After practicing law in Austin for fifteen years, Gregory formed a partnership with Robert L. Batts in 1900; the two added a third partner, Victor L. Brooks, in 1908. Gregory's success as a lawyer provided him with an entry into politics. From 1891 to 1894 he was an assistant city attorney of Austin. Although he declined appointments as an assistant state attorney general in 1892 and as a state judge in 1896, his political involvement deepened. While embracing the progressive rhetoric of the early twentieth century with his condemnations of "plutocratic power," "predatory wealth," and "the greed of the party spoilsmen," Gregory participated in Col. Edward M. House's essentially conservative Democratic coalition. He established his credentials as a progressive reformer with his attacks against Senator Joseph Weldon Bailey, the symbol of political corruption in the eyes of Texas progressives, and with his service as a special prosecutor for the state in a series of antitrust suits, including the famous Waters-Pierce Case.
In 1911-12 Gregory joined other Texas reformers and erstwhile conservatives like Colonel House in promoting the presidential candidacy of Woodrow Wilson. The important contributions of the Texas delegation to Wilson's victory at the 1912 Democratic national convention and House's growing influence upon Wilson led to appointments for Gregory in the new Democratic administration. He was named a special assistant to the United States attorney general to conduct antitrust litigation against the New York, New Haven and Hartford Railroad in 1913, and in 1914 he became attorney general. In 1916 President Wilson wanted to appoint Gregory to the United States Supreme Court, but the attorney general declined the offer because of his impaired hearing, his eagerness to participate in Wilson's reelection campaign, and his belief that he lacked the necessary temperament to be a judge.
Despite a continuing commitment to progressive reform, Gregory's performance as attorney general provoked enormous controversy because of his collaboration with postmaster general Albert S. Burleson and others in orchestrating a campaign to crush domestic dissent during World War I. Gregory helped frame the Espionage and Sedition Acts, which compromised the constitutional guarantees of freedom of speech and press, and lobbied for their passage. He encouraged extralegal surveillance by the American Protective League and directed the federal prosecutions of more than 2,000 opponents of the war.
After resigning his position as attorney general on March 4, 1919, he played a brief and limited role at the Paris Peace Conference and then served on Wilson's Second Industrial Commission in 1919-20, studying the social effects of American industrial development. He also resumed his private law practice, initially in Washington, D.C., where he formed a partnership with a former Justice Department colleague, G. Carroll Todd, and later in Houston, where he lived from 1924 until his death. During the final years of his life Gregory remained active in Democratic politics at both the state and national levels, and he campaigned for Franklin Roosevelt in 1932. During a trip to New York to confer with Roosevelt, Gregory contracted pneumonia and died, on February 26, 1933. He is buried in Austin.
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