On February 5, 1895, the Jupiter of American banking, J. P. Morgan, took the train from New York to Washington to see the president. He had no appointment but came to discuss matters of grave national interest. The crash of 1893 had thrown the country into deep depression, exposed a schizophrenic monetary policy, and now the nation’s gold standard stood on the brink of collapse.

The origin of the crisis lay more than two decades earlier, when Congress had decreed a return to the gold standard, which had been abandoned during the Civil War. (The gold standard effectively restrains inflation by requiring that a nation anchors its currency to gold at a set price.) In 1878, Congress passed the Bland-Allison Act, which ordered the Treasury to buy the silver then pouring out of Western mines in ever increasing amounts, at market price and to coin it at a ratio to gold of 16 to 1.

In 1878, the market price of silver was indeed close to the 16-to-1 ratio. But as silver output continued to swell, it dropped to about 20 to 1 by 1890. In that year, Congress passed the Sherman Silver Act, requiring the government to buy even more bullion, 4.5 million ounces a month, and coin it, still at 16 to 1. This policy guaranteed inflation, favored by the poorer areas of the country, such as the South and, of course, the silver-rich West.

Anyone who knew Gresham’s law (“bad money drives out good”) could have predicted what happened next. With silver worth one-twentieth the price of gold in the marketplace but declared to be 25 percent more when coined into money, people began to spend the silver and hoard the gold.

With the government running big surpluses in the prosperous late 1880s and early 1890s, the effect of this monetary policy was masked. But when the crash of 1893 rolled in, bringing deep depression, the trickle of gold out of the Treasury became a flood. By early 1895,bets were being taken on Wall Street as to exactly when the Treasury would run out of gold and default. Two bond issues were sold to replenish the Treasury’s gold supply, but the gold just cycled out again. Congress, with many free-coinage-of-silver members, refused to authorize another issue. That’s when the deeply alarmed Morgan traveled to Washington in early February.

President Grover Cleveland at first refused to see him, but Morgan replied, in his best imperial manner, “I have come down to see the president, and I am going to stay here until I see him.” Cleveland saw him the next morning.

By early 1895, bets were being taken on Wall Street as to exactly when the Treasury would run out of gold and default

Cleveland, his attorney general, and the secretary of the Treasury all still hoped that they could persuade Congress to float another bond issue and thus avoid the embarrassment of having the gold standard rescued by the very symbol of Wall Street. A telephone call from New York