In February 1911, Kentucky Governor Augustus E. Willson issued a stark warning against ratifying what would become the Sixteenth Amendment. Writing in The New York Times, he cautioned that granting Congress broad authority to tax income would invite abuse. “Give Congress the right to tax, and Congress will use it,” he observed in substance, noting the presence of countless schemes in public life to expand spending and patronage. Willson urged limits and alternatives, including a state-level approach. Kentucky’s legislature ratified the amendment anyway. Two years later, in 1913, three foundational changes took effect that together transformed America: the Sixteenth Amendment, Seventeenth Amendment, and the Federal Reserve Act.

1913 Legislation

That year saw the ratification of the Sixteenth Amendment (February 3), the Seventeenth Amendment (April 8), and the signing of the Federal Reserve Act (December 23).

Individually, these measures addressed problems of the time—tariff disputes, occasional deadlocks and corruption in the selection of senators, and banking panics. But they dramatically shifted power to the federal government, creating their own lasting problems and inequalities. Taken together, the three completely transformed not only America, but the entire world.

1913 ushered in the Progressive Era in the United States, and our nation has never been the same since. Collectively, they removed key restraints that had limited federal power, constrained the money supply, and preserved a meaningful role for the states. The result was a durable shift toward centralized authority, elastic credit, and a vastly expanded capacity for federal taxation and spending.

The United States Before 1913

For more than a century after the Founding, the federal government operated under tight fiscal and structural limits. Tariffs and land sales supplied the bulk of revenue. There was no permanent peacetime income tax. The dollar remained linked to gold (and for a time silver), which constrained the ability of banks and the government to expand the money supply without corresponding reserves. From the late eighteenth century through 1912, average annual inflation stayed extremely low—near zero over long stretches once periods of deflation and inflation are taken together—preserving the purchasing power of money across generations.

Election of Senators

Article I, Section 3 of the original Constitution designed the Senate as a Federal chamber, with State Legislatures choosing Senators. James Madison, in Federalist No. 62, described the Senate as a body whose members would serve as “agents” of the states, providing a structural check against legislation that diminished state authority. State legislatures could, in principle, hold senators accountable to state interests rather than purely national or factional ones.