excerpt of Quigley’s Tragedy and Hope, 1966:

excerpt of Quigley’s Tragedy and Hope, 1966:  http://www.carrollquigley.net/pdf/Tragedy_and_Hope.pdf

   …the great volume of savings in England, resting on England's early successes in commercial and industrial capitalism.  Second was England's oligarchic social structure (especially as reflected in its concentrated landownership and limited access to educational opportunities) which provided a very inequitable distribution of incomes with large surpluses coming to the control of a small, energetic upper class. Third was the fact that this upper class was aristocratic but not noble, and thus, based on traditions rather than birth, was quite willing to recruit both money and ability from lower levels of society and even from outside the country, welcoming American heiresses and central-European Jews to its ranks, almost as willingly as it welcomed monied, able, and conformist recruits from the lower classes of Englishmen, whose disabilities from educational deprivation, provincialism and Nonconformist (that is non- Anglican) religious background generally excluded them from the privileged aristocracy. Fourth (and by no means last) in significance was the skill in financial manipulation, especially on the international scene, which the small group of merchant bankers of London had acquired in the period of commercial and industrial capitalism and which lay ready for use when the need for financial capitalist innovation became urgent.

  The merchant bankers of London had already at hand in 1810-1850 the Stock Exchange, the Bank of England, and the London money market when the needs of advancing industrialism called all of these into the industrial world which they had hitherto ignored. In time they brought into their financial network the provincial banking centers, organized as commercial banks and savings banks, as well as insurance companies, to form all of these into a single financial system on an international scale which manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other. The men who did this, looking backward toward the period of dynastic monarchy in which they had their own roots, aspired to establish dynasties of international bankers and were at least as successful at this as were many of the dynastic political rulers. The greatest of these dynasties, of course, were the descendants of Meyer Amschel Rothschild (1743—1811) of Frankfort, whose male descendants, for at least two generations, generally married first cousins or even nieces.      Rothschild's five sons, established at branches in Vienna, London, Naples and Paris, as well as Frankfort, cooperated together in ways which other international banking dynasties copied but rarely excelled.

In concentrating, as we must, on the financial or economic activities of international bankers, we must not totally ignore their other attributes. They were, especially in later generations, cosmopolitan rather than nationalistic; they were a constant, if weakening, influence for peace, a pattern established in 1830 and 1840 when the Rothschilds threw their

52 TRAGEDY AND HOPE

whole tremendous influence successfully against European wars. They were usually highly civilized, cultured gentlemen, patrons of education and of the arts so that today colleges, professorships, opera companies, symphonies, libraries and museum collections still reflect their  munificence. For these purposes they set a pattern of endowed foundations which still surround us today.

The names of some of these banking families are familiar to all of us and should be more so. They include Baring, Lazard, Erlanger, Warburg, Schroder, Seligman, the Speyers, Mirabaud, Mallet, Fould, and above all Rothschild and Morgan.  Even after these banking families became fully involved in domestic industry by the emergence of financial capitalism, they remained different from ordinary bankers in distinctive ways: ( i ) they were cosmopolitan and international; (z) they were close to governments and were particularly concerned with questions of government debts, including foreign government debts, even in areas which seemed, at first glance, poor risks, like Egypt, Persia, Ottoman Turkey, Imperial China, and Latin America; (3) their interests were almost exclusively in bonds and very' rarely in goods, since they admired "liquidity" and regarded commitments in commodities or even real estate as the first step toward bankruptcy; (4) they were, accordingly, fanatical devotees of deflation (which they called "sound" money from its close associations with high interest rates and a high value of money) and of the gold standard, which, in their eyes, symbolized and ensured these values; and (5) they were almost equally devoted to secrecy and the secret use of financial influence in political life. These bankers came to be called "international bankers" and, more particularly, were known as "merchant bankers" in England, "private bankers" in France, and "investment bankers" in the United States. In all countries they carried on various kinds of banking and exchange activities, but everywhere they were sharply distinguishable from other more obvious kinds of banks such as savings banks or commercial banks.

One of their less obvious characteristics was that they remained as private unincorporated firms, usually partnerships, until relatively recently, offering no shares, no reports and usually no advertising to the public. This risky status, which deprived them of limited liability, was retained in most cases until modern inheritance taxes made it essential to surround such family wealth with the immortality of corporate status for tax-avoidance purposes. This persistence as private firms continued because it ensured the maximum of anonymity and secrecy to persons of tremendous public power who dreaded public knowledge of their activities as an evil almost as great as inflation. As a consequence ordinary people had no way of knowing the wealth or areas of operation of such firms and often were somewhat hazy as to their membership….

  In most countries the central bank was surrounded closely by almost invisible private investment banking firms…Yet a close observer could hardly fail to notice the close private associations between these private, international bankers and the central bank itself. In France, for example, in 1936 when the Bank of France was reformed, its Board of Regents (directors) was still dominated by the names of the families who had originally set it up in 1800; to these had been added a few more recent names, such as Rothschild (added in 1819); in some cases the name might not be readily recognized because it was that of a son-in-law rather than that of a son. Otherwise in 1914 the names, frequently those of Protestants of Swiss origin (who arrived in the eighteenth century) or of Jews of German origin (who arrived in the nineteenth century), had been much the same for more than a century.

  In England a somewhat similar situation existed, so that even in the middle of the twentieth century the Members of the Court of the Bank of England were chiefly associates of the various old "merchant banking" firms such as Baring Brothers, .Morgan Grenfell, Lazard Brothers and others.

In a secondary position, outside the central core, are the commercial banks, called in England the "joint-stock banks," and on the Continent frequently known as "deposit banks." These include such famous names as Midland Bank, Lloyd's Bank, Barclays Bank in England, the National City Bank in the United States, the Credit Lyonnais in France, and the Darmstadter Bank in Germany.

Outside this secondary ring is a third, more peripheral, assemblage of institutions that have little financial power but do have the very significant function of mobilizing funds from the public. This includes a wide variety of savings banks, insurance firms and trust companies….

 57 We have said that two of the five factors which determined the value of money (and thus the price level of goods) are the supply and the demand for money. The supply of money in a single country was subject to no centralized, responsible control in most countries over recent centuries. Instead, there were a variety of controls of which some could be influenced by bankers, some could be influenced by the government, and some could hardly be influenced by either. Thus the various parts of the pyramid of money were but loosely related to each other. Moreover, much of this looseness arose from the fact that the controls were compulsive in a deflationary direction and only permissive in an inflationary direction.

Throughout modern history the influence of the gold standard has been deflationary, because the natural output of gold each year, except in extraordinary times, has not kept pace with the increase in output of goods…The paradox arose from the fact that the basic economic conditions of the nineteenth century were deflationary, with a money system based on gold and an industrial system pouring out increasing supplies of goods, but in spite of falling prices (with its increasing value of money) the interest rate tended to fall rather than to rise. This occurred because the relative limiting of the supply of money in business was not reflected in the world of finance where excess profits of finance made excess funds available for lending. Moreover, the old traditions of merchant banking continued to prevail in financial capitalism even to its end in 1931. It continued to emphasize bonds rather than equity securities (stocks), to favor government issues rather than private offerings, and to look to foreign rather than to domestic investments. Until 1825, government bonds made up almost the whole of securities on the London Stock Exchange. In 1843, such bonds, usually foreign, were 80 percent of the securities registered, and in 1875 they were still 68 percent. The funds available for such loans were so great that there were, in the nineteenth century, sometimes riots by subscribers seeking opportunities to buy security flotations; and offerings from many remote places and obscure activities commanded a ready sale. The excess of savings led to a fall in the price necessary to hire money, so that the interest rate on British government bonds fell from 4.42 percent in 1820 to 3.11 in 1850 to 2.76 in1900. This tended to drive savings into foreign fields where, on the whole, they continued to seek government issues and fixed interest securities. All this served to strengthen the merchant bankers' obsession both with government influence and with deflation (which would increase value of money and interest rates).

  Another paradox of banking practice arose from the fact that bankers, who loved deflation, often acted in an inflationary fashion from their eagerness to lend money at interest. Since they make money out of loans, they are eager to increase the amounts of bank credit on loan. But this is inflationary. The conflict between the deflationary ideas and inflationary practices of bankers had profound repercussions on business. The bankers made loans to business so that the volume of money increased faster than the increase in goods. The result was inflation. When this became clearly noticeable the bankers would flee to notes or specie by curtailing credit and raising discount rates. This was beneficial to bankers in the short run (since it allowed them to foreclose on collateral held for loans), but it could be disastrous to them in the long run (by forcing the value of the collateral below the amount of the loans it secured). But such bankers' deflation was destructive to business and industry in the short run as well as the long run….

On the whole, in the period up to 1931, bankers, especially the Money Power controlled by the international investment bankers, were able to dominate both business and government. They could dominate business, especially in activities and in areas where industry could not finance its own needs for capital, because investment bankers had the ability to supply or refuse to supply such capital. Thus, Rothschild interests came to dominate many of the railroads of Europe, while Morgan dominated at least 26,000 miles of American railroads. Such bankers went further than this. In return for notations of securities of industry they took seats on the boards of directors of industrial firms, as they had already done on commercial banks, savings banks, insurance firms and finance companies. From these lesser institutions they funneled capital to enterprises which yielded control and away from those who resisted.

These firms were controlled through interlocking directorships, holding companies, and lesser banks. They engineered amalgamations and generally reduced competition, until by the early twentieth century many activities were so monopolized that they could raise their noncompetitive prices above costs to obtain sufficient profits to become self-financlng and were thus able to eliminate the control of bankers. But before that stage was reached a relatively small number of bankers were in positions of immense influence in European and American economic circles. As early as 1909, Walter Rathenau, who was in a position to know (since he had inherited from his father control of the German General Electric Company and held scores of directorships himself), said, "Three hundred men, all of whom know one another, direct the economic destiny of Europe and choose their successors from among themselves.”…

Naturally the influence of bankers over governments during the age of financial capitalism (roughly 1850-1931) was not something about which anyone talked freely, but it has been admitted frequently enough by those on the inside, especially in England. In 1852 Gladstone, Chancellor of the Exchequer, declared, "The hinge of the whole situation of factors, of which the most significant perhaps is in the Vast Matters of Finance, to leave the Money Power supreme,”

66

…by 1900 and were largely wiped away as a result of the economic changes brought about by the First World War. Because of these changes it became impossible to restore the financial system which had existed before 1914.  Efforts to restore it were made with great determination, but by 1933 they had obviously failed, and all major countries had been forced to abandon the gold standard and automatic exchanges. When the gold standard is abandoned gold flows between countries like any other commodity, and the value of foreign exchanges (no longer tied to gold) can fluctuate much more widely…. 

  The supremacy of Britain was so complete that it almost never had to be declared by her or admitted by others. It was tacitly assumed by both.  As an unchallenged ruler in these fields, Britain could afford to be a benevolent ruler. Sure of herself and of her position she could be satisfied with substance rather than forms. If others accepted her dominance in

fact, she was quite willing to leave to them independence and autonomy in law.

  This supremacy of Britain was not an achievement of the nineteenth century alone. Its origins go back to the sixteenth century—to the period in which the discovery of America made the Atlantic more important than the Mediterranean as a route of commerce and a road to health. In the Atlantic, Britain's position was unique, not merely because of her westernmost position but much more because she was an island. This last fact made it possible for her to watch Europe embroil itself in internal squabbles while she retained freedom to exploit the new worlds across the seas.  On this basis, Britain had built up a naval supremacy which made her ruler of the seas by 1900. Along with this was her preeminence in merchant shipping which gave her control of the avenues of world transportation and ownership of 39 percent of the world's ocean-going vessels (three times the number of her nearest rival).

To her supremacy in these spheres, won in the period before 1815, Britain added new spheres of dominance in the period after 1815. These arose from her early achievement of the Industrial Revolution. This was applied to transportation and communications as well as to industrial production. In the first it gave the world the railroad and the steamboat; “in the second it gave the telegraph, the cable and the telephone; in the third it gave the factory system.

The Industrial Revolution existed in Britain for almost two generations before it spread elsewhere. It gave a great increase in output of manufactured goods and a great demand for raw materials and food; it also gave a great increase in wealth and savings. As a result of the improved methods of transportation, Britain developed a world trade of which it was the center and which consisted chiefly of the export of manufactured goods and the import of raw materials and food. ..In 1914 British overseas investment was about $20 billion (or about one-quarter of

income). The French overseas investment at the same time was about

68

$9 billion (or one-sixth the French national wealth, yielding 6 percent of the national income), while Germany had about $5 billion invested overseas (one-fifteenth the national wealth, yielding 3 percent of the national income). The United States at that time was a large-scale debtor.

The dominant position of Britain in the world of 1913 was, as I have said, more real than apparent. In all parts of the world people slept more securely, worked more productively, and lived more fully because Britain existed. British naval vessels in the Indian Ocean and the Far East suppressed slave raiders, pirate and headhunters. Small nations like Portugal, the Netherlands or Belgium retained their overseas possessions under the protection of the British fleet. Even the United States, without realizing it, remained secure and upheld the Monroe Doctrine behind the shield of the British Navy. 

…international financial economy must be organized about one center with numerous subordinate centers, so that it would be possible to cancel out international claims against one another in some clearinghouse and thus reduce the flow of gold to a minimum…These conditions, which made the international financial and 

commercial system function so beautifully before 1914, had begun to change by 1890. The fundamental economic and commercial conditions changed first, and were noticeably modified by 1910; the group of secondary characteristics of the system were changed by the events of the First World War….   

  The Founding Fathers of US had assumed that the political control of the country would be conducted by men of property and leisure who would generally know each other personally and, facing no need for urgent decisions, would move government to action when they agreed and be able to prevent it from acting, without serious damage, when they could not agree. The American Constitution, with its provisions for division of powers and selection of the chief executive by an electoral college, reflected this point of view. So also did the use of the party caucus of legislative assemblies for nomination to public office and the election of senators by the same assemblies. The arrival of a mass democracy after 1830 changed this situation, establishing the use of party conventions for nominations and the use of entrenched political party machines, supported on the patronage of public office, to mobilize sufficient votes to elect their candidates.

As a result of this situation, the elected official from 1840 to 1880

WESTERN CIVILIZATION TO I9I4 71

found himself under pressure from three directions: from the popular electorate which provided him with the votes necessary for election from the party machine which provided him with the nomination to run for office as well as the patronage appointments by which he could reward His followers, and from the wealthy economic interests which gave him the money for campaign expenses with, perhaps, a certain surplus for his own pocket. This was a fairly workable system, since the three forces were approximately equal, the advantage, if any, resting with the party machine. This advantage became so great in the period 1865-1880 that the forces of finance, commerce, and industry were forced to contribute ever-increasing largesse to the political machines ln order to obtain the services from government which they regarded as their due, services such as higher tariffs, land grants to railroads, better Postal services, and mining or timber concessions. The fact that these forces of finance and business were themselves growing in wealth and power made them increasingly restive under the need to make constantly larger contributions to party political machines. Moreover, these economic tycoons increasingly felt it to be unseemly that they should be unable to issue orders but instead have to negotiate as equals in order to obtain services or favors from party bosses.

By the late 1870's business leaders determined to make an end to this situation by cutting with one blow the taproot of the system of party machines, namely, the patronage system. This system, which they

called by the derogatory term "spoils system," was objectionable to big business not so much because it led to dishonesty or inefficiency but because it made the party machines independent of business control by

giving them a source of income (campaign contributions from government employees) which was independent of business control. If this source could be cut off or even sensibly reduced, …

At a time when the growth of a mass press…this period, 1884-1933, was the period of financial capitalism—investment bankers moving into commercial banking and insurance on one side and into railroading and heavy industry on the other were able to mobilize enormous wealth and wield enormous power.. It was with this aim in view that civil service began in the Federal government with the Pendleton Bill….

Popularly known as "Society,"

72 TRAGEDY AND HOPE

or the "400," they lived a life of dazzling splendor. Sailing the ocean in great private yachts or traveling on land by private trains, they moved in a ceremonious round between their spectacular estates and town houses in Palm Beach, Long Island, the Berkshires, Newport, and Bar Harbor; assembling from their fortress-like New York residences to attend the Metropolitan Opera under the critical eye of Mrs. Astor; or gathering for business meetings of the highest strategic level in the awesome presence of J. P. Morgan himself.

The structure of financial controls created by the tycoons of "Big Banking" and "Big Business" in the period 1880-1933 was of extraordinary complexity, one business fief being built on another, both being allied with semi-independent associates, the whole rearing upward into two pinnacles of economic and financial power, of which one, centered in New York, was headed by J. P. Morgan and Company, and the other, in Ohio, was headed by the Rockefeller family. When these two cooperated, as they generally did, they could influence the economic life of the country to a large degree and could almost control its political life, at least on the Federal level. The former point can be illustrated by a few facts. In the United States the number of billion-dollar corporations rose from one in 1909 (United States Steel, controlled by Morgan) to fifteen in 1930. The share of all corporation assets held by the 200 largest corporations rose from 32 percent in 1909 to 49 percent in 1930 and reached 57 percent in 1939. By 1930 these 200 largest corporations held 49.2 percent of the assets of all 40,000 corporations in the country ($81 billion out of $165 billion); they held 38 percent of all business wealth, incorporated or unincorporated (or $81 billion out of $212 bilion); and they held 22 percent of all the wealth in the country (or $81 billion out of $367 billion). In fact, in 1930, one corporation (American Telephone and Telegraph, controlled by Morgan) had greater assets than the total wealth in twenty-one states of the Union.

The influence of these business leaders was so great that the Morgan and Rockefeller groups acting together, or even Morgan acting alone, could have wrecked the economic system of the country merely by throwing securities on the stock market for sale, and, having precipitated a stock-market panic, could then have bought back the securities they had sold but at a lower price. Naturally, they were not so foolish as to do this, although Morgan came very close to it in precipitating the "panic of 1907," but they did not hesitate to wreck individual corporations, at the expense of the holders of common stocks, by driving them to bankruptcy. In this way, to take only two examples, Morgan wrecked the New York, New Haven, and Hartford Railroad before 1914 by selling to it, at high prices, the largely valueless securities of myriad New England steamship and trolley lines; and William Rockefeller and his friends wrecked the Chicago, Milwaukee, St. Paul, and Pacific Railroad… 73

In 1925 by selling to it, at excessive prices, plans to electrify the Pacific, copper, electricity, and a worthless branch railroad (the Gary Line). These are but examples of the discovery by financial capitalists that they made money out of issuing and selling securities rather than out of the production, distribution, and consumption of goods and accordingly led them to the point where they discovered that the exploiting of an operating company by excessive issuance of securities or the issuance of bonds rather than equity securities not only was profitable to them but made it possible for them to increase their profits by bankruptcy of the firm, providing fees and commissions of reorganization as well as the opportunity to issue new securities.

When the business interests led by William C.Whitney pushed through the first installment of civil service reform in 1883, they expected that they would be able to control both political parties equally. Indeed, some of them intended to contribute to both and to allow an alternation of the two parties in public office in order to conceal their own influence, inhibit any exhibition of independence by politicians, and allow the electorate to believe that they were exercising their own free choice.

Such an alternation of the parties on the Federal scene occurred in the period 1880-1896, with business influence (or at least Morgan's influence) as to control the Republican Party to a large degree.  As a result of this system, about a quarter of the votes in a Republican Convention were “controlled”, not representing the electorate….But in 1896 came

shocking experience….Mark Hanna

told us in detail how he spent much of the winter of 1895-1896 in Georgia buying over two hundred delegates for McKinley.

….the period 1868-1896—this discontent in turn was based, largely, on the monetary tactics of the banking oligarchy….Accordingly, at the end of the Civil War, they persuaded the

74 TRAGEDY AND HOPE

Grant Administration to curb the postwar inflation and go back on the gold standard (crash of 1873 and resumption of specie payments in 1875). This gave the bankers a control of the supply of money which they did not hesitate to use for their own purposes, as Morgan ruthlessly pressurized Cleveland in 1893—1896. The bankers' affection for low prices was not shared by the farmers, since each time prices of farm products went down the burden of farmers' debts (especially mortgages) became greater. Moreover, farm prices, being much more competitive than industrial prices, and not protected by a tariff, fell much faster than 

industrial prices, and farmers could not reduce costs or modify their production plans nearly so rapidly as industrialists could. The result was a systematic exploitation of the agrarian sectors of the community by the financial and industrial sectors. This exploitation took the form of high industrial prices, high (and discriminatory) railroad rates, high interest charges, low farm prices, and a very low level of farm services by railroads and the government. Unable to resist by economic weapons, the farmers of the West turned to political relief but were greatly hampered by their reluctance to vote Democratic (because of their memories of the Civil War). Instead, they tried to work on the state political level through local legislation (so-called Granger Laws) and set up third-party movements (like the Greenback Party in 1878 or the Populist Party in 1892). By 1896, however, agrarian discontent rose so high that it began to overcome the memory of the Democratic role in the Civil War. The capture of the Democratic Party by these forces of discontent under William Jennings Bryan in 1896, who was determined to obtain higher prices bv increasing the supply of money on a bimetallic rather than a gold basis, presented the electorate with an election on a social and economic issue for the first time in a generation. Though the forces of high finance and of big business were in a state of near panic, by a mighty effort involving large-scale spending they were successful in electing McKinley.

The inability of plutocracy to control the Democratic Party as it had demonstrated it could control the Republican Party made it advisable for them to adopt a one-party outlook on political affairs, although they continued to contribute to some extent to both parties and did not cease their efforts to control both. In fact on two occasions, in 1904 and in1924, J. P. Morgan was able to sit back with a feeling of satisfaction to watch a presidential election in which the candidates of both parties were in his sphere of influence. In 1924 the Democratic candidate was one of his chief lawyers, while the Republican candidate was the classmate and handpicked choice of his partner, Dwight Morrow.      

  Usually Morgan had to share this political influence with other sectors of the business oligarchy, especially with the Rockefeller interest (as was done, for example, by dividing the ticket between them in 1900 and in 1920).

The agrarian discontent, the growth of monopolies, the oppression of

WESTERN CIVILIZA TION TO I 9 I 4 75

labor, and the excesses of Wall Street financiers made the country very restless in the period 1890-1900. All this could have been alleviated merely by increasing the supply of money sufficiently to raise prices somewhat, but the financiers in this period, just as thirty years later, were determined to defend the gold standard no matter what happened.  In looking about tor some issue which would distract public discontent from domestic economic issues, what better solution than a crisis in foreign affairs? Cleveland had stumbled upon this alternative, more or less accidentally, in 1895 when he stirred up a controversy with Great Britain over Venezuela.

The great opportunity, however, came with the Cuban revolt against Spain in 1895. While the "yellow press," led by William Randolph Hearst, roused public opinion, Henrv Cabot Lodge and Theodore Roosevelt plotted how they could best get the United States into the fracas. They got the excuse they needed when the American battleship Maine was sunk by a mysterious explosion in Havana harbor in February 1898. In two months the United States declared war on Spain to fight for Cuban independence. The resulting victory revealed the United States as a world naval power, established it is an imperialist power with possession of Puerto Rico, Guam, and the Philippines, whetted some 

appetites for imperialist glory, and covered the transition from the long- drawn age of semi-depression to a new period of prosperity. This new period of prosperity was spurred to some extent by the increased demand tor industrial products arising from the war, but even more by the new period of rising prices associated with a considerable increase in the world production of gold from South Africa and Alaska after 1895.

America's entrance upon the stage as a world power continued with the annexation of Hawaii in 1898, the intervention in the Boxer uprising in 1900, the seizure of Panama in 1903, the diplomatic intervention in the

Russo-Japanese War in 1905, the round-the-world cruise of the American Navy in 1908, the military occupation of Nicaragua in 1912, the openlng of the Panama Canal in 1914, and military intervention in Mexico post-1916.

During this same period, there appeared a new movement for economic and political reform known as Progressivism. The Progressive movement

resulted from a combination of forces, some new and some old. Its foundation rested on the remains of agrarian and labor discontent, a weakening of acquisitive selfishness and a revival of the older sense of social obligation and idealism.

To some extent this feeling was mixed with a realization that the position and privileges of the very wealthy could be preserved better with supernal concessions and increased opportunity for the discontented to blow its steam than from any policy of blind obstructionism.   As an example of the more idealistic impulse we might mention the

76 TRAGEDY AND HOPE

creation of the various Carnegie foundations to work for universal peace or to extend scholarly work in science and social studies. As an example of the more practical point of view we might mention the founding of The New Republic, a "liberal weekly paper," by an agent of Morgan financed with Whitney money (1914). Somewhat similar to this last point was the growth of a new "liberal press," which found it profitable to print the writings of "muckrakers," and thus expose to the public eye the seamy side of Big Business and of human nature itself. But the great opportunity for the Progressive forces arose from a split within Big Business between the older forces of financial capitalism led by Morgan and the newer forces of monopoly capitalism organized around the Rockefeller bloc. As a consequence the Republican Party was split between the followers of Theodore Roosevelt and those of William Howard Taft, so that the combined forces of the liberal East and the agrarian West were able to capture the Presidency under Woodrow Wilson in 1912.

Wilson roused a good deal of popular enthusiasm with his talk of "New Freedom" and the rights of the underdog, but his program amounted to little more than an attempt to establish on a Federal basis those reforms which agrarian and labor discontent had been seeking on a state basis for many years. Wilson was by no means a radical (after all, he had been accepting money for his personal income from rich industrialists like Cleveland Dodge and Cyrus Hall McCormick during his professorship at Princeton, and this kind of thing bv no means ceased when he entered politics in 1910), and there was a good deal of unconscious hypocrisy in many of his resounding public speeches. Be this as it may, his political and administrative reforms were a good deal more effective than his economic or social reforms. The Clayton Antitrust Act and the Federal Trade Commission Act (1913) were soon tightly wrapped in litigation and futility. On the other hand, the direct election of senators, the establishment of an income tax and of the Federal Reserve System, and the creation of a Federal Farm Loan System (1916) and of rural delivery of mail and parcel post, as well as the first steps toward various laboring enactments, like minimum wages for merchant seamen, restrictions on child labor, and an eight-hour day for railroad workers, justified the support which Progressives had given to Wilson.

The first Administration of Wilson (1913-1917) and the earlier Administration of Theodore Roosevelt (1901-1909) made a substantial contribution to the process by which the United States redirected its aim from extensive expansion of physical frontiers to an intensive exploitation of its natural and moral resources. The earlier Roosevelt used his genius as a showman to publicize the need to conserve the country's natural resources, while Wilson, in his own professorial fashion, did much to extend equality of opportunity to wider groups of the American people. These people were so absorbed in the controversies engendered by these

WESTERN CIVILIZATION TO I9I4 77

efforts that they hardly noticed the rising international tensions in Europe or even the outbreak of war in August, 1914, until by 1915 the clamorous controversy of the threat of war quite eclipsed the older domestic controversies. By the end of 1915 America was being summoned, in no gentle fashion, to play a role on the world's stage. 

           (footnote:  don’t believe all this globalist stuff!!  -r)