In the election of 1908, Roosevelt’s hand picked successor, William Howard Taft, won by a large margin on a conservative platform. Taft, however, could not match Roosevelt’s popularity or legislative success. Although he continued Roosevelt’s progressive reform programs, his pace was more gradual, and he even lent his support to some conservative pro-business policies. His policies divided the Republican Party into progressive and conservative factions.

Taft supported corporate regulation, and even strengthened the Interstate Commerce Commission’s powers and extended its authority to the telephone and telegraph industries. He surpassed the Roosevelt administration in trust-busting. Taft prosecuted ninety cases compared to Roosevelt’s forty-three. These cases, however, did not achieve the same level of publicity or impact as those under Roosevelt, and so Taft was generally considered a less aggressive trust-buster.

Additional reform under Taft centered on two amendments to the Constitution, both ratified after he exited office. In 1913, the Sixteenth Amendment granted Congress the authority to tax income. After the amendment passed, Congress quickly established a graduated income tax with a maximum tax rate of 7 percent. The Seventeenth Amendment, also ratified in 1913, provided for direct election of U.S. senators by the people rather than their selection by state legislatures. This amendment was one part of a general movement for government reform, under which the public took an increasingly powerful and direct role in electing officials.

In foreign affairs, Taft moved away from Roosevelt’s “big stick” policies toward what became known as “dollar diplomacy.” Aiming to avoid military intervention, Taft argued that the influx of American investment abroad, as well as the advancement of American economic interests, would promote stability. Dollar diplomacy failed in China, where European and Japanese economic interests squeezed American businesses out, and it proved only marginally more successful elsewhere. In 1912, Taft finally resorted to military intervention in Nicaragua when he sent marines in to suppress a revolt.

Taft alienated the progressive members of his party by supporting the Payne-Aldrich Act, which raised protective tariff rates—a move supported by conservative pro-business interests. He further outraged progressives by supporting the ultra-conservative speaker of the house, Joseph Cannon, and the ultra-conservative secretary of the interior, Richard A. Ballinger, who reversed Roosevelt’s conservation efforts by, among other things, selling off several million acres of public land in Alaska to bankers interested in mining the land for coal. Angered by Taft’s lack of enthusiasm for reform, Roosevelt himself campaigned for progressive candidates in the 1910 midterm election. Roosevelt advocated increasing regulation for business and even went so far as to suggest that the popular vote be used to overturn Supreme Court decisions. Roosevelt’s defection split the Republican Party in half entering the election of 1912.

In 1912, Roosevelt declared his intention to run against Taft for the Republican nomination. When Taft supporters blocked Roosevelt’s nomination at the Republican Convention, Roosevelt and his supporters broke with the Republican Party and formed the Progressive Party, nicknamed the Bull Moose Party. Roosevelt and Taft entered the election against Socialist Eugene Debs and Democrat Woodrow Wilson. The Bull Moose Party proved to be the most successful third party in American history, with Roosevelt winning over 27 percent of the popular vote to Taft’s 23 percent. Yet with the Republican vote split, Democrat Wilson captured the presidency, winning 42 percent of the vote.