Commerce and the Progressive Era

The twentieth century saw the rise of a widespread but not very clearly defined group of reformers known as the progressives. (In 1912 and 1924 some progressives organized national Progressive parties.) The basic belief that united them was that the industrialized, urbanized United States of the nineteenth century had outgrown its eighteenth-century Constitution. That Constitution did not give the government, especially the federal government, enough power to deal with unprecedented problems. Progressive political theorists argued that government must be regarded as a living organism; that it must evolve along with its environment or die. The progressives targeted big business, whose economic power allowed it to dominate politics, enabling it to gain special privileges (such as franchises, monopolies, tariffs) and to avoid regulation for the public good (such as health and safety regulations). They held that it was necessary to regulate the national economy to counter the influence of big business.
The first steps toward regulation came from Congress in the 1890s, which began to use its constitutional power to tax, spend, and regulate interstate commerce for purposes that lay beyond the Constitution.
In the aftermath of the 1894 Pullman strike, Congress tried to promote labor unions as a way to balance the economic power of the railroads. (The Supreme Court struck down the labor-relations provisions of this act in 1908.) Congress began to use the taxing power not to raise revenue but for regulatory purposes. At the behest of dairy farmers who wanted to drive a competing product, margarine, from the market, it laid a heavy tax on margarine. It then used the taxing power to stop the manufacture of dangerous phosphorous matches, and to control narcotics. It also acted to prohibit the interstate shipment of things that nearly everyone condemned—lottery tickets, diseased meat, other impure foods and drugs, and obscene literature (including information about abortion and contraceptives). In 1910 Congress made it a crime to transport women across state lines “for any immoral purpose.” This law, the Mann “white slave act,” was aimed primarily at commercial (and coercive) prostitution, but was applied more often to consensual and non-commercial sexual immorality.
All of these acts amounted to what was called a “federal police power,” regulating matters of public health, safety, welfare and morals that had been traditionally left to the states.
Teddy roosevelt portrait
Roosevelt was a moderately progressive president from 1901 to 1909 and would run as the head of an independent Progressive party in 1912.
Progressive political theorists placed greater hope in presidential than congressional action, and Theodore Roosevelt set the tone for the modern presidency. Roosevelt was a moderately progressive president from 1901 to 1909 and would run as the head of an independent Progressive party in 1912. In his view, the president could do anything that the Constitution did not expressly forbid. This alarmed the more conservative leadership of the Republican party, which had, like their Whig forebears, regarded the legislature as the predominant branch in a republican government. He thus intervened in a national coal strike in 1902, launched loud rhetorical attacks on big business, and was actively involved in shaping legislation. Above all, Roosevelt promoted the progressive idea that policy should be made by expert administrators, scientifically trained civil servants who would be above politics. This idea led to the creation of a Department of Labor and a Bureau of Corporations.
The federal judiciary lagged behind the other branches in embracing progressivism. Though it accepted most progressive legislation at both the federal and state levels, it continued to believe that the Constitution limited Congress to the exercise of enumerated powers, that most regulatory power (the “police power”) belonged to the states, and the due process clause of the Fifth and Fourteenth Amendments protected fundamental rights from infringement. But it accepted as legitimate doubtful opinions that legislators offered—that margarine was a dangerous product, or that segregating the races was necessary to prevent race riots. A new generation of judges, educated in new law schools, brought a different jurisprudence into the twentieth century. Oliver Wendell Holmes, Roscoe Pound, and Louis D. Brandeis all embraced the idea of a “living Constitution,” of law and a Constitution that would evolve in response to social and economic changes. The socialists among them saw law as simply a tool of the capitalist class, and sought to turn it into a tool of the proletariat, or working class.
Before the presidential election of 1912, Theodore Roosevelt formed an independent Progressive party because he considered his successor as president, William Howard Taft, as insufficiently progressive (though Taft considered himself a “progressive conservative”). This schism in the Republican party paved the way for the election of Woodrow Wilson, who had had a long career as a progressive political scientist and was also critical of the Constitution. Wilson’s legislative agenda, known as the “New Freedom,” included several pieces of economic regulation. He gave the U.S. the equivalent of a central bank in the Federal Reserve Act of 1913. This was a significant delegation of Congress’ monetary powers and made the ensuing century one of marked inflation (the century prior to 1913 had been marked by deflation). Congress also established the Federal Trade Commission as a means of “regulating competition” to protect small businesses. Shortly after the Sixteenth Amendment authorizing the income tax was ratified, Congress enacted a “progressive” (higher rates on higher incomes) income tax. Wilson went further when he sought re-election in 1916, embracing measures that he had previously said were unconstitutional, such as loans to farmers and a prohibition of the interstate shipment of goods produced by child labor. He also got Congress to impose an eight-hour day for railroad workers at the behest of their unions, who then threatened a strike on the eve of American intervention in World War I.
640px child labor in georgia  united states  1909
Wilson went further when he sought re-election in 1916, embracing measures that he had previously said were unconstitutional, such as loans to farmers and a prohibition of the interstate shipment of goods produced by child labor.
World War I brought about the greatest concentration of federal power and economic regulation in American history, far greater than that of the Civil War.
The top income tax rate rose from 7 to over 70 percent, and many more Americans paid income taxes. The Federal Reserve dutifully served the Treasury by keeping its borrowing costs low. The federal government took over the railroads and established a virtual command economy over industry and labor. It prescribed the eight-hour day, promoted collective bargaining, and controlled prices.
After the war came a popular reaction, a desire to return to what the new Republican President Warren G. Harding called “normalcy.” Though usually depicted as a return to isolationism and laissez-faire, the supposedly pro-business 1920s did not repeal the preceding progressive era. The Republicans curtailed but maintained many progressive innovations, like the income tax and the Federal Reserve bank. They continued most of the prewar “grants-in-aid” programs, by which Congress got the states to pursue policies that were held to be beyond the federal government’s power, such as building roads and schools and promoting maternal and child health, by proving matching funds for them. While the railroads were returned to private ownership, they were now a federally-regulated public utility, and the government provided for the promotion of unions in the Railway Labor Act.
Prohibition (secured by the ratification of the Eighteenth Amendment in 1919) abolished in law one of the largest industries in the country and set the federal and state governments on course to the most ambitious effort by the federal government to police morals in American history.
Temperance movement  1
Prohibition (secured by the ratification of the Eighteenth Amendment in 1919) abolished in law one of the largest industries in the country and set the federal and state governments on course to the most ambitious effort by the federal government to police morals in American history.
Herbert Hoover was the most important progressive of the 1920s. He had been a supporter of Roosevelt’s Progressive party in 1912. He initiated many campaigns to regulate the economy as Secretary of Commerce under Presidents Harding and Coolidge. Hoover endeavored to use the federal government to promote voluntary cooperation among American businesses, to eliminate wasteful, “cutthroat” competition, to establish industry standards, to promote fledgling industries like radio, and to save declining industries like coal. Hoover called this the “New Individualism,” which would help America avoid laissez-faire capitalism and socialism or fascism. When the Great Depression began, shortly after his inauguration as president, Hoover took unprecedented steps to alleviate the crisis. The most significant of his measures against the depression was the Reconstruction Finance Corporation, which provided assistance to prevent the failure of banks and utilities—what would later be called “bailouts”—rather than letting the market liquidate failed enterprises. But Hoover was unwilling to use the power of government to impose direct controls on business, or to provide direct relief to the many unemployed.
In the years between the great depressions of 1893 and 1929, the federal government took its first steps to regulate the industrial economy that had grown up in the nineteenth century. These steps were guided by the ascending progressive political philosophy that saw the Founders’ Constitution as outdated. Under Presidents Roosevelt and Wilson especially, Congress’s power to tax, regulate commerce, and spend money was expanded in order to shape the American economy rather than allow it to shape itself. The period also saw the expansion of new “administrative” agencies, as they were called, neither executive nor congressional, and so insulated from popular electoral control, such as the Interstate Commerce Commission, the Federal Reserve Board, and the Federal Trade Commission. Most Americans remained reluctant to make fundamental changes in their political and economic systems, and did so only under the duress of crises like the First World War. It would take the Great Depression of 1929 to make Americans accept a fuller variety of progressive reforms.

This reading brought to you by:

BRI Logo
Law of Demand
As prices decrease, the quantity demanded increases or as prices increase, the quantity demanded decreases.
Natural rights
Rights which belong to us by nature and can only be justly taken away through due process.
Inalienable rights
Rights which belong to us by nature and can only be justly taken away through due process.
Except where authorized by people through the Constitution, government does not have the authority to limit freedom.
Popular sovereignty
The power of government flows from the people.
Separation of powers
A system of distinct powers built into the constitution, to prevent an accumulation of power in one branch.
Checks and balances
Powers distributed among the branches of government allowing each to limit the application of power of the other branches and to prevent expansion of power of any branch.
The people delegate certain powers to the national government, while the states retain other powers; and the people, who authorize the states and national government, retain all freedoms not delegated to the governing bodies.
Fairness or reasonableness in the way people are treated or decisions are made.
private property
The natural right of all individuals to create, obtain, and control their possessions, beliefs, faculties, and opinions, as well as the fruits of their labor.
limited government
Citizens are best able to pursue happiness when government is confined to those powers which protect their life, liberty, and property.
representative government
(or republican government) Form of government in which the people are sovereign (ultimate source of power) and authorize representatives to make and carry out laws.
republican government
(or representative government)Form of government in which the people are sovereign (ultimate source of power) and authorize representatives to make and carry out laws.
civil discourse
Reasoned and respectful sharing of ideas between individuals is the primary way people influence change in society/government, and is essential to maintain self-government.
The fundamental principles by which a state or nation is governed. The United States Constitution, written in 1787, lays out the roles and powers of each of the three branches of government (legislative, executive, and judicial), the protections of due process and rule of law in the states, a republican form of government, and the manner in which to amend the document.
Thomas Jefferson
Jefferson was a Virginia plantation owner who was the principle author of the Declaration of Independence. Jefferson served as a legislator and governor in Virginia, as well as an ambassador to France, Secretary of State under George Washington, Vice President under John Adams, and the third President of the United States. During his political career, Jefferson founded the Democratic-Republican Party with James Madison, and he bought the Louisiana Purchase from France. After his presidency, Jefferson started the University of Virginia near his home, Monticello.
Bill of Rights
The first ten amendments to the Constitution, ratified in 1791, which limit government power and protect individual liberties, including the freedoms of speech, press, religion, petition, and assembly, as well as protections against cruel and unusual punishment, unreasonable search and seizure, and other due process rights.
Second Amendment
Ratified in 1791, it protects citizens’ rights to create a militia and to bear arms. “A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.”
Due Process
The government must interact with all persons according to the duly-enacted laws; applying these rules equally among all persons.
Every individual is equal to every other person with respect to natural rights and treatment before the law.
Consent of the governed
The authority of the government must come from the people through elections and through the people’s interaction with government.
Individual responsibility
Individuals must take care of themselves and their families, and be vigilant to preserve their liberty and the liberty of others.
Rule of law
Government officials and citizens all abide by the same laws regardless of political power.
Declaration of Independence
The document written in 1776 by the Founders to send to Britain’s King George III in which independence from Britain was declared and the reasons for the separation were explained.
Articles of Confederation
The first national government document developed in 1781 by the Founders. The Articles created a federal legislative branch, but there was no executive or judiciary. The states retained most of the governmental powers.
The group of people who wrote and influenced the Declaration of Independence, the Articles of Confederation, the United States Constitution, and the United States Bill of Rights. These men were instrumental in establishing the nation and its governmental documents and practices.
Federalist Papers
A series of 85 essays written to convince the people of New York to ratify the Constitution. The authors were James Madison, Alexander Hamilton, and John Jay. These documents are considered to be the most authoritative explanation of the political theory of the Constitution.
First Amendment
Ratified in 1791, it protects the freedom of speech, the freedom of religion, freedom of the press, freedom to assemble, and freedom to petition the government. “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.”
Law of Supply
As the price drops, the quantity supplied also drops.
Fourth Amendment
Ratified in 1791, it protects citizens’ rights against unreasonable searches and seizures of property and explains that warrants must be issued with probable cause. “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
Fifth Amendment
Ratified in 1791, it protects the right indictment by a jury, against double jeopardy, self-incrimination, loss of life, liberty, or property without due process, and just compensation for private property taken for public use. “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
Tenth Amendment
Ratified in 1791, it states that the powers not enumerated or delegated in the Constitution are reserved for the states and the people. “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”
Eighth Amendment
Ratified in 1791, it protects against excessive bail and fines and cruel and unusual punishments. “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”
Ninth Amendment
Ratified in 1791, the listing of certain rights protected by the Constitution cannot be used to deny rights not enumerated in the document. “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”
Alexander Hamilton
One of the Founding Fathers of the United States, Alexander Hamilton served as General Washington’s chief of staff, promoted the ratification of the Constitution in the Federalist Papers, and founded the nation’s financial system and first political party.
James Madison
Madison was a Framer who was instrumental in writing the Constitution and Bill of Rights. He is known as the “Father of the Constitution.” Madison partnered with Alexander Hamilton and John Jay to write the Federalist Papers in support of the ratification of the Constitution. He also served as a member of the Virginia House of Delegates, the United States House of Representatives, Secretary of State under Thomas Jefferson, and the fourth president of the United States.
George Washington
First President of the United States, George Washington served as commander-in-chief of the Continental Army during the American Revolution and was one of the Founding Fathers of the United States.
John Locke
An English philosopher and physician, John Locke was one of the most influential Enlightenment thinkers and is known today as the Father of Classical Liberalism.
Continental Congress
The Continental Congress, comprised of delegates from 12 of the 13 American colonies, represented the colonists during and after the American Revolution. The Continental Congress issued the Declaration of Independence and ratified the Articles of Confederation.
King George III
King George III was the King of Great Britain at the time of the American Revolution. His actions towards the American colonies, outlined in the Declaration of Independence, spurred the American Revolution.
Great Depression
Spanning ten years from 1929 to 1939, the Great Depression was one of the longest-lasting economic downturns in the history of the United States affecting the U.S. and most of the world.
An introductory statement, preface, or introduction.
Cruel and unfair treatment by people with power over others.
Using power over people in a way that is cruel and unfair.
John Adams
Before becoming the second President of the United States, John Adams served as the country’s first Vice President under George Washington. Adams was an advocate of American independence from Britain and a Federalist.
John Jay
Founding Father John Jay was one of the signers of the Treaty of Paris and served as the first Chief Justice of the United States. He was also one of the authors of the Federalist Papers.
Third Amendment
Ratified in 1791, it protects citizens against the quartering of soldiers in private homes without their approval. “No soldier shall, in time of peace be quartered in any house, without the consent of the owner, nor in time of war, but in a manner to be prescribed by law.”
Sixth Amendment
Ratified in 1791, it protects the rights of impartial jury trials, the right to be informed of the accusations against you, the right to be confronted by witness, and the right to be assisted by counsel. “In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.”
Seventh Amendment
Ratified in 1791, it protects the right of jury trials in law suits dealing with more than twenty dollars and protects against reexamination of the trial in any court if decided by a jury. “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.”
Alexis de Tocqueville
French political thinker and historian, Alexis de Tocqueville is best known for his works Democracy in America and The Old Regime and the Revolution. He visited the U.S. in the 1830s and wrote admiringly about many aspects of American law and society.
Democracy in America
Written by Alexis de Tocqueville after visiting the United States, Democracy in America contains de Tocqueville’s analysis of and reflections on the United States’ democratic system and society. The first volume was published in 1835 and the second in 1840.
Magna Carta
Written in 1215, it is the oldest document in the British and American heritage of rights. Contributed to the adoption of the First, Third, Fourth, Fifth, Sixth, and Eighth Amendments of the Bill of Rights, and speaks of these rights as ancient.
Two Treatises of Civil Government
Written by John Locke in 1690, the Two Treatises of Civil Government criticize absolute power for kings and outline Locke’s suggestions for a more civilized society based on natural rights and the social contract.
Thirteenth Amendment
The Thirteenth Amendment to the Constitution abolished slavery and involuntary servitude, except as punishment for a crime. “Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. Section 2. Congress shall have power to enforce this article by appropriate legislation.”
The group of people who actually attended the Constitutional Convention and participated in writing the Constitution.
Fourteenth Amendment
Ratified in 1868, it states that all people born or naturalized in the United States are citizens and ensures that “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
Sixteenth Amendment
Ratified in 1913, the Sixteenth Amendment gave Congress the ability to collect income taxes. “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census of enumeration.”
Eighteenth Amendment
atified in 1919, the Eighteenth Amendment introduced Prohibition, the period of United States history when the manufacture, sale, and transportation of alcohol was made illegal throughout the country. “Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited. Section 2. The Congress and the several states shall have concurrent power to enforce this article by appropriate legislation. Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several states, as provided in the Constitution, within seven years from the date of the submission hereof to the states by the Congress.”
Twentieth Amendment
The Twentieth Amendment was ratified in 1933, and it establishes procedures for presidential succession and the start and end of federal officials’ terms of office. “Section 1. The terms of the President and Vice President shall end at noon on the 20th day of January, and the terms of Senators and Representatives at noon on the 3rd day of January, of the years in which such terms would have ended if this article had not been ratified; and the terms of their successors shall then begin.
Twenty-First Amendment
In 1933, the Twenty-First Amendment repealed the Eighteenth Amendment, ending Prohibition. “Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed. Section 2. The transportation or importation into any state, territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited. Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several states, as provided in the Constitution, within seven years from the date of the submission hereof to the states by the Congress.”
English Bill of Rights
Passed by the British Parliament in 1689, the English Bill of Rights limited the power of the British monarch, outlined the rights of the Parliament, and guaranteed Protestants the right to bear arms.
The legislative body of the United Kingdom (known as Great Britain or England during the Founding era).
Benjamin Franklin
One of the Founding Fathers of the United States, Benjamin Franklin was a statesman, author, publisher, scientist, inventor and diplomat. He served in the Second Continental Congress during the American Revolution and helped draft the Declaration of Independence. In addition, Franklin helped negotiated the Treaty of Paris which ended the Revolutionary War and later served as a delegate to the convention that produced the U.S. Constitution.
The right to vote.
A government in which the power belongs to citizens through the right to vote.
Fifteenth Amendment
Ratified in 1870, it states that the right could not be restricted based on “race, color, or previous condition of servitude.” “Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of race, color, or previous condition of servitude. Section 2. The Congress shall have power to enforce this article by appropriate legislation.”
Seventeenth Amendment
Ratified in 1913, the Seventeenth Amendment introduced direct election of Senators. “The Senate of the United States shall be composed of two Senators from each state, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each state shall have the qualifications requisite for electors of the most numerous branch of the state legislatures. When vacancies happen in the representation of any state in the Senate, the executive authority of such state shall issue writs of election to fill such vacancies: Provided, that the legislature of any state may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct. This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.”
Nineteenth Amendment
Ratified in 1920, the amendment stated that a citizen’s right to vote must not be restricted based on gender. “The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of sex. Congress shall have power to enforce this article by appropriate legislation.”
Direct Democracy
Direct democracy is a political system in which the people vote directly on policies or laws, as opposed to voting for representatives who enact laws on their behalf.
Not planned or chosen for a particular reason; done without concern for what is fair or right.
Judicial Review
The process by which courts analyze the constitutionality of an act of government.
Majority rule/minority rights
laws may be made with the consent of the majority, but only to the point where they do not infringe on the inalienable rights of the minority.
An arbitrary order or decree.
Something that is owned by a person, business, etc. This includes possessions, beliefs, faculties, and opinions, and the fruits of one's labor.
A government in which the power is held by the people.
Electoral College
A body of electors chosen by each state to vote for the president and vice president of the United States.
Conduct that reflects universal principles of moral and ethical excellence essential to leading a worthwhile life and to effective self-government. For many leading Founders, attributes of character such as justice, responsibility, perseverance, etc., were thought to flow from an understanding of the rights and obligations of men. Virtue is compatible with, but does not require, religious belief.