The year 1890 was further noteworthy as marking the birth of that unfortunate compromise of the silver agitation known as the Sherman silver-purchase law, which was to bring about such direful results within a brief three years. After the shock of the Baring panic had subsided, the beneficial effects of the McKinley tariff law began to be felt and with increased exports, largely of grain, in the succeeding year, together with ample protection for home industries, we were ushered into 1892 under very auspicious circumstances.
Bountiful crops again provided a basis for what developed into a wonderfully prosperous year. During the year, Jay Gould (largely through the aid of his son George), by one of his characteristic strokes, succeeded in obtaining control of the Union Pacific system, while Mr. Huntington was thinking the matter over; but his personal control was not to last very long, for in December of that year, Mr. Gould died, after a career of great activity and venturesomeness, which has elsewhere been reviewed in this book.
J. B. Clews
The Democratic party still clung to their idol, and Mr. Cleveland was renominated for the presidency in 1892, and by one of those inexplicable turns of public opinion which foolishly wished a change of administration in the midst of prosperous times, he was elected, and returned to Washington the following March, be it said, enjoying the confidence of the great majority of the people. Almost from the time of that election, the Wall Street markets were depressed, the fear of free trade measures being the basis of distrust. Late in the year, the Treasury’s stock of gold began to show signs of diminishing, and with the exception of a few rallies, one notably in the following January, prices continued on the downward course. Co-incident with the decrease of gold reserves arose reports of a disposition on the part of the Secretary of the Treasury to interpret the word “coin” in our Government obligations as allowing the redemption of the bonds in either gold or silver at the option of the Government. The effect of any doubt or question upon this most important subject could only result in unsettling confidence; of which Addison speaks as the “high priest in the temple of trade.” For the first time in very many years, our Treasury operations showed a deficit, and things were going from bad to worse. The first great smash in prices occurred in May, when the famous Cordage Trust went to pieces. At the same time, Sugar stock and the remainder of the then few industrial shares took part in the sharp decline. The gold reserve had by the middle of the year reached alarmingly low figures, so that the pressure of public opinion compelled the calling of an extra session of Congress for the purpose of repealing the silver purchase clause of the Sherman law,—which had proved to be a veritable “Old Man of the Sea” upon the back of the country, threatening to throttle business interests everywhere.
The Congressional procrastination, and obstructive tactics in the Senate worked havoc with trade and finance, and when relief finally came in the repeal of the silver purchase clause, the vitality of the patient had sunk so low, that it was a matter of years before returning health, in the form of confidence, brought back our native buoyancy and push. It became necessary early in the following year to issue $50,000,000 worth of bonds in order to keep the gold reserve from getting too near the vanishing point. Tariff agitation, which had been started by President Cleveland’s message to Congress in December, 1893, upset all the calculations of business men, who hoped, after a disastrous summer, that the tide had turned. But, no sooner was the fear of a silver deluge quieted, than revenue reform brought on another period of anxiety and delay. Fortunately when that distorted measure (with its 640 Senate amendments) which bore the name of the late William L. Wilson, a man of deep thought and the highest integrity, did become a law in the following year, it was not burdened with an income tax.
There are those who argue, probably to their own satisfaction, that this latter is an equitable form of taxation, but it has always appeared to me as putting a premium on idleness by taxing thrift.
ROSWELL P. FLOWER.
Another issue of $50,000,000 bonds was necessary before the year was out, and in spite of this replenishment, gold exports to pay our debts to Europe for securities sent back to us by the ream, continued in such volume as to render a further issue imperative in the following February. This will be remembered as somewhat unique in our Treasury operations, being in the form of a purchase of 3,500,000 oz. of gold, which cost the Government $62,500,000. The famous syndicate which undertook the delivery of the precious metal, agreed to do all in its power by the further deposit of gold in the Treasury and as far as possible, a control of foreign exchange rates to keep the reserve intact. Its powerful aid unquestionably saved the people from many more business disasters, by a bolstering up of confidence in the power of the Government to pay its debts. The syndicate lived up to its agreement fully, depositing in the month of August some seven and a half millions of gold.