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The Cleveland Record
The nation confronted numerous problems and conflicts during the second presidential administration of Grover Cleveland (1893-1897).  Shortly after Cleveland assumed office in March 1893, the nation sank into a deep economic depression, which lasted the duration of his term.  Much of the agricultural sector had been suffering since the 1880s, but it experienced even lower crop prices in the early 1890s.  The newly dominant industrial sector was hit severely, causing over 20% unemployment, along with reduced production and consumption.  By July 1893, the stock market had lost 35% of its value from early in the year, and during the entire year almost 30% of the railroad system went bankrupt, 500 banks closed their doors, and 15,000 businesses failed.

Although the president rejected direct economic relief as outside the constitutional authority of the federal government, he did attempt to counteract the depression through monetary policy.  As a staunch defender of the gold standard, Cleveland believed that the Sherman Silver Purchase Act of 1890 was causing a severe drain on the nation’s gold reserve.  At his request, a special session of Congress (1893) repealed the legislation.  But since the nation’s gold supply had already declined to what gold standard supporters believed was a dangerously low level, President Cleveland directed Treasury Secretary John Carlisle on four occasions to sell U.S. bonds to New York bankers for gold.  The tactic provoked his political opponents to charge that the Cleveland administration was hostage to wealthy financiers.

President Cleveland also attacked the economic depression from the fiscal side by attempting to reduce the nation’s high tariffs.  In 1893, he worked with Congressman William Wilson of West Virginia, a Democrat, to introduce into the U.S. House a bill lowering tariff rates.  After the House passed a slightly revised version, Senator Arthur Pue Gorman of Maryland, a Democrat, and other senators radically altered the legislation into a high-tariff bill that only reduced the overall rate from 48% to 41%.  The president denounced the betrayal of genuine reform, but allowed the Wilson-Gorman Act to become law in 1894 without his signature.

The economic depression sparked social unrest, including riots in Chicago, Cleveland, and Buffalo.  In March 1894, Jacob Coxey, an Ohio businessman, organized a march of 500 unemployed laborers, known as Coxey’s Army, to Washington, D.C., to demand a federal public works program.  Coxey was arrested for trespassing on the Capitol lawn, and his plan went unheeded.  In June 1894, a strike began at the Pullman Palace Car Company in reaction to reduced wages and higher prices at company stores.  The strike spread to other railroad companies, interrupted the nation’s transportation system, and erupted into violence.  At the request of railroad executives, but against the wishes of Governor John Atgeld of Illinois, President Cleveland secured an injunction against the strikers and sent federal troops to Illinois, thereby ensuring transit of the commerce and the U.S. mails and breaking the strike.

In 1895, the U.S. Supreme Court issued three controversial decisions concerning the economy and labor-capital relations.  It nullified the recently passed income tax as unconstitutional; ruled that the American Sugar Refining Company, which controlled 98% of sugar refineries in the United States, was not in violation of the Sherman Antitrust Act; and refused to grant a writ of habeas corpus to Eugene Debs, president of the American Railway Union, who had been arrested for participating in the Pullman Strike.  The latter decision had the effect of approving the use of court injunctions against strikers.  During his time in jail, Debs became a socialist and would later be the five-time presidential nominee of the Socialist Party (1900, 1904, 1908, 1912, and 1920).

Foreign policy played a more important role during Cleveland’s second administration than the first (1885-1889).  In early 1893, American business interests, with the assistance of a contingent of U. S. marines, overthrew Hawaiian Queen Liliuokalani and requested that the United States annex the island chain.  The outgoing administration of Republican Benjamin Harrison (1889-1893) had sent an annexation treaty to the U.S. Senate for ratification, but upon taking office, President Cleveland rescinded it.  When a border dispute arose between Venezuela and Great Britain, Cleveland’s secretary of state, Richard Olney, invoked the Monroe Doctrine and pressured Britain to the negotiating table.  The onset of a Cuban revolt against Spanish rule in 1895, prompted Cleveland to declare American neutrality.

The Money Question
Monetary policy had been preeminent in American politics for decades, but the economic depression of the early 1890s increased and bolstered advocates of expanding the money supply.  By that time, the preferred method of inflationists was “free silver”—unlimited coinage of silver at a ratio of 16 to 1 against gold coins.  Its backers hoped to raise prices and ease debt for struggling farmers, but gold-standard supporters argued that inflation would hurt consumers and undermine the economy further.

Free silver was a key plank of the Populist Party, which won nine congressional seats in 1890 and collected over a million popular votes and 22 electoral votes for its 1892 presidential nominee, James B. Weaver.  In the latter election, however, the Populists lost six of its congressional seats and failed to break the Democratic hold on the South.  The economic depression boosted the number of Populist votes in the 1894 elections to almost 1,500,000.  In retrospect, that was the peak of the party’s power, although it continued to have influence, particularly in the Great Plains and Mountain States of the West.  Even Republican politicians in those areas joined the free-silver bandwagon, which put them at odds with the majority of their party.  The GOP, though, was united behind protective tariffs, which party leaders promoted as the main issue of the 1896 campaign. 

Free silver caused an enormous rift in the Democratic Party.  In early 1895, Congressman Richard “Silver Dick” Bland of Missouri and William Jennings Bryan of Nebraska, a former congressman (1891-1894), led the revolt against President Cleveland, arguing that the chief executive did not represent the party’s mainstream.  Bryan promoted a statement signed by 31 House Democrats urging Democrats to become the party of free silver.  In the summer of 1895, Bryan was received enthusiastically on a speaking tour in the Midwest and South during which he attacked the “money power” in Washington and appealed for new party leadership.  In the summer of 1895, Silver Democrats formed two committees with the goal of controlling the national party organization.  Bryan did not join either, but worked alone to build a national movement of Democrats, Republicans, and Populists for the silver cause.  In response, President Cleveland used patronage and persuasion in the increasingly difficult task of keeping the Democratic Party committed to the gold standard.

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