w aging w ar to t ransform the w orld 105administration (and preempt the critics by sharing ownership of the
problems with them), Wilson saw only a challenge to his leadership
that had to be thwarted.
To the president’s credit, he responded decisively to the mobilization
failures. A forceful advocate of presidential power who had demon-
strated how it could be used to secure a domestic reform program
before the war, Wilson did not hesitate to assert the authority of his
offi ce when circumstances seemed to require it. Th e voluntary Railroads
War Board had failed to keep trains running smoothly, contributing to
the loss of industrial output. Accordingly, the president drew upon his
war powers and authorization language in the Army Appropriation Act
of August 1916 to issue an executive order that placed the railroad
industry under government control. Congress then passed the Federal
Control Act of 1918 to assure railroads of compensation while under
government management and promise the return of control to private
ownership within twenty-one months following the end of the war.
Wilson also drafted new legislation, which became the Overman Act,
to give the president sweeping emergency economic powers. (As these
examples suggest, Wilson, like Lincoln, received congressional support
for most of his actions.) Th en he selected the noted fi nancier Bernard
M. Baruch to lead the War Industries Board (WIB), which became the
linchpin of the mobilization effort. Production of war materials
increased swiftly.
Th e Wilson administration also mastered the fi nancing of military
expansion and operations, an important challenge that had bedeviled
American leaders in several previous wars. Both James Madison and
Lincoln had struggled to raise sufficient revenues to sustain their
respective military eff orts. Th anks to the constitutional amendment
that legalized the income tax and to the creation of the Federal Reserve
System under his auspices, Wilson had fi nancing tools at his disposal
that had been unavailable to his predecessors. Initially the president and
Treasury Secretary George McAdoo hoped to pay for the war with an
even mix of taxation and borrowing, and Wilson favored an equitable
tax plan with progressive rates. However, Congress refused to approve
tax increases until after the 1918 elections, while expenditures escalated
rapidly. The administration concluded it had no alternative but to
borrow money, the old standby means for fi nancing wars. To induce