In April 1917, almost fifty-two years to the day after Lee's surrender at Appomattox, the United States entered the First World War. The federal government moved forward tentatively as it sought to mobilize the nation for its first great conflict since the Civil War. By November 1918, however, the federal government overcame its early handicaps and successfully marshaled the nation's human and economic assets to fight. In the process, Washington accumulated vast new powers, vindicated the ideas of a generation of reformers, and set the stage for New Deal and World War II reforms.

The first issue the Wilson administration faced as it prepared America for war in April 1917 concerned financing the mammoth cost of war. On this issue Progressives and their traditionalist opponents waged the first great battle. World War I cost an estimated $33.5 billion, and of this amount the government borrowed some...