American History - Part 149 - Wilson - IRS - FTC - Federal Bank
Channel: ListenAndReadAlong
Date: 2013-07-24

Welcome to the MAKING OF A NATION-- American history in VOA Special English.
A new leader stood before the American people on March fourth, nineteen thirteen. He was Woodrow Wilson-- the 28th President of the United States.
Wilson belonged to the Democratic Party. He was progressive in his belief that government should take an active part in efforts for social reforms.
This week in our series, Kay Gallant and Harry Monroe begin the story of Wilson's presidency.
Woodrow Wilson had spent most of his life at Princeton University. First he was a professor. Then he was university President. Next, Wilson was elected governor of the state of New Jersey. His early success as governor made him a leading candidate for the Democratic Presidential nomination in 1912.
Wilson traveled widely around the country during the campaign. He made speeches to many groups. He tried to make himself and his ideas known to as many Americans as possible.
 Wilson called his program "the New Freedom." One of his campaign promises was to fight for better conditions for America's small business owners.
Such proposals helped him win the Democratic nomination for President. Then he defeated President William Howard Taft and former President Theodore Roosevelt in the election. Woodrow Wilson, the former President of a university, had become the President of a nation.

Lower tariffs reduced the amount of money taken in by the federal government. So the Senate also approved a tax on income, or earnings. A constitutional amendment had been passed earlier to permit such a tax.
President Wilson and the Democratic Party were pleased with the new tariff and income tax bills. But they were far from finished. Next they turned their efforts to reform of the banking industry.
For several years, many people had recognized the need for changes in the banking system. The old system of uncontrolled private banks had developed years earlier, before the United States became a major industrial nation. Many people agreed that a more modern system was needed. But they could not agree on details.
Wilson said the nation needed a money supply that could be increased or reduced, when necessary, to correct economic conditions. He said a method was needed to let banks help each other during economic emergencies. And he said laws were needed to prevent a few wealthy men from using the economic resources of the country for their own purposes.
Finally, Wilson said, "The control of this system of banking must be public, not private. It must belong to the government itself."
 Wilson called his proposal for a central bank the Federal Reserve System.
Under the plan, the nation would be divided into 12 areas. Each area would have its own federal reserve bank. These area banks would not do business with the public. They would serve only as "bankers' banks." And they would issue a new form of money supported by the federal government. Most important, the leaders of the new system would be chosen by the government--not by private business.

Bankers, business leaders, and their representatives in Congress sharply criticized President Wilson's proposals. They said government control of the banking system was socialism, not capitalism.
But Wilson refused to change his proposals. And he helped to lead the fight to make them law. Finally, Congress agreed.
For Woodrow Wilson, the fight over the banking system was yet another political success. He had won major reforms in the nation's tariffs, taxes, and banking systems. Now he told Congress that new legislation was needed to control the power of monopolies and trusts. These were the giant companies and business alliances that controlled complete industries.
Wilson proposed a new anti-trust law to control the actions of large companies. His supporters in Congress wrote a bill that listed a number of business activities that no longer would be permitted.
At President Wilson's request, Congress also prepared a law that set up a government agency called the Federal Trade Commission. The commission was given the job of investigating wrong-doing in business. It had the power to force companies to obey the new anti-trust laws and other rules.
Both the anti-trust law and the Federal Trade Commission helped protect small business owners from the power of business giants. Once again, the proposals caused fierce debate. But, once again, Congress finally voted to give Wilson most of what he wanted.
 The early months of Wilson's term were one of the most successful times in the history of any President. The new President had won the election by promising major reforms in the economic life of the country. And he had kept that promise.
The reforms were not only a victory for Woodrow Wilson. They also changed the face of American business and economics for many years to come. The income tax, for example, grew to become the federal government's main source of money.