The Progressives: The March of the Progressives
Chris Mayer discusses the origins and early days of the Progressive movement in the United States.
IN 1900, William Jennings Bryan ran for the office of president of the United States. His campaign was largely one of anti-imperialism. Just two years before, the country was embroiled in a conflict with the aging ex-superpower that was Spain. America’s spoils from that war included various territories once under Spanish rule. Bryan thought that the United States had better not be in the business of empire. Little could Bryan — or anyone, for that matter — had known how quickly the American republic would slip into the realm of empire.
Anti-imperialism was not the only plank in Bryan’s platform. As a rising demagogue, he played on people’s doubts and fears. Bryan tried to appeal to people’s worries over big business — the infamous trusts. He inveighed against Wall Street power and corporatism. He tried to rally the masses against greed and excess. He even proposed an income tax. In several ways, Bryan was a harbinger of what soon became staples of American presidential politics — promising that the government can do more of everything. Bryan’s vision would have to wait.
The stately William McKinley won in 1900. He was the victor in the war with Spain, and he exuded confidence in America’s newfound importance in the world. This once-scraggly third-rate power, which has contented itself with its own affairs for most of its history, suddenly was a player in world affairs. Such was the intoxicating nature of the imperial drink.
But McKinley would not savor his victory for long. In September 1901, an assassin with the tongue-twister last name Czolgosz shot and fatally wounded McKinley. Suddenly, the vice president — the former governor of New York, the old Rough Rider of San Juan Hill — was president of the United States.
The Progressives: Big Business Under Siege
At the time, perhaps, there were few straws in the wind that things were going to change dramatically, or that Teddy Roosevelt would go on to completely overshadow his predecessor in the history books. But soon enough, the straws were signaling a major shift.
In 1902, Roosevelt’s attorney general called for the dissolution of the Northern Securities Co. under the Sherman Antitrust Act. Northern Securities was under the auspices of one of the wealthiest men of Wall Street, a very symbol of the perceived plutocracy of trust men. Northern was formed by J.P. Morgan and his partner, the renowned Edward Harriman.
This act was a signal that a new movement was afoot in the American conscience — Wall Street and big business would be under siege by a rollicking unorganized reformist faction dubbed the Progressive Movement. The political battle between the haves and have-nots would be central to political and economic events until the specter of World War I subsumed the nation’s attention.
Nonetheless, the Progressives’ attitudes and influences and institutions continue to have influence even to this day. The damage done to the old liberties cherished by prior generations was deep and cut to the bone. Consider that the Labor Department was established in 1913 and that the Clayton Act was passed in 1914 — giving legal standing to collective bargaining, where once what one man paid another was a matter between him and his employer.
These were the years of the Wobblies — the Industrial Workers of the World had been established in 1905 with a constitution beginning, “The working class and the employing class have nothing in common” — and big, bloody strikes.
The Progressives: The Rise of the Socialists
The rise of the Socialist Party in America tells the tale. Its eloquent speaker, Eugene Debs, could only garner 96,000 votes in 1900. In 1912, he got 900,000.
This was the era of Arsene Pujo and his committee investigating the money trusts, with the aging Morgan put to taking questions about his business, which would have been unimaginable only a decade earlier.
There was perhaps a bit of respite in William Taft’s four years, but the messianic spirit was still strong, and in the election of 1912, it was shown to have all but dominated the American political scene. In a three-man race, Taft, the incumbent president, got 3.5 million votes –and finished third. His old boss, the fervent reformer Teddy Roosevelt, got 4 million votes. Woodrow Wilson, ex-professor and former governor of New Jersey, won the presidency with 6 million votes. The spirit of reform was at its peak.
Under Wilson, Americans would accept the first of many chains, though some of them must have been seen trivial burdens at the time. In 1913, for example, the income tax was made possible by constitutional amendment. Most Americans didn’t pay it. A married couple earning less than $4,000 was exempt. A married family making $20,000 per year (a nice sum in those days) paid a total of $16 in income taxes.
The federal government sustained itself on import duties, as it had done since the earliest days of the republic. There were no income tax forms, no army of accountants and lawyers who made a living on such unproductive pursuits. Most Americans were largely untouched by government. It would have seemed utterly incredible to a workingman of that time to expend that kind of money and effort on the government. It would likely have been cause for revolt. But how we got from 1913 to the present took place gradually and in small degrees: As brooks make rivers, rivers run to seas (apologies to John Dryden.)
The Progressives: The Birth of the Federal Reserve
The Progressive Era also gave birth to the Federal Reserve Bank, in 1913. This was the nation’s third attempt at a central bank. The Second Bank of the United States was dissolved in 1836, after its charter was not renewed. Conventional histories then tell the story of the repeated booms and busts of the ensuing years, as the nation stumbled along in darkness, unable to access the wisdom of central banks and their medicines. This story has been told so often it is simply repeated as fact, as Fed Governor Susan Bies recently repeated in a speech in Arlington, Va.: “A series of financial panics in the late 19th and early 20th centuries, most notably the Panic of 1907, revived the idea of creating a central bank to provide the nation with a safer, more flexible, and more stable monetary and financial system.”
It is true that the forces clamoring for a central bank grew much stronger after the Panic of 1907, but it can hardly be said that the Federal Reserve gives the nation anything resembling monetary and financial stability. The price to pay for the Federal Reserve is a currency that is worth less and less with each passing decade, such that today’s dollar is more than a 95% loss in purchasing power since the Fed opened for business.
The nation now seems so far along in its progressivism that notions of a world without these institutions and with gold as money seem so quaint and old-fashioned that they almost mark one as a quack to speak of them in polite society.
The Progressive march continues in various guises, mixed and blended with other ideologies and programs, but the growth of government is an investment theme for the century — for this one, as it was for the last. Government grows apace, eating more and more of the world’s store of wealth.
The surest manifestation of all of this is a continuing weaker currency against the world of things. The fall of paper wealth and the rise of tangible assets will make its mark on long-term investors, as it did on investors of old.
January 25, 2005