Having served nearly eight years as president, Roosevelt did not run again in 1908. His chosen successor was William Howard Taft, a federal judge from Ohio who had served as governor of the Philippines after the Spanish-American War. Taft defeated William Jennings Bryan, making his third unsuccessful race for the White House. Taft’s inaugural address expressed the Progressive view of the state: “The scope of a modern government... has been widened far beyond the principles laid down by the old ‘laissez-faire’ school of political writers.”
Although temperamentally more conservative than Roosevelt, Taft pursued antitrust policy even more aggressively. He persuaded the Supreme Court in 1911 to declare John D. Rockefeller’s Standard Oil Company (one of Roosevelt’s “good” trusts) in violation of the Sherman Antitrust Act and to order its breakup into separate marketing, producing, and refining companies. The government also won a case against American Tobacco, which the Court ordered to end pricing policies that were driving smaller firms out of business. In these decisions, the justices announced a new standard for judging large corporations—the “rule of reason”—which in effect implemented Roosevelt’s old distinction between good and bad trusts. Big businesses were not, in and of themselves, antitrust violators, unless they engaged in policies that stifled competition.
Taft supported the Sixteenth Amendment to the Constitution, which authorized Congress to enact a graduated income tax (one whose rate of taxation is higher for wealthier citizens). It was ratified shortly before he left office. A 2 percent tax on incomes over $4,000 had been included in a tariff enacted in 1894 but had been quickly declared unconstitutional by the Supreme Court as a “communistic threat to property.” The movement to resurrect the income tax united southern and western farmers who wished to reduce government dependence on revenue from the tariff, which they believed discriminated against nonindustrial states, and Progressives who believed that taxation should be based on the ability to pay. A key step in the modernization of the federal government, the income tax provided a reliable and flexible source of revenue for a national state whose powers, responsibilities, and expenditures were growing rapidly.
Despite these accomplishments, Taft seemed to gravitate toward the more conservative wing of the Republican Party. Only a few months after taking office, he signed the Payne-Aldrich Tariff, which reduced rates on imported goods but not nearly as much as reformers wished. Taft’s rift with Progressives grew deeper when Richard A. Ballinger, the new secretary of the interior, concluded that Roosevelt had exceeded his authority in placing land in forest reserves. Ballinger decided to return some of this land to the public domain, where mining and lumber companies would have access to it. Gifford Pinchot accused Ballinger of colluding with business interests and repudiating the environmental goals of the Roosevelt administration. When Taft fired Pinchot in 1910, the breach with party Progressives became irreparable. In 1912, Roosevelt challenged Taft for the Republican nomination. Defeated, Roosevelt launched an independent campaign as the head of the new Progressive Party.