On the morning of March 4, 1901, when Mr. McKinley took the oath of office to succeed himself as President, it appeared to the superficial observer that the Populist movement had spent its strength and disappeared. Such was the common remark of the time. To discredit a new proposition it was only necessary to observe that it was as dead as Populism. Twice had the country repudiated Mr. Bryan and his works, the second time even more emphatically than the first; and the radical ideas which had been associated with his name, often quite erroneously, seemed to be permanently laid to rest. The country was prosperous; it congratulated itself on the successful outcome of the war with Spain and accepted the imperialist policies which followed with evident satisfaction. Industries under the protection of the Dingley Act and undisturbed by threats of legislative interference went forward with renewed vigor. Capital began to reach out for foreign markets and investments as never before. Statesmen of Mr. Hanna's school looked upon their work and pronounced it good.

But Populism was not dead. Defeated in the field of national politics, it began to work from the ground upward, attacking one piece of political machinery after another and pressing upon unwilling state legislatures new forms of agrarian legislation. The People's party, at its convention in 1896, had declared in favor of "a system of direct legislation through the initiative and referendum, under proper constitutional safeguards"; and Mr. Bryan two years later announced his belief in the system, saying: "The principle of the initiative and referendum is democratic. It will not be opposed by any Democrat who indorses the declaration of Jefferson that the people are capable of self-government; nor will it be opposed by any Republican who holds to Lincoln's idea that this should be a government of the people, by the people, and for the people."[70]

The first victory of "direct democracy" came in the very year of Mr. Bryan's memorable defeat. In 1896, the legislature of South Dakota was captured by a Democratic-Populist majority, and at the session beginning in the following January, it passed an amendment to the state constitution, establishing a system of initiative and referendum. Some leaders of the old Knights of Labor and the president of the Farmers' Alliance were prominently identified with the campaign for this innovation. The resolution was "passed by a strict party vote, and to the Populists is due the credit of passing it," reported "The Direct Legislation Record" in June, 1897. In the contest over ratification at the polls a party division ensued. The Democratic state convention in 1898 adopted a plank favoring direct legislation, on "the principle that the people should rule"; and the Republicans contented themselves with urging party members "to study the legislative initiative and referendum." At the ensuing election the amendment was carried by a vote of 23,876 to 16,483; but ten years elapsed before any use was made of the new device.[71]

A cloud no bigger than a man's hand had appeared on the horizon of representative government. East, West, North, and South, advocates of direct government were busy with their propaganda, Populists and Democrats taking the lead, with Republican politicians not far in the rear. The year following the adoption of the South Dakota amendment a combination of Democrats and Populists carried a similar provision through the state legislature of Utah and obtained its ratification in 1900. This victory was a short-lived triumph, for the Republicans soon regained their ascendancy and stopped the progress of direct legislation by refusing to enact the enabling law putting the amendment into force. But this check in Utah did not dampen the ardor of reformers in other commonwealths. In 1902, Oregon adopted the new system; four years later Montana followed; in 1907, Oklahoma came into the Union with the device embodied in the Constitution; and then the progress of the movement became remarkably rapid. It was adopted by Missouri and Maine in 1908, Arkansas and Colorado in 1910, Arizona and California in 1911, Washington, Nebraska, Idaho, and Ohio in 1912. By this time Populists and Democrats had ceased to monopolize the agitation for direct government; it had become respectable, even in somewhat conservative Republican circles.

It should be pointed out, however, that there is a conservative and a radical system of initiative and referendum: one which fixes the percentage necessary to initiate and adopt a measure at a point so high as to prevent its actual operation, and another which places it so low as to make its frequent use feasible. The older and more radical group of propagandists, finding their general scheme so widely taken up in practical politics, soon began to devote their attention rather to attacking the stricter safeguards thrown up by those who gave their support to direct government in theory only.

In its simple form of initiation by five per cent of the voters and adoption by a majority of those voting on the measure submitted, this new device was undoubtedly a revolutionary change from the American system of government as conceived by the framers of the Constitution of the United States—with its checks and balances, indirect elections, and judicial control over legislation. The more radical of the advocates of direct government frankly admitted that this was true, and they sought to strengthen this very feature of their system by the addition of another device, known as the recall, which, when applied to judges as well as other elective officers, reduced judicial control over legislation to a practical nullity. Where judges are elected for short terms by popular vote and made subject to the recall, and where laws are made by popular vote of the same electors who choose the judges, it is obvious that the very foundations of judicial supremacy are undermined.

The recall, like direct democracy, was not new to American politics. Both were understood, at least in principle, by the framers of the Federal Constitution and rejected decisively. The recall seems to have made its appearance first in local form,—in the charter of Los Angeles, adopted in 1903. From there it went to the Seattle charter of 1906, and two years later it was adopted as a state-wide system applicable to all elective officers by Oregon. Its progress was swiftest in municipal affairs, for it quite generally accompanied "the commission form" of city government as a check on the commissioners in their exercise of enlarged powers.

The state-wide recall, however, received a remarkable impetus in 1911 from the controversy over the admission of Arizona, which attracted the attention of the nation. That territory had framed a constitution containing a radical form of the recall based on the Oregon plan, and in August, 1911, Congress passed a resolution admitting the applicant, on condition that the provision relating to the recall should be specifically submitted to the voters for their approval or rejection. President Taft was at once stirred to action, and on August 15 he sent Congress a ringing message, displaying unwonted vigor and determination, vetoing the resolution and denouncing the recall of judges in unmeasured terms. "Constitutions," he said, "are checks upon the hasty action of the majority. They are the self-imposed restraints of a whole people upon a majority of them to secure sober action and a respect for the rights of the minority.... In order to maintain the rights of the minority and the individual and to preserve our constitutional balance we must have judges with courage to decide against the majority when justice and law require.... As the possibilities of such a system [as the recall] pass in review, is it too much to characterize it as one which will destroy the judiciary, its standing, and its usefulness?"

Acting upon the recommendation of President Taft, Congress passed a substitute resolution for admitting Arizona only on condition that the obnoxious recall of judges be stricken from the constitution of the state.[72] The debates in Congress over the admission of Arizona covered the whole subject of direct government in all its aspects, and these, coupled with the President's veto message, brought the issue prominently to the front throughout the country. Voters to whom it had previously been an obscure western device now began to take a deep interest in it; the press took it up; and one more test for "progressive" and "reactionary" was put in the popular program.

The movement for direct popular participation in state and local government was inevitably accompanied by a demand for more direct government within the political party; in other words, by a demand for the abandonment of the representative convention in favor of the selection of candidates by direct primary. During the decade of the great Populist upheaval, legislation relative to political parties was largely confined to the introduction of the Australian ballot and the establishment of safeguards around the primaries at which delegates to party conventions were chosen. The direct primary, like the initiative and referendum, grew out of a discontent with social and economic conditions, which led to an attack on the political machinery that was alleged to be responsible for them. Like the initiative and referendum, also, it was not an altogether new device, for it had been used for a long time in some of the states as a local institution established by party custom; but when it was taken up by the state legislatures, it made a far more rapid advance.

It was not, however, until the opening of the new century that primary legislation began to engross a large share of legislative activities. In 1903, "the first state-wide primary law with fairly complete provisions for legal supervision was enacted by the state of Wisconsin"; Oregon, making use of the new initiative system, enacted a thoroughgoing primary law in 1904; and the following year Illinois adopted a state-wide measure. Other states, hesitating at such an extensive application of the principle, contented themselves at first with laws instituting local primaries, such, for example, as the Nebraska law of 1905 covering cities of over 125,000, or the earlier law of Minnesota covering only Hennepin county. "So rapid was the progress of public opinion and legislation," says Mr. Merriam, "that in many instances a compromise law of one session of the legislature was followed by a thoroughgoing law in the next. For example, the North Dakota law of 1905 authorized direct primaries for all district nominations, but did not include state offices; but in 1907, a sweeping act was passed covering practically all offices."

The vogue of the direct primary was confined largely to the West at first, but it steadily gained in favor in the East. Governor Hughes, of New York, in his contest with the old organization of the Republican party, became a stanch advocate of the system, recommended it to the legislature in his messages, campaigned through the state to create public sentiment in favor of the reform, and labored unsuccessfully to secure the passage of a primary law, until he closed his term to accept an appointment to the Supreme Court of the United States. In 1911, the Democratic party, which had carried New York state at the preceding election, enacted a primary law applicable to local, but not to state, offices. About the same time Massachusetts, Maine, and New Jersey joined the long list of direct primary states. Within almost ten years the principle in its state-wide form had been accepted in two thirds of the states, and in some local form in nearly all of the other commonwealths.

Meanwhile, the theory and practice of direct government made their way upward into the Federal government. As early as 1826, Mr. Storrs, a representative from New York, introduced in the House a constitutional amendment providing for the popular election of United States Senators, and from time to time thereafter the proposal was urged upon Congress. President Johnson, who had long been an advocate of this change in the Federal government, made it the subject of a special message to Congress in 1868; but in his contest with that body the proposed measure was lost to sight. Not long afterward it appeared again in the House and the Senate, and at length the lower house in 1893 passed an amendment providing for popular election by the requisite two-thirds vote, but the Senate refused to act. Again in 1894, in 1898 (by a vote of 185 to 11), in 1900 (240 to 15), and in 1902 by practically a unanimous vote, there being no division, the House passed the amendment; still the Senate resisted the change.

In the Senate itself were found occasional champions of popular election, principally from the West and South. Mitchell, of Oregon, Turpie, of Indiana, Perkins, of California, Berry, of Arkansas, and Bailey, of Texas, took the leadership in this contest for reform. Chandler, of New Hampshire, Depew, of New York, Penrose, of Pennsylvania, Hoar, of Massachusetts, Foraker, of Ohio, and Spooner, of Wisconsin, leveled their batteries against it. State after state legislature passed resolutions demanding the change, until at length three fourths had signified their demand for popular election.

The Senate as a whole remained obdurate. When in the Fifty-third Congress the resolution of the House came before that body, Mr. Hoar, of Massachusetts, made, on April 6 and 7, 1893, one of his most eloquent and impassioned pleas for resisting this new proposal to the uttermost. He declared that it would transfer the seat of power to the "great cities and masses of population," that it would create new temptations to fraud and corrupt practices, that it implied that the Senate had been untrue to its trust, that it would lead to the election of the President and the judiciary by popular majorities, and that it would "result in the overthrow of the whole scheme of the Senate and in the end of the whole scheme of the national Constitution as designed and established by the framers of the Constitution and the people who adopted it." With impatience, he refused to listen to the general indictment which had been brought against the Senate as then constituted. "The greatest victories of constitutional liberty since the world began," he concluded, "are those whose battle ground has been the American Senate, and whose champions have been the Senators who for a hundred years, while they have resisted the popular passions of the House, have led, represented, guided, obeyed, and made effective the deliberate will of a free people."

Having failed to make an impression on the Senate by a frontal attack, the advocates of popular election set to work to capture that citadel by a rear assault. They began to apply the principle of the direct primary in the nomination of candidates for the Senate, and this development at length culminated in the Oregon scheme for binding the legislature to accept the "people's choice." This movement gained rapid headway in the South, where the real contest was over nomination, not election, on account of the absence of party divisions. As early as 1875, the Nebraska constitution had provided for taking a popular preferential vote on candidates for the Senate; but no considerable interest seems to have been taken in it at the time. In 1899, Nevada passed a law entitled "an act to secure the election of United States Senators in accordance with the will of the people and the choice of the electors of the state." Shortly afterward, Oregon enacted her famous statute which attempted to compel the legislature to accept the popular nominee; and from that time forward the new system spread rapidly. By 1910, at least three fourths of the states nominated candidates for the Senate by some kind of a popular primary.

It was not until 1911 that the Senate yielded to the overwhelming popular demand for a change in the methods of election provided in the Constitution. In December, 1909, Senator Bristow, of Kansas, introduced a resolution designed to effect this reform, and after a hot debate it was defeated on February 28, 1911, by a vote of 54 to 33, four short of the requisite two thirds. In the next Congress, which convened on April 4, ten Senators who had voted against the amendment had been retired, and the champions of the measure, taking it up again with renewed energy, were able to force it through the upper house on June 12, 1911, by a margin of five more than the two thirds. The resolution went to the House and a deadlock arose between the two chambers for a time over Federal control of elections, provided in the Senate resolution, which was obnoxious to many southern representatives. At length, however, on May 13, 1912, the opponents in the House gave way, and the resolution passed by an overwhelming vote. Within a year, the resolution was ratified by the requisite three fourths of the state legislatures, and it was proclaimed on May 31, 1913.

The advance of direct democracy in the West was accompanied by a revival of the question of woman suffrage. That subject had been earnestly agitated about the time of the Civil War; and under the leadership of Elizabeth Cady Stanton, Susan B. Anthony, and others it made considerable headway among those sections of the population which had favored the emancipation of the slaves. Indeed, it was inevitably linked with the discussion of "natural rights," extensively carried on during the days when attempts were being made to give political rights to the newly emancipated bondmen. Woman suffrage was warmly urged before the New York state constitutional convention in 1867 by Mr. George William Curtis, in a speech which has become a classic among the arguments for that cause. During the seventies suffrage petitions bearing the signatures of thousands of men and women were laid before Congress, and an attempt was made to secure from the Supreme Court an interpretation of the Fourteenth Amendment which would force the states to grant the ballot to women.

At length the movement began to subside, and writers who passed for keen observers declared it to be at an end. The nineteenth century closed with victories for the women in only four states, Wyoming, Colorado, Utah, and Idaho. The first of these states had granted the vote to women while yet a territory, and on its admission to the Union in 1890, it became the first state with full political equality. Three years later, Colorado enfranchised women, and in 1896 Utah and Idaho joined the equal suffrage commonwealths. Meanwhile, a very large number of northern and eastern states had given women the right to vote in local or school elections, Minnesota and Michigan in 1875 and other states in quick succession. Nevertheless, these gains were, relatively speaking, small, and there seemed to be little widespread enthusiasm about the further extension of the right.

Of course, the agitation continued, but in somewhat obscure circles, under a running fire of ridicule whenever it appeared in public. At length it broke out with unprecedented vigor, shortly after the tactics adopted by militant English women startled the world. Within a short time new and substantial victories gave the movement a standing which could not be ignored either by its positive opponents or the indifferent politicians. In 1910, the suffragists carried the state of Washington; in 1911, they carried California; in 1912, they won in Arizona, Kansas, and Oregon; but lost Ohio, Michigan, and Wisconsin. These victories gave them nine states and of course a considerable influence in the House of Representatives and the right to participate in the election of eighteen out of ninety-six Senators. But the defeat in the three middle states led the opponents of woman suffrage to believe that the movement could be confined to the far West. This hope was, however, dashed in 1913 when the legislature of Illinois gave women the right to vote for all statutory officers, including electors for President of the United States. Determined to make use of the political power thus obtained, the suffragists, under the leadership of Alice Paul, renewed with great vigor the agitation at Washington for a national amendment forbidding states to disqualify women from voting merely on account of sex.

The Rise and Growth of Socialism

With the spread of direct elections and the initiative and referendum, and the adoption of the two amendments to the Federal Constitution authorizing an income tax[73] and the popular election of Senators, the milder demands of Populism were secured. At the same time, the prosperity of the farmers and the enormous rise in ground values which accompanied the economic advance of the country removed some of the most potent causes of the discontent on which Populism thrived. Organized Populism died a natural death. Those Populists who advocated only political reforms went over to the Republican and Democratic parties; the advocates of radical economic changes, on the other hand, entered the Socialist ranks.

Socialism, as an organized movement in the United States, runs back to the foundation of the Social-Democratic Workingmen's party in New York City, in 1874, which was changed into the Socialist Labor party three years later,—a party that still survives. This group did not enter into national politics until 1892, although its branches occasionally made nominations for local offices or fused with other labor groups, as in the New York mayoralty campaign of 1886. In its vigorous propaganda against capitalism, this party soon came into collision with the American Federation of Labor, established in 1886, and definitely broke with it four years later when the latter withheld a charter from the New York Central Federation for the alleged reason that the Socialist Labor party of that city was an affiliated organization. After the break with the American Federation, this Socialist group turned for a time to the more radical Knights of Labor, but this new flirtation with labor was no more successful than the first, and in time the Socialist Labor party declared war on all the methods of American trades-unionism. Its gains numerically were not very significant; it polled something over twenty thousand votes in 1892 and over eighty thousand in 1896—the high-water mark in its political career. Its history has been a stormy one, marked by dissensions, personal controversies, and splits, but the party is still maintained by a decreasing band of loyal adherents.

The growth of interest in socialism, however, was by no means confined to the membership of the Socialist Labor party. External events were stirring a consciousness that grave labor problems had arisen within the American Commonwealth. The bloody strikes at Homestead, Coeur d'Alene, Buffalo, and Pullman in the eighties and early nineties moved the country as no preachments of abstract socialist philosophy could ever have done. That such social conflicts were full of serious portent was recognized even by such a remote and conservative thinker as President Cleveland in his message of 1886 to Congress. In that very year, the Society of Christian Socialists was formed, with Professor R. T. Ely and Professor G. D. Herron among its members, and about the same time "Nationalist" clubs were springing up all over the country as a result of the propaganda created by Bellamy's Looking Backward, published in 1887. The decline of the Populist party, which had indorsed most of the socialistic proposals that appealed to Americans tinged with radicalism, the formation of local labor and socialist societies of one kind or another, and the creation of dissatisfaction with the methods and program of the Socialist Labor party finally led to the establishment of a new national political organization.

This was effected in 1900 when a general fusion was attempted under the name of the Social Democratic party, which nominated Mr. Eugene V. Debs for President at a convention held in Indianapolis. The Socialist Labor party, however, declined to join the organization and went on its own way. The vote of the new party, ninety-six thousand, induced the leaders in the movement to believe that they were on the right track, for this was considerably larger than the rival group had ever secured. Steps were immediately taken to put the party on a permanent basis; the name Socialist party was assumed in 1901; local branches were established in all sections of the country with astonishing rapidity; and a vigorous propaganda was undertaken. In the national election of 1904 over four hundred thousand votes were polled; in 1908, when Mr. Bryan and Mr. Roosevelt gave a radical tinge to the older parties, a gain of only about twenty-five thousand was made; but in 1912, despite Mr. Wilson's flirtation with western democracy and the candidacy of Mr. Roosevelt on a socialistic platform, the Socialist party more than doubled its vote.

During these years of growth the party began to pass from the stage of propaganda to that of action. In 1910, the Socialists of Milwaukee carried the city, secured twelve members of the lower house of the state legislature, elected two state Senators, and returned Mr. Victor Berger to Congress. This victory, which was hailed as a turning point in the march of socialism, was largely due, however, to the divided condition of the opposition, and thus the Socialists really went in as a plurality, not a majority party. The closing of the Republican and Democratic ranks in 1912 resulted in the ousting of the Socialist city administration, although the party polled a vote considerably larger than that cast two years previously. In other parts of the country numerous municipal and local officers were elected by the Socialists, and in 1912 they could boast of several hundred public offices.[74]

While there was no little difference of opinion among the Socialists as to the precise character of their principles and tactics,—a condition not peculiar to that party,—there were certain general ideas running through their propaganda and platforms. Modern industry, they all held, creates necessarily a division of society into a relatively few capitalists, on the one hand, who own, control, and manipulate the machinery of production and the natural resources of the country, and on the other hand, a great mass of landless, toolless, and homeless working people dependent upon the sale of their labor for a livelihood. There is an inherent antagonism between these two classes, for each seeks to secure all that it can from the annual output of wealth; this antagonism is manifest in labor organizations, strikes, and industrial disputes of every kind. Out of this contest, the former class gains wealth, luxury, safety, and the latter, poverty, slums, and misery. Finally, if the annual toll levied upon industry by the exploiters and the frightful wastes due to competition and maladjustment were eliminated, all who labor with hand or brain could enjoy reasonable comfort and security, and also leisure for the cultivation of the nobler arts of civilization.

At the present time, runs the Socialist platform of 1912, "the capitalist class, though few in numbers, absolutely controls the government—legislative, executive, and judicial. This class owns the machinery of gathering and disseminating news through its organized press. It subsidizes seats of learning,—the colleges and the schools,—even religious and moral agencies. It has also the added prestige which established customs give to any order of society, right or wrong." But the working class is becoming more and more discontented with its lot; it is becoming consolidated by coÖperation, political and economic, and in the future it will become the ruling class of the country, taking possession, through the machinery of the government, of the great instrumentalities of production and distribution. This final achievement of socialism is being prepared by the swift and inevitable consolidation of the great industries into corporations, managed by paid agents for the owners of the stocks and bonds. The transition from the present order will take the form of municipal, state, and national assumption of the various instrumentalities of production and distribution—with or without compensation to the present owners, as circumstances may dictate.[75] Such are the general presuppositions of socialism.

The Socialist party had scarcely got under way before it was attacked from an unexpected quarter by revolutionary trade-unionists, known as the Industrial Workers of the World, who revived in part the old principle of class solidarity (as opposed to trade solidarity) which lay at the basis of the Knights of Labor. The leaders of this new unionism, among whom Mr. W. D. Haywood was prominent, did not repudiate altogether the Socialist labors to secure control of the organs of government by the ballot, but they minimized their importance and pressed to the front the doctrine that by vigorous and uncompromising mass strikes a revolutionary spirit might be roused in the working class and the actual control of business wrested from the capitalists, perhaps without the intervention of the government at all.

This new unionism was launched at a conference of radical labor leaders in 1904, at which the following program was adopted: "The working class and the employing class have nothing in common. Between these two classes a struggle must go on until the workers of the world organize as a class, take possession of the earth and machinery of production and abolish the wage system. We find that the centering of the management of industries into fewer and fewer hands makes the trade unions unable to cope with the ever growing power of the employing class. The trade unions foster a state of affairs which allows one set of workers to be pitted against another set of workers in the same industry.... Moreover the trade unions aid the employing class to mislead the workers into the belief that the working class have interests in common with their employers. These conditions can be changed and the interest of the working class upheld only by an organization formed in such a way that all its members in any one industry, or in all industries if necessary, cease work whenever a strike or a lockout is on in any department thereof.... We must inscribe on our banner the revolutionary watchword, 'Abolish the wage system.'"

This new society made a disturbance in labor circles entirely out of proportion to its numerical strength. Its leaders managed strikes at McKees Rocks, Pennsylvania, at Lawrence, Massachusetts, in 1912, and at other points, laying emphasis on the united action of all the working people of all the trades involved in the particular industry. The "new unionism" appealed particularly to the great mass of foreign laborers who had no vote and therefore perhaps turned with more zeal to "direct" action. It appeared, however, that the membership of the Industrial Workers was not over 70,000 in 1912, and that it had little of the stability of the membership of the old unions.

What the effect of this new unionism will be on the Socialist party remains to be seen. That party at its convention in 1912 went on record against the violent tactics of revolutionary unionism, and by a party vote "recalled" Mr. Haywood from his membership on the executive committee. The appearance of this more menacing type of working-class action and the refusal of the Socialist party to accept it with open arms gave a new turn to the attitude of the conservative press toward regular political socialism of the strict Marxian school.

The Counter-Reformation

Just as the Protestant Revolt during the sixteenth century was followed by a counter-reformation in the Catholic Church which swept away many abuses, while retaining and fortifying the essential principles of the faith, so the widespread and radical discontent of the working classes with the capitalist system hitherto obtaining produced a counter-reformation on the part of those who wish to preserve its essentials while curtailing some of its excesses. This counter-reformation made a deep impress upon American political thinking and legislation at the turning of the new century. More than once during his presidency Mr. Roosevelt warned the capitalists that a reform of abuses was the price which they would have to pay in order to save themselves from a socialist revolution. Eminent economists turned aside from free trade and laissez faire to consider some of the grievances of the working class, and many abandoned the time-honored discussions of "economic theories," in favor of legislative programs embracing the principles of state socialism, to which countries like Germany and Great Britain were already committed.

Charity workers whose function had been hitherto to gather up the wrecks of civilization and smooth their dying days began to talk of "a war for the prevention of poverty," and an examination of their concrete legislation proposals revealed the acceptance of some of the principles of state socialism. Unrestricted competition and private property had produced a mass of poverty and wretchedness in the great cities which constituted a growing menace to society, and furnished themes for socialist orators. Social workers of every kind began the detailed analysis of the causes of specific cases of poverty and arrived at the conclusion that elaborate programs of "social legislation" were necessary to the elimination of a vast mass of undeserved poverty.

Under the stimulus of these and other forces, state legislatures in the more industrially advanced commonwealths began to pour out a stream of laws dealing with social problems. These measures included employers' liability and workmen's compensation laws, the prohibition of child labor, minimum hours for dangerous trades like mining and railroading, minimum wages for women and girls, employment bureaus, and pensions for widows with children to support. While none of the states went so far as to establish old-age pensions and general sickness and accident insurance, it was apparent from an examination of the legislation of the first decade of the twentieth century that they were well in the paths of nations like Germany, England, and Australia.

Criticism of the Federal System

All this unsettlement in economics and politics could not fail to bring about a reconsideration of the fundamentals in the American constitutional system—particularly the distribution of powers between the Federal and state governments, which is made by a constitution drafted when economic conditions were totally different from what they are to-day. In fact, during the closing years of the nineteenth century there appeared, here and there in American political literature, evidence of a discontent with the Federal system scarcely less keen and critical than that which was manifested with the Articles of Confederation during those years of our history which John Fiske has denominated "The Critical Period."

Manufacturing interests which, at the time the Federal Constitution was framed, were so local in character as to be excluded entirely from the control of the Federal government had now become national or at all events sectional, having absolutely no relation to state lines. As Professor Leacock remarks, "The central fact of the situation is that economically and industrially the United States is one country or at best one country with four or five great subdivisions, while politically it is broken into a division of jurisdictions holding sway to a great extent over its economic life, but corresponding to no real division either of race, of history, of unity, of settlement, or of commercial interest."[76] For example, in 1900 the boot and shoe industry, instead of being liberally distributed among the several states, was so concentrated, that out of the total product 44.9 per cent was produced by Massachusetts; nearly one half of the agricultural implements for that year were made in Illinois; two thirds of the glass of the whole country was made in Pennsylvania and Indiana; while Pennsylvania alone produced 54 per cent of the iron and steel manufactured. The political significance of this situation was simply this: the nation on which each of these specialized industries depended for its existence had practically no power through the national government to legislate relative to them; but in each case a single legislature representing a small fraction of the people connected with the industry in question possesses the power of control.

The tendency of manufacturers to centralize was accompanied, as has been pointed out above, by a similar centralization in railways. At the close of the nineteenth century, the Vanderbilt system operated "some 20,000 miles reaching from New York City to Casper, Wyoming, and covering the lake states and the area of the upper Mississippi; the Pennsylvania system with 14,000 miles covers a portion of the same territory, centering particularly in Ohio and Indiana; the Morgan system, operating 12,000 miles, covers the Atlantic seaboard and the interior of the Southern States from New York to New Orleans; the Morgan-Hill system operates 20,000 miles from Chicago and St. Louis to the state of Washington; the Harriman system with 19,000 miles runs from Chicago southward to the Gulf and westward to San Francisco, including a Southern route from New Orleans to Los Angeles; the Gould system with 14,000 miles operates chiefly in the center of the middle west extending southward to the Gulf; in addition to these great systems are a group of minor combinations such as the Atchinson with 7,500 or the Boston and Maine with 3,300 miles of road."

Corresponding to this centralization in industries and railways there was, as we have pointed out, a centralization in the control of capital, particularly in two large groups, the Standard Oil and the Morgan interests. As an expert financier, Mr. Moody wrote in 1904: "Viewed as a whole, we find the dominating influences in the trusts to be made up of an intricate network of large and small groups of capitalists, many allied to one another by ties of more or less importance, but all being appendages to, or parties of the greater groups which are themselves dependent on and allied with the two mammoth or Rockefeller and Morgan groups."

Facing this centralized national economy was a Federal system made for wholly different conditions—a national system of manufacturing, transportation, capital, and organized labor, with a national government empowered, expressly, at least, to regulate only one of those interests, transportation—the other fundamental national interests being referred to the mercy of forty-six separate and independent state legislatures. But it is to be noted, these several legislatures were by no means free to work out their own program of legislation; all of them were, at every point, subjected to Federal judicial control under the general phrases of the Fourteenth Amendment relative to due process of law and the equal protection of the laws.[77] To state it in another way, the national government was powerless to act freely with regard to nearly all of the great national interests, but it was all powerful through its judiciary in striking down state legislation.

A few concrete illustrations[78] will show the lack of correspondence between the political system and the economic system. Each state bids against the others to increase the number of factories which adds to its wealth and increases the value of property within its borders, although it makes no difference to the total wealth of the nation and the happiness of the whole people whether a particular concern is located in New Jersey or in Pennsylvania. As the national government enjoys no power to regulate industries—even those which are national in character—the states use their respective powers under the pressure which comes from those who are interested in increasing the industry of the commonwealth. For example, it is stated "the glass workers of New Jersey oppose any attempt to prohibit night work for boys under sixteen years of age on the ground that such work is permitted in the neighboring state of Pennsylvania." In 1907, in South Carolina, Georgia, and Alabama, a ten year old child could, under the law, work for twelve hours a day; North Carolina had sixty-six mills where twelve year old children could do twelve hours' night work under the law. Although this situation was somewhat remedied later, the advocates of reform were resisted at every point by the interested parties who contended that in competing with New England, the southern states had to take advantage of every opportunity, even at the expense of the children.

The situation may be described in the language of the chief factory inspector of Ohio: "Industrially as well as geographically we of the Ohio Valley are one people and our laws should be uniform, not only that they may be the easier enforced, but in justice to the manufacturers who pursue the same industry in the several states and therefore come into close competition with one another." Moreover, if a state enacts an important industrial law, it may find its work in vain as the result of a decision of the national Supreme Court, or of the state courts, interpreting the Fourteenth Amendment.

Another example of a national interest which is wholly beyond the reach of the Federal government, under a judicial decision reached in the case of Paul v. Virginia in 1868, is that of insurance. Although Hamilton and earlier writers on the Constitution believed that the insurance business was a branch of interstate commerce whose regulation was vested in Congress, the Supreme Court in this case dealing with fire insurance declared that the act of issuing a policy of insurance was not a transaction of commerce. "The policies," said the Court, "are simple contracts of indemnity against loss by fire, entered into between the corporations and the assured for a consideration paid by the latter. These contracts are not articles of commerce in any proper meaning of the word; they are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them.... Such contracts are not interstate transactions, though the parties may be domiciled in different states.... They are then local transactions and are governed by the local laws. They do not constitute a part of the commerce between the states any more than a contract for the purchase and sale of goods in Virginia by a citizen of New York whilst in Virginia would constitute a portion of such commerce."

As a result of this narrow interpretation of the commerce clause, the vast insurance business of the country, national in character, was put beyond the reach of Congress, and at the mercy of the legislatures of the several commonwealths. Under these circumstances, the insurance laws of the United States were in splendid chaos. "If a compilation of these laws were attempted," says Mr. Huebner, "a most curious spectacle would result. It would be found that fifty-two states and territories are all acting along independent lines and that each, as has been correctly said, possessed its own schedule of taxations, fees, fines, penalties, obligations and prohibitions, and a retaliatory or reciprocal provision enabled it to meet the highest charges any other state may require of the companies of any other states."

A still better example of confusion in our system is offered by the corporation laws of the several states. Great industrial corporations are formed under state laws. While many contend that Congress has the power to compel the Federal incorporation of all concerns doing an interstate business and thus to occupy the whole domain of corporation law involving interstate commerce, this radical step has not yet been taken. Congress has confined itself to the more or less fruitless task of forbidding combinations in restraint of interstate trade.

Under these circumstances, there appeared the anomalous condition of states actually advertising in the newspapers and bidding against each other in offering the corporations special opportunities and low fees for the privilege of incorporating. If the conscience of one state became enlightened and a strict corporation law was enacted, the result was simply to drive the irregular concerns into some other state which was willing to sell its privileges for the small fee of incorporation, and ask no questions. As might have been expected, every variety of practice existed in the forty-eight jurisdictions in which corporations might be located.

Not only was there the greatest diversity in these practices, but special discriminations were often made in particular states against concerns incorporated in other states; and on top of all this there was a vast mass of anti-trust legislation, frequently drastic in character or loose and futile. Often it was the product of a popular clamor against large business undertakings, and often it was the result of the effort of legislators to "strike" at corporations. Whatever the underlying motive, it was generally characterized at the outset by lack of uniformity and absence of any large view of public policy, and then it was glossed over by judicial decisions, state and Federal, until it was a fortunate corporation official, indeed, who knew either his rights or his duties under the law. Moreover, it was a particularly obtuse attorney who could not lead his client unscathed through this wonderland of legal confusion.

The position of railway corporations, if possible, was more anomalous still. Their interstate business was subject to the regulations of Congress and their intra-state business to the control of the state legislatures. Although there existed, in theory, a dividing line between these two classes of business, there were always arising concrete cases where it was difficult to say on which side of the line they would fall in the opinion of the Supreme Court. States were constantly being enjoined on the application of the railways for their "interference with interstate commerce"; and when far-reaching legislation was proposed in Congress, the cry went up that the rights of states were being trampled upon. If X shipped a carload of goods to Y within the borders of his state, he paid one rate; if he shipped it to Z, two miles farther on in another state, he paid a different rate, perhaps less than in the first instance. In a number of states companies owning parallel lines might consolidate; in others, consolidation was forbidden. According to a report of the Interstate Commerce Commission in 1902, the states were equally divided on this proposition as to the consolidation of competing lines. According to the same report, if a railway company was guilty of unjust discrimination in one state, it paid a fine of $50, and in other states it was mulcted to the tune of $25,000. At the same time, whoever obstructed a railway track in Mississippi was liable to three months in jail; for the same offense in New York he might get three years; if, perchance, after serving three years and three months in these two commonwealths, he tried the experiment again in Wyoming, he might in the mercy of the court be sentenced to death.

A further element of confusion was added by the intervention of the Federal judiciary in declaring state laws invalid, not merely when they conflicted clearly with the execution of Federal law, but on constitutional grounds which meant, for practical purposes, whenever the said laws were not in harmony with the ideas of public policy entertained by the courts at the time. The Federal judiciary in regard to state legislation relative to corporations was, therefore, a destructive, not a constructive, body. To use the language of the street, state legislation was simply "shot to pieces" by judicial decisions. That which was chaotic, disjointed, and founded upon no uniformity of purpose or policy to begin with was riddled and torn by a body which had no power for positive action.

As the Interstate Commerce Commission declared in 1903, "One of the chief embarrassments in the exercise of adequate government control over the organization, the construction, and the administration of railways in the United States is found in the many sources of statutory authority recognized by our form of government. The Federal Constitution provides for uniformity in statutory control, so far as interstate commerce is concerned, but it does not touch commerce within the states, nor, as at present interpreted, does it cover the organization of railroad corporations or the construction of railroad properties. These matters, as well as the larger part of that class of activities included under the police jurisdiction, are left to the states. Such being the case, the development of an harmonious and uniform railroad system must be attained, if at all, by one of two methods. The states must relinquish to the Federal government their reserved rights over internal commerce, or having first agreed upon fundamental principles, they must, through comity and convention, work out an harmonious system of statutory regulation."

This was the situation that called forth the demand for the national regulation of large corporate enterprises, and brought about the demand for a strengthening of the Federal government, either by a constitutional amendment or judicial interpretation, which received the name of "New Nationalism." Wide currency was given to this term by Mr. Roosevelt, in his speech delivered at Ossawatomie on August 31, 1910. After outlining a legislative policy which he deemed to be demanded by the changed economic conditions of our time, Mr. Roosevelt attacked the idea of "a neutral zone between the national and state legislatures," guarded only by the Federal judiciary; and pleaded for the strengthening of the Federal government so as to make it competent for every national purpose.

"There must remain no neutral ground," he said, "to serve as a refuge for lawbreakers, and especially for lawbreakers of great wealth, who can hire the vulpine legal cunning which will teach them how to avoid both jurisdictions. It is a misfortune when the national legislature fails to do its duty in providing a national remedy so that the only national activity is the purely negative activity of the judiciary in forbidding the state to exercise the power in the premises.

"I do not ask for overcentralization; but I do ask that we work in a spirit of broad and far-reaching nationalism when we work for what concerns our people as a whole. We are all Americans. Our common interests are as broad as the continent. I speak to you here exactly as I would speak in New York or Georgia, for the most vital problems are those which affect us all alike. The national government belongs to the whole American people, and where the whole American people are interested, that interest can be guarded effectively only by the national government. The betterment which we seek must be accomplished, I believe, mainly through the national government.

"The American people are right in demanding that New Nationalism without which we cannot hope to deal with new problems. The New Nationalism puts the national need before sectional or personal advantages. It is impatient of the utter confusion that results from local legislatures attempting to treat national issues as local issues. It is still more impatient of the impotence which springs from overdivision of government powers, the impotence which makes it impossible for local selfishness or for legal cunning, hired by wealthy special interests, to bring national activities to a deadlock. This New Nationalism regards the executive power as the steward of the public welfare. It demands of the judiciary that it shall be interested primarily in human welfare rather than in property, just as it demands that the representative body shall represent all the people rather than any one class or section of the people."

FOOTNOTES:

[70] The political history of the initiative and referendum has never been written. Some valuable materials are to be found in Direct Legislation, Senate Document No. 340, 55th Cong., 2d Sess. (1898); and in "The Direct Legislation Record," founded in May, 1894; and in the "Equity Series," now published at Philadelphia. See also Oberholtzer, The Initiative, Referendum, and Recall in America, ed. 1911.