Page images


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 appre-
hensions 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 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 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.

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;

The city authorities, being powerless, Appleton's Annual Cyclopædia, 1892; also the

* Coman, Industrial History, p. 302 (edition of 1905).

testimony before the Judiciary Committee as to the employment of Pinkerton detectives, House Misc. Doc. No. 335, 52d Congress, 1st session.


then withdrawn and order was restored.

With these events still fresh in mind the presidential elections were held. The candidates were as follows:







Benjamin Harrison, Ind.. Whitelaw Reid, N. Y.
Grover Cleveland, N. Y. . Adlai E. Stevenson, Ill.
John Bidwell, Cal.
J. B. Cranfill, Texas.
James B. Weaver, Iowa.. James G. Field, Va.
Simon Wing, Mass.. Charles H. Matchett, N. Y.

In the Democratic convention there.

had been a fight on the tariff plank, but as finally adopted it declared that the Constitution did not give the Federal government power to impose and collect tariff duties except for revenue purposes. In this platform the trusts were denounced, and the party promised to enact laws, if the candidates were elected, to prevent and control them. The convention also adopted the following money plank:

[ocr errors]

We hold to the use of both gold and silver as the standard money of the country, and to the coinage of both gold and silver without discrimination against either metal or charge for mintage, but the dollar unit of coinage of both metals must be of equal intrinsic and exchangeable value or be adjusted through international agreement, or by such safeguards of legislation as shall ensure the parity of the two metals, and the equal power of every dollar at all times in the markets and in the payments of debts; and we demand that all paper currency shall be kept at par and redeemable in such coin."


Missouri, New Jersey, New York, North Carolina, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin, while Harrison carried only Iowa, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Hampshire, South Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wyoming. The Populist candidate, Weaver, carried Colorado, Idaho, Kansas, Nevada, North Dakota, and received one of the electoral votes of Oregon. Mr. Cleveland's popular majority over Mr. Harrison was 380,610, and the vote in the electoral college stood: Cleveland, 277; Harrison, 145; Weaver, 22. The Senate and the House were also Democratic.*

Cleveland and Stevenson were inaugurated on March 4, 1893, and the new President appointed the following as the members of his Cabinet: Secretary of State, Walter Q. Gresham, of Illinois, who was later succeeded by Attorney-General Richard Olney, of Massachusetts; Secretary of the Treasury, John G. Carlisle, of Kentucky; Secretary of War, Daniel S. Lamont, of New York; Secretary of the Navy, Hilary A. Herbert, of Alabama; Secretary of the Interior, Hoke Smith, of Georgia; Attorney-General, Richard Olney, of Massachusetts, who upon taking over the portfolio of State, was replaced by Judson Har

The election resulted in a sweeping Democratic victory, Mr. Cleveland carrying Alabama, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, Porter and Boyle's McKinley, pp. 217-224.

*Stanwood, History of Presidential Elections, pp. 456-493, and History of the Presidency, pp. 486-518; McClure, Our Presidents and How We Make Them, pp. 337-359: Sherman, vol. ii., pp. 1160-1174; Whittle's Cleveland, pp. 134-145;

mon, of Ohio; Postmaster-General, Wilson S. Bissell, of New York, followed by William L. Wilson, of West Virginia, in 1895; Secretary of Agriculture, J. S. Morton, of Nebraska.

Previous to the election the condition of the treasury had been precarious, and the Secretary made strenuous efforts to maintain the redemption fund above $100,000,000. In the latter part of 1892 and the early part of 1893 the drain on the reserve had been heavy, but the banks advanced enough gold to the government so that when the Cleveland administration came in the new Secretary of the Treasury had "$100,982,410 in the gold reserve and barely $25,000,000 in other forms of money." This condition of affairs unsettled the money market, for it was feared that the government would not be able to redeem the legal-tender notes in gold coin. This, therefore, was the chief cause of the panic of 1893. The utterances of the Secretary of the Treasury did not allay the feelings of apprehension and the public mind was on the verge of panic, ready to be swept into active eruption or com

[blocks in formation]

placent quiescence as the course of events might decide.

But events were adverse to a peaceful solution of the difficulty. On February 20, 1893, the Philadelphia and Reading Railway, with $40,000,000 capital and $125,000,000 debt, went into bankruptcy, followed on May 5 by the National Cordage Company, with $20,000,000 capital and $10,000,000 liabilities. As the stocks of these companies were largely delt in on the exchanges, the failures caused a slump, carrying with them the whole stock market. On June 26 the government of British India suspended the free coinage of silver and the price of silver dropped from 82 cents to 67 cents per ounce in three days. Later came the announcements of the failure of the Erie Railroad (July 25), and the suspension of the Milwaukee Bank. Bank depositors became frightened and withdrew their deposits, the strain being particularly violent on the New York banks, the reserves falling below the legal requirements of 25 per cent. on July 8 and continuing so until September 9. The Western banks now began to call their loans placed with New York banks, and to keep these banks from suspending the Eastern banks during July shipped as much as $11,000,000 in cash each week to the interior.

*For the range of prices of stocks see Lauck, Panic of 1893, p. 99.

Horace White, Money and Banking, p. 202. Noyes, American Finance, p. 192 et seq. Lauck, pp. 100, 101, says that "the deposits of the Clearing House, which were $431,000,000 in round numbers on June 3, had been reduced by August 29 to $370,000,000."


It was obvious that this state of affairs could not continue, and as the greater part of the trouble was charged to the Sherman Purchase law, President Cleveland on June 30 convoked the Fifty-third Congress in special session to assemble on August 7 to enact remedial legislation. Upon assembling Cleveland transmitted a message in which he asked for the repeal of the Sherman silver act.* A bill carrying such a provision was introduced August 11 by William L. Wilson, of West Virginia, and passed without amendment by the House, August 28, by a vote of 239 to 108.† The Senate, however, did not act upon the bill for two months, but it was finally passed by that body (October 30 by a vote of 43 to 32 and by the House on November 1 by a vote of 194 to 94). It was signed by the President November 1 and became law.||

But the action of Congress was of no material benefit to the country at this juncture - it had come too late§ though the House by its vote on August 28 helped to restore confidence in the country's financial integrity. "In December, 1893, the comptroller

[blocks in formation]


of the currency announced the failure during the year of 158 national banks, 172 state banks, 177 private banks, 47 savings savings banks, 13 loan and trust companies and six mortgage companies. Some of these institutions afterward resumed business, but the permanent damage was great. Bank clearings were the lowest since 1885 *

"The production of coal, both anthracite and bituminous, fell off; the output of pig-iron, which had been about 9,157,000 tons in 1892, fell to 6,657,000 tons in 1894; new railway construction almost ceased; in 1894 there were 156 railways, operating a mileage of nearly 39,000 miles, in the hands of receivers * * *. The total capitalization in the hands of receivers was about $2,500,000,000, or onefourth of the railway capital of the country.

commercial failures

increased from 10,344 in 1892, with liabilities of $114,000,000 to 15,242 in 1893, with liabilities of $346,000,000."'+

"More than two hundred railway companies, representing fifty-six thousand miles of track and one-fourth of the railway capital of the country, went into the hands of receivers between 1892 and 1896."

"Commercial failures alone in 1893 were three times as numerous as those of 1873 and the aggregate liabilities

Dewey, Financial History, p. 446; Annual Report of the Comptroller of the Currency, 1893, p. 80; Noyes, American Finance, p. 193 et seq.; Lauck, Panic of 1893, p. 107.

Dewey, Financial History, p. 446.

Coman, Industrial History, p. 321 (edition of 1905).

« PreviousContinue »