacted some of the most sweeping economic overhauls the American government has ever seen. The "Professor President", by compromising and cutting deals, was able to bring to life his vision of reform in the business world. The Underwood-Simmons bill, the Federal Reserve Act, the Federal Trade Commission Act and the Clayton Anti-Trust Act were all brought about by Wilson as tools to further his goal of taking away power from the large corporations and banks and giving it to the small businesses and entrepreneurs.
First, Wilson enacted the Underwood-Simmons bill in 1913. This Act lowered the trade tariffs for the first time since before the Civil War, and initiated the first progressive income tax for citizens of the United States. By doing this, Wilson lowered the tariffs, opening the doors for foreign goods to be brought in at cheaper prices. Wilson lowered the tariffs on the belief that "we long ago passed beyond the modest notion of protecting the industries of the country and moved boldly forward to the idea that they were entitled to direct patronage of the government." In essence, he was saying that the original justifications for the tariff were no longer applicable and were only causing harm by giving unfair advantage to corporations. "For a long time a time so long that the men now active in public policy hardly remember the conditions that preceded it we have sought in our tariff schedules to give each group of manufacturers or producers what they themselves thought that they needed in order to maintain a practically exclusive market as against the rest of the world. Consciously or unconsciously, we have built up a set of privileges and exemptions from competition behind which it was easy by any, even the crudest, forms of combination to organize monopoly; until at last nothing is normal, nothing is obliged to stand the tests of efficiency and economy, in our world of big business, but everything thrives by concerted arrangement. Only new principles of action will save us from a final hard crystallization of monopoly and a complete loss of the influences that quicken enterprise and keep independent energy alive."
In addition to the lowering of tariffs, the Underwood-Simmons bill established the first progressive income tax to be charged to all United States' citizens. Wilson realized that by lowering the tariffs, this would take money away from the government. In order to offset the loss in revenue, he put into place the income tax, which the nation had been pushing for but until the passing of an amendment that year, had been ruled unconstitutional. Wilson wanted to relieve the nation of the burden of tariffs, but still realized the importance of government revenue. In addition to government finance, the progressive income tax helped shift the burden off the poor and onto those more able to foot the bill of taxation. The fact that Wilson was able to pass such a tax says something about his relative innocence in respect to affiliation with corporate interest groups. Coming into politics from the world of academia, he had not formed connections with special interests that most career politicians had and thus was able to relate more to the constituents he had left only a few years before his Presidential campaign.
In the same year that the Underwood-Simmons bill had passed, his first year as President, Wilson was also able to get the Federal Reserve Act through Congress. The Federal Reserve was Wilson's vision of the consolidation of money and credit. Credit, up until then, had been centralized in New York by its major banks. "The great monopoly, in this country is the money monopoly. Credit
is dangerously concentrated in this country." The banks had developed close bonds with the nation's industries, an intermingling of board members and directors had fused them together so that the interests of the banks were those...
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