The Depression of 1893

Both the silverites and “gold bugs” warned of economic disaster if their policies were not followed. Then, in 1893, after the London banking house of Baring Brothers collapsed, a financial panic precipitated a worldwide industrial depression. In the United States hundreds of cotton mills and iron foundries closed, never to reopen. During the harsh winter of 1893-1894, millions were without jobs. Discontented industrial workers added their voices to the complaints of the midwestern farmers.

President Cleveland believed that the controversy over silver had caused the depression by shaking the confidence of the business community and that all would be well if the country returned to a single gold standard. He summoned a special session of Congress, and by exerting immense political pressure he obtained the repeal of the Sherman Silver Purchase Act in October 1893. All that this accomplished was to split the Democratic party, its southern and western wings deserting him almost to a man.

During 1894 and 1895, while the nation floundered in the worst depression it had ever experienced, a series of events further undermined public confidence. In the spring of 1894 several “armies” of the unemployed, the most imposing led by Jacob S. Coxey, an eccentric Ohio businessman, marched on Washington to demand relief. Coxey wanted the government to undertake a program of federal public works and other projects to hire unemployed workers to build roads.

When Coxey’s group of demonstrators, perhaps 500 in all, reached Washington, he and two other leaders were arrested for trespassing on the grounds of the Capitol. Their followers were dispersed by club-wielding policemen. This callous treatment convinced many Americans that the government had little interest in the suffering of the people, an opinion strengthened when Cleveland, in July 1894, used federal troops to crush the Pullman strike.

The next year the Supreme Court handed down several reactionary decisions. In United States v. E. C. Knight Company it refused to employ the Sherman Antitrust Act to break up the Sugar Trust. The Court also denied a writ of habeas corpus to Eugene V. Debs of the American Railway Union, who was languishing in prison for disobeying a federal injunction during the Pullman strike.

On top of these indications of official conservatism came a desperate financial crisis. Throughout 1894 the Treasury’s supply of gold dwindled as worried citizens exchanged greenbacks (now convertible into gold) for hard money and foreign investors cashed in large amounts of American securities. The government tried to sell bonds for gold

Table 20.1 The Supreme Court Supports Racial Segregation and Corporate Power

To bolster the reserve, but the gold reserve continued to melt away. Early in 1895 it touched a low point of $41 million.

At this juncture a syndicate of bankers headed by J. P. Morgan turned the tide by underwriting a $62 million bond issue, guaranteeing that half the gold would come from Europe. This caused a great public outcry; the spectacle of the nation being saved from bankruptcy by a private banker infuriated millions.

As the presidential election of 1896 approached, with the Populists demanding unlimited coinage of silver, the major parties found it impossible to continue straddling the money question. The Populist vote had increased by 42 percent in the 1894 congressional elections. Southern and western Democratic leaders feared that they would lose their following unless Cleveland was repudiated. Western Republicans, led by Senator Henry M. Teller of Colorado, were threatening to bolt to the Populists unless their party came out for silver coinage. After a generation of political equivocation, the major parties had to face an important issue squarely.

The Republicans, meeting to choose a candidate at St. Louis in June 1896, announced for the gold standard. “We are unalterably opposed to every measure calculated to debase our currency or impair the credit of our country,” the platform declared. “We are therefore opposed to the free coinage of silver. . . . The existing gold standard must be maintained.” The party then nominated Ohio’s William McKinley for president. McKinley, best known for his staunch advocacy of the protective tariff yet highly regarded by labor, was expected to run strongly in the Midwest and the East.

The Democratic convention met in July in Chicago. The pro-gold Cleveland element made a hard fight, but the silverites swept them aside. The high point came when a youthful Nebraskan named William Jennings Bryan spoke for silver against gold, for western farmers against the industrial East. Bryan’s every sentence provoked ear-shattering applause:

We have petitioned and our petitions have been scorned; we have entreated, and our entreaties have been disregarded; we have begged, and they have mocked when our calamity came. We beg no longer; we entreat no more; we petition no more. We defy them!

The crowd responded like a great choir to Bryan’s oratorical cues. “Burn down your cities and leave our farms,” he said, “and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country.” He ended with a marvelous figure of speech that set the tone for the coming campaign. “You shall not press down upon the brow of labor this crown of thorns,” he warned, bringing his hands down suggestively to his temples. “You shall not crucify mankind upon a cross of gold!” Dramatically, he extended his arms to the side, the very figure of the crucified Christ.

The convention promptly adopted a platform calling for “the free and unlimited coinage of both silver and gold at the present legal ratio of 16 to 1” and went on to nominate Bryan, who was barely thirty-six, for president.

This action put tremendous pressure on the Populists. If they supported the Democrat Bryan, they risked losing their party identity; if they nominated another candidate, they would ensure McKinley’s election. In part because the delegates could not find a person of stature willing to become a candidate against Bryan, the Populist convention nominated him, seeking to preserve the party identity by substituting Watson for the Democratic vice-presidential nominee, Arthur Sewall of Maine.

•••-[Read the Document William Jennings Bryan, Cross of Gold Speech at Www. myhistorylab. com