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CHAPTER IV.

1889-1896.

INDUSTRY, COMMERCE, AND FINANCE.

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President Harrison inaugurated · His Cabinet - Pan-American Conference
Blaine's efforts to secure reciprocity -Act passed-Result-Silver bill
Trust Law

- Idaho and Wyoming admitted

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McKinley Tariff Bill -passed - Sherman AntiOklahoma Territory formed Unstable condition of financial markets - Change in political conditions-Labor troubles - Presidential elections Cleveland inaugurated — Panic of 1893― Repeal of Sherman Silver Law - Destitution among unemployed-Strikes - Agricultural crops fail - Wilson Tariff bill-Efforts to maintain gold reSilver question Utah admitted - World's Fair at Chicago-Cotton States Exposition.

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Harrison and Morton were inaugurated March 4, 1889, and the President appointed the following men as his Cabinet officials: Secretary of State, James G. Blaine, of Maine; Secretary of the Treasury, William Windom, of Minnesota, who was succeeded by Charles Foster of Ohio, in 1891; Secretary of War, Redfield Proctor, of Vermont; Attorney-General, W. H. H. Miller, of Indiana; Postmaster-General, John Wanamaker, of Pennsylvania; Secretary of the Navy, Benjamin F. Tracy, of New York; Secretary of the Interior, John W. Noble, of Missouri; Secretary of Agriculture, Jere M. Rusk, of Wisconsin.

Immediately after he had been appointed Secretary of State, Mr. Blaine again urged the formation of a closer union with the South American republics.* In pursuance of his plan

* For the circular letter of November 29, 1881, see Freeman Snow, Treaties and Topics, pp. 314316

he issued an invitation to eighteen countries to send representatives to meet at Washington, October 2, 1889.* Regular sessions were held down to April 19 of the following year. Special committees, were appointed and mutual interests discussed. The reports of the committees were in the majority of cases approved, such as that on an intercontinental railway (see Records of the Conference, vol. i., pp. 93-102); on an international monetary union (Ibid, vol. ii., pp. 624-828); on an international bank (Ibid, vol. ii., pp. 829-875); on the adoption of the metrical decimal system (Ibid, vol. i., pp. 77-92); and on subsidies to steamship lines plying between the ports of the two divisions of the continent

*The history of the legislative action on this subject is given in the fourth volume of the Proceedings of the International American Conference. The countries represented were Mexico, Honduras, Guatemala, Costa Rica, Salvador, Hayti, Nicaragua, Columbia, Venezuela, Brazil, Argentina, Chili, Peru, Bolivia, Uruguay, Paraguay, Ecuador and the United States.

(Ibid, vol. i., pp. 264-342). After a long debate the conference adopted a treaty of arbitration, but this treaty "failed to receive the approval of the governments whose representatives adopted it."'*

The subject of reciprocity received considerable attention, but nothing definite was done. The discussion had some effect, however, on the reciprocity clause of the McKinley tariff act which was introduced in Congress April 16.†

Two of the immediate results of this Pan-American conference were the establishment of the International Bureau of American Republics for the purpose of disseminating information concerning these countries, and the development of the project for the Pan-American Railroad which is to complete a chain of railroads between the countries of South America and the United States.‡

In accordance with the recommendations of the first congress, delegates to an international monetary conference assembled at Washington January 7, 1891. Delegates from Bolivia, Brazil, Chili, Columbia, Hawaii, Hayti, Honduras, Mexico, Nicaragua, Peru, Uru

* Moore, American Diplomacy, p. 127. The text of the proposed agreement is given in Snow, Treaties and Topics, pp. 323-326. The Records of the Conference, vol. ii., pp. 954-1083, gives the proceedings in connection with this agreement in full

Laughlin and Willis, Reciprocity, pp. 133-138. (The Baker & Taylor Co.)

Hamilton's Blaine, pp. 677-683; Crawford's Blaine, pp. 608-614; Stanwood's Blaine, pp. 315317. See also Intercontinental Railway Commission Reports of surveys, etc.

guay, Venezuela and the United States were present. But though the meetings extended into the month of April no steps were taken to enforce uniformity.

President Harrison had been elected upon a platform calling for a revision of the tariff, and his administration, therefore, is primarily memorable for the tariff law known as the McKinley Act. On April 16 William McKinley reported from the House Committee on Ways and Means a bill" to reduce the revenue and equalize duties on imports." It was debated from May 7 to 21 and was passed by the House on the latter date, with various amendments, by a vote of 164 to 142.†

Much of the credit for the introduction of this bill is due to Secretary Blaine, for while the Pan-American Conference was in session the question of reciprocity with other nations had been seriously discussed and this discussion awakened widespread interest in our foreign trade and created a desire to improve the methods to be employed in its expansion. Therefore, when the terms of the tariff bill, introduced by McKinley, increased the duties over those of previous laws, greatly restricting the free list and was silent upon reciprocity, Blaine, though an ardent friend of protection and a strong believer in reciprocity,

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In an official document prepared by Blaine and transmitted by the President to Congress he recommended:

"An amendment to the pending tariff bill, authorizing the President to declare the ports of the United States free to all the products of any nation of the American hemisphere upon which no export duties are imposed, whenever and so long as such nation shall admit to its ports free of all national, provincial, state, municipal and other taxes, our flour, corn-meal and other breadstuffs, preserved meats, fish, vegetables and fruits, cotton-seed oil, rice and other provisions, including all articles of food, lumber, furniture, and other articles of wood, agricultural implements and machinery, mining and mechanical machinery, structural steel and iron, steel rails, locomotives, railway cars and supplies, street cars and refined petroleum."+

After the passage of the bill through the Senate he wrote to the Boston Journal, September 15, 1890, as follows:

"Finally, there is one fact that should have great weight, especially with protectionists. Every free trader in the Senate voted against the reciprocity provision. The free-trade papers throughout the

*In a speech at Waterville, Me., August 29, 1890, Laughlin and Willis, Reciprocity, p. 186.

Laughlin and Willis, p. 189; Congressional Record, p. 6257, 51st Congress, 1st session; Stanwood, Tariff Controversies, vol. ii., p. 276 et seq.

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On June 18 the bill was reported in the Senate from the Committee on Finance and shortly after, Senator Hale (Republican) introduced amendment along the lines suggested' by Blaine, but it failed. Another amendment was suggested by Senator Sherman, providing a reciprocity arrangement with Canada for the free admission of coal into both countries, and for a joint commission to negotiate a full reciprocity treaty with that country, but this amendment was also defeated. After prolonged debate the bill was passed September 15 in the Senate by a vote of 40 to 29, and sent to the House. A conference committee then was appointed. After the committee had reported, it was passed in the House on September 27 by a vote of 152 to 81 and in the Senate on the 30th of that month by a vote of 33 to 27. The act became a law by the President's signature October 1.§

Laughlin and Willis, Reciprocity, pp. 189190; New York Daily Tribune, September 17, 1890. Record, pp. 6259, 9510, 9908.

Ibid, pp. 9454, 9543-44; Laughlin and Willis, pp. 191-206.

McPherson, Handbook of Politics, 1890, pp. 239-244; 1892, pp. 4-22.

§ Stanwood, Tariff Controversies, vol. ii., p. 262; McPherson, 1892, pp. 22-23; Sherman, vol. ii., pp. 1081-1087; Burton's Sherman, pp. 377-381; Porter and Boyle, McKinley, pp. 325-341.

Under the act generally, coffee, tea, hides, molasses and sugar were put on the free list, but the President was authorized to put them on a dutiable list in retaliation against any country which should, in his judgment, unjustly tax our exports. An impost was placed on eggs at 5 cents a dozen; the tariff on wool and woolen goods, meats, grains, potatoes, butter, tin plate and tin ore was raised; a bounty was granted on all sugar grown in the 'United States; and the duty on steel rails, bar iron, etc., was reduced.*

But Blaine's efforts did not count for naught, as in the course of a little more than a year reciprocity treaties had been negotiated with Brazil, February 5, 1891; with Spain for Cuba and Porto Rico, August 1; with England on behalf of Jamaica, Trinidad, Barbadoes, Guiana and the Leeward and Windward Islands; with Santo Domingo, August 1; Guatemala, May 18, 1892; Salvador, December 31, 1891; Honduras, April 30, 1892; Nicaragua, March 12, 1892; Germany, February 1, 1892; and Austria-Hungary, May

26, 1892.

But the McKinley tariff had a result

*Laughlin and Willis, Reciprocity, pp. 65-69, 105-206; Proctor, Tariff Acts, pp. 325-380; Stanwood, Tariff Controversies, vol. ii., pp. 263-276; Pierce, The Tariff and the Trusts, pp. 289-291.

Laughlin and Willis, p. 208 et seq.; Dewey, Financial History, pp. 438-440; Porter and Boyle, McKinley, pp. 407-410; Hamilton's Blaine, PP. 683-691; and Crawford's Blaine, chap. xxxiv, pp. 631-644, "Mr. Blaine's Reciprocity Policy." For proclamations see Richardson, Messages and Papers, vol. ix., p. 302, footnote; McPherson, Handbook of Politics, 1892, pp. 178-193; Proctor, Tariff Acts, pp. 381-410.

different, taken in conjunction with the expenditures, from that anticipated by its projectors. President Harrison urged upon Congress in his annual message of December 3, 1889, that large appropriations be made for river and harbor work, for coast defences, and for pensions. This was an unnecessary suggestion, for Congress, as it was now constituted, was in a mood to spend money without urging. While the framers estimated the total annual reduction in the revenue from the McKinley Act at $43,000,000, they failed to take into consideration that they had removed the duty on sugar (which in 1889 amounted to $55,976,228 and was one of the largest items of public revenue), and that to offset this the imports even at the increased rates of the act must remain the same, or higher. Furthermore the increased rates tended to check importations and thus to curtail customs receipts, or the imports might fall off from natural causes. This failure to anticiwas brought pate every change sharply to the notice of Congress, for during the first fiscal year in which

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the tariff act was in force the actual decrease in revenue was $52,200,000; in the next year the revenues had fallen $45,600,000 further, so that instead of $43,000,000 reduction the actual amount was nearly $100,000,000.*

Therefore, as the surplus from the year 1889 was $105,053,443, the mar

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

gin for expenditures was not great, but Congress in its first session under Harrison appropriated $79,000,000 more than in the preceding session and in the following year increased this amount by $35,000,000. A season of deficits set in, but in each case the treasury was enabled to struggle along with the aid of a temporary expansion in revenue which followed.

In the meantime Secretary of the Treasury Windom had been working on the problem of currency reform, and as the protectionists needed the votes of the Representatives from the silver-producing States to pass the tariff bill then pending, a concession was made to them in the currency legislation. As the administration was against the free coinage of silver, Secretary Windom undertook to frame a compromise. He proposed to buy up at market price the entire annual silver output of the world and issue notes in payment, storing the silver in the meantime in bulk at Washington. The notes were to be issued " against deposits of silver bullion at the market price of silver when deposited," but redeemed "on demand in such quantities of silver bullion as will equal in value, at the date of presentation, the number of dollars expressed in the face of the notes at the market price of silver, or in gold at the option of the government, or in silver dollars at the option of the holder." Under this plan Secretary Windom estimated that $37,000,000 worth of bullion would be annually

VOL. X-4

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In pursuance to the Secretary's recommendation, the House passed a bill, introduced by McKinley on June 5, 1890, providing for the purchase of $4,500,000 of bullion monthly, making the notes issued for the bullion legaltenders "redeemable, on demand, in coin." But the Senate substituted a free-silver coinage bill by a vote of 42 to 25 and sent it back to the House. Representative Bland then proposed that the Senate substitute be accepted. This was defeated by a vote of 135 to 152,† and the bill went to a conference committee. A compromise was effected there chiefly by the efforts of Senator Sherman;|| and the bill became known as the Sherman Purchase Act, being finally enacted into law (in the Senate July 10, by a vote of 39 to 26 and in the House July 12, by 122 to 90).§ It was approved July 14, 1890. By this act it was declared to be the

* See the Annual Report of the Secretary of the Treasury for 1889; Hepburn, The Contest for Sound Money, pp. 232-234, 314-315.

Watson, American Coinage, pp. 162-165.
Record, vol. xxi., pp. 6503-4.

See his Recollections, vol. ii., p. 1070 et seq.; also Burton's Sherman, pp. 365–372.

§ Record, vol. xxi., p. 7226. For the various votes see McPherson's Handbook of Politics, 1890, pp. 143-157.

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