=SECOND ADMINISTRATION OF CLEVELAND, 1893–1897.=
FINANCIAL LEGISLATION.
=644. Character of the Administration.=—Although Cleveland began his
second administration with a Democratic majority in both houses of
Congress,—something that had not been known since the outbreak of the
war,—he was not able, for two reasons, to make as successful a record
as he had made during his first term. The pension, tariff, and monetary
legislation of Harrison’s administration brought about great financial
disturbances, which lost the Democrats the control of the House of
Representatives and hampered Cleveland; while the latter’s own party,
the Democrats, broke away from his leadership and adopted many of the
extreme, more or less socialistic views of the People’s Party. Cleveland
himself, although he increased the number of offices subject to Civil
Service rules and made good appointments, failed to maintain tactful
relations with the Democratic leaders and even lost some of his hold
upon the people at large. Nevertheless, he administered his duties with
such firmness and honesty that it would be unjust to describe his second
administration as a failure.
=645. Industrial Causes of the Panic of 1893.=—On taking up his duties,
the new President found himself confronted with a serious financial
crisis. The prospect of change in the tariff and in the currency had
unsettled financial and commercial activity. The manufacturers of the
country relied on the aid of high protective duties, but the Democratic
victory had been so sweeping that they feared the tariff would be either
greatly modified or swept away. They argued that in this case the
country would be flooded with foreign articles, and that prices would be
so reduced as to bring disaster to all who had domestic goods on hand.
As soon, therefore, as it seemed probable that the Democrats would carry
the election, manufacturers very generally suspended operations in their
shops, and thousands of workmen were thrown out of employment. From this
cause there was an immediate stagnation of business, which helped to
bring on financial distress.
=646. Financial Causes of the Panic.=—There was another cause of
business depression, which is more difficult to explain, but which had a
still more disastrous influence. The greenbacks not redeemed in 1879 (§
605), but still subject to redemption, amounted to more than
$346,000,000. The Silver Purchase Act of 1890, as we have already seen
(§ 635), directed the Treasurer to buy silver bullion at the rate of
$4,500,000 a month and pay for it with new notes that were “exchangeable
for coin.” Now the government interpreted “coin” to mean gold. In this
way the notes in circulation redeemable in gold increased, till, in
1893, they amounted to nearly $500,000,000. As the number was constantly
increasing at the rate of $4,500,000 a month, the people began to
distrust the ability of the government to redeem the notes. This
distrust of itself would have made a financial crash inevitable, but the
condition was made worse by the decline in the price of silver, to which
reference has several times been made (§ 634).
=647. Decline in the Price of Silver.=—In twenty years the value of
silver had fallen from one dollar and thirty cents an ounce, till in
1893 it was worth only about eighty cents. People in Europe, as well as
in America, naturally feared that our government might interpret the
word “coin” to mean silver as well as gold, and might choose to redeem
its notes in the cheaper metal. This fear led business men everywhere to
desire the redemption of their bonds and notes before the government
should begin to pay silver. Foreign investors sent back their bonds for
redemption, while the people at home in many cases even drew their money
from banks through fear that the latter would soon not be able to meet
the demands for gold made upon them. These various influences caused a
financial crash about two months after Cleveland’s inauguration. More
than three hundred banks either failed outright or suspended payment;
business men found it impossible to borrow money on any terms, and
thousands of failures in business followed.
=648. Repeal of the Sherman Act.=—As the Treasury was still obliged by
the Sherman Act to continue purchasing silver, the President called a
special session of Congress to modify or repeal the law. The clause of
the bill authorizing the purchase of silver was quickly repealed by the
House, when Congress met in August, but the measure was strenuously
opposed in the Senate by numerous advocates of the unrestricted use of
silver currency. The repealing act was finally carried and became a law,
November 1, 1893. Its remedial effects, however, were not speedily
visible. At the beginning of winter it was estimated that as many as two
hundred and sixty thousand laboring men were unoccupied in Chicago, New
York, and Philadelphia. Moreover, the repeal of the Sherman Act and the
persistent decline in the price of silver caused nearly all the silver
mines in the West to be closed. In Colorado alone, from fifteen to
twenty thousand miners not only lost their employment, but became
dependent on charity for food and shelter. The demand for free coinage
of silver at the rate of sixteen to one consequently became emphatic in
the far West and was supported by the Populists and many Democrats in
the East.
=649. The Wilson Tariff Law.=—As the Democrats were pledged to modify
the tariff law, this subject was taken up at the beginning of the first
regular session of Congress in December, 1893. William L. Wilson of West
Virginia, Chairman of the House Committee on Ways and Means, brought in
a bill which greatly reduced the tariff on many articles. This measure,
after being much altered on account of opposition in the Senate, was
finally passed. The President, however, since the bill in its ultimate
form reduced duties only about one quarter on an average, regarded it as
a modification of a protective tariff, rather than as a measure in the
interests of freer trade, and therefore allowed it to become a law
without his approval or signature. It was anticipated that the law would
fail to produce the necessary revenue, and, largely on this account, a
clause was added which provided for an income tax of two per cent on all
incomes of more than four thousand dollars. It was expected that the
income tax would yield not less than forty million dollars a year. The
Supreme Court, however, declared this portion of the act
unconstitutional and therefore null and void. The natural consequences
followed. The income of the government was insufficient to meet the
current expenses; gold continued to be exported for the payment of bonds
offered for redemption. To meet these demands new bonds had to be
issued; and consequently, before the end of the administration, the
public debt had been increased by about two hundred and fifty million
dollars. It is no wonder, in view of the unsatisfactory character of the
Democratic legislation in 1893–1894, that in the congressional elections
of 1894 the Republicans should have swept the country.
FOREIGN AFFAIRS.
=650. Revolution in Hawaii.=—Early in his administration, President
Cleveland was obliged to consider the condition of affairs in Hawaii.
While Harrison was in office, discontented resident Americans and
Sandwich Islanders had overthrown the government of Queen Liliuokalani
and established a republican form of government. The leaders hoped that
they could secure the annexation of the Islands to the United States.
American seamen were landed for the avowed purpose of protecting
American citizens, but it was charged, with probable truthfulness, that
they actively supported the revolutionary movement. The insurgents sent
commissioners to Washington, who were influential enough to secure the
draft of a treaty of annexation, which was sent by Harrison to the
Senate for confirmation. Before the Senate was ready to act on the
treaty, however, Harrison’s administration came to an end; and one of
Cleveland’s first acts was to withdraw the treaty and send a
commissioner to the Islands to investigate and report on the condition
of affairs. On his arrival the commissioner declared the previously
established American protectorate at an end and took down the American
flag. In his final report to the President, he asserted that the success
of the revolution had resulted chiefly from the efforts of the American
Minister and the support of the American troops. The President thereupon
withdrew all such support and wrote a letter of regret and sympathy to
the queen. He also sent a minister to help her to regain her
authority,—an act for which he was much criticised by the many persons
who disapproved of his Hawaiian policy. The movement on the Islands,
however, had been so successful that the queen was unable to regain her
throne and finally sold her rights. The annexationists were completely
successful four years later (§ 672).
=651. The Venezuelan Dispute.=—Two years later, President Cleveland
proved to the critics of his Hawaiian policy that he had a firmer grasp
on foreign affairs than they thought. For nearly half a century a
difference of opinion had existed between Great Britain and Venezuela as
to the boundary line between their possessions in South America. Great
Britain had received by treaty, nearly a hundred years before, the
territory in South America which belonged to Holland; while the rights
of Venezuela had been derived from Spain. The boundary line had never
been clearly defined, and, as time progressed, disputes with regard to
it became more and more serious. Venezuela finally appealed to the
United States for assistance. President Cleveland’s Secretary of State,
Richard Olney of Massachusetts, entered into correspondence with the
British government for the purpose of securing a settlement of the
dispute by arbitration. Great Britain took the ground that the question
was one not appropriate for arbitration, inasmuch as it involved the
possible surrender of territory which had long been believed to be
British and had been occupied by British subjects, whose rights should
not be put in jeopardy. The correspondence became animated, and finally,
in December, 1895, President Cleveland submitted the papers to Congress
with a special message. He took the ground that the United States,
following out the Monroe Doctrine, would be bound to resist in every
possible way any encroachment by Great Britain upon any territory
belonging to Venezuela. He asked for an appropriation by Congress to
provide for a commission to investigate the whole subject of the
boundary dispute. Congress at once appropriated one hundred thousand
dollars for that purpose. The message of the President startled every
one and made a profound sensation, not only in the United States, but
also in Great Britain and in other parts of Europe. The possibility,
even the probability, of war was freely talked of,[292] although the
people of neither country desired it. The commission entered promptly
upon its work, but before it was ready to report, the British government
agreed to submit to arbitration all questions pertaining to lands other
than those that could be shown, before a joint commission, to have been
occupied by British subjects for at least fifty years. In this way the
contentions of both governments were satisfied. The joint commission of
arbitration met in Paris in the summer of 1899, and in due form rendered
a final judgment, which was on the whole favorable to Great Britain.
Cleveland’s action in the matter, while harshly criticised in some
quarters, especially on account of the direct language employed in his
message, was on the whole supported with great enthusiasm by the people
at large, regardless of party. The policy he advocated with respect to
the relations of the United States toward the weaker republics to the
south may be regarded as an extension of the Monroe Doctrine, to which
Congress and the people have given their consent.
DOMESTIC EVENTS.
=652. The World’s Columbian Exposition.=—One of the most conspicuous
events of Cleveland’s second administration was the Columbian
Exposition, commemorative of the four hundredth anniversary of the
discovery of America by Columbus. There was active competition among the
great cities for the privilege of holding the exhibition. Congress
decided upon Chicago. The exposition was projected for the year 1892,
but the preparations to be made were so vast that postponement till 1893
was necessary. A large appropriation was made by Congress, and the state
of Illinois also rendered important assistance; but the remarkable
success of the undertaking was chiefly due to the enterprise of the
people of Chicago. No other exhibition ever presented so magnificent an
appearance. Jackson Park, on the shore of Lake Michigan, was chosen as a
site, and the preparation of grounds and buildings was intrusted to a
board of the most eminent landscape gardeners and architects in the
country. Machinery and manufactured products were brought together from
all lands, and an important impulse was given to every form of American
and European industry. But while the exhibits were most satisfactory,
the beauty of the grounds and buildings was more important, since it
encouraged the belief that America could become in time as notable for
her artistic as for her industrial achievements. The exposition was
visited by more than twenty-seven millions of people—nearly three times
as many as visited the Centennial at Philadelphia in 1876 (§ 595).
=653. Strikes and Riots.=—The Columbian Exposition represented the
benefits of industrial peace; but while it was being held, the panic
already described (§§ 645-649) was in progress, and the country’s
industries were thrown into great confusion. As had so often happened in
the twenty years preceding, discontent among the working classes caused
much agitation and rioting. An “army” of unemployed men and tramps,
under the leadership of a person named Coxey, actually marched to
Washington to demand redress for their grievances. They were easily
dispersed; but a great strike, which took place at Chicago in the summer
of 1894, was put down only with the use of considerable force. General
inactivity in business had led the Pullman Car Company to make a
reduction in the price of labor in their shops. The strike just
mentioned followed; and, after some weeks of turbulence, the American
Railway Union ordered the employees of all those railroads in Chicago
that did not refuse to use the Pullman cars to cease work. The
consequence was a practical cessation of traffic for some days. When an
attempt was made to move the trains, the trainmen were assaulted. Cars
were wrecked and set on fire, and many men were killed or wounded.
President Cleveland, though having no precedent for the act, with
characteristic energy and decision sent United States troops to protect
United States property, to secure the unhindered transmission of the
mails, and to prevent interference with interstate commerce. His
firmness restored order in Chicago and prevented outbreaks of
lawlessness in other places.
=654. The Political Condition of New York City.=—The city of New York
had long been disgracefully ruled by corrupt politicians affiliated with
Tammany Hall. In 1894, an investigating committee exposed the system of
blackmail and plunder by which the politicians maintained themselves in
power. In consequence of these revelations, a reform ticket was
victorious in the fall of 1894 and the government of the city was
improved.
[Illustration: WILLIAM J. BRYAN.]
=655. The Campaign of 1896.=—Political conditions at the time of the
campaign of 1896 were strangely confused. The President and his
supporters were out of sympathy with the chief leaders and the masses of
the Democratic party. Many Democrats had become Populists. Many
Republicans who favored silver had broken more or less with those of
their party who considered the protective tariff the main political
issue. The number of Independent voters had increased. In the midst of
this confusion, the Republican convention met at St. Louis and adopted a
platform favoring protection and, less explicitly, the maintenance of a
gold standard. They also declared their willingness to coöperate with
European nations in an effort to restore a policy of bimetalism. The
Democrats, on the other hand, meeting at Chicago, declared that the
United States should adopt the free coinage of silver at a ratio of
sixteen to one, even without the coöperation of Europe. Other planks,
especially one attacking the Supreme Court, which had given offense by
its decision with regard to the income tax (§ 649), showed that the
party had adopted many of the principles of the Populists. The
administration of Cleveland was expressly condemned. The Republicans,
rejecting the candidacy of Speaker Reed, nominated, for President,
William McKinley,[293] who had left Congress to become governor of Ohio,
and had secured the shrewd support of Marcus A. Hanna of that state.
Garret A. Hobart of New Jersey was nominated for Vice President. The
Democrats, carried away by a remarkable speech of William J. Bryan,[294]
a young ex-congressman from Nebraska, nominated him for President, and
Arthur Sewall of Maine for Vice President. Bryan’s nomination was
accepted by the “People’s” Party, but Thomas E. Watson of Georgia was
put in place of Sewall for Vice President. Those Democrats that could
not advocate a free coinage policy, after much hesitation, met in
separate convention at Indianapolis and nominated General John M. Palmer
of Illinois for President, and General Simon B. Buckner of Kentucky for
Vice President, on a platform advocating a gold basis. The campaign was
an exciting one and caused much anxiety in financial circles; but it was
conducted with unusual freedom from personal accusations. Bryan made a
remarkable tour of the country, stirring large crowds by his eloquence;
but his efforts were vain, since the silver policy he supported drove
thousands of Democrats and Independents into the Republican ranks.
McKinley and Hobart were elected by two hundred and seventy-one
electoral votes, while Bryan and Sewall received one hundred and
seventy-six. So great was the disaffection within the Democratic party,
that the “Solid South” was broken for the first time since the war.
* * * * *
REFERENCES.—See bibliographical note to Chapter XXXIV. See also
Cleveland’s articles on the Venezuelan boundary dispute, in the
_Century_ for June and July, 1902.
-----
[292] In consequence of the war rumors, American securities fell and the
drain on the Treasury’s supply of gold compelled the President to ask
Congress to authorize a fresh issue of bonds.
[293] Born in Ohio, 1843; died at Buffalo, New York, September, 1901.
Volunteered, and rose to the rank of major in the Civil War; was
representative in Congress, 1877–1891; as chairman of the Ways and Means
Committee took principal part in framing the McKinley Tariff Act of
October 1, 1890; governor of Ohio, 1892–1894; was reëlected for the
ensuing term, but in 1896 was nominated and elected President of the
United States; was unanimously renominated by the Republican Convention
in 1900; elected to a second term; assassinated at Buffalo, September,
1901.
[294] Born in Illinois, 1860. Graduated at Illinois College,
Jacksonville, 1881; studied law at Union College of Law, Chicago;
practiced law at Jacksonville, Illinois, 1883–1887; went to Lincoln,
Nebraska, 1887; representative in Congress, 1891–1895; Democratic
candidate for United States senator, 1894; editor of Omaha
_World-Herald_, 1894–1896; delegate to Democratic National Convention in
1896; made a notable speech in advocacy of free silver at sixteen to
one, and was nominated for the Presidency; defeated in November, 1896;
continued to speak on political matters in various parts of the country,
1896–1900; was unanimously renominated for President at the Democratic
Convention, July 5, 1900; defeated, and began to edit a newspaper at his
home in Lincoln, Nebraska; made a tour of the world; nominated again for
the Presidency and defeated, 1908.
[Illustration: COLONIAL POSSESSIONS, 1909]