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The US from 1905 to 1908:
Roosevelt's Second Term

The era of Theodore Roosevelt was also era of "Barnum and Bailey," with selling more of a focus than before the public could vote, and bigger than it had been at the nation's founding. Roosevelt enlarged the president's press conferences, and citizens appreciated his expressions of can-do and righteousness, while a few thought he was too bombastic and too much of a showman seeking attention and admiration.

Roosevelt began his second term (in March 1905) with a great parade down Pennsylvania Avenue, a parade of something like 35,000: members of his old Rough Riders outfit, military bands and army regiments, including the famed 7th Cavalry that had been led by General Custer. And on horseback, side by side, were six Indian chiefs, including the Apache warrior Geronimo, still a prisoner of war and released for the occasion.

A member of Roosevelt's inaugural committee complained that Geronomo was "the greatest single-handed murderer in American history." (The Smithsonian Magazine) Roosevelt replied that he "wanted to give the people a good show." But it is also written that Roosevelt thought it was time to "bury the hatchet," time to end the misunderstanding and hostility regarding the continent's natives. His position on Indians had changed from what it had been in 1886 when he spoke of about good Indians being dead Indians. By 1901 that narrow view rising from conflict and bloodshed had changed. Roosevelt administration policy was to integrate Indians culturally, Roosevelt saying,

In my judgment the time has arrived when we should definitely make up our minds to recognize the Indian as an individual and not as a member of a tribe. The Indian should be treated as an individual — like the white man.

The Railroads

In 1905, many were angry at the railroad industry for having raised prices, and the railroads wanted more cash for further investment, including added safety. There was hostility against the railroads as monopolies and little appreciation of J.P. Morgan (See The Gilded Age). Roosevelt and Congress came down on the side of the hostile. It was Roosevelt’s stand against the railroads that would earned him the nickname, "trustbuster."

Roosevelt asked that the Interstate Commerce Commission (created by Congress back in 1887) be granted authority to decide what constituted a maximum and "reasonable" shipping rate. Inflation and rising expenses was an excuse for the railroads to raise prices, and inflation was a reason given for holding down railroad rates.

Those for regulation complained that the railroads were gouging the public and charging different rates in different regions, and those opposed to regulation said that different rates in different regions was sound business sense. The free enterprise argument about competition controlling prices could not yet be made: railroads were monopolizing monopolized the movement of goods and people, and there was not yet competition from trucking and busses, giving some the idea of nationalizing the railroads as a public utility.

Roosevelt wanted regulation rather than nationalization — opposed by Roosevelt. In February 1906 he signed into law the Hepburn Act, which gave the ICC power to set maximum railroad rates and to define what was just and reasonable. Favoritism in the form of free passes issued by the railroads were forbidden. Economists and historians would be arguing whether it crippled the rail industry in favor of growth in unregulated trucking.

Other Regulations

In October 1905, in Collier's magazine, Samuel Hopkins Adams wrote:

Gullible America will spend this year some seventy-five millions of dollars in the purchase of patent medicines. In consideration of this sum it will swallow huge quantities of alcohol, an appalling amount of opiates and narcotics, a wide assortment of varied drugs ranging from powerful and dangerous heart depressants to insidious liver stimulants; and far in excess of all other ingredients, undiluted fraud. For fraud, exploited by the skilfulest of advertising bunco men, is the basis of the trade.

In a speech in December 1905 Roosevelt said,

Traffic in foodstuffs which have been debased or adulterated so as to injure health or to deceive purchasers should be forbidden.

In 1906, Upton Sinclair's book "The Jungle" was a sensation. Sinclair, it is said, was writing about conditions in the US to sell socialism. His book described conditions in the meat industry, specifically in the Chicago stockyards. It impressed people with the need for reform — more regulation — rather than socialism.

Organized women activists put pressure on legislators and, Roosevelt signed into law the Pure Food and Drug Act and the Meat Inspection Act of 1906, and with this that agency called the Food and Drug Administration was created.

There was also the Antiquities Act of 1906, which gave the President authority to protect "significant natural, cultural, or scientific features" on federal lands that were being ripped off by private collectors.

And to the issue of conservation, Roosevelt butted heads with the lumber, oil and mining companies — while many western politicians were afraid that Roosevelt's conservationism would retard economic growth in their districts. But the Roosevelt administration went ahead and created more parks and made reserves of 17,000,000 acres of forest, claiming,

...the natural resources of our country are in danger of exhaustion if we permit the old wasteful methods of exploiting them longer to continue.

Panic of 1907

People with extra cash had been buying stocks, as gamblers or investors, enthusiastic about making money faster than they could from the interest rate with an ordinary savings account. Banks were also buying stocks — with depositor cash. The Dow Jones Industrial Average hit a high of over 100 in late 1905. In January 1906 the average reached 103 then the Dow declined a little as some thought it was time to cash-in on their gains by selling.

In April an earthquake and fire devastated San Francisco. At least 3,000 were killed and perhaps as many as 300,000 were made homeless. Money that might otherwise have been used to buy stocks was diverted to aid and reconstruction and is said to have contributed to a new weakness in the stock market. Railroad legislation produced a drop for stocks in market's railroad sector. And in late 1906 the Bank of England raised its interest rates, partly in response to the kingdom's insurance companies paying money to US policyholders expected. On 12 March 1907, the Dow Jones Industrial Average stood at 86.53. On March 14 the market was down to 76.23, a drop of almost 12 percent in two days. Speculators were rushing to sell their stocks while they still had some profits or to cut more losses they feared would be coming with a continued fall in stock prices. In mid-October, manipulation of the copper market by the "copper king," Augustus Heinze, was followed by his ruination and the copper market's collapse. By October 21 the Dow Jones Industrial Average was down to 60.81. In November it would be down to 53.00. A lot of people had lost a lot of money, including banks.

By September, the value of stocks had dropped by 24.4%. On October 22, 1907, the Knickerbocker Trust, the second-largest trust company in the United States, was forced to suspend its operations, triggering fear throughout the country and massive cash withdrawals from New York City banks.

A banking crisis had developed, many banks having made bad investments, including lending to market speculators. Without income there were bank crashes. Banks needed an income to continue their primary business: lending money. Depositor fears produced numerous runs on banks and trust companies. Businesses short of income and not borrowing money were going bankrupt, and they were joined by local banks. As businesses and common consumers were buying less, production fell by 11 percent, and unemployment rose from less than 3 percent to 8 percent.

The cycle downward needed to be reversed. The economy was dependent on banks — state banks or private commercial banks able to make loans. Banks in the US were privately owned but licensed by the government. The rescue of banking was not about to come from taxpayers via the Roosevelt administration. There were a few men who in recent decades had accumulated enough wealth that they could reverse the cycle of decline. Money still represented wealth (paper money represented gold but to say it was as "good as gold" was an exaggeration, and there was no inflation). The financier JP Morgan supplied troubled banks with some of his own money, and he convinced others with a huge supply of money to do the same, among them John D Rockefeller. Rockefeller told the Associated Press that he would pledge half his wealth to maintain US credit. Morgan saw the need for some business mergers and he needed immunity from application of the Sherman Antitrust Act, and Roosevelt was pragmatic enough to provide it. Confident that money was circulating again, by early 1908 the economy was recovering.

Events to the November Elections

In addition to reforms at the federal level, reforms were taking shape that followed the example of the State of Wisconsin. Candidates for public office were to be chosen by primaries rather than by behind-the-scene power brokers. And states were beginning to establish referendums, to establish a short ballot and to limit on contributions allowed to political campaigns. And there was the direct election of senators sent to Washington DC rather than senators being chosen by state legislatures.

But the socialist leader and former presidential candidate, Eugene Debs, was getting ready to run again. In January 1908, he said:

President Roosevelt has done more to further the spread of the socialist propaganda than any man I know of. His policy, or lack of policy, whichever way you take it ... is paving the way for socialism. The more he says the longer the bread line will grow, and the people will ultimately see that socialism is their only hope. When the international crisis comes socialism will spread all over the world.

Roosevelt honored his promise not to seek a third term, and he persuaded his close friend and Secretary of War, Howard Taft, to run, and Taft won on the first ballot.

In August "the first race riot in the North in half a century" occurred in Springfield Illinois. There were lynchings, deaths and property destructions, a failure of the cool that would be required to meet the great challenges that would be coming with war in 1914.

In October the Chicago Cubs won the World Series baseball championship, but it was the most poorly attended World Series in history, the final game drawing a record-low of 6,210 fans. Attendance had been harmed by a ticket-scalping scheme and that fans believed the Cub's owner of participated in.

Taft was appealing to voters with Roosevelt's Progressive legacy The Democratic Party nominee for president, William Jennings Bryan (who in seventeen years would participate in the Scopes Trial concerning the teaching of evolution) was running his third presidential campaign (the other two in 1896 and 1900). He supported Labor and campaigned against imperialism (his famous anti-imperialism speech in 1900), against corporate power, corruption and the government wasting money.

In November Taft won 321 electoral votes to Bryan's 162. Bryan had lost for the third time, and the Republicans easily held on to their majorities in Congress. And again the Democrats carried the South, and not because the South had turned left or liberal. The three states Bryans had won outside the South were his home state of Nebraska, Nevada and Colorado.

Debs won 2.83 percent of the popular vote. The bread lines had yet to grow and the socialist revolution seemed in need of more time to develop.

CONTINUE READING: Overseas Empire at the Beginning of 20th Century

Copyright © 2018 by Frank E. Smitha. All rights reserved.