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.

solution reducing revenues by lowering tariff duties and duties 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. 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.*

In

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.