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policy of the United States to maintain a parity between gold and silver at the present rates or such rates as may be provided by law, that silver bullion to the amount of 4,500,000 ounces should be purchased monthly and that of the bullion thus purchased 2,000,000 ounces were to be coined into standard silver dollars monthly till July 1, 1891, after which time the Secretary of the Treasury should have discretionary power as to the amount of dollars to be coined for the redemption of outstanding notes.*

As we have seen, therefore, the tariff bill was then pushed through with the aid of the silver Representatives and the two acts were now given full swing. The tariff act, as already stated, had proven a disappointment and the silver act was now to show an equally unfavorable aspect. The passage of the silver act created a demand for silver bullion and the price rose not only in the United States but all over the world, finally reaching $1.21 an ounce (September 3, 1890). But the high price had been the result of a large speculative movement upon the stock exchanges, and when the speculators began to take their profits a reaction set in, and by December,


Dewey, Financial History, pp. 436-438; Noyes, American Finance, pp. 138-152; Sherman, vol. ii., pp. 1061-1071; Horace White, Money and Banking, pp. 202-204; Watson, American Coinage, pp. 157-162; Taussig, The Silver Situation, p. 49 et seq.; J. F. Johnson, Money and Currency, p. 354 et seq.; Lauck, Panic of 1893, pp. 16-31; Hepburn, Contest for Sound Money, pp. 315-317, 572– 574; Dunbar, Currency, Finance and Banking Laws, pp. 250-252.

1890, silver had fallen below 98 cents an ounce.*

Secretary Sherman had also, in the previous session of Congress, introduced a bill "to declare unlawful, trusts and combinations in restraint of trade and production," but no action at that time was taken upon it. On December 4, 1889, Sherman again introduced this bill and it was referred to the Committee on Finance, whence it was reported to the Senate February 27, 1890. Many amendments were offered and the bill was finally referred to the Committee on the Judiciary. On April 2, Mr. Edmunds, chairman of that Committee, reported a substitute for the bill which on April 8 was passed by a vote of 52 to 1. The House then passed the bill and after being twice referred to conference committees it became law by the approval of the President, July 2, 1890. The law, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," is as follows:

"Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract, or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

"Section 2. Every person who shall monopolize,

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or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize, any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

"Section 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such territory and another, or between any such territory or territories and any state or states or the District of Columbia, or with foreign nations, or between the District of Columbia and any state or states or foreign nations, is hereby declared illegal. Every person who shall make any such contract, or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year or by both said punishments, in the discretion of the court.

"Section 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the attorneygeneral, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition, and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises.

"Section 5. Whenever it shall appear to the court before which any proceeding under section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.

“Section 6. Any property owned under any contract or by any combination, or pursuant to


any conspiracy (and being the subject thereof) mentioned in section one of this act, and being in the course of transportation from one state to another, or to a foreign country, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure and condemnation of property imported into the United States contrary to law.

"Section 7. Any person who shall be injured in his business or property by another or corporation, by reason of anything forbidden or declared to be unlawful by this act, may sue therefore in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover therefore the damages by him sustained, and the cost of the suit, including a reasonable attorney's fee.

Section 8. That the word 'person,' or 'persons,' wherever used in this act, shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the territories, the laws of any state, or the laws of any foreign country."

In 1890 Congress also passed bills admitting Idaho and Wyoming into the Union and organizing the Territory of Oklahoma from the western half of Indian Territory. This session of Congress also passed the Dependent Pension bill, approved June 27, 1890, which nearly doubled the number of pensions. From an expenditure of $30,000,000 for pensions in 1871, the country was forced by this bill to increase the pension figure to about $159,000,000 in 1893.

Meanwhile the foreign financial situation had become much confused. The large English banking firms had made a practice of "developing the resources of young foreign communities, taking securities in payment," and much of this capital had been sent to

the Argentine Republic.* The mania for foreign investment also extended to Germany. In 1889, however, the Argentine wheat crop failed; a political revolution followed in July, 1890; and Argentine securities fell so low that London bankers could not realize on them. This embarrassment caused the suspension, on November 15, 1890, of the firm of Baring Brothers of London with over $100,000,000 of home liabilities. This failure unsettled the American markets as the English investors had dumped their American securities (which, as said before, were taken in payment of trade balances) upon our market and consequently gold began to make its way to London. Furthermore, the English stopped their purchases of securities in this country and thus there was no prospect of the gold returning immediately. The banks were not in a position at this time to withstand this double strain, and in addition the industrial activity in the West and South had also necessitated the withdrawal of funds from the East. A stringency then set in and the bank reserves fell below legal requirements. The banks were then forced to call into operation their emergency measures of 1873 and 1884, the Clearing House at this time issued $15,000,000 in loan certificates. But recovery was

* On the general situation see Lauck, Panic of 1893, pp. 35-54; Hyndman, Commercial Crises, p. 151 et seq.

Hyndman, Commercial Crises, pp. 156-159; Lauck, Panic of 1893, pp. 59-62.

Noyes, American Finance, pp. 156-158; Lauck, pr. 62-72.

rapid in the United States owing to increases in railway and general industrial earnings, the activity of interior trade and the large exports of agriculture crops; and gold, despite the situation in Europe, flowed into our markets.

A change now set in, however, due to the continued frantic efforts of foreign investors to sell their American securities, the high rates of exchange in foreign financial centres, and the heavy import of merchandise during the first half of 1891, and gold wended its way back to Europe. "The year 1891 saw the largest exportation of gold in our history, being upwards of seventy millions in six months, nearly all of which was taken out of the Treasury within one year after the passage of the Sherman act."* "But no such avalanche of specie could move out indefinitely. Already in June, 1891, the gold reserve against the legal-tenders had fallen below the low record of 1884 and be

low even that of 1885."

Fortune favored the treasury for the European crops were the shortest since 1879 and reversely the United States produced the largest grain crop in its history. The English financial markets had also recovered and once again began to purchase American securities; consequently nearly $50,000,000 of gold was sent from Europe to

* White, Money and Banking, p. 205; Taussig, The Silver Situation, p. 66.

Noyes, American Finance, p. 163.

Lauck, Panic of 1893, pp. 79-81; also Reports of the Secretary of Agriculture.


pay for our exports and securities and a large part of this went into the treasury in exchange for silver and legaltender notes. Thus the depleted gold reserve was restored. But for various causes the price of wheat slumped, English investors began to view the condition of the United States treasury and currency with alarm,* and a selling movement in American securities took place, so that in the first six months of 1892 $41,500,000 was shipped to Europe and for some time averaged two to seven millions weekly. By the close of May, 1892, the reserve had fallen to $114,231,883 and at the rate of depletion would soon fall below $100,000,000.†

In 1882 Congress had passed a law providing that the Secretary of the Treasury might" suspend the issue of such [gold] certificates whenever the amount of gold coin and gold bullion in the Treasury available for the redemption of United States notes falls below $100,000,000.”‡ Besides the outflow of gold from the treasury, the revenues were now being paid more


and more in legal-tenders,* and the Secretary of the Treasury, taking advantage of the above provision, after the first week in July, 1892, practically abandoned the payment of gold into the New York Clearing House, hoarding as much as possible in the treasury. The year 1892 then passed without much further trouble in financial circles. †

Political conditions in the country were now changing. The elections which took place in November, 1890, resulted in a decisive Democratic victory. The people were apparently convinced that the McKinley law contained a pernicious principle and the Republican party sustained the most overwhelming defeat in the thirty-six years of its existence. States whose Republicanism had seldom been successfully questioned swung into the Democratic column, Massachusetts, Pennsylvania, Nebraska, Illinois and Michigan being among the number. The House of Representatives chosen in this year had a Democratic plurality of 149. But the Senate was still Republican and the Democratic ma

The general conditions are given in Lauck, jority in the House availed little.

pp. 82-90. He says that the reduced revenues under the McKinley tariff and the extravagance of Congress, in conjunction with the increase of silver certificates which glutted the market had completely upset everything. The English apprehensions were further increased by the fear that we would enact a free coinage silver law.

Noyes, American Finance, PP. 166-167; Taussig, The Silver Situation, pp. 54-56, 68-69. Statutes-at-Large, chap. 290, sec. 12, 47th Congress, 1st session; White, Money and Banking, p. 206.

The year 1892, however, was marked by many events in the industrial world which boded little good to the Republicans in the presidential elections. "Prices and cost of living

*"On the other hand the percentage of gold in the customs receipts fell to 60, 40 and during the summer months to 20 and 10 per cent."— Taussig, P. 57.

Noyes, pp. 168-173.

increased with little compensating advance in wages. The farmers found The farmers found no improvement in the markets for their products. The price of wheat fell from eighty-four cents a bushel in 1890 to forty-nine cents in 1894. Prices of corn, oats, rye, and barley declined in the same proportion. The woolen manufacturers complained that the protection given them did not offset the enhanced cost of their raw materials."'* The workingmen were thus relatively in a worse condition now than they had been before. They therefore went on a strike for higher wages, but the employers resisted their demands. The strikers became surly and began to threaten. The employers became frightened and armed themselves or hired detectives to protect them, and disastrous clashes occurred.

That which roused the strongest feeling was the strike at Homestead, Pa. On June 30 the works of the Carnegie Steel Company were closed because of a disagreement between employers and employees in regard to wages, and non-union men were afterward employed in place of the strikers. A force of Pinkerton men were employed to protect the works and the non-union employees, and on July 5 and 6 these detectives were attacked by the strikers. In the fight which ensued numerous lives were lost, and many on both sides were wounded. The city authorities, being powerless,

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now appealed to the governor of the State, who ordered the national guard - 8,500 men - to restore order and enforce obedience to the law.

The troops took possession of the works on the 12th and on the 21st several leaders of the outbreak were arrested. The mills were again put in operation under protection of the militia, and at the close of the month the strike virtually collapsed, though not declared at an end until November 20, 1892.*

The miners in the Coeur d'Alene mining region of Idaho also went on strike and a clash occurred there early in July, when several non-union men were killed. The strikers also dynamited the railroad bridges leading into the region so as to prevent troops from reaching the scene of the outbreak. Military rule, however, was established on the 17th and the leading rioters were placed under arrest.

The switchmen of the Erie and Lehigh Valley Railroad at Buffalo went on strike and on August 14 burned several loaded freight trains. The sheriff of Erie county, being unable to cope with the situation, called upon the governor for aid and the entire national guard of the State was ordered to the scene of conflict. But the strike failed because the other railway unions would not order a sympathetic strike. The militia was

*Wright, Industrial Evolution, pp. 309-312; Appleton's Annual Cyclopædia, 1892; also the testimony before the Judiciary Committee as to the employment of Pinkerton detectives, House Misc. Doc. No. 335, 52d Congress, 1st session.

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