Mr. Cleveland's Second Administration
( Originally Published Early 1900's )
IF Mr. Cleveland had prudently followed up during his second term a few of the strokes of wise policy and, in several instances, the good guiding and prudent management which characterized his first administration, he might have gone down to posterity in the odor of political sanctity; but his two famous object lessons were two unfortunate departures. These two object lessons were Mr. Cleveland's personal interference with the repeal of the purchasing clause of the Sherman Law of I890 relating to silver coinage, and the Wilson Tariff Bill. In order to understand fully the nature of Mr. Cleveland's second administration, it is necessary to recapitulate a few important points intimately connected with his first. After the nomination for his first term, though a Democratic nominee, he owed his election chiefly to those deserters from the Republican party who were designated "Mugwumps." His peculiar relationship to these independent voters made him in reality an independent President. He therefore acted upon the principle that he was the people's President without regard to party lines, and this idea seemed to inspire him with a feeling that, like Napoleon, he was a man of destiny. After Mr. Cleveland was inaugurated for the first term he found an overflowing Treasury, with a consequent dearth of money outside. Owing to the contraction in circulation caused by this surplus, there were ominous forebodings of panic in the air. Mr. Cleveland first did all he could, as noticed elsewhere, in the way of buying such bonds as the government under existing legislation had authority to purchase, but all to very little purpose. He then wisely resorted to the depository banks, putting the surplus there, and the strain was soon relieved. He even had the number of these banks increased for the purpose of putting the money into circulation. The situation was more alarming than many people think, for dangers of this kind cannot be thoroughly estimated until after the danger is past. Considerable money was required at a certain time, then not far distant, to move the crops, which that year gave an ample yield; while money in Wall Street and throughout the country was becoming very stringent, and very hard to obtain. Hence is seen the financial wisdom manifested by Mr. Cleveland in augmenting the number of the depository banks. He issued an order through his able Secretary of the Treasury, Daniel Manning, to the effect that all money due the government thereafter should be paid into these banks, and kept in circulation, instead of having it remain uselessly in the government vaults; an action which had an immediate and soothing effect upon public feeling, restored confidence in business circles, and enabled the crop movement and other enterprises to go on without interruption. The banks, meanwhile, accumulated $6o,ooo,ooo in deposits to the credit of the government, and had this money gone into the Treasury instead of the depository banks, we should probably have witnessed in Wall Street and throughout the country one of the worst panics on record. Mr. Cleveland and his Secretary of the Treasury gained great praise for the masterly manner in which the finances were managed at that critical period, and the credit is all the more due to them both, inasmuch as it was a new experiment in government financiering on so large a scale, and the necessity was sprung upon these two officials quite unexpectedly. The popularity which Mr. Cleveland suddenly and unexpectedly acquired by this able operation put him and his independent party away ahead, and made him, if possible, still more independent of the Democrats. The confidence on the part of the public had developed considerably beyond even what it had been at the time of his election, and everybody seemed to feel that all matters financial, internal and international, were safe in his hands. In fact he had become dangerously popular, if he had been a man imbued with one man power ambition. This public feeling continued unabated and even waxed warmer quite up to the time of his second inauguration, and it was not therefore to be wondered at that a vast number of the people of the country wanted him again for President. Practically he was forced upon the convention which his managers carried by a coup, and secured his nomination in the face of all the opposition that an antagonistic party machine could concentrate against him. It was demonstrated to his own satisfaction and that of the public that the people were with him at that convention, and in such victorious circumstances, against such odds in the convention, why should he not have continued to feel that he was backed by the people, and not by politicians? Can it be matter of surprise that he fought the politicians all through his second term of office, neither asking nor giving quarter? He thus succeeded in making enemies of nearly all the powerful leaders of the Democratic party. "We love him for the enemies he has made," said one enthusiastic adherent; but harmony between him and those prominent leaders who in a well-regulated administration should uphold the hands of the President was out of the question. On the contrary, the antipathy was mutual and bitter, and discord was the natural result. The administration was divided against itself, and it could not stand. It was mainly due to these unfortunate relations between the Executive and the Democratic party that it became possible at the Chicago convention of 1896 for Altgeld, Tillman, William Jennings Bryan, and a few others of that like, to capture the convention and steal the machine of the party. The dissensions between the Democratic leaders and the Executive enabled free-silver cranks, anarchists, socialists, and others belonging to the revolutionary fraternity, to take advantage of the situation. Moreover, quite a number of sound-money men became silverites at this convention, not from any conviction that the theory was correct, but out of sheer antipathy to Mr. Cleveland. According to the adage, some of them were ready to cut off their noses to spite their faces. The opinion seemed to prevail, at least in inside circles, that the silver plank was inserted in the Democratic platform chiefly for the purpose of heading off the designs of Mr. Cleveland for a third term, as he was famous for springing surprises. In reviewing Mr. Cleveland's administration, it must be borne in mind that the prime cause of commercial misfortune lay in the reversal of national policy. The country was thriving under institutions that had been built up as the result of the politico-economic experience of thirty-two years' rule of the party previously in power. The inevitable result of a reversal of governmental policy is in the upheaval of business, which must needs be entirely readjusted to new methods and conditions, with, in many instances, disastrous consequences. Mr. Cleveland obtained an immense vote in his third campaign, in I892, from those who remembered his energetic struggle to reduce the surplus, and his able management in preserving the country from panic during his first administration. They naturally favored him for another term, being assured that the same shrewd and sagacious policy in finance would direct and inspire all his efforts and actions in that department of the government. He retained this popularity and his hold on the people, notwithstanding his temporary defeat in 1888 and the Harrison interim; and he came up, after a long rest, in 1892, potent and debonair, with the same old clientele considerably augmented, as the darling of the people, and as independent as ever of the machine Democracy. In fact, he had kicked the machine out of his way again, just as he had in 1884 defied John Kelly and Tammany Hall. It may seem somewhat strange that Mr. Cleveland carried his popularity over those four years despite all the allowance that must necessarily be made for secret electioneering in the meantime; and the most puzzling part of it appears to be that he could not beat General Harrison in I888, but vanquished him by the large majority of I32 in the electoral college in 1892. In I888 General Harrison had a majority over Mr. Cleveland of only 65 in the electoral college. It will be remembered that he severely denounced a tariff reform of greater protection to American industries during his first term, and especially in his message of 1887. This was undoubtedly displeasing both to wage earners and their employers. And it was this revulsion of feeling against Mr. Cleveland's language toward protectionists and his strong free-trade proclivities that worked against him in his unsuccessful campaign against General Harrison. How President Harrison in his turn lost his hold and failed to succeed for a second term is a long story, not in place here. Briefly, it was an inauspicious time, and a large number of voters who knew little or nothing about finance were easily persuaded that the President and Congressman McKinley were largely to blame for the Baring panic. This was one element which contributed to the defeat of General Harrison. "Now," said the independent followers of Mr. Cleveland and the stump spellbinders, "didn't we tell you what protection and the McKinley Bill would bring upon the country?" This seemed plausible under the circumstances, but it was only part of the story. There was considerable solidity behind Cleveland. The wealthy financiers, bankers, and others remembered his wise policy in establishing the additional depository banks and filling them with government money, and they had faith in him for this reason, a circumstance which alone brought a large contingent of the money power to his back, and contributions to the campaign fund were on an unusually liberal scale. Added to these facts, Mr. Cleveland was sound on the money question, an uncompromising gold monometallist; and, as he was bold and firm even to the verge of obstinacy, he was properly considered an excellent choice to withstand the hosts of free-silverites whose clans were then gathering with hostile intent and preparing all over the West for a fierce fight. Another thing which favored Mr. Cleveland was the patent fact that President Harrison and his managers did not make as much out of their opportunities as they might have done. If Mr. Harrison had taken up the question of Civil Service Reform, for example, in which the first Cleveland administration failed, and made strenuous efforts to carry out its legitimate purposes, he might have been more popular for the second term than Mr. Cleveland. But where President Harrison made his greatest mistake was in his manifestation of jealousy against Mr. Blaine. If he had magnanimously left the field clear for Mr. Blaine's candidacy, that most popular man in the Republican party, as well as the favorite of many of the Democrats, would probably have defeated Mr. Cleveland. That foolish, alliterative phrase of Burchard's, "Rum, Romanism, and Rebellion," which materially contributed to Blaine's defeat in 1884, had no weight with voters on second thoughts and mature reflection. Mr. Blaine in I892 was probably, after all, the most popular man in the country, both with the industrial element and with the manufacturers, who constitute the backbone of the nation, and his plans for protection and reciprocity might have brought permanent prosperity to the United States. It is my opinion that he would have made a successful run, despite the popularity of his vigorous opponent. This, however, was not to be, and the people, reflecting on the circumstances above narrated, naturally favored Grover Cleveland for a second term, believing that the same desire to guard the welfare of the country and promote its prosperity which marked his first term would still govern him, and that the same line of policy as had been exhibited in his best acts during the first term would actuate all his movements during the second. Minor delinquencies, such as Civil Service neglect, were forgotten or forgiven. In fact they faded out in the light of the superiority which he had manifested as a financier. The surprise was astounding, therefore, when Mr. Cleveland sprang upon the people the object lesson which brought about panic Number One. He acted on the principle that the best way to get a bad law repealed is to enforce its execution. Mr. Cleveland's strange and incomprehensible excuse for teaching this object lesson was that suffering among the people was absolutely necessary to cause them to bring sufficient pressure upon their representatives in Congress to impel the latter to vote for the repeal of the purchasing clause of the Sherman Silver Law of I890, and this clause was repealed in November, I893, during the extra session that had been called for that purpose. To my mind, the chief error regarding this repeal was the inopportune time at which it was forced. The people were exceedingly sensitive about everything relating to the financial situation, and they thought all legislative interference with the currency foreboded panic. It is a fact well known to those who have been close observers of the history of finance that when any considerable number of people hold such views, they become virtual panic-makers. So it was in I893. Mr. Cleveland should have dealt with the Sherman Act immediately after his inauguration. He deferred his action too long. The people had become apprehensive at the remembrance of the recent Baring panic, from the effect of which they were just beginning to recover. The year 1892, moreover, had been in a very large measure prosperous, for the reason that it was the first year since the McKinley Bill had been passed that the law had a chance of exhibiting its good effects above disturbing influences. The time therefore, I say, was very inopportune for the President to recommend legislation that, however good or innocent in itself, was likely to make people apprehensive. If all our people were thoughtful and reflective and could understand the nature of a law, the case would have been very different; but they are not so. While the act in question repealed the purchasing clause, it recommended to the government to make every effort to establish such a system of bimetallism as would maintain the equal value of every dollar coined or issued by the United States, in the markets, and in the payment of debts. I append herewith the entire section, verbatim, by which the idea of the intent, spirit, and purpose of the law can be more fully understood: - ACT OF NOVEMBER 1, 1893. AN ACT TO REPEAL A PART OF AN ACT APPROVED JULY 14, 1890, ENTITLED "AN ACT DIRECTING THE PURCHASE OF SILVER BULLION AND THE ISSUE OF TREASURY NOTES THEREON, AND FOR OTHER PURPOSES. " Be it enacted, etc., That so much of the act approved July 14, 1890, entitled 'An act directing the purchase of silver bullion and issue of Treasury notes thereon, and for other purposes,' that directs the Secretary of the Treasury to purchase from time to time silver bullion to the aggregate amount of 4,500,000 ounces, or so much thereof as may be offered in each month at the market price thereof, not exceeding one dollar for 371.0 grains of pure silver, and to issue in payment for such purchases Treasury notes of the United States, be, and the same is, hereby repealed. And it is hereby declared to be the policy of the United States to continue the use of both gold and silver as standard money, and to coin both gold and silver into money of equal intrinsic and unchangeable value, such equality to be secured through international agreement, or by such safeguards of legislation as will insure the maintenance of the parity in value of the coins of the two metals, and the equal power of every dollar at all times in the markets and in the payment of debts. And it is hereby further declared that the effort of the government should be steadily directed to the establishment of such a safe system of bimetallism as will maintain at all times the equal power of every dollar coined or issued by the United States, in the markets and in the payment of debts." This C' equal power" of every dollar would be lost if owners of silver mines could have their wealth multiplied by two by simple fiat of the National Legislature, and no kind of class legislation could be worse, as it would make gifts of millions to monopolists and silver trusts by the votes of the poor people who are loudest against trusts and monopolies. The policy of the free-silverites would destroy all chances of bimetallism, for which the act invokes the aid of foreign governments. After the repeal of the purchasing clause there was a run on the Treasury to exchange greenbacks for gold, and the public seemed to be seized with a spasmodic feeling that nothing in the shape of money was reliable except the yellow metal. Object lesson Number Two consisted of the agitation over the Wilson Bill, and its final passage in such a deformed condition, however, that its paternal relative was totally unable to recognize his own offspring. Mr. Cleveland obstinately refused to be the godfather of the baby which had been so maltreated by a wicked and prejudiced Senate. The bill had passed the House with easy success. The baby was a smiling cherub in the eyes of a large majority of Congress, and never uttered a squall until it reached the upper House, and the unfeeling senators began to pinch the poor thing. The silverites, and others in that honorable body, had the audacity to make 640 amendments to the bill, until it was like the Irishman's gun, regarding which the gunsmith said, when he was asked if he could mend it, that it wanted a new lock, stock, and barrel. No wonder that Mr. Cleveland exclaimed, when the ugly changeling was presented to him, "It is an act of perfidy and dishonor." We can only imagine what Professor Wilson's feelings must have been when he beheld the metamorphosed production of his fine and profound intellect. To say that the House was thunderstruck on the return of the bill, when they beheld its curious metempsychosis, would be putting it mildly. They soon discovered, however, it was either " that or nothin'," according to the Senate's mandate, and they mournfully accepted it. It is almost needless to say that Mr. Cleveland did not sign this deformity and he was too indignant even to veto it. He let it go by the constitutional ten days' default, and it became a law in all the horrors of its "perfidiousness." No wonder, therefore, that Messrs. Cleveland and Carlisle were "short" on government expenses and " long" on bonds to procure gold. If the President had exercised his veto power, it would have been a good thing for the country, as in that event the McKinley Law would have continued in existence, and we probably would have had better times; but if better times had not ensued, the country's condition would have given the Democrats an excellent opportunity to attribute their luck to the McKinley Bill, instead of the Republicans being able, as things turned out, to set down all business troubles and calamities to the Wilson Bill. Mr. Cleveland's conduct in regard to the bill, and the weak front shown by the House in swallowing it with the absurd amendments, will afford, it seems to me, a barrier for a long period against making free trade an issue in a presidential campaign. Probably a new generation will have appeared on the scene, with little or no knowledge of, or interest in, the disasters of the last four Democratic years, before there can be any possible political recovery for that party, or before free-trade doctrines, as against protection for United States industries, can have any favorable support from the people. In view of the facts herein stated and the references to the tariff bills, it is fitting to quote some official figures regarding the outcome of the two bills. Total receipts under McKinley Law, October, 1890-1892.... $759,456,825 Total expenditures under McKinley Law, October, 1890-I892... 731,211,184 Surplus.. $28,245,641 Total receipts under Wilson Law, September, I894, to December, 1895... $373,790,648 Total expenditures under Wilson Law, September, 1894, to December, 1895.... 444,290,692 Deficiency.... $70,500,044 The total deficiency in meeting government expenses up to November, I895, exceeded $130,000,000. If the Wilson Bill had passed the Senate as it left the House of Representatives, the deficiency in the revenue would have been still larger than it was in December, I895; so the Administration should have been glad that the Senate disfigured the bill. The Wilson Law, moreover, caused the first deficiency that had occurred in the revenue since the close of the Civil War. Every year, from that time up to 1893, there had been a surplus and a consequent reduction of the national debt.