V.

Second Term as President

Cleveland took the presidential oath on March 4, 1893. Once more the job-seekers proved nearly unendurable. The president complained that the period set apart for receiving Congressmen had been “almost entirely spent in listening to applications for office.”

A.

Domestic Affairs

A.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.

A.2.

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.

A.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.

A.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.

A.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.

B.

Foreign Affairs

The major questions of foreign policy confronting Cleveland were the annexation of Hawaii and the Venezuela-British Guiana boundary dispute. In both matters he took firm positions based on American traditions, standing against imperialism and for the Monroe Doctrine, the position that the United States alone should look after political affairs in the western hemisphere. United States presidents had held this position since James Monroe first adopted it in 1823.

In Hawaii, Cleveland was confronted by a rebellion organized by white businessmen and aided by American minister to Hawaii John L. Stevens. The rebellion began after Queen Liliuokalani, who was opposed to the growing influence of American-owned industries on the islands, chose to disregard a constitution that the businessmen had forced her brother to accept when he was king. The queen was removed and a provisional government was set up. Cleveland, when informed that the Hawaiian people were against annexation to the United States, decided not to submit an annexation treaty to the Senate. The provisional government announced the creation of the Republic of Hawaii on July 4, 1894, and Cleveland officially recognized it as an independent country the following month (see Hawaii: The Growth of U.S. Domination).

In a long dispute between Venezuela and British Guiana about their boundary, the United States tried to persuade the British to reach a peaceful settlement with the Venezuelans through arbitration. In 1895 U.S. Secretary of State Richard Olney sent a strongly worded note to the British government insisting that Britain and Venezuela accept an offer from the United States to mediate the dispute. When the note was rejected, Cleveland lost his patience and dispatched to Congress a blistering message written in collaboration with Olney. The letter was almost a threat of war, so strong was its language in warning Britain not to take aggressive action in the western hemisphere. The message, usually called the Olney Corollary, in effect greatly enlarged the scope of the Monroe Doctrine because it asserted that the United States considered even such small matters as boundary disputes vital to its security. Britain and Venezuela finally settled the boundary dispute by arbitration.

Consistent with his strong stand against British interference, Cleveland himself refused to meddle in the Cuban War of Independence (1895-1898) against Spain, despite strong pressure from American imperialists. Revolts and conspiracies against the Spanish regime had dominated Cuban political life throughout the 19th century. The Cuban struggle for independence had become an active revolution in 1895 because Spain failed to institute reforms promised to the Cuban people in 1878. In response the Spanish drove much of the population into confinement camps, in which thousands died of disease and malnutrition. Many Americans strongly sympathized with the Cuban cause, but Cleveland was determined not to involve his country in a war. He made Spain an offer, in April 1896, to act as mediator in the dispute. Spain declined, and the revolution continued.