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Under the act generally, coffee, tea, different, taken in conjunction with hides, molasses and sugar were put on the expenditures, from that anticithe free list, but the President was pated by its projectors. President authorized to put them on a dutiable Harrison urged upon Congress in his list in retaliation against any country annual message of December 3, 1889, which should, in his judgment, un- that large appropriations be made for justly tax our exports. An impost river and harbor work, for coast dewas placed on eggs at 5 cents a dozen; fences, and for pensions. This was an

a the tariff on wool and woolen goods, unnecessary suggestion, for Congress, meats, grains, potatoes, butter, tin as it was now constituted, was in a plate and tin ore was raised; a bounty mood to spend money without urging. was granted on all sugar grown in the While the framers estimated the total United States; and the duty on steel annual reduction in the revenue from rails, bar iron, etc., was reduced.* the McKinley Act at $13,000,000, they But Blaine's efforts did not count

failed to take into consideration that for naught, as in the course of a little they had removed the duty on sugar more than a year reciprocity treaties (which in 1889 amounted to $55,976,had been negotiated with Brazil, Feb

228 and was one of the largest items ruary 5, 1891; with Spain for Cuba

of public revenue), and that to offset and Porto Rico, August 1; with Eng

this the imports even at the increased land on behalf of Jamaica, Trinidad, rates of the act must remain the same, Barbadoes, Guiana and the Leeward

or higher. Furthermore the increased and Windward Islands; with Santo

rates tended to check importations Domingo, August 1; Guatemala, May

and thus to curtail customs receipts, 18, 1892; Salvador, December 31, 1891;

or the imports might fall off from Honduras, April 30, 1892; Nicaragua,

natural causes. This failure to anticiMarch 12, 1892; Germany, February 1, 1892; and Austria-Hungary, May

pate every change was brought

sharply to the notice of Congress, for 26, 1892. But the McKinley tariff had a result during the first fiscal year in which

the tariff act was in force the actual Laughlin and Willis, Reciprocity, pp. 65-69, decrease in revenue was $52,200,000; 105–206; Proctor, Tariff Acts, pp. 325-380; Stanwood, Tariff Controversies, vol. ii., pp. 263-276;

in the next year the revenues had Pierce, The Tariff and the Trusts, pp. 289-291. fallen $15,600,000 further, so that in† Laughlin and Willis, p. 208 et seq.; Dewey,

stead of $13,000,000 reduction the Financial History, pp. 438–440; Porter and Boyle, McKinley, pp. 407-410; Hamilton's Blaine,

actual amount was nearly $100,000,PP. 683-691;

and Crawford's Blaine, chap. 000.* xxxiv, pp. 631-644, “Mr. Blaine's Reciprocity

Therefore, as the surplus from the Policy.” For proclamations see Richardson, les8ages and Papers, vol. ix., p. 302, footnote; Mc- year 1889 was $105,053,443, the marPherson, Handbook of Politics, 1892, pp. 178–193 ; Proctor, Tariff Acts, pp. 381-410.

* Noyes, American Finance, pp. 131-136.

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gin for expenditures was not great exchanged for notes.*

,

This plan but Congress in its first session under would entail an enormous loss to the Harrison appropriated $79,000,000 government if the price of silver more than in the preceding session should drop, for it would take that and in the following year increased much more bullion to redeem the outthis amount by $35,000,000. A season standing notes. But Windom thought of deficits set in, but in each case the his plan would create a sort of “ cortreasury was enabled to struggle along Der" in the silver market and raise with the aid of a temporary expansion the price. in revenue which followed.

In pursuance to the Secretary's In the meantime Secretary of the recommendation, the House passed a Treasury Windom had been working bill, introduced by McKinley on June on the problem of currency reform, 5, 1890, providing for the purchase of and as the protectionists needed the $4,500,000 of bullion monthly, making votes of the Representatives from the the notes issued for the bullion legalsilver-producing States to pass the tenders“ redeemable, on demand, in tariff bill then pending, a concession coin.” But the Senate substituted a

. was made to them in the currency free-silver coinage bill by a vote of 42 legislation. As the administration was to 25 and sent it back to the House. against the free coinage of silver, Representative Bland then proposed Secretary Windom undertook to frame that the Senate substitute be accepted. a compromise. He proposed to buy This was defeated by a vote of 135 to

. up at market price the entire annual 152,1 and the bill went to a conference silver output of the world and issue committee.I A compromise was efnotes in payment, storing the silver in fected there chiefly by the efforts of the meantime in bulk at Washington. Senator Sherman;// and the bill beThe notes were to be issued “ against came known as the Sherman Purchase deposits of silver bullion at the mar- Act, being finally enacted into law (in ket price of silver when deposited.” the Senate July 10, by a vote of 39 to but redeemed “ on demand in such 26 and in the House July 12, by 122 to quantities of silver bullion as will 90). It was approved July 14, 1890. equal in value, at the date of presen- By this act it was declared to be the tation, the number of dollars ex

* See the Annual Report of the Secretary of the pressed in the face of the notes at the

Treasury for 1889; Hepburn, The Contest for market price of silver, or in gold at Sound Money, pp. 232–234, 314-315. the option of the government, or in

† Watson, American Coinage, pp. 162-165.

I Record, vol. xxi., pp. 6503-4. silver dollars at the option of the

|| See his Recollections, vol. ii., p. 1070 et seq. ; holder.” Under this plan Secretary also Burton's Sherman, pp. 365–372. Windom estimated that $37,000,000

§ Record, vol. xxi., p. 7226.

votes see McPherson's Handbook of Politics, 1890, worth of bullion would be annually pp. 143-157.

For the various

Vol. X-4

policy of the United States to main 1890, silver had fallen below 98 cents tain a parity between gold and silver an ounce. * at the present rates or such rates as Secretary Sherman had also, in the may be provided by law, that silver previous session of Congress, introbullion to the amount of 4,500,000 duced a bill “ to declare unlawful, ounces should be purchased monthly trusts and combinations in restraint of and that of the bullion thus purchased trade and production,” but no action 2,000,000 ounces were to be coined at that time was taken upon it. On into standard silver dollars monthly December 4, 1889, Sherman again till July 1, 1891, after which time the introduced this bill and it was referred Secretary of the Treasury should have to the Committee on Finance, whence discretionary power as to the amount it was reported to the Senate Februof dollars to be coined for the redemp- ary 27, 1890. Many amendments were tion of outstanding notes. *

offered and the bill was finally reAs we have seen, therefore, the

ferred to the Committee on the Jutariff bill was then pushed through diciary. On April 2, Mr. Edmunds, with the aid of the silver Representa- chairman of that Committee, reported tives and the two acts were now given a substitute for the bill which on full swing. The tariff act, as already April 8 was passed by a vote of 52 to stated, had proven a disappointment 1. The House then passed the bill and and the silver act was now to show an after being twice referred to conferequally unfavorable aspect. The pas- ence committees it became law by the sage of the silver act created a demand approval of the President, July 2, for silver bullion and the price rose

1890.1 The law, entitled “An act to not only in the United States but all protect trade and commerce against over the world, finally reaching $1.21

unlawful restraints and monopolies,” an ounce (September 3, 1890). But is as follows: the high price had been the result of

“Section 1. Every contract, combination in the a large speculative movement upon form of trust or otherwise, or conspiracy, in rethe stock exchanges, and when the

straint of trade or commerce among the several

states, or with foreign nations, is hereby declared speculators began to take their profits to be illegal. Every person who shall make any a reaction set in, and by December,

such contract, or engage in any such combination or conspiracy, shall be deemed guilty of a misde

meanor, and, on conviction thereof, shall be * Dewey, Financial History, pp. 436-438; Noyes,

punished by fine not exceeding five thousand American Finance, pp. 138-152; Sherman, vol. ii.,

dollars, or by imprisonment not exceeding one pp. 1061-1071; Horace White, Honey and Bank

year, or by both said punishments, in the discre. ing, pp. 202–204; Watson, American Coinage, pp. tion of the court. 157-162; Taus-ig. The Silver Situation, p. 49 et Section 2. Every person who shall monopolize, seq.; J. F. Johnson, Money and Currency, p. 354 et seq.; Lauck, Panic of 1893, pp. 16-31; Hep- * Noyes, American Finance, pp. 153–154. burn, Contest for Sound Money, pp. 315-317, 572- † Sherman, vol. ii., pp. 1071-1076; Burton, 574; Dunbar, Currency, Finance and Banking Sherman, pp. 353-364; McPherson, Handbook of Laws, pp. 250–252.

Politics, 1890, pp. 112-119.

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 de. clared 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 contro. versy, 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 'per. sons,' 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.”

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 subpenas 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

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 rapid in the United States owing to for foreign investment also extended increases in railway and general into Germany. In 1889, however, the dustrial earnings, the activity of inArgentine wheat crop failed; a politi- terior trade and the large exports of cal revolution followed in July, 1890; agriculture crops; and gold, despite and Argentine securities fell so low the situation in Europe, flowed into that London bankers could not realize our markets. on them. This embarrassment caused A change now set in, however, due to the suspension, on November 15, 1890, the continued frantic efforts of forof the firm of Baring Brothers of Lon- eign investors to sell their American don with over $100,000,000 of home securities, the high rates of exchange liabilities.† This failure unsettled the in foreign financial centres, and the American markets as the English in- heavy import of merchandise during vestors had dumped their American the first half of 1891, and gold vended securities (which, as said before, were its way back to Europe. “ The year taken in payment of trade balances) 1891 saw the largest exportation of upon our market and consequently gold in our history, being upwards of gold began to make its way to London. seventy millions in six months, nearly Furthermore, the English stopped all of which was taken out of the their purchases of securities in this Treasury within one year after the country and thus there was no pros- passage of the Sherman act."* " But pect of the gold returning immedi

no such avalanche of specie could ately. The banks were not in a posi- move out indefinitely. Already in tion at this time to withstand this June, 1891, the gold reserve against double strain, and in addition the in- the legal-tenders had fallen below the dustrial activity in the West and low record of 1884

and beSouth had also necessitated the with

low even that of 1885.”. drawal of funds from the East. A

Fortune favored the treasury for stringency then set in and the bank

the European crops were the shortest reserves fell below legal requirements. since 1879 and reversely the United The banks were then forced to call

States produced the largest grain crop into operation their emergency meas

in its history. The English financial ures of 1873 and 1884, the Clearing markets had also recovered and once House at this time issued $15,000,000 again began to purchase American sein loan certificates. But recovery was

curities; consequently nearly $50,000,

*

000 of gold was sent from Europe to * On the general situation see Lauck, Panic of 1893, pp. 35–54; Hyndman, Commercial Crises, p. 151 et seq.

White, Money and Banking, p. 205; Taussig, † Hyndman, Commercial Crises, pp. 156-159 ; The Silver Situation, p. 66. lauck, Panic of 1893, pp. 59-62.

† Noyes, American Finance, p. 163. Noves, American Finance, pp. 156-158; Lauck, | Lauck, Panic of 1893, pp. 79-81; also Reports

of the Secretary of Agriculture.

P: 62-72.

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