VI: The Constitution and the "Social Question," 1877-1930

In the aftermath of the Civil War and Reconstruction, Americans turned their attention to the astonishingly rapid socioeconomic transformation wrought by the industrial revolution. Rural and small-town America became an urban nation and the greatest industrial power in the world. The stress and strain of this radical shift had profound political and constitutional effects, as statesmen wrestled with what was known as “the social question.” In the last quarter of the nineteenth century, the United States became even more legally and politically liberal or “laissez-faire,” with government’s role largely limited to economic promotion and distribution rather than regulation or redistribution. The crisis of the 1890s, however, marked a shift toward a more ambivalent attitude in political economy, and a gradual shift toward intervention and statism in the “progressive” era. It was not until the more acute crisis of the Great Depression, however, that Americans came to accept the centralized, bureaucratic welfare state.

Parties and courts were the dominant actors in the late nineteenth century American state. Party loyalty and strength was at its height, fueled by ethnic, cultural, and religious identification and by patronage or “spoils” system. The nation was very evenly divided at the national level—the presidency, Senate, and House were almost never in the hands of one party between 1875 and 1897. National politics was largely a matter of distributing the public domain for economic improvement, the railroads being the most notable case of what reformers denounced as the “Great Barbecue,” with no end of bribery and corruption accompanying the development. At the state and local level, legislatures frequently extorted graft from businessmen, and urban “machines” exchanged votes for rudimentary welfare services.

Reformers called for changes that would replace the corrupt party system. Government service, the reformers argued, should be provided by disinterested, nonpartisan experts, trained in the science of “administration.” They touted the virtues of meritocracy and efficiency, while defenders of the status quo denounced them as elitists, who sought to keep the common man out of government and create an American mandarinate. When a disappointed office-seeker assassinated President James A. Garfield in 1881, however, Congress was forced to act. It enacted the Civil Service Act in 1883, providing for competitive exams and merit-based promotion for about 14,000 of the federal government’s 100,000 jobs. By the end of the century this encompassed 100,000 out of 200,000. The act was a modest first step toward changing the personnel policy of the federal administration, in hopes that the government would be better able to deal with new social problems.

These problems grew out of the industrialization of the American economy. While the late nineteenth century US economy was not completely unfettered, it came as close to the classical liberal market model as any in history. This mature, relatively unregulated capitalist economy raised living standards in unprecedented ways, but also displayed new problems. One was the business cycle—while the overall trend showed sustained growth, there were unpredictable periods of boom and bust. Another was increased inequality—while most people were getting richer, some were getting a lot richer a lot faster. In the aggregate and on average, people were better off. But people exist as individuals and groups, many of whom were worse off. And even some individuals who were better off in absolute terms regarded their situation in relative terms. Moreover, the sheer chaos of the transformation was profoundly discomfiting for many. The revolution exacted aesthetic and psychological costs that cannot be calculated. On the whole, the American people believed the price was worth it, but there were always fears and suspicions about the process. The general demand was that government help impose order on the wildly free political economy, to smooth out the business cycle and to reduce inequality and waste.

Historians have described this period as a “search for order,” in which social groups and government tried to control the new world and insulate themselves from the vicissitudes of market competition. Businessmen would be the first to do so, through pools, trusts, and cartels. Farmers would attempt to do so through cooperatives, granges, and political organization in the Populist party. Workingmen would do so through labor unions. These were the first steps toward the twentieth century political system of interest group pluralism.

The railroads, the leading industry of the day, showed many of these problems. While they benefited the economy as a whole, there were some who suffered by their power. Where the roads were competitive, on the main lines, shippers enjoyed low rates. Where the roads had monopoly power, in remote and rural areas, shippers were gouged. Yet the roads needed the short-haul profits in order to make up for long-haul losses. If they could not do so, they needed permission to organize the long-haul traffic in cartels— legally sanctioned schemes to divide the market and fix prices to reduce competition and stabilize profits. State governments attempted to deal with these conflicting needs by railroad commissions, but in 1886 the Supreme Court limited their rate-regulating power as an interference in Congress’ power to regulate interstate commerce. This forced Congress to enact the Interstate Commerce Act in 1887, the beginning of the “fourth branch” of government. It created the Interstate Commerce Commission to ensure “just and reasonable” rates. The commission was of little effect, however, as the federal courts prevented the delegation of legislative power to the commission— particularly that of rate-setting--and then arrogated to themselves the power of reviewing the reasonableness of state legislative rates. It also held that the railroads were not exempt from new federal antitrust laws. Not until the twentieth century did the ICC acquire significant regulatory powers, and the railroads were largely nationalized after World War One.

In most other industries, Americans were more concerned about the lack of competition among giant business combinations. While consumers enjoyed the benefits of large-scale production, small businessmen complained of unfair practices by “monopolies,” and people feared the political consequences of concentrated economic power. Again, the sheer novelty of these giant enterprises provoked disorientation and fear. While states did make some attempts to control businesses that had incorporated within their borders, by the end of the century most had abandoned the effort and began to compete with one another to attract corporations, with the jobs and tax revenue that they brought. In 1889 New Jersey took the decisive step of opening itself to “holding companies”—corporations controlling stock in out-of-state businesses.

Congress responded by passing the Sherman Antitrust Act of 1890. The act applied the common law rule outlawing combinations in restraint of trade to businesses engaged in interstate commerce. Rather than establish an independent administrative agency like the ICC, the act relied on Justice Department criminal prosecutions. The chief limitation of the act was that it did not clearly define what kind of “combinations in restraint of trade” were illegal. This—the great problem of all antitrust law—was due to the economic and political fact that much concentration in industry was the result of efficiency and was beneficial to the public. Moreover, the Supreme Court interpreted the power of the federal government in this area quite strictly. In the prosecution of the sugar trust (US v. E. C. Knight Co., 1895), which controlled about 95% of American sugar refining, the Court applied a literal definition of “interstate commerce.” It was not within the power of the federal government to regulate manufacturing activity that took place within one state, regardless of its scale. In addition, manufacturing activity must have a direct effect on interstate commerce before it could be controlled by the federal government. In the decades after this decision, the US economy underwent a massive wave of mergers, creating the first billion-dollar corporation, US Steel.

In the last decades of the century, constitutional law became more closely allied with liberal or “laissez-faire” principles. The Supreme Court developed new doctrines in several high-profile decisions that caused it to be seen as supporting big business against government regulation. This was a shift away from earlier decisions (such as the Slaughterhouse Cases) that gave broad deference to state exercise of the police power in the economic realm. By the 1890s, though, more laissez-faire justices had been appointed to the Court, and they took a firm stand against the social and political upheaval that erupted during the intense economic depression of 1893. The mid-1890s were agonizing years, marked by agrarian protest, violent industrial strikes, and the formation of the Populist party, which demanded radical changes in the American political economy.

The Court began to use the doctrine of “substantive due process” to protect property rights against state regulation. The traditional understanding of “due process of law” was that persons could be deprived of life, liberty, and property only by regular and fair procedures—by constitutionally and legally established legislative, executive, or judicial action. Substantive due process, on the other hand, meant that there were some rights that were so fundamental that individuals could not be deprived of them even with due process of law. Thus the phrase “substantive due process” was something of an oxymoron. It was in fact judicial application of natural or higher law principles to particular cases, allowing judges to make essentially legislative decisions—determining, for example, what a “reasonable” railroad rate was. The doctrine was adumbrated in Chief Justice Taney’s opinion in the Dred Scott case. An act of Congress that prohibited slavery in the territories “deprives a citizen… of his property, merely because he… brought his property into a… territory…, and… committed no offense against the laws, could hardly be dignified with the name due process of law.” The Fourteenth Amendment applied the due process language of the Fifth Amendment to the states, but the Court rejected a substantive reading of it in the Slaughterhouse Cases. By 1887, the Court suggested that it was reconsidering the principle, and in 1890 it did. The best-known substantive due process case was Lochner v. New York (1905), in which the Court struck down a state law that limited the number of hours that bakers could work. Substantive due process was closely related to another laissez-faire judicial principle, “liberty of contract.” This idea was that individuals were perfectly free to make any legal contract that they saw fit, without interference from any third party, including the state. Thus in 1897 the Court held that Louisiana could not prohibit one of its citizens from purchasing insurance from an out-of-state company. More often, though, liberty of contract was used in labor relations cases, leaving adult males to work for whatever wages and under whatever conditions they might.

There was nothing inherently “conservative” or laissez-faire about these doctrines. In the twentieth century, substantive due process was used in civil rights, feminist, and homosexual rights cases. Moreover, the doctrine was not commonly used to strike down state socioeconomic regulations. However notorious they became, cases like Lochner were few and far between. In most cases, the Court accepted state regulation as reasonable. In hazardous occupations, or where women or minors were involved, the Court also sustained labor restrictions. But it usually drew the line at wage fixing and other labor laws where adult males in ordinary jobs were involved.

As industrialization led to employer-employee disputes in the nineteenth century, the courts also fashioned new instruments to protect property rights and the right to work against organized labor. Unions were legally permitted since the 1840s, despite the fact that they were combinations to restrain trade and raise prices (wages). But in the liberal system of liberty of contract, they had virtually no recourse other than quitting their jobs if they were dissatisfied with their wages, hours, or working conditions. Thus unions attempted to use persuasion, intimidation, and violence to force employers to meet their demands and to prevent non-union workers from taking their jobs during a strike. While union coercion was usually directed at non-striking workers rather than employers, the business of the employer could be ruined by a protracted strike. They thus resorted to equity proceedings. Equity was a legal system separate from that of common law. In English history, there were prerogative courts where special judges (“chancellors”) could provide extraordinary remedies in cases where the common law was oppressive or inadequate. In strikes, employers could not sue a union (they were almost never incorporated), or await suit or prosecution of its individual members. Local law-enforcement officials were often sympathetic to the strikers, and the owner would suffer irreparable harm as he sought legal redress. Judges thus issued injunctions—orders to strikers to desist from interfering in the employer’s business. Preliminary injunctions could be issued quickly, with only the employer’s testimony, without any kind of jury trial. They were effective instruments for foiling strikes. In the dramatic and violent railway strike of 1894, federal court injunctions figured prominently in the defeat of Eugene V. Debs’ American Railway Union. Union leaders were enjoined from interfering with the delivery of the mail and violating the Sherman Antitrust Act. Debs was jailed for violating the order, and the Supreme Court unanimously upheld the conviction in 1895.

To its supporters, the labor injunction protected employers and non-strikers against union violence and preserved individual liberty. To its opponents, the injunction showed the bias of the legal system against organized labor, and unionists put its abolition at the head of their legislative agenda. Like substantive due process, the injunction acted as a kind of legal trump that did increase judicial power. And the twentieth century would show that, like substantive due process, it could be used for progressive causes such as racial integration or women’s rights. It was part of the complaint against an “imperial judiciary” in both eras.

In the same term that it upheld the Debs injunction and halted the sugar trust prosecution, the Court struck down the income tax act. An income tax was one of the demands of the Populists, who believed that the burden of taxation should be shifted from the consumer and laborer to the wealthy. The Democrats enacted one in 1894, to replace revenue lost by a lower tariff. The government had collected an income tax during the Civil War, and the Supreme Court upheld it in 1883. But now, in the midst of agrarian and industrial unrest that some believed presaged revolution, the Court held that income taxes were “direct taxes,” and thus (under Article I, section 9 of the Constitution) must be apportioned among the states on the basis of population. This requirement defeated the purpose of an income tax insofar as it was meant to redistribute income from the few to the many. A poor state and a rich state with equal populations would pay equal amounts of the income tax, making it bear more heavily on the poor. The Court appeared to ignore its own precedents and performed a sort of jurisprudential jiu-jitsu to arrive at its decision. Unlike the Debs and sugar trust cases, the Court was closely divided, 5 to 4, in the income tax cases. It would take the ratification of the Sixteenth Amendment in 1913 to overturn the decision.

But to some degree the judicial conservatism of 1895 was ratified by the election of 1896, in which the Republicans defeated the Populist-Democratic party and began a fourteen-year period of national political hegemony, controlling the presidency and both houses of Congress. The economy recovered, and the nation enjoyed sustained economic growth. At the same time, the trauma of the social and political clashes of the mid-1890s persuaded many American leaders that the country could not endure another such laissez-faire cure. This conviction lay behind the “progressive” movement of the first third of the twentieth century.

Historians have struggled to give a clear definition to the progressive movement. In general, it was a mood among middle-class professionals that order need to be imposed on the chaotic American free enterprise system. Progressives addressed most of the same concerns as the Populists, but did so from a broader base, in a less angry, alienated, and apocalyptic way, for many progressives were themselves the products of the economic system that they sought to reform. Thus, the progressive movement was thoroughly ambivalent, and progressives frequently took opposite sides on many issues, and produced contradictory legislation with often unintended consequences. But the one unifying theme of progressivism was statism: at one level or another, progressives called for increased governmental power to deal with social problems. It was in this period that the term “liberal” was inverted from its nineteenth century laissez-faire to its twentieth century big-government definition.

Progressives usually favored the expansion of executive power, seeing nineteenth century politics dominated by legislatures and courts, and above all by corrupt parties in cahoots with business interests. Woodrow Wilson, an academic political scientist before entering politics, was a pivotal progressive theorist. Wilson was the first prominent thinker to argue that the founders’ constitutional system had become obsolete and needed to be radically altered. Reflecting the evolutionary ethos of the era, Wilson argued that a constitution was an organism that must grow and adapt, or die. “The makers of our federal Constitution,” he wrote, “were scientists in their way—the best way of their age…. They constructed a government as they would have constructed an orrery, to display the laws of nature. Politics in their thought was a variety of mechanics…. The trouble with the theory is that government is not a machine, but a living thing. It falls, not under the theory of the universe, but under the theory of organic life. It is accountable to Darwin, not to Newton.” Federalism, separation of powers, checks-and-balances—the various devices by which the Constitution limited government power— now rendered the government incapable of dealing with contemporary problems. “All that progressives ask or desire is permission—in an era when ‘development,’ ‘evolution,’ is the scientific work—to interpret the Constitution according to the Darwinian principle.”

Behind the progressive reconsideration of nineteenth century constitutionalism lay a related legal and judicial philosophy that also sprang from evolutionary-historicist roots. Nineteenth century judicial liberals adhered to the “declaratory theory of law.” They believed that fixed, absolute, transcendent standards of right and justice existed, and that the Constitution reflected them, and that judges simply applied the Constitution to particular laws and cases. This was the perennial natural law theory that law is discovered, not made. Progressive critics responded that such jurisprudence provided an open-ended pretext for judges to defend whatever social, political, and economic interests that they preferred. Progressive legal theorists embraced instead the theory of “legal positivism,” in which law was not some external standard, but simply the “will of the sovereign.” They thus bridled at a judiciary that claimed to trump the will of the sovereign people expressed in legislation. Legislatures quite properly made, altered, and adapted law to changing circumstances, and should not be foiled by judges who appealed to a nonexistent standard.

The principal expositor of American legal positivism was Oliver Wendell Holmes, a Massachusetts judge whom President Theodore Roosevelt appointed to the Supreme Court in 1902. “The life of the law has not been logic, it has been experience,” Holmes wrote in his classic work, The Common Law (1880), expressing the evolutionary anti-formalism of the day. Thus Holmes dissented against the Court’s natural law or substantive due process decisions. It was not the role of judges to overturn social experiments that the people desired, however unwise they might be.

Many progressives agreed with Holmes, and saw the chief problem as judicial review per se. Thus they focused on efforts to limit the power of the courts to overturn legislation. Others argued that progressives should accept the quasi-legislative role of the judiciary and attempt to persuade judges in the same way that they persuaded legislatures. Progressive lawyers like Louis D. Brandeis accumulated heaps of social data and presented it to courts to show the reason for socioeconomic regulation. The “Brandeis brief” in the 1908 case of Muller v. Oregon demonstrated the social ills that resulted from the long hours worked by women in laundries. This shift of adjudication from natural law principles to social facts became known as “sociological jurisprudence” and became the favored progressive judicial philosophy. It showed that “Social Darwinism” was not inherently conservative, but could be used for reform purposes.

More radical was the theory of “legal realism,” which taught that judges consulted neither eternal principles nor social facts but merely their own social, class, or political interests and prejudices. It was similar to the Marxist belief that law was simply an instrument of bourgeois rule and a mask for class hegemony. Later in the twentieth century this theory was applied to feminist and racial theories, known as “critical legal studies” or “critical race theory.” Philosophically speaking, legal realism was altogether opposed to the idea that law had any reality at all, and is perhaps better identified as “legal nominalism.” In any case, these theories did not circulate far outside of the circles of certain law schools, and were seldom explicitly expressed in judicial decisions.

At a more practical, political level, progressives argued that the Constitution had been taken over by nefarious “interests”—primarily big business and party machines— and the progressives aimed to restore it to “the people.” In characteristically paradoxical fashion, they proposed to extend the political power of the people while they took problems “out of politics.”

Progressives extended democracy by a variety of devices. Most important was the direct election of US senators in the Seventeenth Amendment. This amendment was a slap at state legislatures, which progressives believed to be controlled by corrupt party machines. It did away with one of the basic federal features of the original constitution, the idea that the senate represented the states qua states. The Nineteenth Amendment similarly extended democracy by giving the women the vote in states that had not already done so. Progressives also pressed for direct primaries, to give voters rather than party bosses the ability to select candidates. They pushed for the secret (“Australian”) ballot and to allow voters by petition to initiate legislation and to recall officeholders, and to ratify legislation or constitutional amendments by referendum. Progressives also called for greater municipal home rule, to free cities from state legislative control. Yet, the result of the innovations was a marked decline in voter participation, an indication that the nineteenth century party system did play a significant role in mobilizing a mass electorate. In addition, many progressive electoral reforms were intended to reduce the influence of groups that the progressives mistrusted. The movement to disfranchise blacks and poor whites in the South was a progressive cause, since these voters were considered to be easily corrupted. Similarly, progressives sought to reduce the power of immigrant voters in northern cities by ending traditional mayor and alderman-city council systems.

Of greater impact in the long run was the progressive desire to increase the power of the executive branch, the US presidency and administrative branch especially. They saw the president as capable of rising above interest and party and embodying the people as a whole. Theodore Roosevelt, at least rhetorically, set the tone for strong twentieth century presidents. He engaged in dramatic confrontations with powerful business interests, as when he blocked the Northern Securities railroad consolidation. He also used the influence of his office (the “bully pulpit”) on behalf of the Untied Mine Workers in the 1902 anthracite coal strike. Impatient with the recalcitrant mine owners, Roosevelt threatened to seize the mines and use the army to operate them. When a congressman pointed out that the Constitution provided no such power to the federal government, Roosevelt thundered, “To hell with the Constitution when the people want coal!”

Roosevelt particularly called for administrative regulation of big business, beginning with the Bureau of Corporations, established in 1903. The ICC gained new powers during his presidency. Roosevelt recognized the economic and political fact that business concentration was often advantageous and that the public did not want to forego its benefits. While other progressives favored more vigorous antitrust prosecution to break up corporations, on the belief that bigness was inherently bad, progressives in general favored putting more power in the hands of bureaucratic experts. This reflected the fact that many progressive leaders were themselves the products of an increasingly educated, trained, credentialed, professional and managerial class. Various groups in America were moving toward the establishment of higher professional standards, organization and self-government. The American Medical Association, American Bar Association, and others attempted to raise the level of expertise of their professions and to gain influence in public policy, as were farm and labor organizations. To some degree, all were following the lead of the business corporation. Even historians formed a professional association in 1887. Woodrow Wilson was among the first Americans to earn a Ph.D. degree in political science, another sign of professionalization. (Theodore Roosevelt served as president of the American Historical Association, but usually berated the professionals and defended amateur history.) In politics, progressives hoped that a trained civil service would be free of the sordid interests that controlled the party-legislative system. They also sought to draw power away from the courts, the traditionally non-partisan branch of government that the progressives regarded as politicized. Laying the groundwork for the centralized bureaucratic state, the progressives took as their models the English civil service or Prussian bureaucracy, but believed that they could be maintained without their aristocratic or autocratic features. As it grew, the “fourth branch” of government would pose constitutional problems related to the delegation of legislative powers to the executive branch, the bureaucracy’s relationship to the judiciary, and contests between Congress and president for control of it.

Congress began to provide for an expanded federal role in socioeconomic regulation in the early twentieth century. In 1898, hoping to avoid another catastrophic national railroad strike, it passed the Erdman Act, which provided for federal mediation of labor disputes in interstate railroads. The act also prohibited railroads from discriminating against union members and outlawed the “yellow-dog contract,” in which an employee agreed never to join a union when hired. These allowed employers to fend off union organizers, who would be attempting to induce a breach of contract by recruiting workers who had signed them. Congress also established what amounted to a “federal police power”—regulating public safety, health, welfare and morals, which had been traditionally reserved to the states. The Court accepted a congressional ban on the sale of lottery tickets across state lines as a legitimate exercise of the interstate commerce power. It also upheld a similar act that prohibited the transportation of women across state lines for immoral purposes (the Mann “white slave act”). Congress also succeeded in enacting the Pure Food and Drug and Meat Inspection Acts. It used the taxing power to impose a prohibitive duty on colored oleomargarine, on the grounds that it was often fraudulently sold as butter. Apparently enacted in the public interest and for consumers, these acts also served the interests of business. The large meatpackers, for example, supported the Meat Inspection Act as a way to run small packers out of business, and the dairy lobby sought to eliminate oleo competition.

Progressivism reached its apex during the Wilson presidency and World War One. The Republican party split in 1912, with Roosevelt running as a third-party progressive or “Bull Moose” candidate. Roosevelt ran on a platform that he called the “New Nationalism,” essentially a program of state socialism similar to that of Bismarckian Germany. Wilson challenged it with what the called the “New Freedom,” which would use government power to restore individualism and competition. With the Republicans divided, the Democrats were able to take control of the federal government for the first time in twenty years. Wilson exercised the powerful executive leadership that he advocated, returning to the Federalist practice of appearing personally before Congress. He led the legislature to enact a lower tariff and an income tax. A new antitrust act attempted to be more specific about what sort of combinations were illegal, and contained exemptions for farm and labor organizations. The act also curbed the power of federal courts to issue injunctions in labor disputes; American Federation of Labor president Samuel Gompers called these provisions of the Clayton Antitrust Act “labor’s magna carta.” But the act had little impact and, at the same time, Congress created the Federal Trade Commission to promote government-business cooperation, along Rooseveltian New Nationalist lines.

As a minority president, Wilson needed a firmer base in his re-election campaign of 1916, so he tried to assume leadership of the progressive movement, now that Roosevelt had reconciled with the regular Republicans. Wilson made the bold move of appointing Louis D. Brandeis, a leading progressive lawyer and legal realist and his adviser on economic matters, to the Supreme Court. In addition to possessing a controversial judicial philosophy, Brandeis was a Jew, the first to serve on the Court after a heated confirmation fight. Wilson also dropped his opposition to a federal prohibition of child labor, which he heretofore regarded as a state matter, and signed a bill banning the shipment of goods manufactured by child labor in interstate commerce. As the Great War in Europe extended into its third year, Wilson maintained the policy of neutrality and his campaign boasted that “He kept us out of war.” At the same time, the government began to take steps to prepare for possible intervention. The railroad unions took this opportunity to demand an eight-hour day, and threatened to cripple the national transportation network if not satisfied. Wilson went to Congress and induced it to enact legislation imposing the eight-hour day in railroad employment, solidifying the coalition of organized labor with the Democratic party.

Wilson won a very close re-election in 1916. A month after his second inauguration, he asked Congress to declare war on Germany, which had begun a campaign of unrestricted submarine warfare in January. The war was a formative experience for twentieth century progressives and liberals, for it showed that people would accept extraordinary government power in extraordinary circumstances. Many New Dealers cut their teeth in the wartime administration, including Assistant Secretary of the Navy Franklin D. Roosevelt. Conscription returned for the first time since the Civil War, and nearly three million men were drafted into the armed forces. Once the state had compelled so many to risk life and limb, the command of property was of no great moment. As the European powers had already done, the US constructed an economy of war socialism. The government controlled the price and distribution first of food and fuel, and then of anything else related to the war effort. It nationalized the railroads, and imposed income tax rates up to 73%. Antitrust sentiment was discarded as only the biggest producers could provide the necessary materiel of war. Congress created innumerable regulatory agencies and delegated extraordinary control over these agencies to the president. The government orchestrated a campaign of pro-war propaganda, along with surveillance and censorship of dissidents. Finally, Congress enacted a Sedition Act for the first time since 1798, and jailed anti-war advocates. The traditional constitutional limitations on government power that Wilson and Roosevelt complained about disappeared in wartime, and seemed to confirm Randolph Bourne’s observation that “war is the health of the state.” In decades ahead progressives would search for what William James called “the moral equivalent of war.” They would find it in the Great Depression that began in 1929.

Reaction against progressivism had already begun during the war. The Republicans won control of Congress in 1918 and of the presidency in 1920, and controlled the federal government for the entire decade. But these years evinced no return to nineteenth century laissez-faire policy. The Republicans, like much of the nation, were torn by ambivalent attitudes about economic freedom and government regulation. The fundamental institutional achievements of the progressive years remained intact and often grew. The Republicans reduced income tax rates, but maintained the tax itself. They returned the railroads to private ownership, but under restrictions that amounted to a government-sanctioned public utility cartel. Moreover, Congress in the Railway Labor Act of 1926 laid the groundwork for the New Deal’s pro-union policy. Perhaps the outstanding instance of progressive continuity in the 1920s was the effort to enforce the Eighteenth Amendment, which prohibited the manufacture, sale, or transportation of alcoholic beverages. While progressives were no more united on this issue than they were on most others, the movement toward prohibition made great strides in the states in the years before World War One. During the war, the government imposed prohibition as part of its regulation of the food and fuel supply. It was perhaps the most ambitious effort of federal police power ever undertaken, and its colossal failure showed the limits of statism.

Herbert Hoover, Secretary of Commerce from 1921 until his election to the presidency in 1928, was especially energetic in building federal power. Hoover embraced what he called the “New Individualism,” and what historians have termed “Associationalism” or “Corporatism.” He rejected laissez-faire as wasteful and disorderly, and advocated business-government cooperation on voluntary lines. The federal government would do all that it could to promote business standards, to stabilize markets, prices, and profits, and to eliminate “cut-throat” competition. But Hoover drew the line at government coercion or enforcement of such standards. He believed that his policy was a median between fascism and socialism. Thus the federal government tried to aid “sick industries” like agriculture, coal, and lumber, as well as to organize fledgling industries like radio, aviation, and motion pictures. It also helped the states to make improvements in transportation and education through “grants-in-aid,” making funds available to states if they met certain federal standards and provided a matching share. But the Republicans refused to provide direct subsidies or give price-fixing power to agricultural cooperatives, or to build and operate power plants, for example.

Despite the historical legend that Hoover reacted in laissez-faire fashion to the onset of the Great Depression in 1929, he in fact took unprecedented steps to combat it. Indeed, the degree to which the economic collapse and its continuation were the results of government policy—such as inept manipulation of the money supply by the Federal Reserve System and higher tariffs—remains a lively question among economic historians. Hoover accepted responsibility for the condition of the economy, and pursued many policies that adumbrated the New Deal. The most significant of these was the establishment of the Reconstruction Finance Corporation, which lent billions of dollars to banks and utilities, in order to prevent their failure. Hoover similarly induced businessmen to pledge not to cut wages unless compelled to do so. This “high wage policy” was intended to maintain labor and consumer confidence, and was praised by labor leaders, but probably exacerbated the unemployment plague. But to the end he refused to use direct government power to set prices and wages, or to provide direct welfare payments to the unemployed. Far from the last laissez-faire president, Hoover was the quintessential progressive, who remained ambivalent about the limits of government activism in the midst of an economic crisis that swept away the qualms of most Americans.

The Supreme Court’s position was similar to Hoover’s. Until 1937 it continued to use nineteenth century doctrines such as dual federalism, substantive due process, and liberty of contract to place limits on government economic regulation, although it more often approved of such acts. It struck down the maximum-hours law for bakers, but upheld similar laws for miners and women workers. The Court struck down the Erdman Act’s prohibition of yellow-dog contracts as a violation of liberty of contract, and similarly overturned state attempts to outlaw them, but it upheld the imposition of the eight-hour day and the Railway Labor Act. During the war, it upended congressional prohibition of child labor by both the commerce and taxing power and, in an equally controversial and closely-divided decision, struck down a minimum-wage law for women in Washington, DC. It similarly gutted the pro-union provisions of the Clayton Antitrust Act, allowing the issue of labor injunctions by federal courts. Thus, as the political branches responded to a groundswell of popular demand for vigorous economic action, the Supreme Court remained divided and out of step.

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