mission of five members vested with authority to regulate such matters pertaining to interstate commerce as were considered detrimental to public welfare, and to require all railroads to submit sworn reports of their financial conditions and operations on a uniform plan and for a uniform period.*

The financial operations of the government during this time had not been particularly noteworthy. The income of the government far exceeded its expenditures; in 1885, the surplus was over $60,000,000, in 1886, over $90,000,000, and in 1888, it had reached $119,612,115. The treasury officials, therefore, in order to avoid a direct contraction of the currency through an accumulation of money in the treasury, began to purchase outstanding bonds. In 1886, these purchases amounted to $50,000,000; in 1887, $125,000,000; and in 1888, $130,000,000.

President Cleveland, therefore, in his annual message to the Fiftieth Congress, December 6, 1887, dwelt chiefly on the question of revising the tariff. He called attention to the enormous surplus in the treasury and urged Congress to reduce taxation.†

*Burton, Sherman, pp. 337-343. For the various interstate commerce bills introduced see McPherson, Handbook of Politics, 1880, pp. 70-72; 1882, pp. 125-129; 1886, pp. 10-26, 136-146, 233, 234; 1888, pp. 7-13.

Richardson, Messages and Papers, vol. viii., pp. 580-591; McPherson, Handbook of Politics, 1888, pp. 91-96; G. F. Parker, The Writings and Speeches of Grover Cleveland, pp. 72-87; J. L. Whittle, Grover Cleveland, pp. 88-109; Hensel, Cleveland, pp. 268-284, 298-320; Stoddard, Cleveland, pp. 246-253.

A bill reducing the duties on many articles was therefore prepared and introduced in the House by Roger Q. Mills, of Texas, who called it up for consideration, April 17, 1888. A long debate followed, known as "the great tariff debate of 1888," but nothing of a definite nature was done until after the party conventions for nominating presidential candidates had been held. The debate in Congress then became largely political, for the chief issue in the compaign was the tariff, and speeches were made seemingly for the purpose of prolonging the session without enacting a bill untit after the election. This would thus enable the politicians to enact a law in accordance with the issue of the election.

The bill passed the House on July 21, by a vote of 162 to 114, and was

referred to the Senate. On October 3 the Senate Committee on Finance reported its revision of the bill, the chief feature of the revision being a reduction of 50 per cent. in the duty on sugar. As the debate in the Senate was not finished at the close of the session, October 19, the Senate Finance Committee took the matter under consideration. In the meantime Harrison was elected President. When Congress again convened the matter was taken up in the Senate and debated nearly every day until January 22, 1889, when the amended bill was adopted as a substitute for the Mills bill by a vote of 32 to 30. The House then again

took up the bill, but nothing further was done by that Congress."

great

These years has been years of great prosperity, tested by the usual rules.† Profits averaged well upon a large amount of business; the consumption of iron more than doubled; and after 1885, confidence in railroad enterprises having been restored, capital was freely spent in railroad construction, 12,982 miles of railroad being constructed in 1887.||

But labor troubles had been intermittent and some of them were very formidable. The working classes had combined into unions for the purpose of combatting the power of the great industrial corporations, but the local unions found themselves powerless. A local society, the "Knights of Labor," was then developed into a national organization. This society This society had only 52,000 members in 1883, but in 1886 the membership had grown to 500,000. The object of this order was to unite all classes and kinds of labor into one large and powerful organization, so that should a corporation or firm oppress its employees, the entire membership of the organization would refuse to buy the products of such

* Stanwood, Tariff Controversies, vol. ii., pp. 226-242; Dewey, Financial History, pp. 423-425; Sherman, vol. ii., pp. 1004-1010; Burton's Sherman, pp. 344-348; McPherson, Handbook of Politics, 1888, pp. 147-166; 1890, pp. 169-185.

For details see David A. Wells, Recent Economic Changes, chap. iv.

+ See Reports of the American Iron and Steel Association for April, 1887, and May, 1888.

Lauck, Panic of 1893, pp. 3-4, giving a table showing the construction by States, compiled from Poor's Manual of Railroads.

37

firm or corporation or to deal with those who bought or sold them. Thus the boycott was its principal weapon.

*

These boycotts increased in number and effectiveness, but their very ef fectiveness wrought harm to the labor cause, for the local assemblies, after one or two successes, went beyond the control of the central organization. A system of local dictators sprang up and these "rings rings" became tyrannical as well as irresponsible, ordering strikes whenever it so suited them, with or without cause, and in consequence business was in a very unsettled state during 1886 and 1887. Strike after strike took place.†

In May, 1886, large labor demonstrations took place in several cities, particularly in Chicago, where about 30,000 men paraded the streets. The principal demand was for a law restricting the hours of labor to eight a day, but this the employers were unwilling to concede. These demonstrations were peaceable at first, but later developed into turbulent mobs.

In Chicago, the McCormick Reaper Works was attacked, but the mob was finally driven off by the police after considerable damage had been done to the property and many people had been injured. The culmination of the

* Carroll D. Wright, Industrial Evolution of the United States, p. 246 et seq., and the same author's article on the Knights of Labor, in the Quarterly Journal of Economics (January 1887). See also Richard T. Ely, The Labor Movement in America, pp. 75-88.

See the Report of the American Iron and Steel Associations for April 1887. See also Wright's Industrial Evolution, p. 297 et seq.

agitation was the Haymarket Square Massacre of May 4, 1886, when about 70 policemen and laborers were killed and wounded by a bomb thrown by an anarchist.

A meeting of the unemployed had been called and several speeches had been made, which, though inflammatory, did not violate the law of free speech. But a man by the name of Fielden became so violent in his speech that a squad of police was ordered to the square to quiet the rising storm. Finally Fielden was told to distold to discontinue his speech and the crowd was ordered to disperse. Fielden shouted "To arms!" and at that moment a bomb was thrown into the midst of the police squad. It exploded and caused great consternation. The police fired a volley from their revolvers and a battle ensued with the fatal results above mentioned. Spies, Parsons, Fischer, Neebe, Engel, Ling, Fielden, and Schwab, all of whom were leaders in this affair, were arrested and tried as accessories before the fact. Spies, Fischer, Parsons and Engel were hanged on November 11, 1887; Ling committed suicide in jail; and Fielden and Schwab were sentenced to prison for life and Neebe for a term of fifteen years. In 1893, however, Governor Altgeld, on the petition of many prominent persons, pardoned the last three, as the evidence was insufficient to prove that they were connected with the actual throwing of the bomb.*

The trust question now became prominent in the political platforms, the remedies the remedies suggested depending upon the party. These combinations with enormous capital began to stifle competition, using their capital not only to extend and better their own manufacturing plants but to buy off aggressive and successful rivals that they might shut down competing mills.* But even these combinations were not able to stay the trend of the markets. The crop conditions in the West had taken a turn for the worse and the yield was largely reduced. European production on the other hand had enormously expanded and India and India and the Argentine Republic were shipping 50,000,000 bushels of wheat per year to the foreign market. This competition therefore cut down the grain exports. Beside this the manufacturing industries of this country had also witnessed a similar condition of affairs.+ European manufactures, and especially those of England, had reached an unprecedented volume, and this resulted in an aggressive search for

The principle of the trust-combination for more economic production that prices to the public might be reduced was good in itself, but its practical operation was otherwise. When competitors were shut off and a monopoly of trade secured no matter how the selling prices of merchandise were raised, but the cost of production remained the same, thereby enabling the trusts to pile up enormous amounts of capital for use as they saw fit. For the history of such combinations see Moody's The Truth about the Trusts; Luther Conant, Jr., Industrial Combinations in the United States.

See the Report of the American Iron and Steel Association for January, 1889.

outside markets.

The United States was the market chiefly sought and imports of all kinds began to flow into this country.

The United States was now buying more goods from foreign markets than it could pay for immediately and consequently industrial stocks and bonds were sent to foreign creditors to settle balances. "The net importation of $33,000,000 in gold during the year 1887 in the face of a balance of more than $23,000,000 in merchandise exports in favor of the United States also showed that a large amount of our stocks and bonds were being quietly bought by foreign investors in the open markets."*

The imports of merchandise, however, soon outstripped our exports and the excess over exports went bounding upward, thus greatly increasing the revenues of the government from customs receipts. Furthermore, the internal revenues had been largely increased by the greater consumption of domestic products as a result of our expansion in wealth and population. The natural result of these conditions, therefore, was a large increase of the surplus in the treasury which, because the government could find no outlet into the channels of trade, soon threatened to impede the movement of crops and other commercial and financial operations.

A remedy was now sought, but the protectionist majority in the Senate refused to consider the most practical

Lauck, Panic of 1893, p. 11.

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solution - reducing revenues by lowering tariff duties — and - and another method of reducing the surplus was employed. As the public debt which was redeemable at par had already been extinguished, Congress was asked by the treasury officials for authority to purchase the government's unmatured bonds at a premium. In April, 1888, such authority was given; during the next two years $45,000,000 had been paid out in premiums, and by 1890, the total interest-bearing debt of the country had been reduced to $725,313,110.*

Under these conditions the presidential election of 1888 was fought. The candidates were as follows:

expense "by reforming the tariff and reducing the revenues. The Republicans, on the other hand, said they were "uncompromisingly in favor of the American system of protection." Continuing they said they "would effect all needed reductions of the national revenue by repealing the taxes upon tobacco and the

tax upon spirits used in the arts and for mechanical purposes, and by such revision of the tariff as will tend to check imports of such articles as are produced by our people." This of course meant increase, not decrease, but if this were not sufficient the party declared for "entire repeal of internal taxes, rather than the surrender of any part of our protection system." But instead of recommending a reduction in expenditures the party demanded" appropriations for the early rebuilding of our navy; for the construction of coast fortifications; for the payment of just pensions to our soldiers; for the necessary works

of national importance in the improvement of harbors and the channels of internal, coastwise and foreign commerce; for the encouragement of the shipping interest."

The election resulted in favor of Harrison and Morton, for although they received 100,000 popular votes less than Cleveland and Thurman, they secured an electoral vote of 233 against a vote of 168 for the latter.* Both branches of the next Congress would be Republican by small majorities.

* Stanwood, History of Presidential Elections, pp. 413-415, and History of the Presidency, pp. 457-485; McClure, Our Presidents and How We Make Them, pp. 316-336; McPherson, Handbook of Politics, 1888, pp. 182-191, 1890, pp. 26-35; Andrews, Last Quarter-Century, vol. ii., pp. 157168; Sherman's Recollections, vol. ii., pp. 10221032; McClure's Recollections, pp. 138-142; Hoar's Autobiography, vol. ii., pp. 409-415; Lew Wallace, Benjamin Harrison, p. 269 et seq.; Stoddard's Cleveland, pp. 255-263; Whittle's Cleveland, pp. 123-128; Porter and Boyle, Life of William McKinley, pp. 179-189; Murat Halstead, Life and Distinguished Services of William Mo Kinley, pp. 69-72.