References.—See bibliographical notes to Chapters XXXIV. and XXXV.
| [291] | In 1867 Secretary Seward concluded a treaty with Russia, by which the United States secured for $7,200,000 the sparsely populated northwestern territory of Alaska, containing over 530,000 square miles. |
CHAPTER XXXVII.
second administration of cleveland, 1893–1897.
FINANCIAL LEGISLATION.
644. Character of the Administration.—Although Cleveland began his second administration with a Democratic majority in both houses of Congress,—something that had not been known since the outbreak of the war,—he was not able, for two reasons, to make as successful a record as he had made during his first term. The pension, tariff, and monetary legislation of Harrison’s administration brought about great financial disturbances, which lost the Democrats the control of the House of Representatives and hampered Cleveland; while the latter’s own party, the Democrats, broke away from his leadership and adopted many of the extreme, more or less socialistic views of the People’s Party. Cleveland himself, although he increased the number of offices subject to Civil Service rules and made good appointments, failed to maintain tactful relations with the Democratic leaders and even lost some of his hold upon the people at large. Nevertheless, he administered his duties with such firmness and honesty that it would be unjust to describe his second administration as a failure.
645. Industrial Causes of the Panic of 1893.—On taking up his duties, the new President found himself confronted with a serious financial crisis. The prospect of change in the tariff and in the currency had unsettled financial and commercial activity. The manufacturers of the country relied on the aid of high protective duties, but the Democratic victory had been so sweeping that they feared the tariff would be either greatly modified or swept away. They argued that in this case the country would be flooded with foreign articles, and that prices would be so reduced as to bring disaster to all who had domestic goods on hand. As soon, therefore, as it seemed probable that the Democrats would carry the election, manufacturers very generally suspended operations in their shops, and thousands of workmen were thrown out of employment. From this cause there was an immediate stagnation of business, which helped to bring on financial distress.
646. Financial Causes of the Panic.—There was another cause of business depression, which is more difficult to explain, but which had a still more disastrous influence. The greenbacks not redeemed in 1879 (§ [605]), but still subject to redemption, amounted to more than $346,000,000. The Silver Purchase Act of 1890, as we have already seen (§ [635]), directed the Treasurer to buy silver bullion at the rate of $4,500,000 a month and pay for it with new notes that were “exchangeable for coin.” Now the government interpreted “coin” to mean gold. In this way the notes in circulation redeemable in gold increased, till, in 1893, they amounted to nearly $500,000,000. As the number was constantly increasing at the rate of $4,500,000 a month, the people began to distrust the ability of the government to redeem the notes. This distrust of itself would have made a financial crash inevitable, but the condition was made worse by the decline in the price of silver, to which reference has several times been made (§ [634]).
647. Decline in the Price of Silver.—In twenty years the value of silver had fallen from one dollar and thirty cents an ounce, till in 1893 it was worth only about eighty cents. People in Europe, as well as in America, naturally feared that our government might interpret the word “coin” to mean silver as well as gold, and might choose to redeem its notes in the cheaper metal. This fear led business men everywhere to desire the redemption of their bonds and notes before the government should begin to pay silver. Foreign investors sent back their bonds for redemption, while the people at home in many cases even drew their money from banks through fear that the latter would soon not be able to meet the demands for gold made upon them. These various influences caused a financial crash about two months after Cleveland’s inauguration. More than three hundred banks either failed outright or suspended payment; business men found it impossible to borrow money on any terms, and thousands of failures in business followed.