Wilson: The New Freedom 577board provided a modicum of public control over the
banks, but the effort to weaken the power of the
great New York banks by decentralizing the system
proved ineffective. Nevertheless, a true central bank-
ing system was created.
When inflation threatened, the reserve banks
could raise the rediscount rate, discouraging bor-
rowing and thus reducing the amount of money in
circulation. In bad times it could lower the rate,
making it easier to borrow and injecting new dollars
into the economy. Much remained to be learned
about the proper management of the money supply,
but the nation finally had a flexible yet safe currency.
In 1914 Congress passed two important laws
affecting corporations. One created the Federal Trade
Commission (FTC) to replace Roosevelt’s Bureau of
Corporations. In addition to investigating corpora-
tions and publishing reports, this nonpartisan board
could issue cease-and-desist orders against “unfair”
trade practices brought to light through its research.
The law did not define the termunfair, and the com-
mission’s rulings could be taken on appeal to the fed-
eral courts, but the FTC was nonetheless a powerful
instrument for protecting the public against the trusts.
The second measure, the Clayton Antitrust Act,
made certain specific business practices illegal, includ-
ing price discrimination that tended to foster monop-
olies; “tying” agreements, which forbade retailers
from handling the products of a firm’s competitors;
and the creation of interlocking directorates as a
means of controlling competing companies. The act
exempted labor unions and agricultural
organizations from the antitrust laws
and curtailed the use of injunctions in
labor disputes. The officers of corpora-
tions could be held individually respon-
sible if their companies violated the
antitrust laws.
The Democrats controlled both
houses of Congress for the first time
since 1890 and were eager to make a
good record, but Wilson’s imaginative
and aggressive use of presidential power
was decisive. He called the legislators
into special session in April 1913 and
appeared before them to lay out his pro-
gram; he was the first president to
address Congress in person since John
Adams. Then he followed the course of
administration bills closely. He had a
private telephone line installed between
the Capitol and the White House.
Administration representatives haunted
the cloakrooms and lobbies of both
houses. Cooperative congressmen began
to receive notes of praise and encouragement,
whereas recalcitrant ones received stern demands for
support, often pecked out on the president’s own
portable typewriter.
Wilson explained his success by saying, only half
humorously, that running the government was child’s
play for anyone who had managed the faculty of a
university. Responsible party government was his
objective; he expected individual Democrats to sup-
port the decisions of the party majority, and his ideal-
ism never prevented him from awarding the spoils of
office to city bosses and conservative congressmen, as
long as they supported his program. Nor did his
career as a political theorist make him rigid and doc-
trinaire. In practice the differences between his New
Freedom and Roosevelt’s New Nationalism tended to
disappear. The FTC and the Federal Reserve system
represented steps toward the kind of regulated econ-
omy that Roosevelt advocated.
There were limits to Wilson’s progressivism,
limits imposed partly by his temperament and partly
by his philosophy. He objected as strenuously to
laws granting special favors to farmers and workers
as to those benefiting the tycoons. When a bill was
introduced in 1914 making low-interest loans avail-
able to farmers, he refused to support it. “It is
unwise and unjustifiable to extend the credit of the
Government to a single class of the community,” he
said. He considered the provision exempting unions
from the antitrust laws equally unsound. Nor would
he push for a federal law prohibiting child labor;Woodrow Wilson, presiding over the 1906 Princeton commencement, walks beside steel
magnate and educational philanthropist Andrew Carnegie.