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WILSON’S
“NEW FREEDOM”
 TARIFF REDUCTION
REFORM OF THE BANKING SYSTEM
NEW ANTITRUST LAWS TO CONTROL ABUSIVE
CORPORATIONS
RESTORE COMPETITION TO INCREASE
OPPORTUNITY
SUPPORT THE RIGHTS OF UNION AND THE
WORKING MAN
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TARIFF REDUCTION: A TARIFF IS A TAX A GOVERNMENT
PLACES ON IMPORTED GOODS. ITS PURPOSE IS TO RAISE
REVENUE FOR THE GOVERNMENT OR TO DISCOURAGE
CITIZENS FROM BUYING FOREIGN GOODS. IT CAN ALSO BE
USED TO PROTECT DOMESTIC MANUFACTURES FROM FOREIGN
COMPETITION. TARIFFS HAVE THE EFFECT OF RAISING
PRICES ON CONSUMERS.
THE 16TH AMENDMENT AND THE UNDERWOOD-SIMMONS
TARIFF REDUCTION ACT
© THE 16
AMENDMENT FIRST PASSED IN 1909 CREATING A
PROGRESSIVE INCOME TAX. ALL THREE CANDIDATES FOR PRESIDENT IN
1912 SUPPORTED AN INCOME TAX. IT WAS FINALLY RATIFIED BY THE
STATES TO BECOME LAW IN 1913.
th
© ORIGINALLY, ONLY PEOPLE MAKING OVER $4000 A YEAR HAD TO
PAY THE TAX. THAT WOULD BE EQUIVALENT TO $4,000,000 TODAY.
© WILSON URGED CONGRESS TO PASS THE UNDERWOOD SIMMONS
TARIFF IN OCTOBER OF 1913. THE AVERAGE TARIFF RATE WAS REDUCED
TO APPROXIMATELY 26%
© THE FREE LIST WAS INCREASED, ADDING WOOLENS, IRON, STEEL,
FARM MACHINERY AND MANY RAW MATERIALS AND FOODSTUFFS
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17TH AMENDMENT – DIRECT ELECTION OF SENATORS
•Originally, Senators were chosen by the legislature of the state.
•Reform efforts began as early as 1826, when direct election was
first proposed. From 1870 to 1902, support for direct election
increased considerably. Each year, a constitutional amendment
for the direct election of Senators was proposed, but every time
the Senate would reject it.
•In the mid-1890s, the Populist Party put direct election of
Senators in its platform, but neither the Democrats nor the
Republicans paid much notice at the time.
•Direct election was also championed by Republican Senators
Robert M. La Follette and George Norris
•In the early 1900s, Oregon pioneered direct election of Senators
and was soon followed by Nebraska. Popular support of
Senatorial election reform grew rapidly at this time.
•Increasingly, Senators were elected based on state referenda,
similar to what had been developed by Oregon. By 1912, as
many as 29 states elected Senators this way.
•The Senate passed the 17th Amendment in 1911, and the House
passed the amendment in 1912.
•On April 8, 1913, the 17th Amendment was adopted into law. 4
REFORM OF THE BANKING SYSTEM
FEDERAL RESERVE ACT
“An Act to provide for the establishment of Federal
reserve banks, to furnish an elastic currency, to afford
means of rediscounting commercial paper, to establish a
more effective supervision of banking in the United
States, and for other purposes.”
The Federal Reserve Act provided for the
establishment of up to 12 Federal Reserve Banks (district
banks) to coordinate policy with a seven-member Federal
Reserve Board in Washington
The Federal Reserve was set up to prevent or
moderate the cycles of boom and bust that had
devastating impact on the American economy
Along with President Wilson, Carter
Glass, representative from Virginia,
was instrumental in constructing the
Federal Reserve Act
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NEW LAWS TO CONTROL ABUSIVE CORPORATIONS
CLAYTON ANTI-TRUST ACT
±Passed in 1914 to clarify the existing
antitrust law (Sherman Act)
±A number of business practices were
prohibited including:
±Predatory price cutting
±Price fixing
±Ownership of stock in competing
companies
±Interlocking directorates (the practice
of having the same individuals serve as
directors of competing companies)
±Placed limitations on the use of injunctions
Henry Clayton
Representative from
Alabama was the
driving force behind
the Clayton Antitrust Act
against unions and stipulated that labor
organizations were not illegal combinations
acting to restrain trade; boycotts, strikes and
picketing were all recognized as legal
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activities
Federal Trade Commission Act
A new agency, the Federal Trade Commission, was created
in the fall of 1914. It was to be composed of five members,
all of whom were to be appointed by the president and
confirmed by the Senate. The commissioners were to be
selected on a non-partisan basis and serve seven-year
terms. The agency was empowered to investigate
corporate practices and, if necessary, issue cease and
desist orders to halt illegal activities. The commission
replaced the earlier and less powerful Bureau of
Corporations.
Keating Owen Child Labor Act 1916
This act limited the working hours of children and forbade
the interstate sale of goods produced by child labor.
Unfortunately the Supreme Court declared this and
subsequent laws unconstitutional.
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