Woodrow Wilson – First Big Government President

Big government bureaucracy is generally pinned on FDR, but much of its foundation was laid by Woodrow Wilson. Wilson was elected at the apex of the progressive movement formed by the values of industrialization – efficiency and expertise on the one hand, and on the other hand, loss of trust in political and industry leaders.

Growing corporations could increasingly manipulate markets and abuse workers. Amongst these large corporations were few enough banks to have a monopolizing effect of the nations money supply. The progressive solution, in part, was to hand more responsibilities to the technocrats, creating bureaucracies within government to implement presidential and congressional policies and work out specific rules and regulations outside of the political limelight. It was believed that technocrats would be less corrupt than politicians and industrialists. The problem was that the bureaucracies still fell under political control with somebody at the top of the hierarchy reporting to the executive branch.

Wilson actively pushed Congress for two new agencies — the Federal Reserve(Fed) and the Federal Trade Commission(FTC). The legislation placed new powers to impact the economy in the limbs of the executive branch. Much like he could stack the Supreme Court, the president could now impact the economy through his appointments to the independent Federal Reserve board and the FTC board of commissioners. In addition, during Wilson’s presidency, the federal tax was re-imposed and the IRS doubled in response.

Since Wilson’s day the powers held within each of these agencies have increased. The Feds job was initially to smooth the money supply to the banks but today it actually sets monetary policy. While the FTC was created to implement specific legislated regulations, today the agency sets trade policy through its own rules and regulations. And, only with the federal tax, can the president and Congress include tax rates, deductions and exemptions in their economic and social agenda toolboxes.

During WWI, Wilson extended his reach into the economy even more using his wartime powers. He created executive branch agencies and overruled trade regulations to mobilize people and production toward the war effort including the following:

  • Suspended several new restrictions on the hours that federal contractors and agricultural laborers could work so that they could increase production and fill in for those heading off to war.
  • Suspended many of the Civil Service Reform Act employment requirements in order to fulfill the immediate government jobs growth he required for his war plan.
  • Created the Food Administration Grain Corporation whose purpose was to make sure that food, fuel and the items for growing food, and other necessities of life where distributed efficiently to minimize shortages for the civilians the troops.
  • Created the War Industries Board to increase production.
  • Created the War Trade board to make the rules and regulations concerning the Trading with the Enemy Act.

FDR would follow Wilson’s outline for mobilization to support WWII, but to Wilson’s credit, he disbanded these wartime agencies bringing government down close to its original size after WWI was over. The government, from FDR forward, would continue the growth trend in bureaucratic size and scope modeled by President Wilson during WWI.

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