1.1 The end of Reconstruction

All Southern states were readmitted by 1870, but Reconstruction continued until 1877, when the contentious Presidential election of 1876 was decided in favor of Rutherford B. Hayes, supported by Northern states, over his opponent, Samuel J. Tilden. Some historians have argued that the election was handed to Hayes in exchange for an end to Reconstruction; this theory characterizes the settlement of that election as the " Compromise of 1877". Not all historians agree with this theory; in any case, regardless of the circumstances, Reconstruction came to an end at this time.

The end of Reconstruction essentially signalled the end of civil rights for African Americans; as the years passed after the end of the war, the North lost interest in continuing to pursue the matter and instead turned its attention towards other concerns. The South was essentially allowed to establish a segregated society in return for accepting its integration into the Union, and the initial flurry of civil rights measures were eroded over time. In the aftermath of Reconstruction, much of the civil rights legislation was later overturned by the United States Supreme Court near the end of the 19th Century. Most notably, the court ruled in the Civil Rights Cases 109 US 3 1883 that the fourteenth amendments being binding only to the states and not to the persons, Congress could not prevent private businesses to segregate black and white citizens in public places, thus repealing the 1875 Civil Rights Act. Plessy v. Ferguson 163 US 537 1896 went even further, providing that state-mandated segregation was legal as long as it provided for "separate but equal" facilities. Brown v. Board of Education of Topeka 347 US 483 1954 was one of the landmark 20th-century cases in which the Supreme Court reversed itself on segregation, but it was not until the Federal government formally struck down the concept of segregation in all public facilities in Title II of the Civil Rights Act of 1964 that Plessy was formally reversed. This act, along with the Voting Rights Act of 1965, finally paved the way to an end to officially sanctioned segregation in the United States.

2 Further displacement of the indigenous population

Main article: Indian Wars

Determined to lead their peoples' resistance against white takeover of their land, Crazy Horse (above) and Sitting Bull forged a coalition of indigenous fighters, and crushed five units of U.S. General George Custers' cavalry at the Battle of Little Bighorn, overcoming overwhelming obstacles against them.

As in the East, expansion into the plains and mountains by miners, ranchers and settlers led to increasing conflicts with the indigenous population of the West. Many tribes -- from the Utes of the Great Basin to the Nez Perces of Idaho -- fought the whites at one time or another. But the Sioux of the Northern Plains and the Apache of the Southwest provided the most significant opposition to encroachment on tribal lands. Led by such resolute, militant leaders such as Red Cloud and Crazy Horse, the Sioux were skilled at high-speed mounted warfare. The Apaches were equally adept and highly elusive, fighting in their environs of desert and canyons.

Conflicts with the Plains Indians continued through the Civil War. In 1876 the last serious Sioux war erupted, when the Dakota gold rush penetrated the Black Hills. The Army did not keep miners off Sioux hunting grounds. Yet, when ordered to take action against bands of Sioux hunting on the range according to their treaty rights, the Army moved vigorously.

In 1876, after several indecisive encounters, General George Custer found the main encampment of Sioux and their allies at the Battle of Little Big Horn. Custer and his men -- who were separated from their main detachment -- were soundly defeated by the indigenous resistance. Later, in 1890, a ghost dance ritual on the Northern Sioux reservation at Wounded Knee, South Dakota, led to an uprising that saw the slaughter of the Sioux, killing hundreds. The Sioux slaughtered were remnants of a Plains civilization decimated by white encroachment.

Long before this, the means of subsistence and societies of the indigenous population of the Great Plains had been destroyed by the slaughter of the buffalo, almost driven to extinction in the decade after 1870 by indiscriminate hunting, which was encouraged given that it also promoted the corresponding eradication of large shares of the indigenous human population as well. Meanwhile, the Apaches' struggle for survival in the Southwest dragged on until Geronimo, the last important chief, was captured in 1885.

U.S. federal government policy since the James Monroe administration had been to move the indigenous population beyond the reach of the white frontier. White "reformers" believed the indigenous population should be forcibly assimilated into white culture. The federal government even set up a school in Carlisle, Pennsylvania, in an attempt to impose the values and beliefs of the U.S. white population on indigenous youths.

In 1887 the Dawes Act reversed U.S. Indian policy, permitting the president to divide up tribal land and parcel out 0.65 km² of land to each head of a family. Such allotments were to be held in trust by the government for 25 years, after which time the owner won full title and citizenship. Lands not thus distributed, however, were offered for sale to settlers. This policy allowed more plundering of indigenous lands by waging an assault on the communal organization of tribes, which caused further disruption of the traditional culture of the surviving population of the indigenous West. In 1934 U.S. policy was reversed again by the Indian Reorganization Act, which attempted to protect tribal and communal life on the reservations.

3 "The Gilded Age"

thumb 1917 painting of John D. Rockefeller by John Singer Sargent

From 1865 to about 1900, the U.S. became the world's leading industrial nation, witnessing meteoric expansion in the pace and scale of production.

The great extent of the country's landmass spanning a continent; the diversity of climate and the corollary economic diversity; the ample presence of navigable canals, rivers, and coastal waterways that filled the transportation needs of the emerging industrial economy; and the abundance of natural resources; fostered the cheap extraction of energy, fast transport, and the availability of capital.

Railroads opened up vast markets, helping to explain steady growth in aggregate demand. The transcontinental railroad provided access to previously remote expanses of land. Railway construction boosted demand for capital resources, credit, and rapid increases in land values. Industry learned how to coordinate such diversity of economic activities across broad geographic areas. To finance such large-scale enterprises, the corporation emerged as the dominant form of business organization. Corporations also grew by combining into trusts, creating single firms out of competing firms.

Business leaders backed government policies of laissez-faire. High tariffs sheltered U.S. producers from foreign competition; federal railroad subsidies enriched investors; and all branches of government at all levels generally sought to keep a lid on organized labor.

In this context of cutthroat competition for accumulation, the skilled labor of the petty artisan and craftsman gave way to unskilled labor and increased mechanization. Meanwhile, a steady stream of immigrants encouraged the availability of cheap labor, especially in the mining and manufacturing sectors.

Unskilled labor (often child labor), with its repetitive and monotonous tasks, was quite alienating. Toilers coped with hazardous conditions, virtually no system of insurance against accidents, wage cuts, long hours, and unpredictable cycles of mass lay-offs and unemployment. Tensions between labor and management increased.

3.1 Agrarian distress and the rise of Populism

Despite their remarkable progress, 19th-century U.S. farmers experienced recurring periods of hardship. Several basic factors were involved -- soil exhaustion, the vagaries of nature, a decline in self-sufficiency, and the lack of adequate legislative protection and aid. Perhaps most important, however, was over-production.

Along with the mechanical improvements which greatly increased yield per unit area, the amount of land under cultivation grew rapidly throughout the second half of the century, as the railroads and the gradual displacement of the Plains Indians opened up new areas for western settlement. A similar expansion of agricultural lands in countries such as Canada, Argentina, and Australia compounded these problems in the international market, where much of U.S. agricultural production was now sold.

The farther west the settlers went, the more dependent they became on the railroads to move their goods to market. At the same time, farmers paid high costs for manufactured goods as a result of the protective tariffs that Congress, backed by Eastern industrial interests, had long supported. Over time, the Midwestern and Western farmer fell ever more deeply in debt to the banks that held their mortgages.

In the South, the fall of the Confederacy brought major changes in agricultural practices. The most significant of these was sharecropping, where tenant farmers "shared" up to half of their crop with the landowners in exchange for seed and essential supplies. An estimated 80 percent of the South's African American farmers and 40 percent of its white ones lived under this debilitating system following the Civil War.

Most sharecroppers were locked in a cycle of debt, from which the only hope of escape was increased planting. This led to the over-production of cotton and tobacco, and thus to declining prices and the further exhaustion of the soil. The first organized effort to address general agricultural problems was the Granger movement. Launched in 1867 by employees of the U.S. Department of Agriculture, the Granges focused initially on social activities to counter the isolation most farm families encountered. Women's participation was actively encouraged. Spurred by the Panic of 1873, the Grange soon grew to 20,000 chapters and one-and-a-half million members.

Although most of them ultimately failed, the Granges set up their own marketing systems, stores, processing plants, factories and cooperatives. The movement also enjoyed some political success during the 1870s. A few states passed "Granger laws," limiting railroad and warehouse fees.

By 1880 the movement began to decline, replaced by the Farmers' Alliances. By 1890 the Alliance movements had members from New York to California totaling about 1.5 million. A parallel African American organization, the Colored Farmers National Alliance , numbered over a million members.

From the beginning, the Farmers' Alliances were political organizations with elaborate economic programs. According to one early platform, its purpose was to "unite the farmers of America for their protection against class legislation and the encroachments of concentrated capital." Their program also called for the regulation -- if not the outright nationalization -- of the railroads; currency inflation to provide debt relief; the lowering of the tariff; and the establishment of government-owned storehouses and low-interest lending facilities.

During the late 1880s a series of droughts devastated the western Great Plains. Western Kansas lost half its population during a four-year span. To make matters worse, the McKinley Tariff of 1890 was one of the highest the country had ever seen.

By 1890 the level of agrarian distress was at an all-time high. Working with sympathetic Democrats in the South or small third parties in the West, the Farmer's Alliance made a push for political power. From these elements, a third political party, known as the Populist Party, emerged. Never before in American politics had there been anything like the Populist fervor that swept the prairies and cotton lands. The elections of 1890 brought the new party into power in a dozen Southern and Western states, and sent a score of Populist senators and representatives to Congress.

Its first convention was in 1892, when delegates from farm, labor and reform organizations met in Omaha, Nebraska, determined at last to make their mark on a U.S. political system they viewed as hopelessly corrupted by the monied interests of the industrial and commercial trusts.

The pragmatic portion of their platform focused on issues of land, transportation, and finance, including the unlimited coinage of silver. The Populists showed impressive strength in the West and South in the 1892 elections, and their candidate for president polled more than a million votes. Yet it was the currency question, pitting advocates of silver, against those who favored gold, which soon overshadowed all other issues. Agrarian spokesmen in the West and South -- supported by labor groups in the Eastern industrial centers -- demanded a return to the unlimited coinage of silver. Convinced that their troubles stemmed from a shortage of money in circulation, they argued that increasing the volume of money would indirectly raise prices for farm products and drive up industrial wages, thus allowing debts to be paid with inflated currency. Conservative groups and the financial classes, on the other hand, believed that such a policy would be disastrous, and insisted that inflation, once begun, could not be stopped. Only the gold standard, they said, offered stability.

The financial Panic of 1893 heightened the tension of this debate. Bank failures abounded in the South and Midwest; unemployment soared and crop prices fell badly. The crisis, and President Grover Cleveland's inability to solve it, nearly broke the Democratic Party. Democrats who were silver supporters went over to the Populists as the presidential elections of 1896 neared.

The Democratic convention that year was witness to one of the most famous speeches in U.S. political history. Pleading with the convention not to "crucify mankind on a cross of gold," William Jennings Bryan, the young Nebraskan champion of silver, won the Democrats' presidential nomination. The Populists also endorsed Bryan. The moment was to prove their high-water mark. Despite carrying the South and all of the West except California and Oregon, Bryan lost the more populated, industrial North and East -- and the election -- to the Republican's William McKinley.

The following year the country's finances began to improve, in part due to the discovery of gold in Alaska and the Yukon. In 1898 the Spanish-American War drew the nation's attention further from Populist issues. If the movement was dead, however, its ideas were not. Many of them passed into law within the next two decades.

3.2 Workers' struggle

Sketch of U.S. troops breaking up the 1894 Pullman Strike

The life of a 19th-century U.S. industrial worker was far from easy. Even in good times wages were low, hours long and working conditions hazardous. Little of the wealth generated went to the proletariat. The situation was worse for women and children, who made up a high percentage of the work force in some industries and often received but a fraction of the wages a man could earn. Periodic economic crises swept the nation, further eroding industrial wages and producing high levels of unemployment.

At the same time, the technological improvements, which added so much to the nation's productivity, continually reduced the demand for skilled labor. Yet the unskilled labor pool was constantly growing, as unprecedented numbers of immigrants -- 18 million between 1880 and 1910 -- entered the country, eager for work.

Before 1874, when Massachusetts passed the nation's first legislation limiting the number of hours women and child factory workers could perform to 10 hours a day, virtually no labor legislation existed in the country. Indeed, it was not until the 1930s that the federal government would become actively involved. Until then, the field was left to the state and local authorities, few of whom were as responsive to the workers as they were to wealthy industrialists.

The laissez-faire capitalism, which dominated the second half of the 19th century and fostered huge concentrations of wealth and power, was backed by a judiciary which time and again ruled against those who challenged the system. In this, they were merely following the prevailing philosophy of the times. As John D. Rockefeller is reported to have said: "the growth of a large business is merely a survival of the fittest." This " Social Darwinism," as it was known, had many proponents who argued that any attempt to regulate business was tantamount to impeding the natural evolution of the species.

Yet the costs of this indifference to the victims of capital were high. For millions, living and working conditions were poor, and the hope of escaping from a lifetime of poverty slight. As late as the year 1900, the United States had the highest job-related fatality rate of any industrialized nation in the world. Most industrial workers still worked a 10-hour day (12 hours in the steel industry), yet earned from 20 to 40 percent less than the minimum deemed necessary for a decent life. The situation was only worse for children, whose numbers in the work force doubled between 1870 and 1900.

3.2.1 Labor organization

The first major effort to organize workers' groups on a nationwide basis appeared with The Noble Order of the Knights of Labor in 1869. Originally a secret, ritualistic society organized by Philadelphia garment workers, it was open to all workers, including African Americans, women and farmers. The Knights grew slowly until they succeeded in facing down the great railroad baron, Jay Gould, in an 1885 strike. Within a year they added 500,000 workers to their rolls.

The Knights of Labor soon fell into decline, however, and their place in the labor movement was gradually taken by the American Federation of Labor (AFL). Rather than open its membership to all, the AFL, under former cigar union official Samuel Gompers, focused on skilled workers. His objectives were "pure and simple" and apolitical: increasing wages, reducing hours and improving working conditions. As such, Gompers helped turn the labor movement away from the socialist views earlier labor leaders had espoused.

Still, labor's goals -- and the unwillingness of capital to grant them -- resulted in the most violent labor conflicts in the nation's history. The first of these occurred with the Great Rail Strike of 1877 , when rail workers across the nation went out on strike in response to a 10-percent pay cut. Attempts to break the strike led to a full scale working class uprising in several cities: Baltimore, Maryland; Chicago, Illinois; Pittsburgh, Pennsylvania; Buffalo, New York; and San Francisco, California.

The military was called in at several locations before the strike to crush the uprising workers. The Haymarket Square incident took place nine years later, when someone threw a bomb into a meeting called to discuss an ongoing strike at the McCormick Harvester Company in Chicago. In the ensuing battle, nine people were killed and some 60 injured. Next came the riots of 1892 at Carnegie's steel works in Homestead, Pennsylvania.

A group of 300 Pinkerton detectives the company had hired to break a bitter strike by the Amalgamated Association of Iron, Steel and Tin Workers were fired upon and 10 were killed. The National Guard was called in as a result to crush the striking workers; non-union workers were hired and the strike broken. Unions were not let back into the plant until 1937.

Two years later, wage cuts at the Pullman Palace Car Company just outside Chicago, led to a strike, which, with the support of the American Railway Union, soon brought the nation's railway industry to a halt. As usual, as soon as labor exerted its immense power over capital, the federal governement steped in and weighed in on the side of capital by force. U.S. Attorney General Richard Olney, himself a former lawyer for the railroad industry, deputized over 3,000 men in an attempt to keep the rails open. This was followed by a federal court injunction against union interference with the trains.

When workers refused to kowtow to the manuverings of the railroad industry and their agents in the federal government, Cleveland -- again -- sent in federal troops, and the strike was eventually broken. The most militant working class organization of the time was the Industrial Workers of the World (IWW). Formed from an amalgam of unions fighting for better conditions in the West's mining industry, the IWW, or "Wobblies" as they were commonly known, gained particular prominence from the Colorado mine clashes of 1903 and the singularly brutal fashion in which they were put down. Openly calling for class warfare, the Wobblies gained many adherents after they won a difficult strike battle in the textile mills of Lawrence, Massachusetts, in 1912. Their call for work stoppages in the midst of World War I, however, led to a government crackdown in 1917, which virtually destroyed them.

4 The rise of U.S. imperialism

See also History of United States Imperialism and New Imperialism and the emerging empires.

The findings of the 1890 Census, popularized by historian Frederick Jackson Turner in his paper entitled The Significance of the Frontier in American History , contributed to fears of dwindling natural resources. The Panic of 1893 and the ensuing depression also led some businessmen and politicians to come to the same conclusion as influential European imperialists (e.g., Leopold II of Belgium, Jules Ferry, Benjamin Disraeli, Joseph Chamberlain, and Francesco Crispi) had reached nearly a generation earlier in Europe: that industry had apparently over-expanded, producing more goods than domestic consumers could buy.

Like the Long Depression in Europe, which bred doubts regarding growing strength of political resistance of world capitalism, the main features of the Panic of 1893 included deflation, rural decline, and unemployment (indicative of under-consumption), which aggravated the bitter social protests of the Gilded Age, the Populist movement, the free-silver crusade, and violent labor disputes such as the Pullman Strike.

Similarly, the post-1873 in Europe period saw a reemergence of far more militant working-class organization and cycles of large strikes. The rapid turn to the " New Imperialism" in the late nineteenth century can be correlated with cyclically spaced economic depressions that adversely affected many elite groups. Like the Long Depression, an era of increasing unemployment and deflated prices for manufactured goods, the Panic of 1893 contributed to fierce competition over markets in the growing "spheres of influence" of the United States, which tended to overlap with Britain's, especially in the Pacific and South America.

Some U.S. politicians, such as Henry Cabot Lodge, William McKinley, and Theodore Roosevelt, advocated a more aggressive foreign policy and a policy of to pull the United States out of the depression of the second Grover Cleveland administration.

Just as the German Reich reacted to depression with the adoption of protective tariff protection in 1879, so would the United States with the landslide election victory of William McKinley, who had risen to national prominence six years earlier with the passage of the McKinley Tariff of 1890 .

As Germany emerged as a great power after victory in the Franco-Prussian War completed the process of its unification, the U.S. would emerge as a great power after victory in the Civil War. Like newly industrializing great powers, the U.S. adopted protectionism, seized a colonial empire of its own (1898), and built up a powerful navy (the " Great White Fleet)." On the Pacific, since the Meiji Restoration, Japan's development followed a similar pattern, following the Western lead in industrialization and militarism, enabling it to gain a foothold or "sphere of influence" in Qing China.

Although U.S. capital investments within the Philippines and Puerto Rico were relatively small (figures that would seemingly detract from the broader economic implications on first glance), these colonies were strategic outposts for expanding trade with Asia, particularly China and Latin America.

U.S. imperialism was marked by the reaffirmation of the Monroe Doctrine, formalized by the Roosevelt Corollary to the Monroe Doctrine in 1904.

4.1 The Philippine-American War

For details see the main article Philippine-American War.

Beginning in 1898, Emilio Aguinaldo led the resistance to U.S. imperialism in the Philippines, until he was captured by U.S occupation forces in 1901.

Nevertheless, the United States found itself in a familiar colonial role when it suppressed an armed independence movement in the Philippines in the first decade of its occupation. During the ensuing (and largely forgotten) Philippine-American War, 4,234 U.S. soldiers were killed, and thousands more were wounded. Philippine military deaths were estimated at roughly 20,000. Filipino civilian deaths are unknown, but some estimates place them as high as one million.

U.S. attacks into the countryside often included scorched earth campaigns where entire villages were burned and destroyed, torture ( water cure) and the concentration of civilians into "protected zones." Many of these civilian casualties resulted from disease and famine. Reports of the execution of U.S. soldiers taken prisoner by the Filipinos led to disproportionate reprisals by American forces. Many U.S. officers and soldiers called the war a " nigger killing business."

During the U.S. occupation, English was declared the official language, although the languages of the Philippine people were Spanish, Visayan, Tagalog, Ilokano and other native languages. Six hundred American teachers were imported aboard the U.S.S. Thomas. Also, the Catholic Church was disestablished, and a considerable amount of church land was purchased and redistributed.

In 1914, Dean C. Worcester, U.S. Secretary of the Interior for the Philippines (1901-1913) described "the regime of civilization and improvement which started with American occupation and resulted in developing naked savages into cultivated and educated men."

5 The "progressive" era

The presidential election of 1900 gave the U.S. a chance to pass judgment on the McKinley administration, especially its foreign policy. Meeting at Philadelphia, the Republicans expressed jubilation over the successful outcome of the war with Spain, the restoration of prosperity and the effort to obtain new markets through the " Open Door " policy. McKinley's election was a foregone conclusion.

But the president did not live long enough to enjoy his victory. In September 1901, while attending an exposition in Buffalo, New York, McKinley was shot down by an assassin. (He was the third president to be assassinated since the Civil War.) Theodore Roosevelt, McKinley's vice president, assumed the presidency.

In domestic as well as international affairs, Roosevelt's accession coincided with a new epoch in American political life. The continent was peopled; the frontier was disappearing. The country's political foundations had endured the vicissitudes of foreign and civil war, the tides of prosperity and depression. Immense strides had been made in agriculture and industry.

However, the influence of big business was now more firmly entrenched than ever, and local and municipal government often was in the hands of corrupt politicians. A new spirit of the times known as "progressivism" emerged from approximately 1890 until the U.S. entry into World War I in 1917.

Many self-styled "progressives" saw their work as a crusade against urban political bosses and corrupt "robber barons." The era saw increased demands for effective regulation of business, a revived commitment to public service, and expanding the scope of government to ensure the welfare and interests of the country as the groups pressing these demands saw fit. Almost all the notable figures of the period, whether in politics, philosophy, scholarship or literature, were connected, at least in part, with the reform movement.

Years before, in 1873, the celebrated author Mark Twain had exposed American society to critical scrutiny in " The Gilded Age." Now, trenchant articles dealing with trusts, high finance, impure foods and abusive railroad practices began to appear in the daily newspapers and in such popular magazines as McClure's and Collier's. Their authors, such as the journalist Ida M. Tarbell, who crusaded against the Standard Oil Trust, became known as "muckrakers." In his sensational novel, The Jungle, Upton Sinclair exposed unsanitary conditions in the great Chicago meat packing houses and the grip of the beef trust on the nation's meat supply.

The hammering impact of "progressive" era writers bolstered aims of certain sectors of the population, especially a middle class caught between big labor and big capital, to take political action. Many states enacted laws to improve the conditions under which people lived and worked. At the urging of such prominent social critics as Jane Addams, child labor law s, were strengthened and new ones adopted, raising age limits, shortening work hours, restricting night work and requiring school attendance.

5.1 The Roosevelt presidency

After decades of wrangling, the Panama Canal finally opened in 1914.

By the early 20th century, most of the larger cities and more than half the states had established an eight-hour day on public works. Equally important were the workmen's compensation laws, which made employers legally responsible for injuries sustained by employees at work. New revenue laws were also enacted, which, by taxing inheritances, laid the groundwork for the contemporary federal income tax.

Roosevelt called for a " Square Deal," and initiated a policy of increased federal supervision in the enforcement of antitrust laws. Later, extension of government supervision over the railroads prompted the passage of major regulatory bills. One of the bills made published rates the lawful standard, and shippers equally liable with railroads for rebates.

His victory in the 1904 election was assured. Emboldened by a sweeping electoral triumph, Roosevelt called for still more drastic railroad regulation, and in June 1906 Congress passed the Hepburn Act. This gave the Interstate Commerce Commission real authority in regulating rates, extended the jurisdiction of the commission and forced the railroads to surrender their interlocking interests in steamship lines and coal companies.

Meanwhile, Congress had created a new Department of Commerce and Labor, with membership in the president's Cabinet. One bureau of the new department, empowered to investigate the affairs of large business aggregations, discovered in 1907 that the American Sugar Refining Company had defrauded the government of a large sum in import duties. Subsequent legal actions recovered more than $4 million and convicted several company officials.

Conservation of the nation's natural resources was among the other facets of the Roosevelt era. The president had called for a far-reaching and integrated program of conservation, reclamation and irrigation as early as 1901 in his first annual message to Congress. Whereas his predecessors had set aside 188,000 km² of timberland for preservation and parks, Roosevelt increased the area to 592,000 km² and began systematic efforts to prevent forest fires and to retimber denuded tracts.

5.2 Taft and Wilson

Roosevelt's popularity was at its peak as the campaign of 1908 neared, but he was unwilling to break the tradition by which no president had held office for more than two terms. Instead, he supported William Howard Taft, who won the election and sought to continue his predecessor's programs of reform. Taft, a former judge, colonial governor of the U.S-held Philippines and administrator of the Panama Canal, made some progress. (For details on U.S. foreign policy under the Taft administration, see Dollar Diplomacy.)

He continued the prosecution of trusts, further strengthened the Interstate Commerce Commission, established a postal savings bank and a parcel post system, expanded the civil service and sponsored the enactment of two amendments to the Constitution. The 16th Amendment authorized a federal income tax; the 17th Amendment, ratified in 1913, mandated the direct election of senators by the people, replacing the system whereby they were selected by state legislatures.

Yet balanced against these achievements was Taft's acceptance of a tariff with protective schedules that outraged liberal opinion; his opposition to the entry of the state of Arizona into the Union because of its liberal constitution; and his growing reliance on the conservative wing of his party. By 1910 Taft's party was divided, and an overwhelming vote swept the Democrats back into control of Congress.

Two years later, Woodrow Wilson, the Democratic, progressive governor of the state of New Jersey, campaigned against Taft, the Republican candidate, and against Roosevelt who, rejected as a candidate by the Republican convention, had organized a third party, the Progressives.

Wilson, in a spirited campaign, defeated both rivals. Under his leadership, the new Congress enacted one of the most notable legislative programs in American history. Its first task was tariff revision. "The tariff duties must be altered," Wilson said. "We must abolish everything that bears any semblance of privilege." The Underwood Tariff, signed on October 3, 1913, provided substantial rate reductions on imported raw materials and foodstuffs, cotton and woolen goods, iron and steel, and removed the duties from more than a hundred other items. Although the act retained many protective features, it was a genuine attempt to lower the cost of living.

The second item on the Democratic program was a long overdue, thorough reorganization of the inflexible banking and currency system. "Control," said Wilson, "must be public, not private, must be vested in the government itself, so that the banks may be the instruments, not the masters, of business and of individual enterprise and initiative."

The Federal Reserve Act of December 23, 1913, was one of Wilson's most enduring legislative accomplishments. It imposed upon the existing banking system a new organization that divided the country into 12 districts, with a Federal Reserve Bank in each, all supervised by a Federal Reserve Board. These banks were to serve as depositories for the cash reserves of those banks that joined the system. Until the Federal Reserve Act, the U.S. government had left control of its money supply largely to unregulated private banks. While the official medium of exchange was gold coins, most loans and payments were carried out with bank notes, backed by the promise of redemption in gold. The trouble with this system was that the banks were tempted to reach beyond their cash reserves, prompting periodic panics during which fearful depositors raced to turn their bank paper into coin.

With the passage of the act, greater flexibility in the money supply was assured, and provision was made for issuing federal reserve notes to meet business demands. The next important task was trust regulation and investigation of corporate abuses. Congress authorized a Federal Trade Commission to issue orders prohibiting "unfair methods of competition" by business concerns in interstate trade.

A second law, the Clayton Antitrust Act, forbade many corporate practices that had thus far escaped specific condemnation -- interlocking directorates, price discrimination among purchasers, use of the injunction in labor disputes and ownership by one corporation of stock in similar enterprises.

The Federal Workingman's Compensation Act in 1916 authorized allowances to civil service employees for disabilities incurred at work. The Adamson Act of the same year established an eight-hour day for railroad labor. The record of achievement won Wilson a firm place in American history as one of the nation's foremost political reformers. However, his domestic reputation would soon be overshadowed by his record as a wartime president who led his country to victory but could not hold the support of his people for the peace that followed.

6 World War I

Main article: World War I

During the 20th century the U.S. was involved in two World Wars. Firmly maintaining neutrality when World War I began in 1914, the United States entered the war after the RMS Lusitania, a British ship carrying many American passengers, was sunk by German submarines. With American help, Britain, France and Italy won the war, and imposed severe economic penalties on Germany in the Treaty of Versailles. Despite President Woodrow Wilson's calls for agreeable terms, the economic impact of the reparations mandated by the Treaty were severe. The misery they helped produce in Germany helped Adolf Hitler to seize power in Germany in 1933. The United States Senate did not ratify the Treaty of Versailles; instead, the United States signed separate peace treaties with Germany and her allies.

Disillusioned by the failure of the war to achieve the high ideals promised by President Woodrow Wilson, the U.S. chose not to join the League of Nations, despite Wilson's efforts.

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