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 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

pate every change 1, 1892; and Austria-Hungary, May

was brought 26, 1892.1

sharply to the notice of Congress, for 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 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

a

and

CURRENCY REFORM; SHERMAN PURCHASE ACT.

45

cor

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 treasury was enabled to struggle along ner" 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."

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, 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;ll 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.

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. For the various

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

Vol. X-4

a

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,

a

*

SHERMAN ANTI-TRUST LAW; STATES ADMITTED.

the Argentine Republic. The mania rapid in the United States owing to
for foreign investment also extended increases in railway and general in-
to Germany. In 1889, however, the dustrial earnings, the activity of in-
Argentine 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 wended 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.1 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,

.