The advent of the American Civil War revived the demand for boots, and Douglas briefly returned to the shoemaking business before enlisting in the Union Army.

His business grew rapidly: every few years the factory's output doubled, and by 1892 he was making 3,600 shoes per day.

He stamped the soles of his shoes[5] with his own image (a use he took up after he saw P. T. Barnum's advertising), making it one of the most recognized likenesses of the time.

[8] The rank and file were unhappy with this increase, and the dispute threatened the company's ability to label its products with the union stamp.

Douglas, who had a reputation as a fair employer, worked with the union to ensure his employees paid the higher dues.

[11] In 1904 Republican governor John L. Bates vetoed an eight-hour work day bill, galvanizing labor opposition.

[12] He successfully mediated the end of a labor action in Fall River, raising his popularity, and he also supported reciprocity, in particular the reduction of tariffs with Canada that would reduce the price of hides and coal.

[13] Douglas defeated Bates by a wide margin with support from the American Federation of Labor, and also drawing significant votes from Socialist circles.

He bypassed Irish Americans (a significant force in the party) in appointments, leading to accusations of anti-Catholic sentiment.

According to Charles S. Hamlin, Douglas may have been forced into this position by the discovery by Republicans that he had apparently fraudulently acquired an honorable discharge after deserting during the Civil War.