As Elihu Root's successor as secretary of war, Taft served Roosevelt less as secretary, because Roosevelt ran the army, than as a provider of sound legal advice, spokesman on the stump, and general troubleshooter. It was only natural then that Roosevelt supported him above all others as his successor because Taft appeared to be an edited version of himself, the best man to carry out "the Roosevelt policies." The most important of these included supporting the right of labor to organize, forcing capital to obey the law, reforming the currency, improving the Sherman Antitrust Act, strengthening the powers of the Interstate Commerce Commission (ICC) over railroads, avoiding government ownership and socialism, and keeping the tariff rates steady.
Until elected president in his own right in 1904, Roosevelt sought only moderate reforms, in order to win the support for his renomination and election by the old guard. Once in power, he followed a "middle-of-the-road, middle-class program of mild reform" and was able to add a bit of constructive legislation to the rolls by appealing to the people over the head of Congress and promising everyone a "square deal." When in 1908 he suggested more radical reforms, the old guard balked. Then, with Roosevelt's strong support, Taft easily defeated Willam Jennings Bryan.
If Taft and Roosevelt agreed on objectives, they differed greatly on methods and interpretation. Both in domestic and foreign affairs, Roosevelt wanted to make the presidency the paramount branch of government. He would act unless constrained by "specific restrictions and prohibitions appearing in the Constitution or imposed by Congress under its constitutional power." As the steward of the people, he sought to do all he could for them, above all to obtain a more equitable distribution of the national wealth. Taft wanted to keep the branches of government in equilibrium and limit government in order to give personal and property rights free rein. He would not act unless he found the power to do so in the Constitution or in law and held that "there is no undefined residuum of power which [a president] can exercise because it seems to him to be in the public interest." He would not use government as an agency to relieve the misery of the masses, whose capability for voting intelligently he doubted. Never during his term did he intervene to settle a labor strike. He depended upon southern whites to solve the blacks' many problems even though the former were racists who equated white supremacy with progressivism. He also opposed the extension of more democratic political methods, including woman suffrage. Yet he did more than any other president before him through mechanistic means devoid of humanitarianism to make the federal government "efficient."
Taft believed, as he noted in his inaugural address, that his tasks would be to "complete and perfect" the progress Roosevelt had made; quiet the popular clamor he had excited, especially among businessmen; and oppose progressive reforms achievable only by the intervention of the federal government.
The most critical domestic problems facing Taft were the obtaining of an income tax that would raise revenue but also serve as a redistributor of the national wealth, the control of big business so as to provide free competition, reform of the tariff and currency and banking systems, the conservation of natural resources, and the improvement of democratic government by the admission of more democratic methods to it that would improve its organization and operations.
To leave Taft alone to run his administration, Roosevelt went hunting in Africa for a year. With Roosevelt's dynamic spell over him broken, Taft returned to his conservative self, thus appearing to progressives as having deserted them and Roosevelt's cause. In addition, his numerous social entertainments, frequent golf games, and long traveling junkets raised the question whether he was truly serving the public or seeking personal pleasure. Another action that helped cause his later split with Roosevelt was his failure to keep Roosevelt's cabinet, which by implication, rather than pledge, he had said he would retain as his own. Of nine men, seven had studied law, five were corporation lawyers, none was a progressive or reformer, and only three had served Roosevelt. He further alienated insurgents—defined as those who rejected dictation by their congressional leaders—and progressives by depending for legislative advice upon the reactionary Joseph Cannon, the dictatorial Speaker of the House, and upon the conservative Nelson W. Aldrich in the Senate, upon his equally conservative brother Henry and half brother Charles, and upon Mrs. Taft, the last three of whom constantly fed him their suspicions of Roosevelt's desire to return to the presidency.
Taft called Congress into special session, on 15 March 1909—the first Republican president to do so since Rutherford B. Hayes—to revise the tariff rates downward and in addition create a tariff commission that would investigate and report each year on those products whose schedules should be raised or lowered. Saying that he was "god-damned tired of listening to all this babble for reform," Cannon wanted to keep the Dingley Tariff of 1897 inviolate, but of his majority of forty-seven men, approximately thirty were insurgents who threatened his control. Believing that he needed Cannon's strength in the battle for tariff reform, Taft withheld his support from the insurgents seeking to unseat Cannon as Speaker. The insurgents naturally wondered how Taft could win progressive reforms by supporting conservatives.
As usual, congressmen sought to protect the economic interests of their own states or regions. Taft failed to give directions to Aldrich or to Sereno E. Payne, chairman of the House Ways and Means Committee, or to threaten opponents with the use of his patronage power. Payne's committee considered four thousand items. While it lowered four hundred duties on products for the benefit of their consumers, in the end it produced a bill that pinched consumers even further. A novelty was a federal inheritance tax of 1 percent on $10,000 or more. After it was passed by a vote of 217 to 161, Taft said it came "as near complying with our purposes as we can hope." He rejected advice from Senator Robert La Follette of Wisconsin and others that it did not square with his platform pledge, adding that he would not interfere with Congress while it was at work; he would veto it if it did not comply with the platform.
Aldrich increased 600 of the 847 items in the Payne bill and demanded its immediate passage so that delay would not disturb business. Instead, a summer of senatorial debate ensued that, for the oratory it produced and the consequences that followed, ranks with the debates over the League of Nations and Franklin D. Roosevelt's attempt to pack the Supreme Court. If the progressives could not move Aldrich, they widely publicized the inequities of his bill. After Aldrich read them out of their party, they told their constituents their side of the story in order to win continued political life. Taft then complained that he had been deceived by some "very astute and expert politicians," including Aldrich, whom he had trusted; but instead of berating Aldrich, he became angry with the insurgents, who were fighting his fight, because he believed that their criticism of the senator was also directed at him.
On 15 April 1909 the insurgents introduced an amendment calling for a flat 3 percent tax on individual and corporate incomes above $5,000 a year as a substitute for Aldrich's inheritance tax. Taft approved but said the Supreme Court would find the income tax unconstitutional and suggested a constitutional amendment for it. Congress passed such an amendment on 28 June. Moreover, he supported an insurgent amendment calling for a 2 percent tax on all corporate income except that derived from banking.
Although Cannon and Aldrich stacked the conference committee with extreme protectionists, Taft did not pressure it or appeal over its head to the public. Instead, he extended patronage to "standpatters" on the ground that his veto of its work would lose him their support for obtaining additional reforms in the subsequent regular session. The House approved the bill on 31 July by a vote of 195 to 183, with 20 Republicans voting nay and only 2 Democrats aye. On 5 August the Senate approved by 47 to 31, with 10 insurgents voting nay.
In addition to modifying the rates of the Dingley Tariff, the Payne-Aldrich Tariff gave Taft the Tariff Commission, which he wanted. It also set minimum and maximum rates and permitted the president to employ the latter against nations that discriminated, in some undefined way, against the United States. Taft concluded that while a veto of it would make him popular with the people, he would lose the support of standpatters. Moreover, he was pleased with the Tariff Commission, the increase of needed revenues, and the reductions in some rates. On 6 August he therefore signed the tariff act. He thereby ended his hundred-day honeymoon with Congress, further separated the regular and insurgent wings of his party, determined the latter to oppose his renomination in 1912, and infused new life into the Democratic opposition. Although he had done more about the tariff than Roosevelt had done in seven years, he decided to explain the new tariff to the people and thus dampen the flames of insurgency that engulfed the West, which was incensed because the tariff cuts had been made largely on western products and therefore helped the eastern manufacturers and trusts.
Rather than carefully preparing his speeches, he vacationed for a month and confessed that "I am putting off those speeches from day to day." His procrastination in the matter and his failure to employ a speechwriter or to submit his writings for editing caused him to make some disastrous gaffs. In Boston on 14 September he highly praised Aldrich. In La Follette's state, instead of thanking the insurgents for their support, he spoke of a postal savings-bank plan. As for a speech to be delivered in Winona, Minnesota, on the seventeenth, he told Mrs. Taft the night before that "it will be a close shave. Speech hastily prepared, but I hope it may do some good." He was never more wrong. While he admitted that he had agreed to some high rates in order to maintain party solidarity, he made a supreme blunder by asserting, "When I do say without hesitation that this is the best tariff bill that the Republican party has ever passed, and therefore the best tariff bill that has been passed at all, I do not feel that I could have reconciled any other course to my conscience than that of signing the bill."
Newspaper headlines, various congressmen, and even his devoted military aide, Captain Archibald W. Butt, saw that he had revealed his lack of proper preparation and ignorance of certain aspects of tariff making. More important, he was standing pat against further tariff revision and, by reading the insurgents from his party, providing them with excellent ammunition for the campaign of 1910. He then added to the animus against him by consorting openly with Cannon and other conservatives. Most important, by aligning himself with conservatives, he opened the door to demands that Roosevelt be reelected in 1912.
Even though controversy over the tariff had not ended, Taft became involved in another, over conservation policy, that engendered mountains of debate and had fantastic political repercussions. The basic argument was between those who would "preserve" what was left of the nation's natural resources for posterity, thus denying them to exploitation by corporate interests and "trusts," and those who would use them under stated conditions for mining, grazing, lumbering, and waterpower. Roosevelt believed conservation the most important contribution he had made to his domestic administration. His way was to employ scientific land-management techniques that would result in orderly resource development, to excuse federal intervention on the ground that the ends justified the means, and to invest the physical values of conservation with social and moral values. By 1908, Congress had blocked further progress in his program.
Taft agreed with Roosevelt on conservation but promised appropriate legislation to regularize various executive orders Roosevelt had used to accomplish his purposes. Roosevelt was pleased that Taft would retain his secretary of the interior, James Garfield, who had enthusiastically supported conservation, and then was disgruntled when Taft replaced him with Richard Achilles Ballinger of Washington State. For conservation, Roosevelt preferred federal control. Taft preferred state control. Taft wanted to lease national lands to private capital for exploitation and let Congress determine whether water should be under federal or state control but limit the reclamation of swamp and marginal lands to the federal government. Above all, he would regularize Roosevelt's extralegal methods, regardless of the results for conservation.
Like Taft a strict constructionist, Ballinger questioned the legality of some of Roosevelt's conservation measures, such as letting Gifford Pinchot, head of the Forestry Service in the Department of Agriculture, grant forest and mineral rights to land whose title was vested in the Department of the Interior. Moreover, Ballinger wanted to sell rather than lease coal lands and waterpower sites. Without specific congressional authority, Roosevelt and Garfield had withdrawn from settlement lands along rivers and streams in the Northwest and failed to inform Ballinger, who within ten days of his taking office stopped granting waterpower permits in the public domain and began restoring the right of private use. Taft supported him against Pinchot by saying that Congress, not the executive, could withdraw lands for conservation purposes. At Taft's request, Congress set aside, between 1910 and 1912, all valuable waterpower sites, thus legitimizing the work begun under Roosevelt yet giving waterpower magnates a lucrative opportunity to develop waterpower on the national domain. Pinchot was soon in disgrace with Ballinger, and the public quickly became interested in the personal battle between the exemplars of Roosevelt's and Taft's conservation methods and in how Taft would solve this interdepartmental squabble.
Taft's greatest political crisis in the conservation issue came over the coal-lands problem. To foil speculators who merged dummy entries on 160-acre homestead claims in order to exploit coal beneath, in 1905 Roosevelt had directed that coal lands be leased rather than sold. He then withdrew 66 million acres, 7.68 million of them in Alaska, from entry. When one Clarence Cunningham, aided by Ballinger, then a Seattle lawyer, amassed 5,280 acres, rumors began about the impending rape of Alaska's mineral resources by unscrupulous Wall Street interests. Although as land commissioner Ballinger found Cunningham's claim legal, upon the report of a special investigator named Louis R. Glavis he rescinded the approval order. After becoming secretary of the interior, he had still another investigation made. This also upheld Cunningham. Blocked at Interior, Glavis turned to Pinchot in Agriculture, saying he had damaging evidence against Ballinger. Pinchot hoped to be able to drive him from office, but by attacking strict constructionists who favored "the great interests as against the people," he earned Taft's ire.
In February 1907, when Congress verged upon taking the power to establish national forests from the president, Pinchot had helped prepare for Roosevelt a "midnight forests" proclamation covering 16 million acres and Garfield had withdrawn 4 million acres of waterpower sites in the area just before a law creating national forests in six western states went into effect. Deeming Pinchot "a radical and a crank" who utterly worshiped Roosevelt, Taft in December 1908 had refused to use a speech Pinchot had written for him and hinted that because he was not a lawyer he might use illegal methods to accomplish his purposes. Pinchot thereupon concluded that Taft would kill conservation and that Ballinger was a traitor to the cause, but for the moment he kept the argument within the family. In August 1909, Taft accepted reports on the Cunningham claim from both Glavis and Ballinger. After reading them and submitting them to still further examination by his attorney general and others, he decided that Glavis should be fired "for disloyalty to his superior officers in making a false charge against them." He then wrote Pinchot that Ballinger was a true friend of conservation who operated only "within the law and [was] buttressed by legal authority," adding that he would be sorry to have Pinchot leave government service.
In November, in Collier's magazine, Glavis publicized his report, soon copied by a number of muck-raking publications, which impugned Ballinger. While he praised Ballinger privately, Taft told Pinchot that he was determined to end "public discussion between departments and bureaus" because it was "most demoralizing and subversive of governmental discipline and efficiency." Pinchot pleased Taft by saying that he would not resign but would furnish a bill of particulars against Ballinger. The men parted amicably, yet Pinchot saw a way to keep up his fight for conservation—get himself fired and so dramatize the differences in attitude toward conservation between Roosevelt and Taft. To get himself fired, Pinchot openly attacked Taft in a speech in January 1910 and also in a letter to the chairman of the Senate Committee on Agriculture. Realizing that firing Pinchot would please those who sought to rupture his relations with Roosevelt and stimulate a "Back from Elba" movement that would be supported by the insurgents, Taft decided that others must take the initiative. On the advice of Elihu Root, who at his request read the record of the Ballinger-Pinchot dispute, he wrote Pinchot a letter of dismissal. When the letter arrived at his home, he waved it toward his doting mother and cried, "I'm fired." Eyes flashing, head flung back, and waving an arm over her head, she exclaimed, "Hurrah!"
The House of Representatives held hearings on the charges against Ballinger from 26 January to 20 May 1910. The report exonerated both Ballinger and Taft of evildoing but revealed that Ballinger's actions usually resulted in favors for private enterprise and for the exploitation of the resources desired by the West, thus contradicting Roosevelt's conservation policies. What had been a "tilt between Taft and Ted" then turned the tables on Taft by showing that he had sought to whitewash Ballinger, in part by the use of a predated document. Pressed for time, he had directed his attorney general to date certain papers "prior to the date of my opinion." Not knowing that Ballinger and the attorney general had openly acknowledged the fact, Taft denied it, thus laying himself open to the charge of being a liar and forger. The public press thereupon "convicted" him and "vindicated" Pinchot. Meanwhile, both Pinchot and Norman Hapgood of Collier's had gone to Europe to tell Roosevelt how Taft had turned away from his policies.
Proof that Taft was devoted to conservation lies in his withdrawing almost as much land from entry as Roosevelt had. He had regularized Roosevelt's conservation measures but wrecked the inter-departmental arrangements between Agriculture and Interior that had existed under Roosevelt; strengthened the power of Interior over conservation; widened the split in his party over the tariff issue by the conservation controversy; made Pinchot a martyr to progressives; furnished new ammunition to insurgents, especially westerners, who now hoped to add Roosevelt to their ranks; ensured that the House would lose its Republican majority in the elections of 1910; and provided issues for the presidential campaign of 1912. Most important, by firing Pinchot, Taft drove a deep wedge between himself and Roosevelt, who now saw him a failure as a leader.
Although Taft well knew of the serious insurgent and progressive uprising against him, he "walked to his doom 'a gentleman unafraid,"' as William Allen White put it. Having on 4 March 1910 completed a year in office, he alleged that the no-third-term tradition would block Roosevelt. While he admitted that his party was split, he pleaded for solidarity on the grounds that a good beginning had been made in carrying out his party's platform, as instanced by the Payne-Aldrich Tariff, which he still thought was the best tariff bill ever passed; his regularization of conservation; and his undertaking of railroad regulation, an antitrust crusade, and still other reforms. He should not be judged until he had finished his work.
Nonetheless, on the basis of his record, the progressives openly declared war on him as the primaries of 1910 approached. Furthermore, upon his return home on 18 June, Roosevelt submitted to a great popular reception but declined an invitation to visit the White House. Although he said he had no intention of running again and would not take sides in the battle between the regulars and progressives, he could not support Taft for renomination and reelection, despite letters from Taft saying that he had been "conscientiously trying to carry out your policies, but my method of doing so has not worked smoothly." Mrs. Taft's illness—she had suffered a stroke a year earlier—also placed a terribly great strain on Taft. Roosevelt replied that he intended "to keep my mind open as I keep my mouth shut." He broke a promise to Root to keep quiet for sixty days after only four days and conferred with a number of progressives before accepting Taft's invitation to visit him on 30 July at Taft's summer home but excluded discussion of serious political matters, even though he held Taft responsible for splitting their party and making Democratic victories possible in November. He conceived his task to be the drawing together of the two wings of the party without supporting one against the other. "Taft has passed his nadir," he told Pinchot, but with new advisers he might redeem himself and become worthy of renomination and reelection.
While Roosevelt learned of the difficulties of drawing his party together—the president and the party's old guard defeated him when he sought a "clean-cut progressive program" in New York—Taft, irritated by his failure to keep silent, told Archie Butt on 6 July that "I do not see how I am going to get out of having a fight with President Roosevelt." Of the options available to him of helping, opposing, or bargaining with him, he chose the last. If Roosevelt would endorse him he would drop Aldrich and Cannon as advisers and let him suggest a replacement for Ballinger. If he did not agree, he would fight him.
Roosevelt replied in late August and early September 1910 by undertaking a three-week, sixteen-state western tour to announce the policies of his New Nationalism and so help elect progressives. But instead of cementing his party, he split it still further by demanding advanced social legislation, branding the Supreme Court—Taft's holy of holies—as a barrier to the achievement of social justice, and calling for federal power sufficient to obtain social justice and a president who would be the "steward of the public welfare" and place human rights before property rights. He thus ranged conservatives against himself and by comparison made Taft appear to be the conservator of all worth saving. However, in his customary way of balancing opposed forces, Roosevelt then sought support from conservatives as well as from progressives and so attempted to unite the party. He praised Taft's work on conservation, for example, and agreed to meet him to show the public that they were in harmony. Perplexed, Taft told a friend that "I don't know whither we are drifting, but I do know where every real thinking patriot will stand in the end, and that is by the Constitution," and withdrew even closer into his conservative shell.
Saying that those who had been disloyal to him must be read out of the party, Taft cited Albert J. Beveridge of Indiana, Albert B. Cummins and Jonathan Dolliver of Iowa, La Follette of Wisconsin, and Hiram Johnson of California. By confusing the anti-Cannon insurgents with progressives, he made one of the worst mistakes of his political career, for he drove away men long loyal to their party and divided it by
Despite the tempestuous primary politics, by the end of the second session of the Sixty-first Congress, on 10 June 1910, Taft had obtained a number of progressive reforms. The House Speaker had been stripped of his most dictatorial powers, and Taft was well on his way toward achieving more reforms, with some fifty new laws, in four years than Roosevelt had won in seven. Among these were more power for the Tariff Commission; a limit on the issue of labor injunctions; postal savings-bank, parcel post, and federal budget systems; streamlining of the post office so as to put it on a paying basis; and creation of the United States Court of Commerce to hear cases arising from decisions of the ICC.
Taft viewed the functions of the ICC in judicial terms, whereas progressives, recalling what the courts had done to its original powers, saw them as economic and political. In a bill introduced by Representative James Mann, Taft tried to lift the antitrust laws and permit railroads to cooperate in drafting freight rates and passenger fares but agreed that the ICC approve the amount of stocks and bonds they issued. However, House insurgents and Democrats amended the bill to bar mergers and to prohibit a greater charge for a short than for a long haul, included telephone and telegraph companies as common carriers, and failed by only one vote to delete the Commerce Court. When progressive and Democratic senators sought to strengthen the bill and thus support Taft, he took their aid as opposition and made the original bill a test of party loyalty.
In the end, he compromised with the House: Arizona and New Mexico could become states, even though they would be Democratic, in return for a railroad bill lacking control over railroad securities. In the Senate, the insurgents deleted from the companion Elkins bill its authorization of traffic agreements and mergers. The greatly changed result, the Mann-Elkins Act, covered not only telephone, telegraph, and cable companies but railroad terminals, bridges, and ferries, and forbade a greater charge for a short than for a long haul but excluded government control over railroad securities. It passed with solid Republican support, but Taft had helped it pass by directing his attorney general to issue an injunction against the presidents of a number of eastern railroads who had joined together to raise their rates. After they rescinded the higher rates and promised to follow the new law, the injunction was dropped. Nevertheless, Taft interpreted the insurgents' attempts to strengthen the law—a great improvement over the Hepburn Act of Roosevelt's day—as opposition to him and determined to seek their defeat in 1912.
Taft pleased businessmen in general by demanding government efficiency and currency and banking reform, by taking the patronage out of politics, by increasing American investments at home, and by obtaining additional foreign markets. Yet he had no word of cheer for the political, economic, and social reforms demanded by progressives. At any rate, finding the government poorly organized and lacking a good accounting system, he reorganized some departments; improved the system of collecting customs duties; cut military appropriations; and, in order to be able to reach administrative decisions, demanded an executive budget, a central purchasing system, and a budget office. The first president to have the federal administration studied in detail—by the Commission on Economy and Efficiency (1911–1913)—he was able in 110 reports to show Congress how the government could save money and the time and energy of public officials. He wanted to reduce federal spending and the number of public employees, stop pork-barrel legislation, use the best accounting systems adopted by the business world, reorganize and reduce government agencies, and devote a minimum of expenditures to social welfare projects—the last a sore point with progressives.
Desiring to keep its power of the purse, Congress refused to provide the president authority to prepare a federal budget. Saying that his constitutional authority denied Congress power in the matter, Taft, in his budget for fiscal 1914, asked not only for appropriations but for authority to change laws, management procedures, organization, business methods, and even the personnel of the executive branch. Because Congress refused to act, the United States remained the only important nation in the world as yet without a federal budget. What reorganization Taft accomplished, as in the Department of State in 1909, was only mechanistic, because he conceived of administration in terms merely of structure and failed to give it the leadership and spirit good management requires. During his last days as president, he approved the act creating the Department of Labor, theretofore a division of Commerce, and again asserted the need for a thorough reorganization of the executive structure.
While the Payne-Aldrich Tariff was the most generous American one to apply to Canada since a reciprocity treaty of 1854 had been abrogated by the United States in 1866, Taft told the Senate on 26 January 1911 that Canada would have to decide whether to stay out of American markets or become a commercial friend. He then tried to jam a Canadian reciprocity treaty through Congress. By appealing over the head of Congress for popular support for "the most important measure of my administration," he obtained a House bill that lowered some rates of the Payne-Aldrich Tariff and greatly pleased Democrats because it portended the fall of the extreme protectionist system. When the Senate balked at revising the tariff, Taft called Congress into extraordinary session for 1 April 1911.
On the surface, reciprocity promised many benefits. The United States could look for increased sales of manufactures, greater access to Canadian raw materials, and cheaper foodstuffs—at the cost of American farmers, producers of raw materials, and fishermen. Canada would enjoy greater sales of agricultural products to the United States, lower prices for American manufactures, and a drop in taxes—at the cost of increased prices for food and agricultural implements, the destruction of benefits derived from the British imperial preference system, and the end of subsidies for industry. Once the Senate agreed with the House on lower duties, the "legislative agreement" (rather than treaty) had still to run the gauntlet of two national legislatures.
When the new Speaker, Champ Clark, outlined the legislative program, he avoided reciprocity but called for reductions in the tariff that would render ineffective any reciprocity agreement with Canada. The Ways and Means Committee supported him, but he then bungled by saying that "I am for this [reduction] Bill, because I hope to see the day when the American flag will float over every square foot of the British North American possessions clear to the North Pole." In any event, the House passed the bill on 21 April, but on the twenty-fifth it began debating a farmers' free list and wholly disregarded Taft's stentorian call for reciprocity.
In the Senate, Republican insurgents Cummins and La Follette opposed reciprocity because it would hurt American farmers and help the trusts by giving them cheap raw materials. Assuming that the American Congress could not reach agreement before the end of July, the Canadian Parliament on 19 May adjourned for ten weeks. While Taft pressured opposed senators, the House continued to lower agricultural tariff duties, yet on 22 July the Senate passed the Canadian reciprocity bill by a vote of 53 to 27—with Democratic support. It was now Canada's turn, but Taft was also on the spot because the Senate passed bills reducing the rates on various agricultural products and the House went along. Taft thereupon vetoed the bills.
The Canadian Parliament opened on 18 July, but because the majority could not force closure on the question, it was dissolved and new elections were set for September, thus delaying the meeting of Parliament again until 1 October. Taft, on 15 September, began a long tour in which he spoke mostly about the tariff. A week later he learned that Sir Wilfrid Laurier, the Liberal party premier, who favored reciprocity, had been defeated by one who opposed it. Taft, the "father of reciprocity," had thus been repudiated by his northern neighbor.
During the special session Taft called to deal with Canadian tariff reciprocity, Congress admitted Arizona and New Mexico as states, reapportioned the House, provided for free trade with the Philippines, and enacted a number of progressive measures, approving postal savings banks, publicity for campaign contributions, creation of the Industrial Bureau and the Bureau of Mines, an eight-hour day for workers on federal projects, compensation for workers injured on interstate railroads, increased power of the ICC over railroad rates, and a strengthened Pure Food and Drugs Act. Taft vetoed the admission of Arizona because its constitution provided for the recall of judges; he also vetoed several tariff revision bills and was lukewarm toward the popular election of senators. Although the direct-elections bill passed the Senate by only one vote more than the required two-thirds, its popularity was revealed when the House passed it by a vote of 296 to 16.
In January 1911 Senator Aldrich offered recommendations for reforming the currency and banking system distilled from a two-year study. Briefly, he sought to create a great central bank with Reserve Association branches, all under the direction of private bankers, and issue untaxed asset currency. He was attacked by those who variously decried the concentration of lendable funds in the largest cities, demanded public rather than private control, wanted government rather than bank currency, and urged that credit facilities also be provided farmers. Taft approved Aldrich's conclusions after treasury officials were added to the board of directors of the central bank, but he did not push for the plan very hard, and after Aldrich retired from the Senate later in 1911, four standing committees of the House began work on the subject. The Federal Reserve Act, adopted by the succeeding Wilson administration, was based on a report made by a subcommittee of the House Banking and Currency Committee, headed by Carter H. Glass.
Taft's attitude toward the civil service was ambivalent, yet he wished to extend the merit system to all but the most important administrative offices of government and also called for a civil-service pension plan. When Congress balked, he extended the merit system in the postal and consular services and to skilled workers in navy yards.
Taft continued the antitrust cases Roosevelt had begun, adding that he would enforce the Sherman Antitrust Act, pending improved legislation designed to prevent monopoly. He had no quarrel with big business as long as it behaved itself, and he recommended that "good" trusts with a capitalization of $100 million or more incorporate under a new federal law, thus exempting them from suits brought by states. When a law embodying his ideas was introduced in both houses on 7 February 1910, it was spurned by Democrats and insurgents because it would have destroyed the Sherman Act. Although Taft's unrelenting antitrust crusade far exceeded Roosevelt's—seventy-five suits in four years, compared with forty suits in seven years—by misunderstanding Roosevelt's antitrust policy, he was to cause himself and Roosevelt great personal embarrassment.
On appeal, the Supreme Court on 15 May 1911 decided against the Standard Oil Company of New Jersey, and on the twenty-ninth, against the American Tobacco Company. Roosevelt had entered suit in both cases. But in the Standard Oil case the Court announced a "rule of reason" by which it could decide whether a restraint of trade was "reasonable" or not and what restraints of trade were allowable. More important in expanding the break between Taft and Roosevelt were suits against the United States Steel and International Harvester companies.
During the Panic of 1907, J. P. Morgan and other bankers wished to prevent additional business failures and to shore up confidence in Wall Street by letting United States Steel acquire many shares of the Tennessee Coal, Iron, and Railroad Company (TCI). Fearing an antitrust suit, United States Steel's Elbert H. Gary suggested that the president or the Department of Justice grant approval for the purchase of TCI shares. On 4 November, Gary spoke with Roosevelt, who said that "while he could not advise them to take the action proposed, he felt it no public duty of his to interpose any objection." Wall Street and the nation had thus been saved.
Congressional hearings held on the matter in June 1911 revealed that Gary and George Perkins of United States Steel and International Harvester not only defended the steel company's taking over TCI but disliked the Sherman Act and advocated federal control over industrial corporations and even control of their sale prices—the latter of which Taft saw as state socialism. Asked to testify on the part he had played in the TCI affair, Roosevelt, on 5 August, assumed full responsibility for what had transpired, adding that the result had "justified my judgment." But Taft's entering of a suit against the corporation on 26 October implied that Roosevelt had fostered monopoly and been deceived about the facts of the transaction. This marked the final break between Roosevelt and Taft. Thereafter, while Roosevelt called for a law that would tell businessmen exactly where they stood with respect to the Sherman Act or, better still, a law granting the federal government power to regulate and supervise business engaged in interstate trade, Taft insisted that the Sherman Act was "clear," thus alienating conservative interests, damaging himself politically, and giving rise to a clamor for Roosevelt to enter the ring against him in 1912.
Roosevelt was also involved in the suit Taft brought against International Harvester, or the "farm machinery trust," in April 1912. Both Taft and Roosevelt had awaited the decision impatiently because each would make it a leading issue in the contest for the presidential nomination. Lacking an agency to control corporations, Roosevelt had not sued Harvester, a "good" trust, but Taft viewed the situation as meaning that he had granted gross executive favoritism to a Morgan interest and was now defending Perkins. But when Taft was secretary of war, he had approved Roosevelt's action; he had then waited three and a half years, until Roosevelt contested the presidential primaries with him, before entering a suit.
Various plans for controlling corporations had been considered by a Senate committee in November 1911, including a plan favored by Roosevelt and Perkins that would "regulate" big business, and Taft's plan, which would have "exterminated" it under what he insisted was the "clear" meaning of the Sherman Act. In consequence of Taft's stand, the voters turned to presidential aspirants who were more friendly than he to big business. In December 1911, Taft sent Congress a special message in which he made three "sanely progressive" proposals that appealed to Wall Street and found favor in all political quarters: (1) that the Sherman Act not be amended; (2) that a supplemental law should be enacted "which shall describe and denounce methods of competition which are unfair and badges of the unlawful purpose denounced in the Anti-trust law"; and (3) that government control of trusts be strengthened by federal incorporation and by the creation of a "special bureau of commission" in the Department of Commerce and Labor.
By highlighting the minatory rather than the reform aspects of these suggestions, he made it diffi-cult for Congress to comprehend his meaning. Moreover, the first regular session of the Sixty-second Congress, which met in December 1911, would not sit until the eve of the national conventions. Last, it could not be expected that the strong Democratic majority in the House and small Republican majority in the Senate would pass any measures he demanded. Congress amended those patent laws that supported monopoly and hindered the enforcement of the Sherman Act, but it did nothing to pass the antitrust laws he demanded. Taft had thus failed to fulfill his platform plank on the matter and driven Perkins and many other businessmen from his side and toward Roosevelt.