Daily Class OutlineDaily Class QuestionsDaily Class Web LinksDaily Class Notes


Question for Discussion: Was the Progressive movement successful in reforming state and federal government in the early 1900s?

Reading: Roosevelt, "The New Nationalism"; Roosevelt, "We Stand at
Armageddon"; The Progressive Party Platform (1912);
Wilson "The New Freedom";

Video: The Distinguished Gentlemen

Daily Class Web Links

The Progressive Reform Movement

Theodore Roosevelt vs. Woodrow Wilson on Monopoly and Democracy

Corporate Power and the Subversion of Democracy

Corporate Welfare and the Subversion of Free Enterprise

Daily Class Outline

1. Glenn Beck's War against the Progressives
(Why is Beck obsessed with the Progressives?)

Social, Economic, and Political Problems facing
America in the early 1900s.

2. The Rise of the Progressive Movement

3. Roosevelt vs. Wilson

  • Theodore Roosevelt

  • Monopoly and Antitrust (in-class)

  • 1896: Trusts and Anti-Trust (in-class)

    The Sherman Anti-Trust Act, passed in 1890, was the first important federal measure to limit the power of companies that controlled a high percentage of market share. Ironically, in the 1890s the Act was used primarily to block strikes, since it prevented any 'conspiracy to restrict trade,' and businesses like the Pullman Railcar Company argued that labor unions were such conspiracies. They won the support of state and federal militia to enforce this anti-labor view.

  • Monopolies and Antitrust Law - Further Readings:

    In the free market, competition is often ruthless. Antitrust law regulates this competition in order to prevent unfairness in the conduct of business. Theterm antitrust refers to the industrial giants of the nineteenth century, corporations which organized themselves into jointly managed units known as trusts. Through size and strength, the trusts single-handedly controlled the nation's most important markets, crushing all competitors, dictating prices, anderratically supplying goods and services to consumers. This led to the condition of overall dominance known as monopoly.


  • Bull Moose years of Theodore Roosevelt by Theodore Roosevelt

  • The Most Consequential Elections in History: Woodrow Wilson and Theodore Roosevelt

  • Progressive Reform and the Trusts (in-class)

  • The Progressive Party Platform (1912) (in-class)

  • Roosevelt, "We Stand at Armageddon" (in-class)

  • Roosevelt, "The New Nationalism" (in-class)

  • Woodrow Wilson, Monopoly or Opportunity- (1913) (in-class)

  • Wilson "The New Freedom" (in-class)

  • Sixteenth Amendment to the United States Constitution (1913)

  • History of the Income Tax in the United States :

    In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4 billion by 1920. With the advent of World War II, employment increased, as did tax collections—to $7.3 billion. The withholding tax on wages was introduced in 1943 and was instrumental in increasing the number of taxpayers to 60 million and tax collections to $43 billion by 1945.

  • Federal Reserve System - Wikipedia:

    The Federal Reserve System (also known as the Federal Reserve, and informally as The Fed) is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907.[2][3][4]


  • The Federal Trade Commission was created in 1914:

    When the FTC was created in 1914, its purpose was to prevent unfair methods of competition in commerce as part of the battle to “bust the trusts.” Over the years, Congress passed additional laws giving the agency greater authority to police anticompetitive practices.

  • Revenue Act of 1916:

    The United States Revenue Act of 1916, (ch. 463, 39 Stat. 756, September 8, 1916) raised the lowest income tax rate from 1 % to 2 % and raised the top rate to 15 % on taxpayers with incomes above $2 million. (Previously, the top rate had been 7 % on income above $500,000.) The Act also instituted the federal estate tax.[1]

  • The Modern Estate Tax Evolves: 1916 to 1975
    In the early 20th century, worldwide conflict cut into trade tariffs--a mainstay of federal revenues--and Congress turned to another revenue source. The Revenue Act of 1916, which introduced the modern-day income tax, also contained an estate tax with many features of today's system. After an exemption of $50,000 (over $11 million in terms of today's wealth), tax rates started at 1 percent and climbed to 10 percent on estates over $5 million (over $1 billion in terms of today's wealth). Estate taxes were increased in 1917 as the U.S. entered World War I.

4. Corporations, Money, and Modern Politics

  • See Roosevelt and Wilson's statements on Government Regulation
    of Large Corporations     (in-class)

  • Roger Tamaraz in his Own Words (in-class)

    Roger Tamraz, an international businessman with an unsavory reputation who gave $300,000 to Democrats for last year's election campaigns, testified on Thursday that he had donated the money expressly to pry open the doors of power.

    "It's the only reason -- to get access," Tamraz told the senators investigating campaign finance practices.

    Quick with one-liners, Tamraz was the first large donor to testify in the seven weeks of hearings by the Governmental Affairs Committee, and he was by far the most colorful witness yet.

    Tamraz was asked whether he got his money's worth for his large contributions. Yes, he replied and said, "I think next time I'll give $600,000."

  • Capitol Sketchbook- A Fat Cat Tells How the West Wing Was Won:

    "You know how to game it," he was told angrily by Sen. Richard Durbin, D- Ill. "You put enough money into the slot, you get a response from the political party in power."

    Tamraz remained unrepentant. After a while, some of the senators seemed numbed by his repeated defense and near celebration of big-money political access. There was shock near the end of his testimony at the disclosure that he had never registered to vote, despite all the generous wielding of his political checkbook.

    "I think it's a bit more than a vote," he explained as the senators studied him as someone special.

    "Thank God we're a capitalist society and there's nothing wrong with running after money," he exulted before the politicians, speaking not just as a pipeline promoter but as a proud bipartisan big-money contributor.


5.  Campaign Finance Reform

6. Global Corporations and Globalization:
The Rise of the Very Rich and Powerful

  1. Too big to fail - Wikipedia

  2. Who’s Behind the Financial Meltdown?

  3. Simon Johnson, The Quiet Coup (in-class)

  4. MIT's Johnson Says Too-Big-to-Fail Banks Will Spark New Crisis

  5. Bailout Recipients spent Millions on Lobbying:

    "The banks lobbied Washinton so they write the rules that got us into this crisis. They then lobbied Washington to get the money to bail them out. And now they are lobbying Washington to write the rules so they get us into the next crisis. It's perfect circularity. I look at it as more a question than an answer: Who owns this process?"

    Elizabeth Warren, TARP Congressional Watchdog


  6. Elizabeth Warren Hires Some Bankers to Run
    Consumer Protection Agency

  7. Reich, "Why Wall Sreet Reform is Stuck in Reverse"

  8. Corporate Globalization Fact Sheet

  9. Facts on the Concentration of Wealth

  10. Corporate Oligopolies

  11. The Corporate Welfare Budget Bigger than Ever

  12. Corporate Welfare Information Center

  13. Public Citizen: Corporate Welfare

  14. TIME Study of Corporate Welfare

  15. Ending Corporate Welfare as we Know It

  16. Global Problems not being Solved by Globalization
    ( in-class)

7. Can We Limit Corporate Domination of the Political Process?



Daily Class Questions

1. What does Roosevelt mean when he argues that "there can be no effective
control of corporations while their political activity remains"

2. Why does Roosevelt believe that large industrial corporations are a natural 
result of the growth of our modern industrial society?

3. Do you agree with Roosevelt that government must increase its own power
to match and control these powerful industrial corporations?

4. What does Roosevelt mean by the New Nationalism?

5. Do you agree that a strong national government led by a strong President
 is the only force that can control these powerful industrial corporations?

6. Does Wilson believe that monopolies and  trusts are inevitable?

7. Why does Wilson believe that trusts are a threat to both our democratic 
society and to our free-enterprise economy?

8. Why does Wilson believe that Roosevelt's "New Nationalism" is
simply "regulated monopoly"?

9. What does Wilson propose to do to limit the growing political and 
economic power of monopolies and trusts?

10. Do you think Roosevelt and Wilson really differ in their attitude toward 
government regulation and control over monopolies and trusts.



Daily Class Notes

....."There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done.....
....."It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes...have supplied one of the principal sources of corruption in our political affairs"
.........................Theodore Roosevelt, 1910

....."I believe that every national officer, elected or appointed, should be forbidden to perform any service or receive any compensation, directly or indirectly, from interstate corporations; and a similar provision could not fail to be usefulwithin the States."
........Theodore Roosevelt, 1910

"We therefore demand a strong National regulation of inter-State corporations. The corporation is an essential part of modern business. The concentration of modern business, in some degree, is both inevitable and necessary for National and international business efficiency. but the existing concentration of vast wealth under a corporate system, unguarded and uncontrolled by the Nation, has placed in the hands of a few men enormous, secret, irresponsible power over the daily life of the citizen--a power insufferable in a free government and certain of abuse.

This power has been abused, in monopoly of National resources, in stock watering, in unfair competition and unfair privileges, and finally in sinister influences on the public agencies of State and Nation. We do not fear commercial power, but we insist that it shall be exercised openly, under publicity, supervision and regulation of the most efficient sort, which will preserver its good while eradicating and preventing its evils."
                Progressive Party Platform, 1912

....."What most of us are fighting for is to break up this very partnership between big business and the government. We call upon all intelligent men to bear witness that if this plan were consummated , the great employers and capitalists of the country would be under a more overpowering temptation than ever to take control of the government and keep it subservient to their purpose."
...................Woodrow Wilson, 1913

In order to understand the debate between Roosevelt and Wilson, we need to go back and look at the collapse of the Populist movement in 1896. The failure of the Populists created a political dilemma for American politicians and the two major political parties, the Republican and the Democratic parties. In order to avoid another challenge like the Populists both parties would be forced to address the larger causes for the Populist's rise and initial successes.

The Populist party in the early 1890s represented small farmers, rural small businesses, and American workers. Supporters of the Populists were worried about the growing failure of family farmers, the threat to rural businesses and the small-town way of life, and about workers' shrinking wages and the threat from competing immigrant workers. From 1870 to the 1900, there were three major Depressions--1873, 1884, and 1893. These Depressions, in which farmers, small businesses, and workers suffered from bankruptcy, the loss of jobs, and wage cuts, caused many Americans to begin to question whether the American economy worked. By the 1890s, Populist politicians were arguing that the growing power of large, national corporations and oligopolies were threatening to undermine free enterprise and our democracy. They charged that there was a conspiracy between these dominant corporations and the government to enrich the wealthy and large corporations at the expense of farmers, small businesses, and the American worker.

But in 1896, the Republican candidate for President, William McKinley, was elected President. And the Populist party collapsed, because its supporters were drawn into the Democratic or Republican parties. The collapse of the Populists was caused by both parties recognition and efforts to address some of the economic difficulties experienced by farmers, small businesses, and workers. McKinley was elected President on his promise to promote economic growth, create jobs, and provide opportunities for all Americans. McKinley was elected by those Americans who were prospering in America's growing industrial cities, where jobs, wealth, and opportunities offered them the promise of achieving the American Dream. The Populist lost because farmers and small, rural businesses were now in the minority. Since 1896, the majority of Americans would support the growth of an urban, industrial America based on large national corporations and a consumer economy.

In order to prevent the re-emergence of a Populist political challenge that would once again try to unite American farmers, small businesses, and workers to challenge the continued domination of the Republican and Democratic parties, politicians from both parties would have to ensure that the economy was growing fast enough, providing enough good jobs, and offering opportunities for all who were willing to work hard. But how could they do this? Afterall, the economy had stopped working three times between 1870 and 1900, and had suffered three terrible Depressions.

It is here that Williams' argument about the growth of support for American imperialism becomes important. Williams argues that the 1893 Depression, the Populist challenge, and the growing sense that the American economy didn't work very well created a "cultural crisis" for Americans in the 1890s and early 1900s. For Williams, Americans were faced with a dilemma: The expansion of the American economy fueled by the settling of the West had provided jobs and opportunities for all. Now with the West and America settled, what would fuel the economic expansion and opportunities to provide Americans with jobs, wealth, and opportunities? Williams argues that this economic dilemma fueled the cultural crisis of the 1890s. Because Americans believed that their individual freedom depended on economic success and opportunities for advancement. Without the freedom to expand their individual wealth, Americans worried that their individual freedom and their democratic society was threatened. Instead of redefining freedom, and turning away from the endless pursuit of wealth, and recognizing the limits of the American economy to provide new wealth and opportunities for all Americans, Americans discovered a new frontier, a new land to settle and development, that would provide Americans a tremendous source of new wealth and economic opportunities. This new frontier was the world. American political and economic leaders argued that American should become an empire and spread its economic influence, culture, and democratic institutions throughout the world.

Williams concludes that American resolved this cultural crisis in the 1890s and early 1900s by supporting the growth of an American empire. By becoming a "benevolent, progressive policemen," by imposing law and order on backward countries, and by promoting the growth and expansion of American corporations and economic interests throughout the world, American leaders believed they had discovered a way to provide Americans the economic freedom, the jobs, opportunities, and pursuit of wealth that Americans believed their society was based on. But how did the growth of this American empire help resolve the economic problems that created periodic Depressions?

The Depressions between 1870 and 1900 were caused by overproduction. With the growth of large, national corporations and huge, industrial factories that could produce more goods than Americans could buy, the American economy faced a serious problem. Because of the growing success and productivity of these new industrial factories, America was producing more goods than Americans could buy, and if these goods weren't bought, then the economy would begin to falter. Here is how it works. If these large national corporations can't sell all the goods they are producing, they will be forced to lay off workers, close plants, and even default on the loans they took out to build these new industrial factories. Without continuous growth and increasing production, these large American corporations could not maintain their profits, pay off their debts, and compete with other modern, industrial corporations. Depressions occur when overproduction and undercomsumption leads large numbers of factories to lay off workers and close up, because they are producing more goods than they can sell. The more workers that lose their jobs, the less Americans can afford to buy the products that the industrial economy is creating, and this causes even more overproduction and even more layoffs and plant closings. Depressions end when enough factories are closed, and enough surplus production is finally sold off, that corporations must hire more workers and open more factories to meet the demand for goods. And, of course, with more and more factories opening up again, and workers working, Americans can now afford to buy the products created by this expanding industrial production.

If overproduction and underconsumption created Depressions, one of the easiest ways to solve this problem was to expand the markets for American goods to countries throughout the world. But in order to expand foreign markets for our manufacturers and expand opportunities for American corporations and investors to invest their profits in other countries, the United States musts pressure other countries to buy our products and allow American investors to invest in their countries. This would seem simple enough, but it is not. American companies and investors were blocked by European imperialism. From 1870 to 1920, facing the same economic crisis that the American economy faced, European nations decided to expand their economies by controlling and dominating other countries, by expanding their empires. Britain, France, Germany, and Belgium compete with each other to divide up and colonize Africa and Asia. These European empires forced their colonies to sell their resources to them and to buy manufactured goods only from them. Thus, facing competition with European imperialism, American economic and political leaders concluded that American could compete only it it too expanded its empire.

From 1898 to 1920, American expanded its economic and political domination and control of Latin America, the Philippines, Hawaii, and China. But American leader argued that, unlike the Europeans, American imperialism was benevolent, that our larger goals were to bring our economic wealth, political institutions, and modern civilization to backward people. Leaders from Roosevelt to Wilson argued that expanding American influence throughout the world was our God-given manifest destiny as a superior civilization and culture. The American Empire, therefore, was not an empire at all, but an extension and expansion of American freedom. But, as Williams notes, the contradictions created by forcing other peoples to accept your influence, control, and domination often leads to resistance and resentment.

As a result of the growth and expansion of the American empire in the early 1900s, the American economy begins to boom and Americans are prospering. But in order to create this empire, the federal government has greatly expanding its power and influence. Moreover, in order to promote and support economic growth and expansion both within America and within its larger empire, the federal government has massively expanded its size and influence. In addition to the growth of a powerful, federal government in the early 1900s, we see the continued growth of large, national corporations, who were expanding their control over the economy. Between the 1890s and 1920s, American reformers known as Progressives attempted to reform the American economic and political system in order to protect free enterprise and free competition and protect our democratic institutions from the growing power of these large, national corporations. Two of the leading reformers were Theodore Roosevelt and Woodrow Wilson.

Roosevelt served as President between 1900 and 1908, and Wilson served as President between 1912 and 1920. In 1912, Roosevelt ran against Wilson for President. Roosevelt came out of retirement because he thought Wilson and President Taft, who also ran for re-election in 1912, were threatening to undo the reforms he created as President. The basic problem facing all three candidates for President was how should the federal government promote economic growth, regulate large corporations, and protect our democratic institutions from the growing power of these corporations.

Roosevelt argued that dominant, large, national corporations that dominated their industries were inevitable. He believed that oligopolies were the natural result of economic competition in the free market. Large companies could produce higher quality goods in greater number at a lower price than smaller companies. As a result of their ability to out-compete smaller companies, a few giant companies would inevitably dominate whole industries. Instead of trying to break up these giant corporations, as Wilson was proposing, Roosevelt believed that the government should regulate and control them to ensure that they didn't use their power to control the economy and threaten our democratic institutions. Thus Roosevelt supported a strong, powerful central government whose power good be used to check and balance the power of these giant corporations. In addition to regulating these corporations, Roosevelt wanted to prevent them from using their money to influence politicians and elections. In order to protect our democratic institutions, the federal government must limit and strictly control the influence of large, national corporations in politics.

Given Roosevelt's desire to control giant corporations, what do you think their attitude was toward Roosevelt? You might think that they would be opposed to his programs, but their weren't. Many of these giant corporations supported Roosevelt's campaign for President. The reason they were not opposed to him is that they had worked with him while he was President. Under Roosevelt, many of the leaders of these giant corporations were appointed to run the very government agencies that Roosevelt wanted to use to regulate national corporations. Because corporate interests dominated these government agencies, these corporations weren't opposed to Roosevelt's reforms. By controlling the very agencies created to regulate them, these giant corporations could acquire even more control over the economy and their industries.

Running against Roosevelt, Wilson argued that these large, national corporations had become a threat to the American economy and society. By creating oligopolies and trusts that allowed them to dominate whole industries, these corporations were undermining free enterprise and free competition. Wilson believed that without the constant competition for consumers created by free competition between competing corporations, that the American consumer would suffer; they would no longer be able to buy the highest quality goods at the lowest price, because these oligopolies would not have to compete on the basis of price and quality. Thus Wilson wanted the federal government to break up these trusts and oligopolies and restore free enterprise and free competition. Unlike Roosevelt, Wilson believed that the federal government should challenge and limit the power of these large national corporations in order to product free enterprise and protect our democratic institutions.

It appears that Wilson and Roosevelt have some real fundamental differences on how the government should regulate large national corporations and control the economy. But do they? Wilson is elected President in 1912, because Roosevelt and Taft split the remaining votes between them in this three-way race. As President, Wilson's policies were little different from Roosevelt's when he was President. Wilson did not work to break up these giant corporations and restore free enterprise. Like Roosevelt, Wilson appointed business leaders to the government agencies created to regulate business. Why did Wilson do this? Doesn't this go against his campaign promises?

First of all, as President, Wilson realized that he must create economic growth, jobs, and opportunities if he was going to get re-elected. In order to do this, he found that he was forced to cooperate with these large national corporations and even promote their growth and profits. As a result of the "reforms" created by Roosevelt and Wilson, we get the continued growth of the federal government, increasing cooperation between the government and large corporations, and less American democratic control over their government and political system.

Faced with the cultural crisis in the 1890s and early 1900s, Americans made a conscious choice. In return for the growth and expansion of an American Empire, the jobs and opportunities created by large, dominant national corporations, and the massive growth and power of the federal government, Americans gave up some of their democratic control over their government and political institution and accepted the domination of the American economy by large, dominant corporations. The irony Williams doesn't fully explore is this: In return for economic freedom, the freedom to acquire wealth and success, Americans gave up some of their democratic rights to control their society and economy. And giant global corporations are now competing with each other to buy control and influence over the federal government and our now global empire and interests. But can American democratic society really work if freedom means economic freedom and not the political and democratic right to shape our society, economy, and government? This is one of the larger contradictions created by what Williams calls "empire as a way of life."


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© 2000 by Chris H.  Lewis, Ph.D.
Sewall Academic Program; University of Colorado at Boulder
Created 1 June 2000:  Last Modified: 27 February, 2012
E-mail: cclewis@spot.colorado.edu
URL:    http://www.colorado.edu/AmStudies/lewis/1025/index.htm


American History 1025