as made to permit a moderate
element of foreign competition. As a part of the revenue act Congress
levied a tax on incomes as authorized by the sixteenth amendment to the
Constitution. The tax which roused such party passions twenty years
before was now accepted as a matter of course.

Having disposed of the tariff, Congress took up the old and vexatious
currency question and offered a new solution in the form of the federal
reserve law of December, 1913. This measure, one of the most interesting
in the history of federal finance, embraced four leading features. In
the first place, it continued the prohibition on the issuance of notes
by state banks and provided for a national currency. In the second
place, it put the new banking system under the control of a federal
reserve board composed entirely of government officials. To prevent the
growth of a "central money power," it provided, in the third place, for
the creation of twelve federal reserve banks, one in each of twelve
great districts into which the country is divided. All local national
banks were required and certain other banks permitted to become members
of the new system and share in its control. Finally, with a view to
expanding the currency, a step which the Democrats had long urged upon
the country, the issuance of paper money, under definite safeguards, was
authorized.

Mindful of the agricultural interest, ever dear to the heart of
Jefferson's followers, the Democrats supplemented the reserve law by the
Farm Loan Act of 1916, creating federal agencies to lend money on farm
mortgages at moderate rates of interest. Within a year $20,000,000 had
been lent to farmers, the heaviest borrowing being in nine Western and
Southern states, with Texas in the lead.

=Anti-trust Legislation.=--The tariff and currency laws were followed by
three significant measures relative to trusts. Rejecting utterly the
Progressive doctrine of government regulation, President Wilson
announced that it was the purpose of the Democrats "to destroy monopoly
and maintain competition as the only effective instrument of business
liberty." The first step in this direction, the Clayton Anti-trust Act,
carried into great detail the Sherman law of 1890 forbidding and
penalizing combinations in restraint of interstate and foreign trade. In
every line it revealed a determined effort to tear apart the great
trusts and to put all business on a competitive basis. Its terms were
reinforced in th