Grover Cleveland

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1

The Depression of 1893

In 1893 a financial crisis struck the country, brought on mostly by the overexpansion of the railroad industry. Many businesses failed, bringing unemployment, poverty, and suffering. Instead of surrendering to the public clamor for free coinage of silver as the remedy for the depression, the president persuaded Congress, which was controlled by Democrats, to repeal the Sherman Silver-Purchase Act of 1890. This action won him the permanent hostility of the pro-silver Democrats.

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Tariff

Almost as soon as Cleveland won repeal of the silver-purchase law, he faced the tariff issue again. Cleveland continued the fight for a low tariff to reduce the government surplus. However, a group of Senate Democrats from Eastern manufacturing states joined with high-tariff Republicans to raise rates in certain categories in the Wilson-Gorman Tariff Act. Cleveland neither signed nor vetoed the bill, and it became law without his signature.

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3

Coxey’s Army

In the depression year of 1894 while the tariff bill was being debated, Jacob Coxey, a well-to-do citizen of Massillon, Ohio, proposed a public works program to make internal improvements and to provide employment. To underscore the need for relief, Coxey led an army of 500 unemployed men in a march on Washington, but nothing came of his plans.

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4

The Pullman Strike

One of the most serious incidents of Cleveland’s second term was the Pullman strike of 1894 in Chicago, Illinois. The American Railway Union, led by Eugene V. Debs, halted railroad traffic with a sympathy strike in support of the employees of the Pullman Palace Car Company. Cleveland used army troops to break the strike, claiming that the strikers had interfered with the U.S. mail. Cleveland’s action was supported by the business community and much of the public, but trade-unionists, liberals, and intellectuals criticized the use of troops. See Railroad Labor Organizations; Trade Unions in the United States.

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5

Gold Bonds

During the last half of his second administration, Cleveland once more offended those in favor of inflation, alienating them still further. Between 1890 and 1894, the U.S. government’s gold reserve had declined by about two-thirds from $190 million to $65 million. This was a problem because the gold reserve was the basis of the public’s confidence in the U.S. dollar. With the depletion of the reserve in sight, the president struck a deal with the John Pierpoint Morgan and Belmont banking firms. These firms were permitted to purchase more than $62 million in government bonds and to pay for them in gold. The banks guaranteed that they would procure half of the needed gold from abroad and would use their influence to prevent further withdrawals of gold from the U.S. Treasury. When the bonds were offered to the public, their price rose, which put gold back into U.S. holdings and returned a handsome profit to the banking firms.

Cleveland restored public confidence in the U.S. dollar. Some months later, when the federal government offered $100 million in 4 percent bonds to the highest bidder, the bonds were sold instantly. Nevertheless, in the West and the South Populists, mostly farmers in favor of free silver, complained that bankers owned the nation.

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