tinued to decline. Stock prices slowly began to rise after a record 508-point drop on October 19, 1987, but they plummeted again in October 1989. By July 1990, leading economists pronounced that the country was in a recession. Still facing growing budget deficits, Congress passed a budget bill on October 27, 1990, that raised taxes by $140 billion over 5 years. The annual budget deficit reached $269 billion in 1991 and $290 in 1992.

Although the recession officially ended in February 1991, the economy was slow to recover. The 1992 Presidential election campaigns focused primarily on economic issues, and Governor Bill Clinton of Arkansas, who called for a change from the policies of supply-side economics, emerged the winner. He faced the formidable challenge of revitalizing an economy with unprecedented federal budget deficits; stagnating real incomes; intense foreign competition, both in products and over jobs; runaway health care costs; and disagreement over the sources, amount, and use of tax revenues. President Clinton called on Congress and the American people to join his administration in a plan to address these problems for a new and better future.

President Ronald Reagan addresses Congress, 1987. Reagan based his "Program for Economic Recovery" on the principles of supplyside economics. From the Ronald Reagan Library.

Beardsley Ruml's idea for a "Pay-As You-Go" tax plan, adopted in the Current Tax

Payment Act of 1943, simpli

fied the payment of federal income taxes for many Americans.

The 1919 Treaty of Versilles, which ended World War I, proposed a new U.S. role in foreign relations. The United States had participated sparingly in world affairs throughout the 19th century. But the Spanish-American War at the close of the century brought the nation to the threshold of a new era and a new role. The acquisition of Puerto Rico and the Philippine Islands as a result of that war thrust the United States directly into the vortex of international politics. Consequently, in 1904 President Theodore Roosevelt had to devise a "corollary" to the venerable Monroe Doctrine, which stated that under certain conditions the United States would act to keep order in the Western Hemisphere. Meanwhile in the Far East, upheaval in China and insurrection in the Philippines had required the use of American troops to restore order. And before the outbreak of World War I in 1914, the Marines were to serve in several places in the Caribbean.

During these tumultuous years, the United States endeavored to play the role of arbiter in international disputes. In 1905 President Roosevelt's good offices helped end the Russo-Japanese War. American diplomats became familiar figures at The Hague peace conferences and elsewhere, but World War I in Europe precluded all efforts to arbitrate a settlement. After 3 years of neutrality, President Woodrow Wilson, who sought to build a lasting peace, led the nation into the war on the side of Great Britain, France, and their allies.

Under the command of General John J. "Black Jack" Pershing, more than 2 million Americans eventually served in Europe. Fighting alongside the tired, dispirited, and sometimes mutinous Allied troops, the Americans became the deciding factor in the war's outcome and supplied Wilson with the opportunity to implement his vision of lasting peace. This vision was embodied in his Fourteen Points and in the creation of an organization of all nations to act as a permanent peacekeeper-the League of Nations.

But Wilson's vision of permanent peace was

not to be. Despite his personal presence and his great popularity with the people of Europe, he was unable to prevent France and Great Britain from writing self-defeating punitive measures against Germany into the Treaty of Versailles. Yet Wilson still hoped that the proposed League