How Wilson and Roosevelt tried to roll back the power of corporations.

The history behind current events.
July 15 2010 1:35 PM

Too Big To Fail, the 1912 Version

How Wilson and Roosevelt tried to roll back the power of corporations.

(Continued from Page 1)

Some observers have portrayed Wilson's platform as a return to laissez-faire and therefore Roosevelt's as the more radical. Others saw Wilson's desire to abolish, rather than tolerate, the trusts as the bolder plan. Both summaries have merit, but both oversimplify. The difference was really one of emphasis. Wilson saw corporate bigness in and of itself as more of a threat than did Roosevelt. Despite his superficial gestures toward small government, Wilson had more faith in government to rid the economy of this blight. As a product of the middle class himself, Wilson sympathized with the average American's aspirations to professional success and financial security, and he wanted government to enable everyone to pursue those goals. The patrician Roosevelt, in contrast, carried a deep belief in noblesse oblige. His vision of enlightened men managing the economy for the common welfare expressed his faith in the virtue of the well-born liberals of his world.

Wilson, of course, won the election—42 percent to 27 percent—though in a two-man race, Roosevelt might well have gotten most of Taft's vote and prevailed. It's far from clear that voters cared much about the differences between the New Freedom and the New Nationalism, or that those differences—as opposed to the sharp personal contrasts between the blustery Roosevelt and the eloquent, professorial Wilson—tilted them one way or the other. The journalist William Allen White was one of many who dismissed the finer points of the candidates' disagreements. "Between the New Nationalism and the New Freedom," he wrote, "was that fantastic imaginary gulf that has existed between tweedle-dum and tweedle-dee."

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As president, Wilson earned his place in history by enacting, within his first two years, a flurry of bills from the New Freedom playbook: the lowering of tariffs, to help consumers and weaken monopolistic corporations (it was coupled with a modest, graduated income tax—made possible by the recently passed 16th Amendment); the creation of the Federal Reserve, answerable to a government board and not just private bankers (as many had wanted); and a new, tougher antitrust law, alongside the creation of the Federal Trade Commission. These laws achieved a greater measure of economic fairness and empowered the government to intervene against corporate predation. Few people have doubted their wisdom since.

But these laws didn't lead to the vision of the New Freedom, the dynamic capitalism of the 19th century. Indeed, the New Republic, then a brand-new magazine edited by Herbert Croly, coiner of the New Nationalism, praised Wilson because it felt the president had wisely backed away from his campaign positions.Croly's assessment was unfair, since it slighted, among other things, the potential of the antitrust laws to restore competition. But in another sense Croly was correct. Wilson's program did nothing to refute Roosevelt's contention that bigness was here to stay.

Ideas, especially those born on the campaign trail, rarely turn out as planned. In the long view of history, Wilson's victory mattered not because his presidency bequeathed a regulatory regime so different from what Roosevelt would have overseen, but because progressivism itself prevailed. From one perspective, the most important fact about the outcome was that Taft, representing the stand-patters, finished third—the only incumbent ever to seek re-election and do so.

Having failed to reverse the metastasis of big business in the Progressive Era, reformers have stood little chance of doing so in the years since. In the wake of the great debate of 1912, liberals have periodically warred among themselves about the best way to repair the injustices of the capitalist system that they otherwise support. Most often, the Rooseveltian view has prevailed, even when Wilsonian solutions were put in place. Today, even those aware of the constraints the Democrats face can sympathize with the judgment that the new controls fall short. The curse of bigness will continue. But just as the progressive moment of 1912 brought forth some good laws that mitigated the worst of industrial capitalism, so the progressive moment of 2008—fleeting though it was—brought to power officials who are prevailing, however imperfectly, over the forces who would stand pat.

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