Chapter 29

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Chapter 29:
The Revolt of the Debtor
1889-1900
Esther Park & Nataliya Sulyik
The Republicans Return Under
Harrison
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Benjamin Harrison, a Republican, was inaugurated president
under weeping heavens on March 4, 1889. (image right)
He was an honest and earnest party man, but he was also
brusque and abrupt.
After their four-year out of the White House, the
Republicans were seeking federal offices; James G. Blaine
became the secretary of state and Theodore Roosevelt was
named to the Civil Service of Commission.
A new Republican Speaker of the House, Thomas B. Reed
of Maine, with his hulking figure and as a masterful debater,
undertook single-handedly to change the House rules; He
believed that the majority should legislate, in accord with
democratic practices, and not be crippled by the minority.
After three days, Reed prevailed and the Fifty-first or
“Billion Dollar” Congress was established; When the
Democrats won control of the House two years later, they
paid Reed the compliment of adopting some of his reforms
for speedier action.
Political Gravy for All
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President Harrison, himself a Civil War general, was disposed to deal generously with his old comrades-in-arms; He
appointed as commissioner of pensions a Civil War amputee used federal surplus to give out pensions.
The Pension Act of 1890 gave pensions to all Union Civil War veterans who had served for ninety days and who were now
unable to do manual labor
Thus, between 1891 and 1895 the host of pensioners was thus raised from 676,000 to 970,000, and by the time Harrison left
office in 1893, the annual bill had shot up from $81 million to $135 million.
This policy attracted the Republican support of the GAR (Grand Army of the Republic) and the GOP (Grand Old Party).
The Sherman Anti-Trust Act of 1890 was unsuccessful
However, the Sherman Silver Purchase Act of 1890 appealed those who disliked the Bland-Allison Law of 1878; The
Sherman Silver Purchase Act allowed the Treasury to buys a total of 4.5 million ounces monthly and pay for it in notes
redeemable in either silver or gold
The McKinley Tariff Bill of 1890, also boosted rates to their highest peacetime level, 48.4%
Mounting discontent against “Bill” McKinley and his McKinley Bill caused voters to rise in wrath, especially in the
Midwestern farm belt. The congressional landslide of 1890 reduced the Republican membership of the House from 166 to a
scant 88 members, as compared with 235 Democrats. Even the highly publicized McKinley lost his seat in the House.
Ominously for conservatives, the new Congress also included nine members of the Farmers’ Alliance, the militant
organization of southern and western farmers.
The Populist Challenge in 1892
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In the election of 1892, former president Grover Cleveland defeated
the unpopular Harrison and became a conservative president, yet his
reputation was such that he was nominated in Chicago on the first
ballot.
In the campaign of 1892, a newly formed People’s Party ( Populist),
which was mainly made out of frustrated farmers in the West and the
South. The majority was the members of the Farmers’ Alliance and
they demanded free and unlimited coinage of silver at the ration of
16:1, a graduated income tax, and government ownership of the
telephone and telegraph, as well as the railroad.
The nationwide strikes in the summer of 1892 also increased the
popularity of the Populist Party to aggrieved workers and indebted
farmers
A violent strike happened at Andrew Carnegie’s Homestead steel
plant near Pittsburgh, which called in 300 armed Pinkerton detectives
from the U.S. army; Ten people were killed and some sixty were
wounded; That same month, federal troops had to be dispatched to
crush a strike among silver miners in Idaho’s Coeur d’Alene district.
The Populist’s popularity continued to increase and they made a
remarkable showing in the 1892 presidential election; They rolled up
1,029,846 popular votes and 22 electoral votes for General Weaver;
They became on of the few third parties in US history to break into
the electoral column; but they fell far short of an electoral majority –
industrial laborers did not rally to the Populist banner in appreciable
numbers.
The Populist Challenge in 1892
continued…
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The South, although a hotbed of agrarian agitation, did
not support the Populist because of race.
More than a million southern black farmers were
organized in the Colored Farmers’ National Alliance;
They shared a host of grievances with the poor white
farmers, and for a time the common economic goals of
black and white farmers promised to overcome their
racial differences; Populist leaders like Tom Watson
reached out for the black community.
The blacks were the real losers for the election of 1892.
The populist-inspired reminder of potential black
political strength led to the near-total extinction of what
little African-American suffrage remained in the South.
Literacy tests and poll taxes were used to deny blacks the
ballot. The notorious “grandfather clause” exempted
from those requirements anyone whose forebear had
voted in 1860 – when, of course, black slaves had not
voted at all.
Accompanying this disfranchisement were more severe
Jim Crow laws, designed to enforce racial segregation in
public places. Such were the bitterly ironic fruit of the
Populist crusade in the south.
“Old Grover” Cleveland Again
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Cleveland won the election, but the Depression of 1893 out; it lasted
for about four years, and it was the most devastating economic
downturn of the century. As the first large-scale depression in the
new urban and industrial age, it brought unprecedented hardships in
the masses in the cities.
About eight thousand American business houses collapsed in six
months, and dozens of railroad lines went into the hands of
receivers. Soup kitchens were set up for the unemployed. Local
charities did their feeble best, but the federal government, bound by
the let-nature-take-its-course philosophy of the times, was unable to
relieve the suffering masses.
Cleveland was now burdened with a deficit. Under the Sherman
Silver Purchase Act, the Treasury was required to issue legal tender
notes of the silver bullion that was bought; the gold reserve in the
Treasury dropped below $100 million, which was regarded as the
safe minimum for supporting about $350 million in outstanding
paper money.
If Cleveland died during his surgery, which took place in a yacht
with extreme secrecy, he could have been replaced by the “soft
money” vice president, Adlai E. Stevenson.
Also, a young advocate of “free silver,” William Jennings Bryan
was gaining support.
Gold Shortages and Job Shortages
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The Sherman Silver Purchase Act was repealed but it only partially stopped the problem; by 1894, the gold reserve sank to a
dismaying $41 million.
The U.S. was now in danger of going off the gold standard; the nation was stinking into turmoil and ruining its international
trade.
Cleveland thus, turned to J.P. Morgan, “the bankers’ banker,” who agreed to have the Wall Street loan the government $65
million in gold; this angered the silverites and other debtors because they saw it as an evil and corrupted bargain with the
“Jupiter” Morgan.
Ragged armies of the unemployed, victims of the depression, were meanwhile staging demonstrations; “General” Jacob S.
Coxey, a wealthy Ohio quarry owner, who started for Washington in 1894 with several score of supporters, accompanied by a
swarm of newspaper reporters; The “Commonweal Army” of Coxeyites finally straggled into the nation's capital. But the
“invasion” took on the aspects of a comic opera when “General” Coxey and his “lieutenants” were arrested for walking on
the grass.
Cleveland Crushes the Pullman Strike
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In Chicago, there were violent flare-ups accompanied by labor protests;
Most frightening was the crippling Pullman strike of 1894; it was led by
Eugene V. Debs (image left) and he had helped organized the American
Railway Union of about 150,000 members.
The Pullman Palace Car Company was hit hard by the depression and
cut wages about one-third, while holding the lone on rent for the
company houses; The workers finally struck and paralyzed railway
traffic from Chicago to the Pacific Coast.
Governor Altegeld of Illinois, who pardoned the Haymarket Square
anarchists the year before, saw it as serious but not out of hand;
however, Attorney General Olney urged the dispatch of the federal
troops. Cleveland supported Olney, but this method lead to controversy.
This was the first time that such a legal weapon had been used
conspicuously by Washington to break a strike, and it was all the more
distasteful because defiant laborites who were held in contempt could
be imprisoned without jury trial.
They saw brutal Pullman episode further proof of an unholy alliance
between big business and the courts.
Democratic Tariff Tinkering
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The Democrats undertook to frame a tariff that would provide adequate revenue with moderate protection, as they had
promised in the Cleveland-Harrison campaign of 1892. This new bill even included a tax of 2% on $4000 incomes. The
Wilson-Gormon Bill was drastically revamped by the addition of over 630 amendments. As a result of such backstairs
pressures, the Wilson-Gormon Tariff of 1894 fell scandalously short of establishing a low tariff, even though it did reduce the
existing McKinley rates from 48.4% on dutiable goods.
As a result, the Democrats lost a lot of their seats in the House, and the Republicans regained its control.
Discontented debtors, especially the Populists, were turning in throngs to free silver as a cure-all. An enormously popular
pamphlet entitled Coin’s Financial School (1894) were being distributed by the hundreds of thousands of copies. Written by
William Hope Harvey, it was illustrated by clever woodcuts, one of which depicted the gold ogre beheading the beautiful
silver maiden.
McKinley: Hanna’s Fair-Haired Boy
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The leading candidate for the Republican presidential
nomination in 1896 was ex-congressman William
McKinley of Ohio (image right), sponsor of the illstarred tariff bill of 1890.
McKinley was peculiarly the creation of a fellow Ohioan,
Marcus Alonzo Hanna (image left). The latter had made
his fortune in the iron business, and he now coveted the
role of president-maker.
Hanna, as a wholehearted Hamiltonian, believed that a
prime function of government was to aid business.
Honest, earnest, rough, and direct, he became the
personification of big industry in politics.
McKinley’s platform also called for bimetallism, or
worldwide gold-silver standard.
The catch was that all the leading nations of the world
would have had to agree to such a scheme, and this
obviously they would not.
Bryan: Silverite Messiah
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The Democrats were in turmoil and was unable to come up with a
candidate found William Jennings Bryan of Nebraska, also known as
“the Boy Orator of the Platte.” He radiated honesty, sincerity, and
energy.
At the Democratic convention in Chicago in July 1896, Bryan delivered
a sensational speech known as “the Cross of Gold” speech. This speech
made him the nominee of the fifth ballot the next day.
The platform declared for the unlimited coinage of silver at the ration of
16 ounces of silver to 1 ounce of gold, though ration was about 32 to 1.
Democrats who could not agree with Bryan left the party.
The Democratic minority, including Cleveland, charged that the
Populist-silverites had stolen both the name and the clothes of their
party. They nominated a lost-cause ticket of their own, and many of
them, including Cleveland, hope for McKinley victory.
During the election of 1896, the Democrat Party was essentially known
as the “Demo-Pop” party.
Hanna Leads the “Gold Bugs”
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Mark Hanna smugly assumed that he could make the tariff the focus of the campaign, but Bryan forced the free-trade issue
into a back seat when he took the stump in behalf of free silver.
Free silver became almost as much a religious as a financial issue. Hordes of fanatical free silverites hailed Bryan as the
messiah to lead them out of the wilderness of debt. They sang, “We’ll All Have Our Pockets Lined with Silver” and “No
Crown of Thorns, No Cross of Gold.”
Bryan created panic among eastern conservatives with his threat of converting their holdings overnight into fifty-cent dollars.
Widespread fear of Bryan and the silverites enabled Hanna, now the man of the Republican national Committee, to shine as a
money raiser. The Republicans amassed the most formidable political campaign chest thus far in American history.
Thus, many Bryanites accused Hanna of “buying” the election and of floating McKinley into the White House on a tidal
wave of greenbacks. The Democrats only had $1 million for their campaign but in contrast, the Republican had about $16
million.
Appealing to the Pocketbook Vote
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With gold gushing into his money bags, Hanna waged a
high-pressure campaign against silver; He distributed
tens of millions of pamphlets, tracts, leaflets, and posters,
many of them in the native languages of immigrant
groups.
There was a maximum of shouting and a minimum of
thinking, primarily because only a few trained
economists were able to grasp fully the implications of
silver-and-gold bimetallism.
Bryan’s cyclonic campaign, launched with irresistible
enthusiasm, began to lose steam as the weeks passed.
Just before the election, the price of wheat rose sharply,
owing largely to crop failures abroad. Hostility to the
Republican party in the vast wheat belt began to wane,
even though agriculture generally remained depressed.
Class Conflict: Plowholders versus
Bondholders
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Hanna’s campaign methods paid off, for on election day McKinley triumphed; The vote was 271 to 176 in the Electoral
College, and 7,102,246 to 6,492,559 in the popular column; McKinley ran strongly in the populous East, where he carried
every county of New England, and in the upper Mississippi Valley
Bryan’s states, concentrated in the debt-burdened South and the trans-Mississippi West, involved more acreage than
McKinley’s but less population.
The free-silver election of 1896 was probably the most significant since Lincoln’s victories in 1860 and 1864.
The outcome was instead a resounding victory for big business, the big cities, middle-class values, and financial conservatism.
The smashing Republican victory of 1896 also heralded a Republican grip on the White House for sixteen consecutive years.
Republican Standpattism Enthroned
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McKinley took the inaugural oath in 1897. Unlike Cleveland,
McKinley was able to work smoothly in party harness. With
impeccable white vest, he seemed never to perspire, even in
oppressively muggy Washington.
McKinley continued to maintain intimate relations with Hanna,
but he was by no means under the thumb of his mentor.
The Dingley Tariff Bill was passed to replace the WilsonGorman law, and the new Bill raised the average rates to 46.5%.
Inflation Without Silver
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Prosperity returned with a rush in 1897 after McKinley became president; the depression of 1893 had run its course, and farm
prices rose.
The Gold Standard Act was not passed by the Republicans until 1900, when many silverites had left Congress; It provided
that the paper currency was to be redeemed freely in gold. Las-ditch silverites fought the bill with bitterness but without
success.
A controlled expansion of American currency in the 1880s and 1890s was clearly desirable. Prices were depressed, money
was tight, and the volume of currency in circulation lagged far behind the increasing volume of business.
Inflation later occurred when new gold deposits in Canada, Alaska, South Africa, and Australia were discovered. Nature and
science gradually provided cheap cyanide process for extracting gold form low-grade ore.
Moderate inflation thus took care of the currency needs of an explosively expanding nation, as its circulatory system greatly
improved.
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