were being betrayed, and many a Senator or Representative who regarded the reserve banks with profound alarm felt, nevertheless, that if the iniquitous things were going to be established there ought to be one in his home town. When Paul M. Warburg, a Wall Street banker, was appointed as one of the members of the Federal Reserve Board, there were more protests from politicians who professed to believe that the nation was being delivered over to the money power, while the complaints of bankers who thought that the banks were being given over to politicians had not yet died down. But when the act once went into operation criticism almost disappeared; and in the course of a few months the unprecedented financial strain attendant on the outbreak of the European war made it plain to almost anybody that without this timely reform of the banking system 1914 would have seen a disaster far worse than that of 1907.

The work of "striking the shackles off business" was continued in 1914 by the introduction of bills to carry out the President's recommendations for prohibiting interlocking directorates, clarifying the anti-trust laws, establishing an Interstate Trade Commission, and supervising the issue of railroad securities. The chief results of this discussion were the creation of the Trade Commission, a body of which much more was expected at the time than it has accomplished, and the passage of the Clayton Anti-Trust Act, which exempted farmers' combinations and labor unions from the anti-trust laws, and wrote into the statutes the declaration that labor is not a commodity. The La Follette Seamen's Bill, drawn by Andrew Furuseth of the Seamen's Union, was introduced in 1913 and not enacted until much later. Its friends. declared that it would at least establish decent living conditions for sailors, and its opponents, including nearly all the shipping interests, asserted that, so long as foreign ship owners were not under similar restrictions, the bill would ruin the American Merchant Marine. Of the actual workings of this law there has really been no fair test, as conditions which arose during the war unsettled the entire shipping situation.

The domestic program of the first year and a half of the Wilson Administration comprised, then a long-needed and immeasurably valuable reform of the banking and currency system, a revised tariff, which was at least a technical victory for Democratic principles, and a number of minor measures which seem less important in retrospect than they did at the time. The program. neither completely unshackled business nor opened the door to a new era of coöperation and human brotherhood, but it was a large and on the whole decidedly creditable accomplishment, and it was above all the work of President Wilson, who had led the fight that carried the Administration measures through Congress, quite as any Prime Minister might have done. He had not done it without exposing himself to severe criticism. Ex-Senator Win

X

throp Murray Crane, for example, declared that he had "virtually obliterated Congress.' But he had got most of what he wanted, and by the end of his first year in office Mr. Bryan was no longer the most powerful individual in the Democratic Party.

Foreign Policies, 1913-1914

N The North American Review for March, 1913, edited by Colonel George Harvey, the original Wilson man, who had mentioned Wilson as a Presidential possibility back in 1904, when such a suggestion was regarded as only a playful eccentricity, who had begun to work hard for him in 1911, and who had finally been asked by Wilson himself to give up his activity because the connection of one of Harvey's magazines with J. P. Morgan & Co. was hurting Wilson in the West-there appeared an article entitled "Jefferson-Wilson: A Record and a Forecast." It consisted of eight pages of quotations from Wilson's "History of the American People," dealing with the beginning of Jefferson's Administration. The reader's attention was arrested by the startling parallel between the division in the Federalist Party and the quarrel between Hamilton and Adams that facilitated Jefferson's election, and the situation which led to Wilson's victory in November, 1912. Wilson, writing a dozen years before the fight between Taft and Roosevelt, had unconsciously drawn a parallel closer perhaps than the facts warranted; and the reader who had been attracted by this similarity read on into Wilson's characterization of Jefferson an introduction to the achievements of his Administration with a growing hope--if he happened to be a Wilson man-that after as before election Wilson's record would duplicate Jefferson's.

I The North Americany, the

Colonel Harvey was as good a prophet in 1913 as in 1904. Wilson's achievement in domestic affairs in the first year of his Administration was not likely to suffer much by comparison with Jefferson's. But it could not have crossed anybody's mind in March, 1913, that complications of international politics such as had almost ruined the country under Jefferson would in the latter part of Wilson's first term expose him to as much criticism as Jefferson, and for the same reasons.

America was still new as a world power, but was beginning to feel more at home. In Taft's Administration, with Philander C. Knox as Secretary of State, there had been for the first time the beginnings of what might fairly be called a consistent foreign policy. True, it was not a very lofty policy, nor was it by any means generally approved in America. It was called by its friends dollar diplomacy," meaning the promotion of American commercial interests by diplomatic agencies. It had been exemplified principally in Central America, where its operations

Landmarks in Wilson's Mexican Policy

Program for armistice and elections to end civil war, August, 1913.

"Watchful waiting," 1913-14.

Capture of Vera Cruz, April 21, 1914.

A B C mediation, April 25, 1914.

Flight of Huerta, July, 1914.

Recognition of Carranza, September, 1915.

Villa's raid on Columbus and Pershing's expedition into Mexico, March, 1916.

Flight and death of Carranza, May, 1920.

had not always commanded admiration, and in China, where Knox had made a well-intentioned but not very skillful effort to prevent the absorption of Manchuria by Russia and Japan.

However primitive this organization of foreign policy, none the less Taft and Knox had taken a great step forward in the improvement of American diplomatic machinery. The diplomatic service and the State Department were beginning to be regarded as two parts of the same agency, and for the first time diplomacy had begun to be a career with possibilities. The practice of promoting able young secretaries to chiefs of legation, begun by Roosevelt, had been widely extended by Taft; and though the highest posts were still filled by wealthy amateurs it seemed that at last the American diplomatic service offered some attraction to an ambitious man. It was the general expectation in Europe and still more in America that President Wilson, who by training and inclination might be expected to approve of the elevation of standards in the diplomatic service, would continue and extend this work. Instead of that, he undid it, or rather permitted it to be undone.

Mr. Bryan had of necessity been made Secretary of State, and it may be supposed that there was equal necessity for opening up the diplomatic service as a happy hunting ground for the Bryan men-"deserving Democrats, as Mr. Bryan called them in a famous letter. The chief European posts,, to which the Taft Administration had not begun to apply the merit system, were filled chiefly by Mr. Wilson's own nominees. These included several well-known men of letters, and with one or two exceptions the amateur diplomats serving as the heads of the missions in Europe did satisfactory and even brilliant service under the unprecedented strain which the war brought on them. The service in Latin America, however, which Knox had almost entirely

professionalized, was given over bodily to personal followers of Bryan. In what was in 1913 perhaps the most important of our diplomatic posts, the embassy to Mexico, Mr. Wilson was compelled to rely provisionally on Henry Lane Wilson, a holdover appointee from the previous Administration.

It was soon made clear that there was to be no more dollar diplomacy. The Knox policies in Central America were droppedalthough American troops continued to dominate Nicaraguaand in 1914 the Administration successfully discouraged American participation in a six-power loan to China. The Russo-Japanese absorption of Manchuria was to be treated as the accomplished fact that it was; and in general the policy of the new Administration was anything but aggressive. It would not use diplomacy to advance American commercial interests, nor was it prepared to accept the assistance of American financiers in promoting the i policies of diplomacy.

But it was evident from the outset that the most quiescent foreign policy could not prevent foreign complications. Growing anti-Japanese sentiment in California led to the passage of a State law against Japanese land holdings. There was much resentment in Japan, and protest was made to the Federal Government. Mr. Bryan, as Secretary of State, had to make a personal trip to Sacramento to intercede with the Californians; and at one time (May, 1913) military men appeared to feel that the situation was extremely delicate. But the crisis passed over, the Californians modified the law, and though in its amended form it suited neither the Californians nor the Japanese, the issue remained in the background during the more urgent years of the war. Toward the very end of the Wilson Administration it was to come back into prominence.

Another question which caused much disturbance to the new Administration was the question of Panama Canal tolls. An act passed in 1912 had exempted American coastwise shipping passing through the canal from the tolls assessed on other vessels, and the British Government had protested against this on the ground that it violated the Hay-Pauncefote treaty of 1901, which had stipulated that the canal should be open to the vessels of all nations "on terms of entire equality." Other nations than England had an interest in this question, and there was a suspicion that some of them were even more keenly if not more heavily interested; but England took the initiative and the struggle to save the exemption was turned, in the United States, into a demonstration by the Irish, Germans and other anti-British elements. Innate hostility to England, the coastwise shipping interests, formed the backbone of the opposition to any repeal of this exemption, but the Taft Administration had held that the exemption did not conflict with the treaty (on the ground that the words "all nations meant all nations except the United States), and British oppo

sition to the fortification of the canal, as well as the attitude of a section of the British press during the Canadian elections of 1911, had created a distrust of British motives which was heightened by the conviction of many that the Hay-Pauncefote treaty had been a bad bargain.

It was understood early in President Wilson's Administration that he believed the exemption was in violation of the treaty, but not until October did he make formal announcement that he intended to ask Congress to repeal it. The question did not come into the foreground, however, until March 5, 1914, when the President addressed this request to Congress in ominous language, which to this day remains unexplained. "No communication I addressed to Congress," he said, "has carried with it more grave and far-reaching implications to the interests of the country. After expressing his belief that the law as it stood violated the treaty and should be repealed as a point of honor, he continued: "I ask this of you in support of the foreign policy of the Administration. I shall not know how to deal with other matters of even greater delicacy and nearer consequence if you do not grant it to me in ungrudging measure.

It has been most plausibly suggested that this obscure language had reference to the Mexican situation, which a few weeks later was to lead to the occupation of Vera Cruz. The European powers were known to be much displeased at the continuing disturbances in Mexico and the American policy of "watchful waiting," and the belief has been expressed that repeal of the exemption was a step to get British support for continued forbearance with Mexico. Other critics have seen a reference to the unsettled issues with Japan and a fear that England might give more aggressive support to her ally if the tolls question were left unsettled. The attempt of a writer of biography to maintain that even in March, 1914, the President and Colonel House foresaw the European war and wanted to arrange our own international relations by way of precaution has been generally received with polite skepticism.

At any rate, the President's intervention in the question, against the advice of his most trusted political counselors, brought down. on him a shower of personal abuse from Irish organs and from the group of newspapers which presently were to appear as the chief supporters of Germany. The arguments against the repeal were unusually bitter, and even though Elihu Root took his stand beside the President and against the recent Republican Administration, partisan criticism seized upon the opening. Nevertheless the tolls exemption was repealed in June, and events of July and August gave a certain satisfaction to those who had stood for the sanctity of treaties.

As a part of what might be called the general deflation of overseas entanglements, the new Administration brought about a