Appeals to Congress to remedy the situation proved absolutely fruitless, and the only choice left to the President was to continue pumping operations or abandon the gold standard, as the silver faction in Congress desired.By February 8, 1895, the stock of gold in the Treasury was down to $41,340,181.The Administration met this sharp emergency by a contract with a New York banking syndicate which agreed to deliver 3,500,000 ounces of standard gold coin, at least one half to be obtained in Europe.The syndicate was, moreover, to "exert all financial influence and make all legitimate efforts to protect the Treasury of the United States against the withdrawals of gold pending the complete performance of the contract."The replenishing of the Treasury by this contract was, however, only a temporary relief.By January 6, 1896, the gold reserve was down to $61,251,710.The Treasury now offered $100,000,000 of the four per cent bonds for sale and put forth special efforts to make subscription popular.Blanks for bids were displayed in all post-offices, a circular letter was sent to all national banks, the movement was featured in the newspapers, and the result was that 4635 bids were received coming from forty-seven States and Territories, and amounting to $526,970,000.This great oversubscription powerfully upheld the public credit and, thereafter, the position of the Treasury remained secure; but altogether, $262,000,000 in bonds had been sold to maintain its solvency.
Consideration of the management of American foreign relations during this period does not enter into the scope of this book, but the fact should be noted that the anxieties of public finance were aggravated by the menace of war.* In the boundary dispute between British Guiana and Venezuela, President Cleveland proposed arbitration, but this was refused by the British Government.President Cleveland, whose foreign policy was always vigorous and decisive, then sent a message to Congress on December 17, 1895, describing the British position as an infringement of the Monroe Doctrine and recommending that a commission should be appointed by the United States to conduct an independent inquiry to determine the boundary line in dispute.He significantly remarked that "in making these recommendations I am fully alive to the responsibility incurred and keenly realize all the consequences that may follow." The possibility of conflict, thus hinted, was averted when Great Britain agreed to arbitration, but meanwhile, American securities in great numbers were thrown upon the market through sales of European account and added to the financial strain.
* See "The Path of Empire," by Carl Russell Fish (in "The Chronicles of America").
The invincible determination which President Cleveland showed in this memorable struggle to maintain the gold standard will always remain his securest title to renown, but the admiration due to his constancy of soul cannot be extended to his handling of the financial problem.It appears, from his own account, that he was not well advised as to the extent and nature of his financial resources.He did not know until February 7, 1895, when Mr.J.P.
Morgan called his attention to the fact, that among the general powers of the Secretary of the Treasury is the provision that he "may purchase coin with any of the bonds or notes of the United States authorized by law, at such rates and upon such terms as he may deem most advantageous to the public interest." The President was urged to proceed under this law to buy $100,000,000 in gold at a fixed price, paying for it in bonds.This advice Cleveland did not accept at the time, but in later years he said that it was "a wise suggestion," and that he had "always regretted that it was not adopted."But apart from any particular error in the management of the Treasury, the general policy of the Administration was much below the requirements of the situation.The panic came to an end in the fall of 1893, much as a great conflagration expires through having reached all the material on which it can feed, but leaving a scene of desolation behind it.Thirteen commercial houses out of every thousand doing business had failed.Within two years, nearly one fourth of the total railway capitalization of the country had gone into bankruptcy, involving an exposure of falsified accounts sufficient to shatter public confidence in the methods of corporations.Industrial stagnation and unemployment were prevalent throughout the land.Meanwhile, the congressional situation was plainly such that only a great uprising of public opinion could break the hold of the silver faction.The standing committee system, which controls the gateways of legislation, is made up on a system of party apportionment whose effect is to give an insurgent faction of the majority the balance of power, and this opportunity for mischief was unsparingly used by the silver faction.
