FREE SILVER
Serious students of finance are almost unanimous in their belief that
the adoption of free silver would have brought into operation the
Gresham Law and would have resulted in a reduction of the value of the
dollar. But the motives which divided the United States were less
economic law than personal interest. The creditor foresaw the shrinkage
of his property, and feared it. The debtor saw the lightening of his
debt, and easily convinced himself that the ethics of the case required
such relief for him.
It appeared to the West that the declining prices of the eighties had
been due not so much to overproduction and mechanical invention as to an
appreciation of the dollar. The silver advocate claimed that the money
supply was inadequate to the demands of increasing business, that the
overworked dollars were acquiring a scarcity value, and that their
increase in value was placing an unfair burden upon every person with a
debt to pay. It was the old attitude of the Greenback Northwest, brought
out by a period of debt and depression. In accounting for the scarcity
of money the Act of 1873 seemed important to the West. The
demonetization of silver became a crime, and justice from the Western
standpoint demanded the restoration of the dollar to its old value,--the
value of its silver. Before 1893 the discontent was serious, but had
not come to be the primary interest of the West. Men were not yet
willing to leave their parties for the sake of silver. The panic drove
them to the final step.
Through the campaign of 1892 the major parties had dodged the issue of
free silver by adopting evasive planks, while the general ignorance
respecting the laws of money prevented the evasion from being seen.
Until 1890 neither organization had been unfavorably disposed towards
free silver and Congressmen catered to the movement when they dared. As
its accomplishment became more probable, the selfish interests that
would be adversely affected, and the economists who saw its theoretical
danger, and the moralists who disliked repudiation, made common cause in
a wide campaign of education.
With the exception of extreme inflationists, all had declared that they
wanted "honest" or "sound" money, and both parties insisted, in 1892,
that all dollars, of whatever sort, must remain equal in value and
interchangeable. They insisted, too, that silver must be used as well as
gold, and neither platform saw that the demands were either inconsistent
or improbable of realization. The pledge of equality pleased the
creditor East, while that of equal use of both metals satisfied the
debtor West and South.
Bimetallism was a cry of many who disliked free silver, yet feared that
a demand for the gold standard would wreck the party. As long as the
traditional ratio of sixteen to one remained the commercial ratio, the
free use of both metals was theoretically possible, but the experience
of the United States showed that a slight variation in the commercial
ratio inevitably drove the more valuable dollar into retirement and left
the cheaper in use. The truth of Gresham's Law was believed by most
economists, who doubted whether the commercial ratio was ever
sufficiently permanent to make bimetallism possible. With the silver
declining rapidly it was out of the question. If the silver in
circulation ever got beyond the power of the government to control it
through redemption in gold nothing could avoid the silver standard. No
law of the United States could prevent it. There was only a bare
possibility that an international agreement always to regard sixteen
ounces of silver as worth one ounce of gold might establish the ratio,
but to this straw the bimetallist turned, trying to ward off the demand
for free silver with his plea for international bimetallism.
[Illustration: The Flood of Silver
Gold and Silver Output of the World, 1861-1911 In Ounces
(Based on United States Statistical Abstract, 1912, pp. 796, 797)]
The panic of 1893, the decline of silver, and the repeal of the Sherman
Law stimulated the activities of those who believed in free silver and
produced formal steps to bring it into politics. A silver convention,
held in Chicago in August, 1893, denounced the "Crime of 1873," and
Governor Waite recommended to the Colorado Legislature that it open a
mint of its own for the coinage of legal-tender silver dollars. At state
conventions, in 1893 and 1894, both parties adopted silver planks. The
Nebraska Democrats rejected such a plank in 1893, but in 1894, after a
caucus of free-silver Democrats in Omaha, they adopted a demand for the
immediate restoration of free-silver coinage "without waiting for the
aid or consent of any nation on earth."
At the congressional election of 1894 the Republicans regained control
of both Senate and House and many of the silver candidates were left at
home. Some thirty, who had sat in the Fifty-third Congress, joined in
March, 1895, in a call for the adoption of free silver as a party
measure. To the iniquity alleged to exist in the gold standard was added
the aggravating fact that its defenders had wealth and were often
directors of corporations. The measure had become a class contest. Its
textbook was found in _Coin's Financial School_, a little book with
simple dialogue and graphic illustration, that popularized the Western
view of free silver and reached hundreds of thousands with its apparent
frankness. Free silver had by 1895 outgrown the Populists, and had
overshadowed other measures of reform before either party had taken a
frank attitude respecting it. "I have been more than usually
despondent," wrote the originator of the Wilson Bill, who had lost his
seat in 1894, "as I see how the folly of our Southern people, in taking
up a false and destructive issue, and assaulting the very foundations of
public and private credit, are throwing away the solid fruits of the
great victory, solidifying the North as it never was solid in the
burning days of reconstruction, and condemning the South to a position
of inferiority and lessening influence in the Union she has never before
reached."
When the Fifty-fourth Congress met in 1895, Reed was again enthroned as
Speaker, but the spread of silver sentiment had undermined party
loyalty. Cleveland's annual Message contained the usual range of items
upon government and foreign relations, and devoted several pages to a
resume of the financial operations of the Treasury and the currency
problem. It closed with an appeal to the enthusiastic multitude that
approved free coinage to reexamine their views "in the light of
patriotic reason and familiar experience." It gave no hint that any
other topic was likely to pass free silver in the public view. Fifteen
days later, on December 17, 1895, the President sent a special Message
to Congress, in reference to an old dispute between Great Britain and
Venezuela, that startled the world, upset the stock markets, and brought
to life once more the Monroe Doctrine.
For many years the unsettled boundary between Venezuela and British
Guiana had been a source of irritation. The pretensions of both
claimants were great and vague, while the continuous encroachment of
British miners alarmed the weaker country. For nearly twenty years
Venezuela had vainly appealed to the United States, asking that the
dispute be arbitrated. The United States had taken a mild interest in
the wrangle, but no one before Cleveland had felt vitally concerned. He
undertook, in the summer of 1895, to persuade Great Britain to accept an
arbitration, and pressed Lord Salisbury in a series of notes drafted by
Richard Olney, Secretary of State.
The contention of Olney was that the dispute was suitable for
arbitration because of the difference in physical strength between the
two countries, and that the United States had an interest in an
equitable territorial adjustment. He stated the doctrine that John
Quincy Adams had advanced in the Administration of Monroe, that
interference with the destiny of the South American Republics affects
the United States, and asserted that this was now a part of the public
law of the United States. He listed the precedents in which it had been
advanced since 1823, finding none in which it had been flatly checked.
His long arguments upon the interests and proper supremacy of the United
States in all American questions failed to convince the British Foreign
Office, which denied both Olney's correctness in applying the Monroe
Doctrine and the binding force of the doctrine itself. Arbitration was
declined, and Cleveland, in submitting the correspondence to Congress,
urged that an American court be created to ascertain the true boundary
and that the United States afterward maintain it. "In making these
recommendations," he admitted, "I am fully alive to the responsibility
incurred and keenly realize all the consequences that may follow."
The threat of war conveyed in the Message drove silver from the public
mind. Business was aghast, and judicious publicists either questioned
the value of the Monroe Doctrine or denied the propriety of its
application. The general public supported the President without
question, but many of his closest advisers turned against him. His
political enemies charged him with raising a foreign issue to reunite
his party, or with creating a scare to help his speculations in stocks.
Great Britain blustered in her press, but opened her archives to the
American Venezuelan Commission. In 1897 she allowed an arbitration to
take place, and the affair passed over.
Whatever Cleveland's motive in the Venezuela Message, it did not
establish more than a transient calm in either party. His own was doubly
split by silver and the tariff, while Republican plans for 1896 had
become badly deranged. That party had organized to play upon protection,
but found interest in its chosen subject silenced for the time.
In spite of its defeats in 1890 and 1892, the Republican organization
had kept up its fight for protection. Quay had in 1888 completed the
partnership between the manufacturers who had a cash interest in the
tariff and the Republican voters. In manufacturing communities the
doctrine had been accepted that prosperity and protection went together.
Ruin was prophesied if the Democrats should win. The panic of 1893
seemed to prove this, and when the Democrats passed the Wilson Bill the
Republicans asserted that the fear of this had caused the panic. In
private, the leaders agreed with the president of the Home Market Club,
who wrote in his memoirs, "The bill ... was much less destructive than
there was reason to fear." "Our business was not unprofitable during
these lean years, but much less profitable than it had been and ought to
have been." Prosperity was clearly lacking and to be desired, and among
the candidates for the nomination in 1896 was the author of the McKinley
Bill, in whom an Ohio cartoonist had discovered the "Advance Agent of
Prosperity."
Associated with the name of William McKinley, of Canton, Ohio, was that
of Marcus Alonzo Hanna, a citizen of Cleveland who had acted on the
borderland between business and politics since 1880. Hanna had been
among the earliest to see the financial interest of the manufacturers in
the tariff and to capitalize it for political purposes. For several
years he had collected money in Ohio for campaign funds, assessing the
manufacturers according to their interests and impressing upon them the
duty of paying on demand. It had been a business transaction. Hanna had
no extraordinary stake in the result, but combined a genuine interest in
politics with business standards of the prevailing type. About 1890 he
became a friend of the Ohio protectionist and worked steadily thereafter
for his election to the Presidency.
McKinley was a tactful and successful Congressman. He believed in the
tariff, spoke convincingly in its favor, had few enemies and many warm
friends, and was widely advertised by the Tariff Bill of 1890. In public
places after 1893 he was repeatedly hailed as the next candidate, but as
the silver issue rose it appeared that there might be great difficulty
in adapting his record to the new problem. He had favored bimetallism
and free coinage in so many debates that the East, where lay the
strongholds of the party, distrusted his soundness on the currency
question. Yet if he abandoned free silver it was doubtful if he could
hold the West. For months his friends, steered by Hanna, who spent his
own money freely, endeavored to keep the tariff in the foreground, while
the candidate preserved a discreet and exasperating silence upon the
dominant issue of free silver.
The most important rivals of McKinley for the nomination were Harrison
and Reed, but neither of these possessed a manager as shrewd and
resourceful as Hanna. McKinley was nominated on the first ballot at St.
Louis, with Garrett P. Hobart, of New Jersey, a corporation lawyer who
believed in the gold standard, as his associate.
The nature of the Republican platform had been in debate throughout the
spring of 1896. The organization was reluctant to take up the silver
issue and the predetermined candidate was uncertain upon it. In the
Platform Committee there was a contest involving the opportunists, who
wanted to continue the policy of evasion; the Westerners, who felt that
silver meant more to them than the party; and the representatives of the
populous commercial East, who were devoted to the gold standard.
Bimetallists had progressed in their education until most of them saw
that bimetallism must be international if it could be at all. Various
committeemen later assumed the credit for the plank that was finally
adopted. After castigating the Democrats for producing the panic and
renewing the pledge for protection, the party denounced the debasement
of currency or credit. It opposed the free coinage of silver, asserted
that all money must be kept at a "parity with gold," and pledged itself
to work for an international agreement for bimetallism.
The fight for free silver was carried by the silver state delegations to
the floor of the convention, where it was defeated by a vote of 818-1/2
to 105-1/2. At this point, led by Senators from Colorado and Utah,
thirty-four members withdrew from the convention in protest. Even the
Prohibition party had already been broken by the new issue. The humorous
weekly, _Life_, spoke seriously when it declared that "The two great
parties in the country at this writing are the Gold party and the Silver
party. The old parties are in temporary eclipse." Few were satisfied
with the Republican result, for while the platform pointed one way and
the candidate's career pointed the other on free silver, the real
interest of the party, protection, aroused no enthusiasm.
No Democrat was the predetermined candidate of his party when it met at
Chicago in July, 1896. Cleveland, least of all, was not given even the
scanty notice of a commendatory plank. He stood alone as no other
President had done, at issue with the Republicans on their major policy,
yet without followers in his own organization. Slow, patient,
courageous, stubborn, he had twice held his party to its promise, and he
had refused to be carried away by the transitory demand of the West for
dangerous finance. He had guided the National Administration through
eight years of expansion and reorganization, and had been a devoted
servant of civil service reform. In May, 1896, he had aggravated his
offenses in the eyes of the politicians by issuing new rules that
extended the classified service to include some 31,000 new employees,
making a total of 86,000 out of 178,000 federal employees. He passed out
of party politics at least two years before his term expired, and in
1897 he took up his final abode in Princeton. From Princeton he wrote
and spoke for eleven years, and before he died in 1908 the animosities
of 1896 were forgotten, and he looked large in the American mind as a
statesman whose independence and sincerity were beyond reproach.
Forces beyond the control of politicians carried the Democrats toward an
alliance with Populism and free silver. As two minority parties they had
felt in 1892 a tendency to fuse against the Republicans. By conviction
they were both obliged to fight the party of Hanna and McKinley, in
which the forces of business, finance, and manufacture were assembled in
the joint cause of protection and the gold standard. It was convenient
to make this fight in close alliance, the more so because the Populist
doctrine of free silver had permeated the Democratic organization in the
West and South. In the conventions of 1896 more than thirty States, as
Nebraska had done in 1894, asked for immediate free coinage, and a
majority of the Democratic delegates were pledged to this before they
came to Chicago. They gained control of the convention on the first
vote, determined contests in their own favor, and offered a plank
demanding "the free and unlimited coinage of both silver and gold at the
present legal ratio of sixteen to one without waiting for the aid or
consent of any other nation."
The debate on the silver plank was long and bitter, although its passage
was certain. It was closed by the leader of the Nebraska delegation,
William Jennings Bryan, who had been a former Congressman, and who
later said, "An opportunity to close such a debate had never come to me
before, and I doubt if as good an opportunity had ever come to any other
person during this generation." He took advantage of the moment, in a
tired convention that had been wrangling in bitterness for several days,
that had deserted the old politicians, and that had no candidate. He was
only thirty-six years old, his face was unfamiliar, and his name had
rarely been heard outside his State, but he had been preaching free
silver with religious intensity and oratorical skill. His speech had
grown through repeated speaking, and reached its climax as he pleaded
for free silver: "If they dare to come out in the open field and defend
the gold standard as a good thing, we will fight them to the uttermost.
Having behind us the producing masses of this nation and the world,
supported by the commercial interests, the laboring interests, and the
toilers everywhere, we will answer their demand for the gold standard by
saying to them: You shall not press down upon the brow of labor this
crown of thorns; you shall not crucify mankind upon a cross of gold."
Swept off its feet by the enthusiasm for silver, and having no other
candidate in view, the convention nominated Bryan on the fifth ballot,
selecting Arthur Sewall, of Maine, as his companion.
The Populists met in St. Louis on July 22. "If we fuse, we are sunk,"
complained one of the most devoted leaders; "if we don't fuse, all the
silver men will leave us for the more powerful Democrats." Fusion
controlled the convention, voting down the "Middle-of-the-Road" group
that adhered to independence. Bryan was nominated, although Sewall was
rejected for Thomas E. Watson, of Georgia. The organization of the
People's Party continued after 1896, but its vitality was gone forever.
The campaign of 1896 was an orgy of education, emotion, and panic.
McKinley was driven by the opposition to defend the gold standard with
increasing intensity. Protection ceased to arouse interest and other
issues were forgotten. The Bryan party attracted to itself the silver
wings of the Republicans and Prohibitionists, and absorbed the
Populists. The gold Democrats, after several weeks of indecision as to
tactics, became bolters, held a convention at Indianapolis in September,
and nominated John M. Palmer and Simon Buckner. To this ticket,
Cleveland and his Cabinet gave their support. Up and down the land Bryan
traveled, preaching his new gospel, which millions regarded as "the
first great protest of the American people against monopoly--the first
great struggle of the masses in our country against the privileged
classes." "Probably no man in civil life," said the _Nation_ at the end
of the fight, "has succeeded in inspiring so much terror without taking
life."
As chairman of the National Committee, Marcus A. Hanna directed the
Republican campaign. He encouraged the belief that Bryan was waging a
"campaign against the Ten Commandments." He drew his sinews of war from
the manufacturers, who were used to such demands, and from a wide range
of panic-stricken contributors who feared repudiation. Insurance
companies and national banks were assessed and paid with alacrity. The
funds went into the broadest campaign of education that the United
States had seen.
In contrast to the activity of Bryan, McKinley stayed at home through
the summer, and delegations from afar were brought up to his veranda at
Canton, Ohio. To these he spoke briefly and with dignity, gaining an
assurance that grew with the campaign. His arguments were taken over the
country by a horde of speakers whom Hanna organized, who reached and
educated every voter whose mind was open on the silver question. In the
closing days of the campaign panic struck the conservative classes and
produced for Hanna campaign funds such as had never been seen, and cries
of corruption met the charges of repudiation.
An English visitor in New York wrote on the Sunday before election: "Of
course nothing can be done till Wednesday. All America is aflame with
excitement--and New York itself is at fever heat. I have never seen such
a sight as yesterday. The whole city was a mass of flags and innumerable
Republican and Democratic insignia--with the streets thronged with over
two million people. The whole business quarter made a gigantic parade
that took seven hours in its passage--and the business men alone
amounted to over 100,000. Every one--as, indeed, not only America, but
Great Britain and all Europe--is now looking eagerly for the final word
on Tuesday night. The larger issues are now clearer: not merely that the
Bryanite fifty-cent dollar (instead of the standard hundred-cent) would
have far-reaching disastrous effects, but that the whole struggle is one
of the anarchic and destructive against the organic and constructive
forces."
The vote was taken in forty-five States, Utah having been admitted early
in 1896, and no election had evoked a larger proportion of the possible
vote. Bryan received 6,500,000 votes, nearly a million more than any
elected President had ever received, but he ran 600,000 votes behind
McKinley. The Republican list included every State north of Virginia and
Tennessee, and east of the Missouri River, except Missouri and South
Dakota. The solid South was confronted by a solid North and East, while
the West was divided. McKinley received 271 electoral votes; Bryan, 176.
Education played a large part in the result, and economic opinion
believes that the better cause prevailed. But cool analysis had less
effect than emotion and self-interest at the time. The lowest point of
depression had been reached during 1894, while the harvests of 1895 and
1896 were larger and more profitable than had been known for several
years. Free silver was a hard-times movement that weakened in the face
of better crops. "Give us good times," said Reed to Richard Watson
Gilder, "and all will come out right." Inflation was not to be desired
by the citizen who had in hand the funds to pay his debts. When he
became solvent he could understand the theories of sound finance. It is
probable that nature as well as gold was a potent aid to Hanna in
procuring the result.
William McKinley was advertised as the "Advance Agent of Prosperity,"
and before he was inaugurated in March, 1897, prosperity was in sight.
His election had destroyed all fear that the currency would be upset by
legislative act, while the liquidation after the panic of 1893 had
nearly run its course. Business was reviving, crops were improving, and
the luckless farmers of the Western plains had abandoned their farms or
learned how to use them. After 1896 the financial danger was not silver
but gold inflation. In that year great mines were opened in Alaska,
drawing heavy immigration to the valley of the Yukon and, a little
later, to the beach at Nome. Other discoveries increased the gold output
and flooded the world with the more precious metal. By 1900 prices were
rising instead of falling, and public interest was turned upon the high
cost of living rather than the low prices of the previous period. The
average annual output of gold for the fifteen years ending in 1896 was
$132,000,000. For the fifteen years beginning in 1896, it was
$337,000,000. The election of McKinley was in name a victory for the
Republican party, but was in reality one for sound money. The
organization upon which he stood was an amalgamation of creditors and
manufacturers, reenforced by gold-standard men of all parties. Without
the aid of the last element he could hardly have been elected, on this
or any other issue. When he took office the Republican party had control
in both houses of Congress, had been elected on a money issue, but had a
permanent organization based upon the tariff propaganda. Before his
inauguration, Hanna declared that the election was a mandate for a new
protective tariff, and one of McKinley's earliest official acts was to
summon Congress to meet in special session, to fulfill that mandate, on
March 15, 1897.
BIBLIOGRAPHICAL NOTE
The most popular document in the free-silver propaganda was W.H. Harvey,
_Coin's Financial School_ (_c._ 1894). This was replied to by Horace
White, _Coin's Financial Fool; or the Artful Dodger Exposed_ (_c._
1896); and the same author, in _Money and Banking_ (4th ed., 1911),
discusses the economics of free silver. The best economic arguments for
free silver came from the pens of Francis A. Walker and E. Benjamin
Andrews. The Reports of the International Monetary Conferences (at
Paris, 1867 and 1881, and at Brussels, 1892) are useful upon the attempt
to establish a currency ratio by international agreement. There is no
good biography of William McKinley, although the external facts of his
career may be obtained in the _Annual Cyclopaedia_, and in _Who's Who in
America_ (a biennial publication which, since its first issue in
1899-1900, has been the standard source of biographical data concerning
living Americans). These may be strengthened by D. Magie, _Life of
Garrett A. Hobart_ (1910). The best biography of the period is H. Croly,
_Marcus Alonzo Hanna_ (1912), which gives an illuminating survey of
Republican politics, although based on only the public printed materials
and personal recollections. The opposition may be studied in W.J. Bryan,
_The First Battle_ (1896). The platforms, as always, are in Stanwood,
and there are useful narratives in Dewey, Latane, Andrews, and Peck.
From this period the _Outlook_ (January, 1897), and the _Independent_
(July, 1898), take on a modern magazine form and are to be added to the
list of valuable newspaper files, while the _Literary Digest_ begins to
play the part carried by _Niles's Register_ in the early part of the
century. They may generally be trusted as intelligent, honest, and
reasonably independent. The Venezuelan affair, besides stimulating
diplomatic correspondence (_q.v._, in Foreign Relations Reports), led to
the writing of W.F. Reddaway, _The Monroe Doctrine_ (1898), which is
still one of the most judicious discussions of the topic. J.B.
Henderson, _American Diplomatic Questions_ (1901), is useful also.