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Rh wave of reform and of revolt against former political forces was rising. In five states which Roosevelt carried by his popularity the machine Republican candidates for governor were defeated by reforming Democratic candidates, and in cities like Chicago and Philadelphia the issues of reform and radicalism won unexpected though temporary success. Roosevelt had “stolen the thunder” of the parties of social unrest, including the old populistic areas of the Middle West and the labour element of the cities at the same time that he retained control of the Republican party machinery.

402. In his second administration President Roosevelt pressed his policies so hard and with such increasing radicalism

that he lost control of the regular organization in Congress before the end of his term. In the House Speaker Joseph G. Cannon, of Illinois, exhibited the full power of his office in concentrating party policies in the hands of the few regular leaders, while in the Senate a directing group of New England men who had served for a long time, chiefly senators Nelson W. Aldrich and Eugene Hale, showed a similar mastery. Against this control a significant revolt, illustrative of revived discontent in the Middle West, was made by the Republican senator Robert M. La Follette, of Wisconsin, who had won his fight in that state against the faction friendly to the railways, and had secured primary elections, railway rate regulation on the basis of expert valuation of the physical property of the railways, and a system of taxation which rested more heavily upon public utilities. In pressing similar policies upon Congress he became isolated from the party leaders, but forced them to go on record by roll calls.

403. In New York a legislative investigation of the insurance companies disclosed such connexions with the high

financiering of Wall Street as to create widespread distrust and to lead to reform legislation. The attorney who conducted the investigation, Charles Evans Hughes (b. 1862), had shown such ability that he was chosen governor of New York in 1906. His administration was marked by independence of the party machine and a progressive policy. Foreign relations were conducted during the second administration of Roosevelt by Secretary Elihu Root from 1905. He fostered friendly relations with the other American nations, allaying their concern lest ambitious designs of their larger neighbour might endanger their independence. In Cuba a signal illustration of the good faith of the United States was exhibited when an insurrection in the summer of 1906 left the republic substantially without a government.

Mr Taft, then secretary of war, was sent, under the treaty provisions for intervention, to organize a provisional government. During his few days' service as governor-general he set in motion the machinery for restoring order. But President Roosevelt had plainly stated that if the insurrectionary habit became confirmed in Cuba she could not expect to retain continued independence.

404. Attention was again fixed upon the Pacific coast, not only by the earthquake and conflagration which in 1906

destroyed the business parts and much of the residence section of San Francisco, but also by municipal regulations there against the presence of Japanese in the public schools. The incident seemed to threaten grave consequences, which were averted by the popularity of Roosevelt both in California and in Japan. In the Immigration Act of the 20th of February 1907 the problem of exclusion of Japanese labour, which underlay the difficulty, was partly solved by preventing the entrance to the continental United States by way of neighbouring countries of persons holding passports issued by a foreign government for going to other countries or dependencies of the United States. Since Japan discouraged its citizens from migrating directly to the United States this satisfied California.

405. As a demonstration of the naval power of the United States in Pacific waters, the President sent the American fleet on

a cruise around the world, in the course of which they were received in a friendly spirit by Japan. The navy was increased to keep pace with the growth of that of other nations, both in numbers and size of vessels, in this period, but not to the extent demanded by the administration. Already a more efficient organization of both army and navy had been effected. While the nation prepared for war, it also engaged prominently in the successive international peace congresses between 1899 and 1907, aiming consistently to increase the use of arbitration.

406. The tendencies of the government to deal with social improvement were exemplified by the laws of 1906 providing

for pure food and meat inspection. The Railway Rate Regulation Act of 1906 strengthened previous inter-state acts by including pipe lines (except for gas and water) under the jurisdiction of the Interstate Commerce Commission, and extending the meaning of “common carrier” to include express and sleeping-car companies. Published rate schedules were required, not to be changed without thirty days' notice, and more stringent provisions were made to prevent rebating. The act provided for review by the Federal courts, and did not permit the commission to investigate an increase of rates until the rates went into operation, nor did it provide for a valuation of the railways as a basis of rate-making which the commission had desired. Later acts partly met the demands of railway employés by increasing the liability of common carriers and by providing for shorter hours.

407. Although Roosevelt had made concessions to the railways in the formation of the act of 1906, his utterances showed a tendency alarming to the large business interests and the holders of corporation securities generally. The unsettled business conditions were reflected in the stock market, and began to produce a reaction against the activity of government in this direction. The panic of 1907 started with the downfall of an attempted combination of a chain of banks, copper interests and other enterprises of F. Augustus Heinze and Charles W. Morse, two daring operators in Wall Street, and was followed by the collapse of the Knickerbocker Trust Company (October 21, 1907). Already, in 1903, liquidation had begun in some of the stocks so actively issued in the preceding years. The leading New York banks failed to check speculation, however, and were even contributors to the movement up to the time of the panic. The country was generally prosperous, though much of the banking funds was tied up in New York City at this juncture. Clearing-house certificates were resorted to; by the 1st of November partial suspension was general throughout the nation; and banking facilities were more completely interrupted than at any time since the Civil War.

The government greatly increased its deposits, and offered Panama 2% bonds to the amount of $50,000,000, and 3% certificates for $100,000,000, with the object of providing the national banks a basis for additional note issues. But these were taken only to a small amount, as they proved useful for their moral effect chiefly. An enormous addition to the money supply was made in the course of the panic, both by governmental activity, gold imports and national bank-notes. The crisis was brought to a close before the end of 1907 by the vigour of the government and the activity of the large financial interests under the lead of J. P, Morgan, who finally entered the field to stop the decline, at the same time that his associates in the Steel Trust acquired possession of their last remaining rival of importance, the Tennessee Coal & Iron Company.

408. The reaction after the panic, and the loss of influence resulting from his announcement that he would not permit his renomination for the campaign of 1908, left Roosevelt unable to exercise the compelling power which he had displayed in previous years. Congress under the control of the

conservatives refused him legislation which he asked, but before he left the presidency he raised a new issue to national importance in his calling of a congress of state governors and experts to consider the need