Authors:
Historic Era:
Historic Theme:
Subject:
October 1957 | Volume 8, Issue 6
Authors:
Historic Era:
Historic Theme:
Subject:
October 1957 | Volume 8, Issue 6
When Charles Francis Adams called what happened to the United States in 1893 its “most deep-seated financial storm,” his metaphor was weak. More than a storm, it was a major earthquake, a violent onset of national growing pains which upheaved the young country’s financial crust and shook the whole continental economy along major fault lines.
The Republicans’ high protective tariffs had put fat gold surpluses into the Treasury which not even Republican largess to Civil War pensioners depleted. But the tariffs and gold were no good for farmers, just then in a run of their leanest years. Despairing for cheaper money and more of it, the westerners turned to silver, of which some of the new states just admitted to the Union had mountains at bargain prices. In 1890 their senators very nearly obtained the free and unlimited coinage of silver. When the Republican-controlled House blocked that, the compromise Sherman Silver Purchase Act required the Treasury to buy 4,500,000 ounces of the white metal per month (the estimated total U.S. output), at market, and to issue notes against it redeemable either in silver or in gold. Most people, of course, took gold.
This was a particularly hazardous fiscal gesture at a time when European countries, and even Russia and India, had demonetized silver. The way foreigners queued up at his Treasury windows to get something for nothing gave Uncle Sam one of his early glimpses of himself as Uncle Sucker.
By putting on their ticket little Adlai E. Stevenson of Illinois, a former assistant postmaster general and a flirt with the Populist movement, the Democrats in 1892 were able to re-elect New York’s trusted Grover Cleveland as President. No friend of soft money or Treasury raids, Cleveland had stood against both in his 1884–88 term, and he still maintained his opposition. But even before he retook office, the earthquake was in motion and much of the havoc wrought.
More than $100 million in silver notes had been issued, redeemable in gold. The gold reserve was down from $185 million to $101 million and was soon to fall lower yet. That winter and spring of 1893, the Treasury was kept solvent only by omitting sinking fund payments and not spending appropriations voted by Congress.
The clang of closing bank doors reverberated through the land; 642 would shut this year. Savings banks required thirty days notice for withdrawals. Call money was 60 per cent in March and headed for 73 per cent. In February the solid old Reading Railroad went into receivership.
As unemployment spread, not only did panic grip industrialists and financiers, but stark desperation and actual starvation gripped the working masses. Not for another year would Coxey’s Army march on the White House, but Grover Cleveland could already hear it being recruited. His solid sense was sickened, and his honest heart.
The whole trouble, he saw, was the Silver Act, which only he might be able to get Congress