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The United States Since The Civil War by Charles Ramsdell Lingley

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example, where competition existed were hardly more than half the
charges to places at a similar distance where a single road was in a
position to demand what it pleased. Manufacturers in Rochester could
send goods to New York City and reship them to Cincinnati, back
through Rochester, for less than the rate direct to their destination.
Yet the direct haul was seven hundred miles shorter than the indirect.
Secret arrangements were commonly made with favored shippers by which
they secured lower rates than their competitors. When it became
evident that transportation cost entered into the price of
substantially everything which the ordinary citizen consumed, and when
it was considered that a slight rise in railroad rates might easily
amount to a heavy tax on a shipper or an entire region, it was seen
that uniformity of rates was a matter of the utmost concern.

In brief, then, it was complained that the growth of the
transportation system had placed enormous power in the hands of a
small group of men, many of whom had indicated by their selfishness,
arrogance and questionable practices that they ought not to be
entrusted with so great a measure of authority.

The best example of the American railroad president after the war was
Commodore Cornelius Vanderbilt. Vanderbilt began his career by
ferrying passengers and freight between Staten Island and New York
City. Later he turned his attention to shipping, in which he made a
fortune, and planned the operation of steamships on a large scale.
Becoming interested in railroading, he clearly perceived the
importance of the western trade and the necessity of consolidation.
Vanderbilt was a man of vision, a man who combined magnitude of plan
with the vigorous grasp of the practical details necessary for the
realization of his ambitions. He was buoyant, energetic, confident,
ambitious, determined, despotic. Unhampered by modern conceptions of
public duty, undeterred by the hostility of powerful opponents, with
eyes fixed upon the combination and control of a great transportation
system, Vanderbilt entered courageously upon bitter struggles for
supremacy which involved the misuse of the courts, the control of the
New York state legislature and a thousand charges of corrupt influence
and bribery, but he welded railroads together, replaced wood and iron
with steel, and constructed tracks and terminals. At his death in 1877
he left a huge fortune and bequeathed to his successors a great,
consolidated railroad enterprise, skillfully and successfully
administered. The great weakness of Commodore Vanderbilt and his
associates, and of those who later imitated his work was their
fundamental conception of the railroad as a private venture. Success
consisted in bigness, great profits, crushing or buying out
competitors, and administering the business for the best good of the
few owners, regardless of the interests of the region through which
the railway passed. Vanderbilt and many of his contemporaries were men
of business sagacity and foresight, but their ethical outlook was
restricted and their sense of public responsibility not well
developed.

So considerable a list of grievances naturally bestirred the people to
seek relief at the hands of their legislators. Two lines of action
were followed. In Massachusetts, as early as 1869, a state commission
was formed with purely advisory powers. Under the able leadership of
Charles Francis Adams it attained great influence and worked
effectively for the elimination of railroad abuses through conference
and the weight of public opinion. In Illinois, on the other hand,
reliance was placed upon compulsory action. The state constitution of
1870 declared the railroads to be public highways and required the
legislature to fix rates for the carriage of freight and passengers,
and to pass laws to correct abuses connected with the railways and
grain warehouses. In compliance with the constitution the state passed
the necessary legislation and placed their execution in the hands of a
commission with considerable power. Other western states followed the
Illinois model.

On the national scale the agitation for government action began with
the minor parties. In 1872 the Labor Reformers demanded fair rates and
no discrimination; in 1876 the Prohibitionists called for lower rates;
in 1880 the Greenbackers stood for fair and uniform rates; four years
later they urged laws which would put an end to pooling,
stock-watering and discrimination, and in the same year the
Republicans promised an act to regulate commerce if they were elected.
The most effective force behind the demand for railroad regulation was
the Patrons of Husbandry, better known as the "Grange." This society
was founded by O.H. Kelley, a government clerk in Washington, in 1867.
Its initial purpose was the organization of the agricultural classes
for social and intellectual improvement, but later it engaged in the
effort to correct transportation abuses and to arouse cooperation
among the farmers in other ways. The movement grew astonishingly,
especially in the Middle West, where its membership reached nearly
759,000 in 1875.

Transportation conditions in the West had not reached the relatively
stable situation which characterized those of the East. In the West
much new work was being done, with the attendant evils of construction
companies and unnecessary and speculative undertakings. Much of the
railroad stock was in the hands of eastern investors whom the western
farmers pictured as living in idle ease on swollen incomes, careless
of the high rates and unfair discriminations under which the farmer
groaned. The constantly falling prices, which influenced the West in
so many other ways, served to heighten the discontent with any abuse
which increased the farmer's burden. Moreover, the western states had
contributed huge amounts of land to help build the railways and they
were not minded to give up the hold which their generosity had
justified.

Impelled, then, by such force as the Grange and similar organizations
supplied, the western states proceeded to the adoption of laws whose
purposes ordinarily included railroad rate-making by the legislature
or by a commission, the doing away with such abuses as discrimination,
and the prohibition of free passes. The railroads promptly opposed the
laws and carried the battle to the courts. The so-called "Granger
Cases" resulted. Three of these were representative of the general
trend of the decisions.

The famous case Munn _v._ Illinois, which was decided by the Supreme
Court in 1876 was possibly the most vital case in the history of the
regulation of public service corporations after the Civil War. The
legislature of Illinois, in conformity with the state constitution of
1870, had passed a law fixing maximum charges for the storage of grain
in warehouses. The owners of a certain warehouse refused compliance
with the law on the ground that it was contrary to the Constitution
and hence null and void. They argued that when the state fixed rates
it deprived the owners of the right to set higher charges and so, in
effect, deprived them of their property, in defiance of that portion
of the Fourteenth Amendment forbidding a state to "deprive any person
of life, liberty, or property, without due process of law."

On examination of the history of the control of such enterprises, the
Court found that it had been customary in England for many centuries
and in this country from the beginning, to regulate rates on ferries,
charges at inns, and similar public enterprises, and that it had never
been thought that such action deprived persons of property without due
process of law. In other words, the established common law, at the
time of the passage of the Fourteenth Amendment, did not look upon
rate regulation as a deprivation of property. The Court, therefore,
declared the Illinois warehouse law constitutional, and in doing so
made the following statement:

Property does become clothed with a public interest when
used in a manner to make it of public consequence, and affect
the community at large. When, therefore, one devotes his
property to a use in which the public has an interest, he, in
effect, grants to the public an interest in that use, and must
submit to be controlled by the public for the common good,
to the extent of the interest he has thus created.

While the Munn case was before the Court, the case Peik _v._ the
Chicago and Northwestern Railway Company was raising a question which
struck at the heart of the chief practical impediment in the way of
state control of transportation. The central question in the
litigation was whether the legislature of Wisconsin could lawfully
regulate rates on railroads inside the state. Since the bulk of the
traffic on most roads crosses state borders at one time or another in
its transit, the regulation of rates within a state normally affects
interstate commerce. But the regulation of interstate commerce is
vested in Congress by the terms of the Constitution. The railroad was
quick to take advantage of the division of power between the states
and the nation. Indeed, when fighting state legislation, the roads
earnestly emphasized the exclusive power of Congress over interstate
commerce; but when fighting national regulation, they equally
deprecated any interference with the reserved rights of the states.
Acting in accordance with its established practice, the Court decided
that the state was authorized to regulate rates within its borders,
even though such regulation indirectly affected persons outside, until
Congress passed legislation concerning interstate commerce. Obviously
this decision allowed the states to work out their railroad problems
unhampered, and constituted one of the chief victories for the
Grangers.

In 1886, however, the Court overturned some of the principles which
had been established in the Munn and Peik cases. The new development
came about in connection with the Wabash railroad. It appeared that
the road had been carrying freight from Peoria, Illinois, to New York
for smaller rates than were charged from Gilman to New York, despite
the fact that Peoria was eighty-six miles farther away. Since Illinois
law forbade a road to levy a greater charge for a short haul than for
a long one, a suit was instituted and carried to the Supreme Court.
The company held that the Illinois legislation affected interstate
commerce and hence trenched upon the constitutional power of Congress.
This time the Court upheld the road. It decided that the
transportation of goods from Illinois to New York was commerce among
the states, that such commerce was subject to regulation by Congress
exclusively, and that the Illinois statute was void. It seemed, then,
that state regulation was a broken reed on which nobody could safely
lean, and attention thereupon turned to the federal government.

Congress had already been discussing federal regulation intermittently
for some years. The so-called "Windom Report" of 1874 had advised
federal construction and improvement of transportation facilities in
order to lower rates through competition, but no action had resulted.
In 1878 the "Reagan bill" had proposed government regulation, and from
that time the subject had been almost continuously before Congress. In
1885 the Senate had appointed a select committee of five to
investigate and report upon the regulation of freight and passenger
transportation. The committee was headed by Shelby M. Cullom, who had
been a member of the legislature of Illinois and later governor, in
the years when the railroad and warehouse laws were being put into
effect. It endeavored to discover all shades of opinion by visiting
the leading commercial centers, and by consulting business men, state
commissioners of railroads, Granger officials and others. After a
somewhat thorough investigation, the committee expressed its
conviction that no general question of governmental policy occupied so
prominent a place in the attention of the public as that of
controlling the growth and influence of corporations. The needed
relief might be obtained, the committee thought, through any one of
four methods: private ownership and management, with a greater or less
degree of government oversight; government ownership and management;
government ownership with private management under public regulations;
partial state ownership and management in competition with private
companies. The widespread opposition to state ownership of railroads,
the commission thought, seemed to point to some form of government
regulation and control of the existing situation.

Impressed with the magnitude of the abuses involved, and the
hopelessness of regulation through state laws, the committee presented
a bill designed to bring about regulation on a national scale through
a federal agency. The resulting law was the Interstate Commerce Act of
February 4, 1887. It provided that all railway charges should be
reasonable and just; forbade the roads to grant rebates, or to give
preferences to any person, locality or class of freight, or to charge
more for a short haul than for a long one except with the consent of
the proper authorities; it made pooling unlawful; and it ordered the
companies to post printed copies of their rates, which were not to be
altered except after ten days' public notice. The act also created an
Interstate Commerce Commission of five members to serve six-year
terms, into whose hands the administration of the measure was placed.
Persons who claimed that the railways were violating the provisions of
the law could make complaint to the Commission, or bring suit in a
United States Court. In order that the Commission might know the
condition of the roads, it was given power to call upon the carriers
for information, to demand annual reports from them, and to require
the attendance of witnesses. If the railroads refused to carry out the
orders of the Commission, they could be brought before a United States
district court.

In forbidding pools, the Act committed the railroads to the policy of
enforced competition, a policy which was commonly accepted at the time
as the best one for the public interest. Such experts, however, as
Professor A.T. Hadley and Charles Francis Adams, Jr., raised important
objections. They cited the rate wars to indicate the results of
competition and declared that railroads ought to be monopolies. If two
grocery stores are established where trade enough exists for only one,
they asserted, the weaker competitor can close his doors and the
public loss is not heavy; but in the case of the railways a weak
competitor must continue business even at disastrously low rates
because all his interest charges continue and the depreciation on his
property is extreme. The construction of an unnecessary road and its
subsequent operation at a loss, its failure or its abandonment,
constitute a great drain upon the public. Such objectors contended
that pooling combinations did away with many of the evils of
cut-throat competition, and they accordingly urged that the carriers
be permitted to make such arrangements, under whatever government
regulation might be needed to prevent unreasonable charges. By such
means the available business of a region might be fairly divided among
the roads entering it, without resort to competitive rate-cutting and
its consequent evils.

The passage of the law was looked upon with much hostility on the part
of the railroad interests. James J. Hill thought that the railroads
might survive, although the country would be ruined, and he predicted
that Congress would shortly be called in special session to repeal the
act. More important than mere hostility was the constant opposition
and evasion which characterized the attitude of the carriers toward
the operation of the law. Discriminations were commonly practiced and
hidden away in accounts under false or misleading headings. Rebates
were given and received, a fact which was due in no small degree to
the shippers themselves. A large shipper might demand advantageous
rates and threaten to turn his trade over to a rival road. As the
arrangement would be secret, and the likelihood of discovery small,
the temptation to break the law was correspondingly great.

The good results of the passage of the law were disappointingly
slight. To be sure, the Commission was gaining experience,
administrative precedents were being established and injustice was
somewhat less common than before. The first chairman was Judge T.M.
Cooley, a noted lawyer whose appointment was considered an admirable
one. Most important of all, the principle of government regulation was
established. Nevertheless, progress was so slow as to be almost
invisible. The courts hampered the activities of the Commission. When
cases arose involving its decisions, they allowed a retrial of the
entire case from the beginning, permitting the introduction of facts
which had been designedly withheld by the carriers in order to
undermine the influence of the Commission, and sometimes they reversed
its findings and so dulled the effectiveness of its labors. Eleven
years after the Act was passed the Commission declared that abuses
were so constant that the situation was intolerable; a prominent
railroad president made the charge that "good faith had departed from
the railway world"; and an important authority on railroad affairs
declared that the Commission had become an impotent bureau of
statistics.

BIBLIOGRAPHICAL NOTE

More study has been made of railroad regulation and the technical side
of railroading than of the history of transportation and the effects
of the roads on the political and economic life of the people. An
excellent single volume is John Moody, _The Railroad Builders_ (1919),
which devotes attention to the important personages of railroad
history, discusses the growth of large systems and contains valuable
maps; the best concise account of the history of the railways is W.Z.
Ripley, _Railroads: Rates and Regulation_ (1912). Chap. I; W.Z.
Ripley, _Railway Problems_ (rev. ed., 1913), is reliable; E.R. Johnson
and T.W. Van Metre, _Principles of Railroad Transportation_ (1916),
has some excellent chapters and several informing maps; C.F. Carter,
_When Railroads were New_, (1909), is a popular account; C.F. Adams,
_Chapters of Erie_ (1886), exposes early railroad practices; H.G.
Pearson, _An American Railroad Builder_ (1911), presents the career
of J.M. Forbes as a railroad president; A.T. Hadley, _Railroad
Transportation_ (1886), is a classic, early account. Consult also E.R.
Johnson, _American Railway Transportation_ (1903); Frank Parsons,
_Heart of the Railroad Problem_ (1906); C.F. Adams, Jr., _Railroads:
Their Origin and Problems_ (1878, rev. ed., 1893); "A Decade of
Federal Railway Regulation," in _Atlantic Monthly_ (Apr., 1898). On
the personal side, the following are valuable: E.P. Oberholtzer, _Jay
Cooke, Financier of the Civil War_ (2 vols., 1907); J.G. Pyle, _Life
of J.J. Hill_ (2 vols., 1917); _Memoirs of Henry Villard_ (1909). On
the subject of land grants and regulation: L.H. Haney, _Congressional
History of Railways_ (2 vols., 1910); S.J. Buck, _The Granger
Movement_ (1913), and the same author's _The Agrarian Crusade_ (1920),
are best on the relation of unrest among the agricultural classes to
the railroad problem. The "Cullom Report" is in Senate Reports, 49th
Congress, 1st session (Serial Number 2356), in 2 vols., and is a mine
of information on early abuses. The most important Granger cases are
in _United States Reports_, vol. 94, p. 113 (Munn _v._ Ill.), and vol.
118, p. 557 (Wabash case).

* * * * *

[1] For example, an investor might contribute $100 in cash to an
enterprise. The "paid in capital" or "actual" capital would, then be
$100. He might receive in return $100 in stock and $100 in bonds, in
which case the "nominal capital" would be $200; the additional $100
would be "water." If the enterprise paid interest on the bonds, and
dividends on the stock, it would, of course, be paying a return on the
water. The practice of stock-watering did not end with the days of
Gould and Drew.

[2] In this connection Professor Farrand mentions the statement of a
railroad magnate that "in Republican counties he was a Republican, and
in Democratic counties he was a Democrat, but that everywhere he was
for the railroad." _Development of the United States_, p. 290.

CHAPTER X

EXTREME REPUBLICANISM

That the election of 1888 differed from its predecessors since 1865 was
due chiefly to the independence, courage and political insight of
President Cleveland. Hitherto campaigns had been contested with as
little reference to real issues as conditions rendered possible.
Neither party had possessed leaders with sufficient understanding of
the needs of the nation to force a genuine settlement of an important
issue. That 1888 saw a clear contest made it a memorable year in recent
politics.

It will be remembered that the tariff act of 1883 had been satisfactory
only to a minority in Congress, because it retained the high level of
customs duties that had been established during the Civil War. The
congressional election of 1882 had resulted in the choice of a
Democratic House of Representatives and had offered another opportunity
for downward revision. Early in 1884, therefore, William R. Morrison
presented a bill making considerable additions to the free list and
providing for a "horizontal" reduction of about twenty per cent. on all
other duties as levied under the act of 1883. The measure was defeated
by four votes. Opposed to it were substantially all the Republicans and
forty-one Democrats, most of them from the industrial states of New
York, New Jersey, Pennsylvania and Ohio. The Democratic tariff plank of
1884, as has been seen, was practically meaningless, but the election
of Cleveland, and the choice of a Democratic House gave another
opportunity for revision. Again Morrison attempted a reduction, and
again he was defeated by Samuel J. Randall and the other protectionist
Democrats.

The entire matter, however, was about to receive a new and important
development at the hands of President Cleveland and John G. Carlisle,
who was the Speaker of the House during the four years from 1885 to
1889. Carlisle was a Kentuckian, a man of grave bearing, unflagging
industry and substantial attainments. His tariff principles were in
accord with those of the President, and his position as Speaker enabled
him to determine the make-up of the Committee on Ways and Means, which
would frame any tariff legislation. Cleveland had expressed his belief
in the desirability of tariff reduction in his messages to Congress of
1885 and 1886, basing his recommendations on the same facts that had
earlier actuated President Arthur in making similar suggestions. His
recommendations, however, had received the same slight consideration
that had been accorded those of his Republican predecessor. He
therefore determined to challenge the attention of the country and of
Congress by means of a novel expedient.

Previous presidential messages had covered a wide variety of
subjects--foreign relations, domestic affairs, and recommendations of
all kinds. Departing from this custom, the President made up his mind
to devote an entire message to tariff reform. His project was startling
from the political point of view, for his party was far from being a
unit in its attitude toward reduction, a presidential campaign was at
hand, and the Independents, who had had a strong influence in bringing
about his success in 1884, sent word to him that a reform message would
imperil his chances of re-election. This type of argument had little
weight with Cleveland, however, and his reply was brief: "Do you not
think that the people of the United States are entitled to some
instruction on this subject?"

On December 6, 1887, therefore, he sent to Congress his famous message
urging the downward revision of the tariff. The immediate occasion of
his recommendation, he declared, was the surplus of income over
expenditure, which was piling up in the treasury at a rapid rate and
which was a constant invitation to reckless appropriations. The portion
of the public debt which was payable had already been redeemed, so that
whatever surplus was not expended would be stored in the vaults, thus
reducing the amount of currency in circulation, and making likely a
financial crisis. The simplest remedy for the situation seemed to
Cleveland to lie in a reduction of the income, and the most desirable
means of reduction seemed to be the downward revision of the tariff, a
system of "unnecessary taxation" which he denominated "vicious,
inequitable, and illogical." Disclaiming any wish to advocate free
trade, he expressed the hope that Congress would turn its attention to
the practical problem before it:

Our progress toward a wise conclusion will not be improved by
dwelling upon the theories of protection and free trade. This
savors too much of bandying epithets. It is a _condition_ which
confronts us, not a theory.

The effect of the message was immediate. Men began at once to take
sides as if everybody had been waiting for a leader to speak his mind;
and the parties adopted the definite principles to which they adhered
for many years afterwards. The Democrats very generally rallied to the
support of their champion; gaps in the ranks were closed up; and
doubtless the usual pressure was applied to obstinate members who were
disinclined to follow the leader. The Republican attitude was well
expressed in the phrase of one of the politicians: "It is free-trade,
and we have 'em!" The most prominent Republican, James G. Blaine, was
in Paris, but true to his instinctive recognition of a good political
opportunity he gave an interview which was immediately cabled to
America. In it Blaine maintained that tariff reduction would harm the
entire country, and especially the South and the farmers, and urged the
reduction of the surplus by the abolition of the tax on tobacco, which
he termed the poor man's luxury. The "Paris Message" was generally
looked upon as the Republican answer to Cleveland, and as pointing to
Blaine as the inevitable candidate for the ensuing campaign. On one
point, most men of both parties were agreed--that the President had
displayed great courage. "The presidential chair," declared James
Russell Lowell, "has a MAN in it, and this means that every word he
_says_ is weighted with what he _is_."

The chairman of the Ways and Means Committee in the House of
Representatives, Roger Q. Mills, promptly presented a bill which
conformed to the principles for which the President had argued. The
discussion of the Mills bill was long known as the "Great Tariff Debate
of 1888." The House seethed with it for more than a month. Mills and
Carlisle on one side and William McKinley and Thomas B. Reed on the
other typified the new leadership and the new positions which the
parties were taking. Senator Morrill's idea that the war tariff was a
temporary one, President Arthur's advice that the tariff be revised,
the recommendations of the Tariff Commission of 1882 that reductions
were necessary,--all these were no longer heard. Instead, the
Republicans upheld the protective system as the cause of the unexampled
prosperity of the nation. It is not to be supposed that protectionist
or reductionist converts were made by the endless discussion, but the
initial prejudices of each side were undoubtedly deepened. Each telling
blow on either side was applauded by the partisans of each particular
speaker, so that "applause" fairly dots the dull pages of the
Congressional Record. McKinley enlivened his colleagues by pulling from
his desk and exhibiting a suit of clothes which he had purchased for
$10.00, a figure, he asserted, which proved that the tariff did not
raise prices beyond the reach of the laboring man. Mills tracked down
the cost of the suit and the tariff on the materials composing it, and
further entertained the House by an exhibit showing that it cost $4.98
to manufacture the suit and that the remainder of the price which the
laborer paid was due to the tariff. In the end, the Mills bill passed
the House with but four Democrats voting against it. Randall was so ill
that he was unable to be present when the final vote was taken, but a
letter from him declaring his opposition to the bill was greeted with
great applause on the Republican side. Randall's day was past, however,
and leadership was passing to new men.

Meanwhile the Republicans in the Senate, where they were in control,
had prepared a tariff bill which was designed to give evidence of the
sort of act which would be passed if they were successful in the
campaign. Senator Allison and Senator Aldrich were influential in this
connection. The passage of leadership in tariff matters to Senator
Aldrich and men of his type was as significant as the transition in the
House. Aldrich was from Rhode Island, an able man who had had
experience in state affairs, had served in the federal House of
Representatives and had been in the Senate since 1881. He had already
laid the foundations of the great financial and industrial connections
which gave him an intimate, personal interest in protection and which
later made him an important figure in American industry and politics.
Since neither party controlled both branches of Congress, it was
impossible to pass either the Mills bill or the Senate measure; but the
proposed legislation indicated what might be expected to result from
the election. Each side had thoroughly committed itself on the tariff
question.

In the meanwhile, great interest attached to the question of leaders
for the campaign. Opposition to Cleveland was not lacking. His efforts
in behalf of civil service reform had not endeared him to the
office-seekers, and the hostility of the Democrats in the Senate was
shown by their feeble support of him. The West did not relish his
opposition to silver coinage, while his vetoes of pension legislation
were productive of some hostility, even in his own party. Nor was the
personality of the President such as to allay ill-feeling. Indeed,
Cleveland was in a position comparable to that of Hayes eight years
before. He was the titular party leader, but the most prominent
Democratic politicians were not in agreement with his principles, and
any step taken by him was likely to arouse as much hostility in some
Democratic quarters as among the Republicans. Opposition to his
nomination focused upon David B. Hill, Governor of New York, a man who
was looked upon as better disposed towards the claims of party workers
for office. Other leaders like Bayard, Thurman and Carlisle aroused
little enthusiasm, and the gradual drift of sentiment toward Cleveland
became unmistakable. If the politicians did not accept him with joy,
they at least accepted him; for he was master of the party for the
moment at least, and his hold on a large body of the rank and file was
not to be doubted. When the Democratic convention met in St. Louis in
June, 1888, his nomination was made without the formality of a
ballot.[1]

The platform was devoted, for the most part, to the question of revenue
reform, indorsing the President's tariff message and urging that the
party be given control of Congress in order that Democratic principles
might be put into effect. Resolutions were also adopted recommending
the passage of the Mills bill, which was still under discussion when
the convention met.

Among the Republicans the choice of a candidate was a far more
difficult matter. The probable choice of the party was Blaine, but his
letter from Italy, where he was travelling early in the convention
year, forbade the use of his name and opened the contest to a great
number of less well-known leaders. Publicly it was stated that Blaine
refused for reasons which were "entirely personal," but intimate
friends knew that he would accept a nomination if it came without
solicitation and as the result of a unanimous party call. Although the
demand for him still continued, there were smaller "booms" for various
favorite sons, and as his ill health continued he made known his
irrevocable decision to withdraw. Except for Blaine, the most prominent
contender was Senator Sherman, whose candidacy reached larger
proportions than ever before. The Ohio delegation was unitedly in his
favor and considerable numbers of southern delegates were expected to
vote for him. On the other hand, his lack of personal magnetism was
against him and his career had been connected with technical matters
which did not make a popular appeal. On the first ballot in the
nominating convention his lead was considerable, although not decisive,
but no fewer than thirteen other leaders also received votes. One of
these was Senator Benjamin Harrison of Indiana whom Blaine had
suggested as an available man and whom the New York delegation
considered a strong candidate because he was poor, a reputable senator,
a distinguished volunteer officer in the war and a grandson of William
H. Harrison of Tippecanoe fame. Further voting only emphasized the lack
of unanimity until the eighth ballot, when the delegates suddenly
turned to Harrison and nominated him.

The platform was long and verbose. It devoted much attention to the
protective tariff which, in imitation of Henry Clay, it entitled the
"American system"; it advocated the reduction of internal revenue
duties, if necessary to cut down the surplus; and it urged civil
service reform, liberal pensions and laws to control oppressive
corporations.

Two factions of the Labor party, as well as the Prohibitionists,
nominated candidates and urged programs to which no attention was paid,
but which were later taken up by both the great parties, such as
arbitration in labor disputes, an income tax, the popular election of
senators, woman suffrage and the prohibition of the manufacture of
alcoholic beverages.

The campaign deserves attention because of the unusual elements that
entered into it. A spectacular feature which, although not new, was
developed on a large scale, was the formation of thousands of political
clubs, which paraded evenings with flaming torches. In this type of
organization the Republicans were more successful than the Democrats
and thus steered many young men into the party at a time when they were
looking forward to casting their first ballot. The most unwholesome
feature was, as before, the methods used to finance the campaign. In
this connection both parties were guilty, but the Republicans were able
to tap a new source of supply. The campaign was in the hands of Matthew
S. Quay, a Pennsylvania senator whose career as a public official left
much to be desired. Quay's political methods were vividly described at
a later time by his friend and admirer Thomas C. Platt, whose account
lost none of its delightfulness in view of the fact that Platt
obviously felt that he was complimenting his friend in telling the
story. Believing in the "rights" of business men in politics, Platt
declared, Quay was always able to raise any amount of money needed,
although when funds were raised by business interests against him, he
lifted the "fiery cross" and virtuously exposed his opponents before
the people. Having calculated with skill the number of votes needed for
victory, he found out where he could get them--"and then he got them."

That Quay was able to tap a new source of supply was due to a
combination of circumstances. It will be remembered that the Pendleton
civil service act of 1883 had forbidden the assessment of
office-holders in political campaigns, and had made it necessary to
procure funds elsewhere. In the campaign of 1888, business men who
believed that the success of Cleveland would hurt their interests, and
manufacturers who profited directly by the protective tariff rallied to
the defence of Harrison and contributed heavily to his campaign
fund.[2]

The use to which the funds thus contributed were put was revealed in a
letter written apparently by W.W. Dudley, treasurer of the National
Republican Committee, and sent to party leaders in Indiana. The latter
were directed to find out who had the "Democratic boodle" and force
them, presumably by competition, to pay big prices for their own men.
The leaders were also instructed to "divide the floaters into blocks of
five and put a trusted man with the necessary funds in charge of these
five, and make him responsible that none get away, and that all vote
our ticket."

On the other hand the most wholesome feature of the campaign was its
educational aspect. Hundreds of societies, tons of "literature,"
thousands of stump speeches attacked and defended the tariff.
Schoolboys glibly retailed the standard arguments on one side or the
other. Attention was centered, as it had not been since the war, on an
important issue.

At the close of the campaign the Republicans played a trick which was
reminiscent of the Morey letter of Garfield's day. A letter purporting
to be from a Charles F. Murchison, a naturalized American of English
birth, was sent to the British minister in Washington, Lord
Sackville-West. Murchison requested the minister's opinion as to
whether President Cleveland's hostile policy in a recent controversy
with Canada had been adopted for campaign purposes and whether after
election the President would be more friendly toward England. Lord
Sackville indiscreetly replied that he believed President Cleveland
would show a conciliatory spirit toward Great Britain. The
correspondence was held back until shortly before the election and was
then published in the newspapers and on hand bills. Republicans
triumphantly declared that Cleveland was the "British candidate." The
President was at first inclined to overlook the incident but eventually
gave way to pressure and dismissed the minister, whereupon the English
government refused to fill the vacancy until there was a change of
administration.

In the ensuing election the vote cast was unusually heavy; the
protectionists felt that a supreme effort must be made to preserve the
tariff system, and the Democrats, having experienced the joys of power,
were determined not to loosen their grip on authority; the
Prohibitionists increased their vote over that of 1884 by 100,000,
while the Labor party cast 147,000, almost as many ballots as the
Prohibitionists had numbered in the earlier year. Cleveland received
somewhat over 100,000 more votes than Harrison, but his support was so
placed that his electoral vote was sixty-five less than his opponent's.

From the standpoint of political history the result was unfortunate.
The tariff question had been sadly in need of a definite answer, the
people had been educated upon it and had given a decision, but the
electoral system placed in power the party pledged to the theories of
the minority. Aside from the unusual effect of our machinery of
election, many small elements entered into the Republican victory. Some
of the Independents had become disaffected since 1884 and had returned
to the Republican fold. Disgruntled office-seekers opposed a President
who did not reward his workers. In New York, which was the decisive
factor, Hill was a candidate for re-election as governor and was
elected by a small majority, while Cleveland lost the state by 7,000
votes. This gave color to charges that the enemies of the President had
made a bargain with the Republicans by which the latter voted for Hill
as governor and the Democrats for Harrison as President.

Benjamin Harrison, veteran of the Civil War in which he had attained
the rank of brevet brigadier-general, and senator from Indiana for a
single term, was hardly a party leader when he was nominated for the
presidency. Although he was by no means unknown, he had been
sufficiently obscure to be unconnected with factional party quarrels,
and his career and character were without blemish. At the time of his
accession to the executive chair he was fifty-six years of age, a short
man with bearded face, and with head set well down between his
shoulders. Accounts of his characteristics, drawn by his party
associates, did not differ in any essential detail. As a public
speaker, the new President was a man of unusual charm--felicitous in
his remarks, versatile, tactful. In a famous trip through the South and
West in 1891, he made speech after speech at a wide variety of places
and occasions, and created a genuine enthusiasm. His remarks were
widely read and highly regarded. Nevertheless there seems to have been
some truth in the remark of one of his contemporaries that he could
charm ten thousand men in a public speech but meet them individually
and send every one away his enemy. His manner, even to senators and
representatives of his own party, was reserved to the point of
frigidity. When he granted requests for patronage he was so ungracious
as to anger the recipients of favor. Although his personal character
and integrity were as unquestioned as those of Hayes, and although he
was a man of cultured tastes, well-informed, thoughtful and
conscientious, it must be admitted that he lacked robust leadership and
breadth of vision, and that he did not understand the real purposes of
the policies which his party associates were embarking upon, or if he
did that he tamely acquiesced in them. The party leaders were soon
engaged in initiating practices and passing legislation which would
strengthen the organization with certain groups of interested persons.
Harrison, conscientious but aloof, provided no compelling force to turn
attention toward wider and deeper needs.

Two appointments to the cabinet were important. Since Blaine was the
foremost leader of the party and had done much to bring about the
election of Harrison, it was well-nigh impossible for the latter to
fail to offer him the position of Secretary of State. The appointment
was so natural that popular opinion looked upon it as the only
possibility, yet the natures of the two men were so diverse and their
positions in the party so different that friction seemed likely to
result. Even before the administration began it was freely predicted
that Blaine would "dominate" the cabinet, a prophecy that might well
create a feeling of restraint between the two. The invitation to John
Wanamaker to become Postmaster-General was regarded as significant.
Wanamaker was a wealthy merchant of Philadelphia, who had organized an
advisory campaign committee of business men which contributed and
expended large sums of money during the canvass. Critical reformers
like the editor of _The Nation_ were not slow to connect Wanamaker's
large contribution to the campaign fund with his elevation to the
cabinet, and to suggest that the business interests were being brought
into close relations with the administration. T.C. Platt, expectant of
a return for his campaign assistance, in the form of a cabinet
position, and in fact understanding that a pledge had been made that he
would be appointed, found himself superseded by William Windom of
Minnesota in the Treasury and became a bitter opponent of the
President.[3]

It was an odd turn of the fortune of politics that brought Benjamin
Harrison face to face with the responsibility for furthering the cause
of civil service reform--the same Harrison who, as a senator, had
sneered at Cleveland for surrendering to difficulties. The party
platform had urged the continuation of reform, which had been
"auspiciously begun under the Republican administration" and had
declared that the party promises would not be broken as Democratic
pledges had been; and Harrison had announced his adherence to the party
statement. In some respects real progress was made. Secretary of the
Navy Tracy introduced reform methods in his department. The appointment
of Theodore Roosevelt to the Civil Service Commission was productive of
good results. The work of reform was defended forcefully and
successfully; its opponents were challenged to substantiate their
charges. When Senator Gorman declared that in an examination for letter
carriers in Baltimore the candidates were asked to tell the most direct
route from Baltimore to China, Roosevelt at once wrote asking him to
state the time and place of the examination himself or to send somebody
to look over the papers, copies of which were in the commission's
office. The senator did not reply.

The removal of office holders, however, proceeded with amazing
rapidity. The First Assistant Postmaster-General was J.S. Clarkson, who
had been vice-chairman of the Republican National Campaign Committee.
The speed with which he cleared the service of Democrats earned him the
title "headsman" and is indicated by the estimate that he removed one
every three minutes for the first year. When the force of clerks was
increased for the taking of the census of 1890, the superintendent of
the census office found himself "waist deep in congressmen" trying to
get places for friends. The Republican postmaster of New York who had
been continued by Cleveland was not re-appointed. It was soon
discovered, also, that the President was placing his own and his wife's
relatives in office and giving positions to large numbers of newspaper
editors, thus indirectly subsidizing the press. The Commissioner of
Pensions, Corporal James Tanner, distributed pensions so freely as to
arouse wide-spread comment and was soon relieved of his position.[4]

Curtis, addressing the National Civil Service Reform League, flayed the
President because he had despoiled the service. A Republican newspaper,
he declared, had said that the administration whistled reform down the
wind "as remorselessly as it would dismiss an objectionable tramp."
Prominent members of the party went to the President in person to urge
on him the redemption of the platform promises.

Although progress was not general, nevertheless there were particular
reforms that commended themselves. The offensive Clarkson gave way to
hostile criticism and retired. During the last half of the
administration, the civil service rules were amended so as to add a
considerable number of employees to the classified service, especially
in the post office department. Quay and Dudley found their methods
condemned by public opinion and resigned their positions on the
National Republican Committee.[5]

Aside from his choice of subordinates, Harrison contributed little to
the political history of his administration, for the leadership was
seized by a small coterie of extreme Republicans in the House of
Representatives, of whom the chief figure was the Speaker, Thomas B.
Reed. The House which had been elected with Harrison contained 159
Democrats and 166 Republicans. The Republican majority was too slight
for safety, for the questions which were coming before Congress were
such as to arouse party feeling to a high pitch. The Republicans felt
themselves commissioned, by a successful election, to put the party
program into force, but so powerful a minority could readily block any
legislation under the existing parliamentary rules. Only Reed knew what
expedient would be resorted to in the attempt to put through the party
program, and not even he could guarantee that the adventure would be
successful.

Thomas B. Reed had long represented Maine in the House of
Representatives. He was a man of huge bulk, bland in appearance,
imperturbable in his serenity, caustic, concise and witty of tongue,
rough, sharp, strong, droll. In the cut-and-thrust of parliamentary
debate and manoeuvre, as well as in his knowledge of the intricacies of
procedure, Reed was a past master. He worsted his adversaries by
turning the laugh on them, and his stinging retorts, which swept the
House "like grapeshot," made him a powerful factor in partisan
contests.[6]

The political and economic philosophy of Reed and his associates was
unusually important, because it controlled their action during the time
when they dominated the House and determined the character of the
legislation passed during Harrison's time. When President Cleveland's
tariff message welded the Democrats together to demand reduction, it
likewise influenced the Republicans to adopt the other extreme. That is
not to say, of course, that the Republican attitude was due solely to
Cleveland, for the party was already committed to protectionism.
Nevertheless, many of its prominent leaders, including its presidents,
had urged revision. That recommendation was now no longer heard. Such
men as McKinley in the House fairly apotheosized the protective system.
The philosophy of the party leaders received full exposition in a
volume edited by John D. Long, ex-governor of Massachusetts, and
composed of articles written by sixteen of the most prominent
Republicans. It had been published during the campaign. The attitude of
the party toward its chief tenet was expressed in the phrase, "The
Republican party enacted a protective tariff which made the United
States the greatest manufacturing nation on earth"; and its conception
of the Democratic party in the statement that the Democrats were mainly
old slave-holders, liquor dealers and criminals in the great northern
cities. In the field of national expenditure, also, the party reacted
from Cleveland's frugality. Senator Dolph frankly urged the expenditure
of the surplus revenue rather than the reduction of taxation. McKinley
took the position that prices might be too low. "I do not prize the word
cheap," he said; "cheap merchandise means cheap men and cheap men mean
a cheap country." Harrison remarked that it was "no time to be weighing
the claims of old soldiers with apothecary's scales." This philosophy
was now to have its trial, but first the obstructive power of the
minority must be curbed. Reed's plan for accomplishing this result
appeared late in January, 1890.

A contested election case was up for decision in the House. The roll
was called and three less than a quorum of representatives answered.
Scores of Democrats were present, but by merely refusing to answer to
their names they could be officially absent. Unless the Republicans
could provide a quorum--that is, more than half the total membership of
the chamber of their own number, they were helpless. Clearly they
could not muster their full force at all times and especially on
questions upon which the party might be divided. On the other hand, the
right to refuse to vote was a long-standing one and had been used over
and over again by Republicans as well as Democrats. Reed, however, had
made up his mind to cut the Gordian knot. Looking over the House he
called the names of about forty Democrats, directed the clerk to make
note of them and then declared a quorum present. The meaning of the act
was not lost on the opposition. Pandemonium broke loose. Members rushed
up the aisle as if to attack the Speaker, but Reed, huge, fearless and
undisturbed, stood his ground. The Democrats hissed and jeered and
denounced him with a wrath which was not mollified by the derisive
laughter of the Republicans, who were surprised by the ruling, but
rallied to their leader. Two days later, when a member moved to
adjourn, the Speaker ruled the motion out of order and refused to
entertain any appeal from his decision. He then firmly but quietly
stated his belief that the will of the majority ought not to be
nullified by a minority and that if parliamentary rules were used
solely for purposes of delay, it was the duty of the Speaker to take
"the proper course."

The rules committee then presented a series of recommendations designed
to expedite business. One of the proposed changes provided that the
chair should entertain no dilatory motions. Such motions, whose purpose
was merely to obstruct action, had long been common. The Republicans
were said to have alternated motions to adjourn and to fix a day for
adjournment no less than one hundred and twenty-eight times in an
attempt to defeat the Kansas-Nebraska bill in 1854. The second rule
allowed the speaker to count members who were present and not voting in
determining whether a quorum was present. Other rules systematized
procedure and facilitated the passage of legislation. The Democrats
raged, denounced Reed as a "Czar," fought against the adoption of the
rules--all to no avail. The majority had its way; the Speaker
dominated legislation.[7]

The efficacy of the Reed reforms in expediting legislation was quickly
demonstrated. One of the earliest proposals to pass the House was Henry
Cabot Lodge's federal election law, which was intended to insure
federal control at polling places. Theoretically the measure was
applicable to the North as well as to the South, but no doubt existed
that it was really designed to prevent southern suppression of the
negro vote. The Democrats rallied to the opposition and denounced
Lodge's plan as a "force act." Despite objections it passed the House,
but it languished in the Senate and finally was abandoned. The generous
expenditure policy which the new philosophy called for brought forth
certain increases which were noteworthy. The dependent pension bill
which Cleveland had vetoed was passed, and a direct tax which had been
levied on the states during the Civil War was refunded. Another extreme
party measure was the Sherman silver act which became law on July 14,
1890. By it, 4,500,000 ounces of silver were to be purchased each
month. Its partisan character was indicated by the fact that no
Republicans voted against it, and no Democrats for it. Since the amount
of silver to be purchased was practically the total output of the
country, it was evident that the western mine owners were receiving the
same attention that was being accorded manufacturers who sought
protective tariff laws. Indeed, western Republicans, who were opposed
to the high tariff which eastern Republicans favored, were brought to
support such legislation only by a bargain through which each side
assisted the other in getting what it desired.[8]

The tariff measure which was thus entwined with the silver bill was
intended to carry out the pledge made in the party platform. Harrison
had early called the attention of Congress to the need of a reduction
of the surplus, had urged the passage of a new tariff law and the
removal of the tobacco tax which, he declared, would take a burden from
an "important agricultural product." The framing of the bill was in the
hands of William McKinley, the chairman of the Committee on Ways and
Means. McKinley was a thorough-going protectionist whose attitude on
the question had already been expressed somewhat as follows: previous
Democratic tariffs have brought the country to the brink of financial
ruin; without the protective tariff English manufacturers would
monopolize American markets; under the protective system the foreign
manufacturer largely pays the tax through lessened profits; under
protection the American laborer is the best paid, clothed and contented
workingman in the world; since it is necessary, then, to preserve
protection, the surplus should be reduced by the elimination of the
internal revenues; and protective tariff duties should be raised and
retained, not gradually lowered and done away with.

The Committee early proceeded to hold public hearings at which
testimony was taken, and to which manufacturers came from all over the
country to make known what duties they thought they ought to have. The
bill which was finally presented to the House proposed a level of
duties which was so high that it has generally been considered the
extreme of protection. McKinley himself justified the high rates only
on the ground that without them the bill could not be passed. With the
help of the Reed rules and the western Republicans the McKinley tariff
reached the President and was signed by him on October 1, 1890. It went
into effect at once.

The more prominent features of the measure sprang from the tariff creed
which had been advocated through the campaign. In order to conciliate
the farmers, the protective principle was applied to agricultural
products, and tariffs were laid on such articles as cereals, potatoes
and flax. On the cheaper grades of wool and woolens and on carpet wools
there was a slight rise over even the rates of 1883. On the higher
grades of woolen, linen and clothing the increase was marked. The duty
on raw sugar was removed and one-half cent per pound retained on the
refined product, but domestic sugar producers were given a bounty of
two cents a pound in order to protect them against the free importation
of the raw material. As the sugar duty had been productive of large
amounts of revenue, its remission reduced the surplus by about sixty to
seventy millions of dollars. In order to encourage the manufacture of
tin-plates, a considerable duty was imposed, which was to cease after
1897 unless domestic production reached specified amounts. As the
result of Blaine's urgency, a reciprocity feature was introduced. The
usual plan had been to reduce duties on certain products in case
concessions to American goods were given by the exporting countries,
but in the McKinley act the Senate inserted a novel provision. Instead
of being given power to lower duties in case reciprocal reductions were
made, the President was authorized to impose duties on certain articles
on the free list when the exporting nation levied "unjust or
unreasonable" customs charges on American products. It was expected
that this plan would be applied to Latin-American countries and would
increase our exports to them in return for sugar, molasses, tea, coffee
and hides. In general, the McKinley act was the climax of protection.
Under the impetus of President Cleveland's reduction challenge, the
Republican party had recoiled to the extreme.

The high rates levied by the new tariff act were quickly reflected in
retail prices and caused immediate and wide-spread discontent. The
benefits which the farmer had been led to expect did not put in their
appearance. Unhappily for McKinley and his associates the congressional
elections occurred early in November, scarcely a month after the new
law went into effect, and when the dissatisfaction was at its height.
The result was a stinging defeat for the Republicans. The 159 Democrats
were increased to 235, and the 166 Republicans dwindled to 88. Even in
New England the Democrats gained eleven members, in New York eight, and
in Iowa five. In Wisconsin not one Republican survived, and among the
lost in Ohio was McKinley himself.

Although the Republicans retained control of the Senate after 1890, the
Democratic House brought an end for a time to the domination of Reed
and the primacy of the lower chamber in the government. Such extreme
legislation as had characterized the first half of the Harrison regime
stopped abruptly. The role played in all this by Harrison himself seems
to have been a minor one. Many of his recommendations lacked the solid
character of those made by Hayes, Arthur and Cleveland, and he did not
make his influence felt in connection with the silver legislation, of
which he probably disapproved. It is significant that the one piece of
legislation which had the most enduring results was not a partisan act.
This act, the Sherman Anti-Trust law, demands attention in detail.

BIBLIOGRAPHICAL NOTE

In addition to the general and special works already mentioned, C.
Hedges, _Benjamin Harrison: Speeches_ (1892), provides useful material;
Cleveland's tariff message of Dec. 6, 1887 is in J.D. Richardson,
_Messages and Papers of the Presidents_, VIII, 580-591.

On the administration, and particularly the ascendancy of the House of
Representatives under Reed, consult: De A.S. Alexander, _History and
Procedure of the House of Representatives_ (1916); Mary P. Follett,
_Speaker of the House of Representatives_ (1896); C.S. Olcott, _William
McKinley_ (2 vols., 1916); J.G. Cannon in _Harper's Magazine_ (Mar.,
1920); _Annual Cyclopaedia_, 1890, pp. 181-191; S.W. McCall, _Thomas B.
Reed_ (1914), well written, although adding little to what was already
known; H.D. Croly, _Marcus A. Hanna_ (1912); W.D. Foulke, _Fighting the
Spoilsman_ (1919), on Harrison and the civil service; G.W. Curtis,
_Orations and Addresses_ (2 vols., 1894), summarizes the
administration's attitude toward civil service; T.B. Reed, _Reed's
Rules, A Manual of General Parliamentary Law_ (1894), gives a concise
summary of parliamentary conditions from Reed's standpoint; H.B.
Fuller, _The Speakers of the House_ (1909), excellent on the personal
side. The tariff is well treated in Stanwood, Taussig and Tarbell. On
pensions consult W.H. Glasson, _History of Military Pension Legislation
in the United States_ (1900), or better, the same author's _Federal
Military Pensions in the United States_ (1918).

* * * * *

[1] The vice-presidential candidate was Allan G. Thurman of Ohio,
affectionately known as the "noble old Roman," one of whose titles to
fame was the ownership of a large red bandanna handkerchief which he
nourished on all occasions.

[2] A party worker who realized the opportunity which this fact
presented complained that Pennsylvania manufacturers who made fortunes
under protection did not contribute to the Republican campaign fund,
and remarked: "If I had my way about it I would put the manufacturers
of Pennsylvania under the fire and fry all the fat out of them."

[3] The remaining members of the cabinet were: Redfield Proctor, Vt.,
Secretary of War; W.H.H. Miller, Ind., Attorney-General; B.F. Tracy,
N.Y., Secretary of the Navy; J.W. Noble, Mo., Secretary of the
Interior; J.M. Rusk, Wis., Secretary of Agriculture.

[4] Corporal Tanner is commonly supposed to have been so anxious to
have a hand in the generous distribution of government revenue among
the old soldiers that he declared one morning as he seated himself at
his desk, "God help the surplus." This is a mistake, although the
Corporal seems to have been more ready than the President to act
quickly and generously on claims.

[5] The open character of the financial corruption of the campaign
also gave impetus to the movement for the secret or Australian ballot
which was first introduced in Louisville, Ky., on Feb. 28, 1888, and in
Massachusetts on May 29, of the same year. Another reform movement was
that which resulted in the destruction of the Louisiana lottery. Cf.
A.K. McClure, _Recollections_, 173-183, and Peck, _Twenty Years_,
215-220.

[6] An incident which occurred when he was not speaker may serve to
illustrate the manner in which he routed his opponents. Representative
Springer, of Illinois, who had a reputation for loquacity and
insincerity, once asked for unanimous consent to correct a statement
which he had previously made in debate. "No correction needed," shouted
Reed. "We didn't think it was so when you made it."

[7] In his _Manual of General Parliamentary Law_, Reed declared that
the House prior to 1890 was the most unwieldy parliamentary body in the
world. Three resolute men, he asserted, could stop all public business.
A few years later, when the Democrats were in power, they adopted the
plans which Reed had so successfully used.

[8] These acts were part of the general financial history of the
period and in that connection demand fuller discussion at a later
point. Cf. Chap. XV.

CHAPTER XI

INDUSTRY AND _LAISSEZ FAIRE_

About the time the Sherman Anti-trust law was being passed, in 1890,
Henry D. Lloyd was writing his book _Wealth Against Commonwealth_, in
which occurred a memorable passage:

A small number of men are obtaining the power to forbid any but
themselves to supply the people with fire in nearly every form known
to modern life and industry, from matches to locomotives and
electricity. They control our hard coal and much of the soft, and
stoves, furnaces, and steam and hot-water heaters; the governors on
steam-boilers and the boilers; gas and gas-fixtures; natural gas and
gas-pipes; electric lighting, and all the appurtenances. You cannot
free yourself by changing from electricity to gas, or from the gas
of the city to the gas of the fields. If you fly from kerosene to
candles, you are still under the ban.

To understand the dangers of the monopolies which Lloyd feared and
denounced, it is necessary to know the principal features in the
development of American industry from the close of the Civil War to
1890.

It will be remembered that the consolidation of small railroad lines
into large systems was accompanied by such advantages to the companies
and to the travelling public, as to demonstrate that combination was the
inevitable order of the day. The similar integration of small industrial
and commercial enterprises took place more slowly between 1870 and 1890,
but the process was no less inevitable on that account. The census of
1890 indicated that the production of manufactured articles had greatly
increased since 1870; more capital was engaged; the product was more
valuable; and more workmen were employed. Nevertheless the number of
establishments which were in operation had shown a considerable decline
in many industries. An army of 100,000 employees represented the
expansion of the wage-earning force in the iron and steel works, for
example, and $270,000,000 the increase in the value of their products;
yet the number of establishments engaged showed a shrinkage of nearly
fourteen per cent. The workers in the textile mills grew from 275,000 to
512,000, and the capital outlay from $300,000,000 to $750,000,000, but
the number of factories declined from 4,790 to 4,114. A cartoon in
_Puck_ on January 26, 1881, remarked that "the telegraph companies have
been consolidated, which in simple language means that Mr. Jay Gould
controls every wire in the United States over which a telegram can be
sent."

Some of the reasons for the prevalent tendency toward combination were
not hard to discover. In the first place, although industrial
organizations fought one another with the utmost bitterness, it was in
the nature of things for them to combine if threatened by any common
foe. Moreover, production on a large scale made possible savings and
improvements that were outside the grasp of more modest enterprises;
buying and selling large quantities of goods commanded opportunities for
profit; waste products could be made use of and costly scientific
investigations conducted in order to discover improved methods, overcome
difficulties and open new avenues of activity; large salaries and
important positions could be offered to men of executive capacity; and
expensive equipment could be purchased and utilized.[1] An effective
force which tended to drive industries to combine was the cut-throat
competition which prevailed. Herbert Croly in his stimulating book _The
Promise of American Life_ vividly describes the bitter, warlike
character of industrial competition after 1865. Competition was battle
to the knife and tomahawk. The leaders were constantly seeking bigger
operations, to which the bigger risks only added zest. A company might
be making unbelievable profits one year and "skirting" bankruptcy the
next. Exciting as all this was, however, the desire for adventure was
not as powerful as the desire for profits, and cut-throat competition in
industry led as naturally to combination, as rate-wars on the railroads
led to pooling agreements.

An important factor in the development of large corporations was the
increasing use of the corporation form of industrial organization, as
contrasted with the co-partnership plan. If a few men enter a
copartnership, each of them must supply a considerable amount of
capital; but if a corporation is formed and stock is sold, the par value
of the shares may be placed at a low figure--$100 or less, for
example--and thus a large number of persons may be able to establish an
industry which is far beyond the financial resources of any individual
or small group among them. The corporation, moreover, is relatively
permanent, for the death of one stock-holder among many is unimportant
as compared with that of one member of a co-partnership. In case of
disaster to the enterprise the liability of the stock-holder in a
corporation is limited to the amount which he has invested, while any
member of a partnership may be legally held for all the debts of the
organization. With such advantages in its favor the corporation plan
largely dominated the organization of industry.

The most famous example of combination before 1890 was the Standard Oil
Company, which was the cause of more litigation, more study and more
complaint than any other industrial organization that has ever existed
in America. In 1865 Rockefeller & Andrews started an oil-refining
business in Cleveland, Ohio. Samuel Andrews was a mechanical genius and
he attended to the technical end of the industry; John D. Rockefeller
had bargaining capacity, and to him fell the task of buying the crude
oil, providing barrels and other materials and selling the product. The
firm prospered. H.M. Flagler was taken into the company and a branch was
established in New York. In 1870 these three with a few others organized
the Standard Oil Company of Ohio, with a capitalization of a million
dollars. It controlled not over ten percent. of the business of
oil-refining in the United States at that time. But the oil business was
so profitable that capital flowed into it and competition became keen.
Rockefeller and some associates, therefore, devised the South
Improvement Company of Pennsylvania, a combination of refiners, headed
and controlled by the Standard, the purpose of which was to make
advantageous arrangements With the railroads for transportation
facilities. Early in 1872, a most remarkable contract was signed between
the company and the important railroads of the oil country--the
Pennsylvania, the New York Central and the Erie. By it the roads agreed
to establish certain freight rates from the crude-oil producing region
of western Pennsylvania to such refining and shipping centers as New
York, Philadelphia, Baltimore, Pittsburg and Cleveland. From these rates
the South Improvement Company was to receive substantial rebates,
amounting to forty or fifty per cent. on crude oil and twenty-five to
forty-five per cent. on refined. On their side the railroads were
promised the entire freight business of the Company, each to have an
assured proportion of the traffic, with freedom from rate-cutting
competition. All this was the common railroad practice of the times.

But another portion of the contract was not so common. It provided that
the roads should give the South Improvement Company rebates on all oil
shipped by its competitors and furnish it with full way-bills of all
such shipments each day. In other words, the Company was to know exactly
the amount of the business of its competitors and with whom it was being
done. The contract allowed the roads to make similar rebates with
anybody offering an equal amount of traffic, but the likelihood of such
an outcome was slender in the extreme. Armed with this powerful weapon,
Rockefeller entered upon a campaign to eliminate competition by offering
to buy out independent refiners either with cash or with Standard Oil
stock, at his estimate of the value of their property. Those who
objected to selling were shown that the alliance between the South
Improvement Company and the railroads was so strong that they faced the
alternative of giving way or being crushed. Of the twenty-six refineries
in Cleveland, at least twenty-one yielded. The capacity of the Standard
leaped from 1,500 to 10,000 barrels a day and it controlled a fifth of
the refining business of the country. When these facts came to be known
in the oil country, the bitter Oil War of 1872 began. Independent
producers joined to fight for existence, and at length the railroads
gave way and agreed to abandon the contract with the South Improvement
Company, and the legislature of Pennsylvania annulled its charter,
although in one way or another rebates continued and the absorption of
rivals went on. In 1882 the entire combination--thirty-nine refiners,
controlling ninety to ninety-five per cent. of the product--was
organized as the Standard Oil Trust. All stock-holders in the combining
companies surrendered their certificates and received in return receipts
or "trust-certificates," which showed the amount of the owner's interest
in the trust. In order to secure unity of purpose and management, the
affairs of the combination were put into the hands of nine trustees,
with Rockefeller at the head.

The wonderful success of the Standard Oil Company, however, was not due
solely to the alliance with the railroads, although this advantage came
at a strategic time when it was fighting for supremacy. Its marketing
department gave it an unenviable reputation, but achieved amazing
success. The department was organized to cover the country, find out
everything possible about competitors, and then kill them off by
price-cutting or other means. The great resources of the Company enabled
it to undersell rivals, going below cost if necessary, and thus wearing
out opposition. Continuity of control, also, contributed to Standard
success; the narrow limits of the area in which the crude oil was
produced before 1890 rendered the problem of securing a monopoly
somewhat easier; the organization was extremely efficient and the
constituent companies were stimulated to a high degree of productivity
by encouraging the spirit of emulation; men of ability were called to
its high positions; the policy of gaining the mastery over the trade in
petroleum and its products was kept definitely and persistently to the
front; and then there was John D. Rockefeller.

Rockefeller was what used to be called a "self-made" man. He began his
business life in Cleveland as a clerk at an extremely modest salary.
Capacity for details and for shrewd bargaining, patience, frugality,
seriousness, secretiveness, caution, an instinctive sense for business
openings, self-control--all these were characteristic both of the
Cleveland clerk and the later oil-refiner. In the bigger field he
developed a daring caution, a quick understanding of the value of new
inventions, a capacity for organization, quick grasp of essentials and a
resourcefulness that dominated the entire Standard combination. He built
his own barrels, owned the pipe-lines, tank-cars, tank-wagons and
warehouses. Consolidation, magnitude and financial returns were his
aims, and in achieving these he and his associates were so successful as
to make the Standard a leader in all branches of business, except the
ethics of industry. Litigation has been the constant accompaniment of
Standard progress.

Following the Standard Oil Company, other combinations found the trust
form of organization a convenient one. The cotton trust, the whiskey
trust, and the sugar, cotton bagging, copper and salt trusts made the
public familiar with the term. Moreover, popular suspicion and hostility
became aroused, and the word "trust" began to acquire something of the
unpleasant connotation which it later possessed.

Although it was upon the Standard Oil Company that people turned when
they denounced the trusts and feared or condemned their practices, the
principles to which the Standard adhered when under the strain of
competition were the practices which were followed by their
contemporaries, both big and little. When the Diamond Match Company, for
example, was before the Courts of Michigan in 1889, it appeared that the
organization was built up for the purpose of controlling the manufacture
and trade in matches in the United States and Canada. Its policy was to
buy up and "remove" competition, so that it might monopolize the
manufacture and sale of matches. It could then fix the price of its
commodity at such a point that it could recoup itself for the expense of
eliminating competitors and also make larger profits than were possible
when its rivals were active.

Still more dangerous was the combination of the hard coal operators. By
1873, six corporations owned both the hard coal deposits of Pennsylvania
and the railroads which made it possible to haul the coal out to the
markets. In the same year and later these companies made agreements
which determined the amounts of coal that they would mine, the price
which they would charge, and the proportion of the whole output that
each company would be allowed to handle. Independent operators--that is,
operators not in the combination--found their existence precarious in
the extreme, for their means of transportation was in the hands of the
six coal-carrying railroads, who could raise rates almost at will and
find reasons even for refusing service. The states were powerless to
remedy the situation because their authority did not extend to
interstate commerce, yet it was intolerable for a small group of
interested parties to have power to fix the output of so necessary a
commodity as coal, on no other basis than that provided by their own
desires.

Other abuses appeared which showed that industrial combinations were
open to many of the complaints which, in connection with the railroads,
had led to the Interstate Commerce Act. Industrial pools resembled
railroad pools and were objected to for similar reasons. Bankers and
others who organized combinations were given returns that seemed as
extravagant as the prices paid to railroad construction companies; the
issues of the stock of corporations were bought and sold by their own
officers for speculative purposes; and stock-watering was as common as
in railroading. The industrial combinations also had somewhat the same
effect on politics that the railroads had. Lloyd declared that the
Standard Oil Company had done everything with the Pennsylvania
legislature except refine it.

One of the most noted cases of corporation influence in politics was
that of the election of Senator Henry B. Payne of Ohio. In 1886 the
legislature of the state requested the United States Senate to
investigate the election of Payne because of charges of Standard Oil
influence. The debate over the case showed clearly the belief on the
part of many that the Standard, which controlled "business, railroads,
men and things" was also choosing United States senators. Senator Hoar
raised the question whether the Standard was represented in the Senate
and even in the Cabinet. In denying any connection with the Oil Company,
Payne himself declared that no institution or association had been "to
so large an expense in money" to accomplish his defeat when he was a
candidate for election to the lower house. Popular suspicion seemed
confirmed, therefore, that the Company was taking an active share in
government. Whether the trust was for or against Payne made little
difference.

A complaint that brought the trust problem to the attention of many who
were not interested in its other aspects was the treatment accorded
independent producers. The rough-shod methods employed by the Standard
Oil Company, the Diamond Match Company and the coal operators were
concretely illustrated in many a city and town by such incidents as that
of a Pennsylvania butcher mentioned by Lloyd. An agent of the great meat
slaughtering firms ordered the butcher to cease slaughtering cattle, and
when he refused the agent informed him that his business would be
destroyed. He then found himself unable to buy any meat whatever from
Chicago, the meat-packing center, and discovered that the railroad would
not furnish cars to transport his supplies. Faced by such overwhelming
force, the independent producer was generally compelled to give way to
the demands of the big concerns or be driven to the wall. The
helplessness of the individual under such conditions was strikingly
expressed by Mr. Justice Harlan of the Supreme Court in a decision in a
suit against the Standard Oil Company:

All who recall the condition of the country in 1890 will remember
that there was everywhere, among the people generally, a deep
feeling of unrest. The Nation had been rid of human slavery ...
but the conviction was universal that the country was in real danger
from another kind of slavery sought to be fastened on the American
people, namely, the slavery that would result from aggregations of
capital in the hands of a few ... controlling, for their own ...
advantage exclusively, the entire business of the country, including
the production and sale of the necessaries of life.

Observers noted that fortunes which outstripped the possessions of
princes were being amassed for the few by combinations which sometimes,
if not frequently, resorted to illegal and unfair practices, and they
compared these conditions with the labor unrest, the discontent and the
poverty which was the lot of the many.

In the meanwhile there had arisen a growing demand for action which
would give relief from the conditions just described. As early as 1879
the Hepburn committee appointed by the New York Assembly had
investigated the railroads and had made public a mass of information
concerning the relation of the transportation system to the industrial
combinations. In 1880 Henry George had published _Progress and Poverty_
in which he had contended that the entire burden of taxation should be
laid upon land values, in order to overcome the advantage which the
ownership of land gave to monopoly. In 1881 Henry D. Lloyd had fired
his first volley, "The Story of a Great Monopoly," an attack on the
Standard Oil Company which was published in the _Atlantic Monthly_ and
which caused that number of the periodical to go through seven
editions.[2] In 1888 Edward Bellamy's _Looking Backward_ had pictured
a socialized Utopian state in which the luxuries as well as the
necessities of life were produced for the common benefit of all the
people. Societies had been formed for the propagation of Bellamy's
ideas, and the parlor study of socialism had become popular.

The platforms of the political parties had given evidence of a
continuing unrest without presenting any definite proposals for relief.
As far back as 1872 the Labor Reformers had condemned the "capitalists"
for importing Chinese laborers; in the same year the Republicans and
Democrats had opposed further grants of public land to corporations and
monopolies--referring in the main to the railroads; in 1880 the
Greenbackers and in 1884 the Anti-Monopolists, the Prohibitionists and
the Democrats had denounced the corporations and called for government
action to prevent or control them; and in 1888 the Union Labor party,
the Prohibitionists and the Republicans had urged legislation for doing
away with or regulating trusts and monopolies. By 1890 eight states had
already passed anti-trust laws. Among unorganized forces, possibly the
independent producers were as effective as any. Although usually
overcome by the superior strength of their big opponents, they
frequently conducted vigorous contests and sometimes carried the issue
to the courts where damaging evidence was made public.

The solution of the problem of trust control was not easy to discover.
The amount of property involved was so great that forceful legislation
would be fought to the last ditch; while legislation that was obviously
weak, on the other hand, would not satisfy public opinion. Public
officials were hopelessly divergent in their views. Cleveland had
called attention to the evils of the trusts in his tariff message of
1887, but had laid his emphasis on the need of reduced taxation rather
than upon control of the great combinations. Blaine was opposed to
federal action. Thomas B. Reed had characteristically ridiculed the
idea that monopolies existed:

And yet, outside the Patent Office there are no monopolies in this
country, and there never can be. Ah, but what is that I see on the
far horizon's edge, with tongue of lambent flame and eye of forked
fire, serpent-headed and griffin-clawed?

Surely it must be the great new chimera "Trust." Quick, cries every
masked member of the Ways and Means. Quick, let us lower the tariff.
Let us call in the British. Let them save our devastated homes.

More serious was the almost universal lack of knowledge of the elements
involved in the situation. Industrial leaders were unenlightened and
wrapped up in the attempt to outdo rivals who were equally
unenlightened and absorbed; the nation needed instruction and
leadership, and neither was to be found. Instead, the poorer classes
became more and more hostile to big business interests; the capitalist
class set itself stolidly to the preservation of its interests. The one
saw only the abuses, the other only the benefits of combinations.
Thoughtful men felt that industrialism was afflicted with a malady
which would kill the nation unless a remedy were found.

The legal and constitutional position of the trusts was almost
impregnable. Ever since the decision of the Supreme Court in the
Dartmouth College case, handed down in 1819, franchises and charters
granted by states to corporations had been regarded as contracts which
could not be altered by subsequent legislation. Moreover, the Court had
so interpreted the Fourteenth Amendment, as has been seen, that the
states had found great difficulty in framing regulatory legislation
that would pass muster before the judiciary.[3] It was doubtful
whether federal attempts at regulation would be more fortunate. More
fundamental still, for public opinion underlies even constitutional
interpretation, American industrial and commercial expansion had run
ahead of our conception of the possible and proper functions of
government. Government as the protector of property was an ancient
concept and commonly held in the United States; government as the
guardian of the individual against the powerful holder of a great deal
of property was a new idea and not generally looked upon with favor.

It has already been seen that the prevailing economic theory, _laissez
faire_, was diametrically opposed to government regulation of the
economic activities of the individual. According to this view,
unrestricted industrial liberty would result in adjustment by business
itself on honorable lines. Men whose integrity was such that they were
in control of great enterprises, asserted an attorney for the Standard
Oil Company, would be the first to realize that a fair policy toward
competitors and the public was the most successful policy. Combination
was declared to be inevitable in modern life and reductions in the
price of many commodities were pointed to as a justification for
leaving the trusts unhampered.

Public opinion, however, was reaching the point where it was prepared
to brush aside theoretical difficulties. President Harrison, Senator
Sherman and others urged action. Large numbers of anti-monopoly bills
were presented in Congress. The indifference of some members and the
opposition of others was somewhat neutralized by the fiery zeal of such
men as Senator Jones of Arkansas, who declared that the fortunes made
by the Standard Oil Company did not represent a single dollar of honest
toil or one trace of benefit to mankind. "The sugar trust," declared
the senator, "has its 'long, felonious fingers' at this moment in every
man's pocket in the United States, deftly extracting with the same
audacity the pennies from the pockets of the poor and the dollars from
the pockets of the rich."

After much study of the mass of suggested legislation, Congress relied
upon its constitutional power to regulate commerce among the several
states and passed the Sherman Anti-trust Act, which received President
Harrison's signature on July 2, 1890. Its most significant portions are
the following:

Sec. 1. Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations, is ... illegal.

Sec. 2. Every person who shall monopolize, or attempt to monopolize,
or combine or conspire with any other such person ... to monopolize
any part of the trade or commerce among the several States, or with
foreign nations, shall be deemed guilty of misdemeanor.

The purpose of the framers of the Act seems clearly to have been to
draw up a general measure whose terms should be those usual in the
English common law and then rest on the assurance that the courts would
interpret its meaning in the light of former practice. For some
centuries restraint of trade had been considered illegal in England,
but no contract was held to be contrary to law if it provided only a
_reasonable_ restraint--that is, if the restraint was merely minor and
subsidiary. The Sherman act was a Senate measure, was presented from
the Judiciary Committee and was passed precisely as drawn up by it. In
speaking from the Committee, both Edmunds and Hoar took the attitude
which the latter expressed as follows: "The great thing that this bill
does ... is to extend the common-law principles, which protected fair
competition ... in England, to international and interstate commerce in
the United States." Just how far the members of Congress who were not
on the Judiciary Committee of the Senate shared in this view or really
understood the bill can not be said. Indeed, many members of both
chambers absented themselves when the bill came to a vote.[4]

For a long time the Sherman Act like the Interstate Commerce Act was
singularly ineffective and futile. Trusts were nominally dissolved, but
the separate parts were conducted under a common and uniform policy by
the same board of managers. The Standard Oil Company changed its form
by selecting the Standard Oil Company of New Jersey as a "holding
corporation." Stock of the members of the combination was exchanged for
stock in the New Jersey organization, leaving control in the same hands
as before. The "same business was carried on in the same way but 'under
a new sign.'" The wide variety of conditions tolerated under the
corporation laws of the several states made confusion worse confounded.
In its early attempts to convict corporations of violation of the law,
the government was uniformly defeated.

In 1893 came the climax of futility. The American Sugar Refining
Company had purchased refineries in Philadelphia which enabled it to
control, with its other plants, ninety-eight per cent. of the refining
business in the country. The government asked the courts to cancel the
purchase on the ground that it was contrary to the Sherman law, and to
order the return of the properties to their former owners. The Supreme
Court declared that the mere purchase of sugar refineries was not an
act of interstate commerce and that it could not be said to restrain
such trade, and it refused to grant the request of the government.
Unhappily the prosecuting officers of the Attorney-General's office had
drawn up their case badly, making their complaint the purchase, not the
resulting restraint. No direct evidence was presented to show that
interstate commerce in sugar and the control of the sugar business and
of prices were the chief objects of the combination. To the public it
seemed that the corporations were impregnable, for even the United
States government could not control them.

BIBLIOGRAPHICAL NOTE

The early history of anti-trust agitation centers about Henry D. Lloyd.
His earliest article, "The Story of a Great Monopoly," is in _The
Atlantic Monthly_ (Mar., 1881); his classic account of trust abuses is
_Wealth against Commonwealth_ (1894); consult also C.A. Lloyd, _Henry
D. Lloyd_ (2 vols., 1912). Early and valuable articles in periodicals
are in _Political Science Quarterly_, 1888, pp. 78-98; 1889, pp.
296-319; W.Z. Ripley, _Trusts, Pools, and Corporations_ (rev. ed.,
1916), is useful; B.J. Hendrick, _Age of Big Business_ (1919), is
interesting and contains a bibliography. Ida M. Tarbell, _History of
the Standard Oil Company_ (2 vols., 1904), is carefully done and a
pioneer work. Other valuable accounts are: S.C.T. Dodd, _Trusts_
(1900), by a former Standard Oil attorney; Eliot Jones, _The Anthracite
Coal Combination in the United States_ (1914); J.W. Jenks, _Trust
Problem_ (1900), contains a summary of the economies of large scale
production; J.W. Jenks and W.E. Clark, _The Trust Problem_ (4th ed.,
1917), is scholarly and complete; J.D. Rockefeller, _Random
Reminiscences of Men and Events_ (1916), is a brief defence of the
Standard Oil Company; W.H. Taft, _Anti-Trust Act and the Supreme Court_
(1914), summarizes a few important decisions on the Sherman law. Edward
Bellamy, _Looking Backward_ (1888), describes an economic Utopia. Early
proposed anti-trust laws, together with the Congressional debates on
the subject are in _Senate Documents_, 57th Congress, 2nd session, vol.
14, No. 147 (Serial Number 4428). No complete historical study has yet
been made of the effects of industrial development, immediately after
the Civil War, on politics and the structure of American society.

* * * * *

[1] Charles M. Schwab mentions an unusual example. Under the direction
of Andrew Carnegie, the wealthy steel magnate, he had a new mill
erected, which seemed likely to meet all the demands which would be
placed upon it. But in the process of building it Schwab had seen a
single way in which it could be improved. Carnegie at once gave orders
to have the mill taken down before being used at all, and rebuilt on
the improved plan.

[2] It was not until 1894 that Lloyd published _Wealth Against
Commonwealth_, but his pen had been busy constantly between 1881 and
1894.

[3] Cf. above, pp. 89-93, on Fourteenth Amendment.

[4] The authorship of the Sherman law has often been a source of
controversy. Senator John Sherman, as well as other members, introduced
anti-trust bills in the Senate in 1888. Senator Sherman's proposal was
later referred to the Judiciary Committee, of which he was not a
member. The Committee thoroughly revised it. Senator Hoar, who was on
the Committee, thought he remembered having written it word for word as
it was adopted. Recent investigation seems to prove that the senator's
recollection was faulty and that Edmunds wrote most of it, while Hoar,
Ingalls and George wrote a section each and Evarts part of a sentence.
If this is the fact, it seems most nearly accurate to say that Sherman
started the enterprise and that almost every member of the Judiciary
committee, especially Edmunds, shared in its completion.

CHAPTER XII

DEMOCRATIC DEMORALIZATION

In view of the fact that Harrison had been successful in 1888 and that
Cleveland had been the most able Democratic leader since the Civil War,
it seemed natural that their parties should renominate them in 1892.
Yet the men at the oars in the Republican organization were far from
enthusiastic over their leader. It is probable that Harrison did not
like the role of dispenser of patronage and that he indicated the fact
in dealing with his party associates; at any rate, he estranged such
powerful leaders as Platt, Quay and Reed by his neglect of them in
disposing of appointments. The reformers were no better satisfied; much
had been expected of him because his party had taken so definite a
stand in 1888, and when his choice of subordinates failed to meet
expectations, the scorn of the Independents found forceful vent. Among
the rank and file of his party, Harrison had aroused respect but no
great enthusiasm.

The friends of Blaine were still numerous and active, and they wished
to see their favorite in the executive chair. Perhaps Blaine felt that
there would be some impropriety in his becoming an active candidate
against his chief, while remaining at his post as Secretary of State;
at any rate he notified the chairman of the National Republican
Committee, early in 1892, that he was not a candidate for the
nomination. The demand for him, nevertheless, continued and relations
between him and Harrison seem to have become strained. Senator Cullom,
writing nearly twenty years afterward, related a conversation which he
had had with Harrison at the time. In substance, according to the
senator, the President declared that he had been doing the work of the
Department of State himself for a year or more, and that Blaine had
given out reports of what was being done and had taken the credit
himself. Cullom's recollection seems to have been accurate, at least as
far as relations between the two men were concerned, for three days
before the meeting of the Republican nominating convention Blaine sent
a curt note to the President resigning his office without giving any
reason, and asking that his withdrawal take effect immediately. The
President's reply accepting the resignation was equally cool and
uninforming. If Blaine expected to take any steps to gain the
nomination, the available time was far too short. That the act would be
interpreted as hostile to the interests of Harrison, however, admitted
of no doubt, and it therefore seems probable that Blaine had changed
his mind at a late day and really hoped that the party might choose
him.[1]

Despite Blaine's apparent change of purpose, it seemed necessary to
renominate Harrison in order to avoid the appearance of discrediting
his administration, and on the first ballot Harrison received 535 votes
to Blaine's 183 and was nominated. The only approach to excitement was
over the currency plank in the platform. Western delegates demanded the
free coinage of silver, which the East opposed. The plank adopted
declared that

The Republican party demands the use of both gold and silver as
standard money, with such restrictions and under such provisions,
to be determined by legislation, as will secure the maintenance of
the parity of values of the two metals.

It was a meaningless compromise, but it seems to have satisfied both
sides.

Cleveland, during the Harrison administration, had been an object of
much interest and not a little speculation. After seeing President
Harrison safely installed in office, he went to New York city where he
engaged in the practice of law. He himself thought that he was retiring
permanently and not a few enemies were quite willing that this should
be the case. The eminent Democratic editor, Henry Watterson, remarked
that Cleveland in New York was like a stone thrown into a river, "There
is a 'plunk,' a splash, and then silence.". He was constantly invited,
nevertheless, to address public assemblies, which provided ample
opportunity for him to express his thoughts to the country. Moreover,
the McKinley Act of 1890 and the political reversal which followed
brought renewed attention to the tariff message of 1887 and to its
author. In February, 1891, Cleveland was asked to address a meeting of
New York business men which had been called by the Reform Club to
express opposition to the free coinage of silver. The question of the
increased use of silver as a circulating medium, as has been seen, was
a controverted one; neither party was prepared to take a definite
stand, and, indeed, division of opinion had taken place on sectional
rather than partisan lines. While the subject was in this unsettled
condition Cleveland received his invitation to the Reform Club, and was
urged by some of his advisors not to endanger his chances of
renomination by taking sides on the issue. The counsel had no more
effect than similar advice had produced in 1887 when the tariff was in
the same unsettled condition. Although unable to attend, Cleveland
wrote a letter in which he characterized the experiment of free coinage
as "dangerous and reckless." Whether right or wrong, he was definite;
people who could not understand the intricacies of currency standards
and the arguments of the experts understood exactly what Cleveland
meant. Little doubt now existed but that the name of the ex-president
would be a powerful one before the nominating convention, for he would
have the populous East with him on the currency issue--unless David B.
Hill should upset expectations.

Hill was an example of the shrewd politician. Like Platt, whom he
resembled in many ways, he was absorbed in the machinery and
organization of politics, rather than in issues and policies. Beginning
in 1870, when he was but twenty-seven years of age, he had held public
office almost continuously. In the state assembly, as Mayor of Elmira,
as Lieutenant-Governor with Cleveland and later as Governor, he
developed an unrivalled knowledge of New York as a political arena. In
1892 he was at the height of his power and the presidency seemed to be
within his grasp. The methods which he used were typical of the
man--the manipulation of the machinery of nomination.

The national Democratic nominating convention was called for June 21,
but the New York state Democratic committee announced that the state
convention for the choice of delegates would meet on February 22. So
early a meeting, four months before the national convention, was
unprecedented, and at once it became clear that a purpose lay behind
the call. It was to procure the election of members to the state
convention who would vote for Hill delegates to the nominating
convention, before Cleveland's supporters could organize in opposition.
Furthermore, it was expected that the action of New York would
influence other states where sentiment for Cleveland was not strong.
Hill's plan worked out as he had expected--at least in so far as the
state convention was concerned--for delegates pledged to him were
chosen. Cleveland's supporters, however, denounced the "snap
convention" and a factional quarrel arose between the "snappers" and
the "anti-snappers"; outside of New York it was so obvious that the
snap convention was a mere political trick that the Hill cause was
scarcely benefited by it. Delegates were chosen in other parts of the
country who desired the nomination of Cleveland.

The convention met in Chicago on June 21 and proceeded at once to adopt
a platform of principles. The silver plank was hardly distinguishable
from that of the Republicans, except that it was enshrouded with a
trifle more of ambiguity. The adoption of a tariff plank elicited
considerable difference of opinion, but the final result was an extreme
statement of Democratic belief. Instead of adopting the cautious
position taken in 1884, the convention declared that the constitutional
power of the federal government was limited to the collection of tariff
duties for purposes of revenue only, and denounced the McKinley act as
the "culminating atrocity of class legislation."

Although it was evident when the convention met, that the chances of
Hill for the nomination were slight indeed, the battle was far from
over. Hill was a "straight" party man, a fact which he reiterated again
and again in his famous remark, "I am a Democrat." Cleveland was not
strictly regular, a fact which Hill apparently intended to emphasize by
constant reference to his own beliefs. The oratorical champion of the
Hill delegation was Bourke Cockran, an able and appealing stump
speaker. For two hours he urged that Cleveland could not carry the
pivotal state, New York, and that it was folly to attempt to elect a
man who was so handicapped. Eloquence, however, was of no avail. The
first ballot showed that the Hill strength was practically confined to
New York, and Cleveland was easily the party choice. For the
vice-presidency Adlai E. Stevenson, a partisan of the old school, was
chosen.

Among the smaller parties there appeared for the first time the
"People's Party," later and better known as the "Populists." Their
nominee was James B. Weaver, who had led the Greenbackers in 1880.
Their platform emphasized the economic burdens under which the poorer
classes were laboring and listed a series of extremely definite
demands.

The campaign was a quiet one as both Cleveland and Harrison had been
tried out before. So unenthusiastic were the usual political leaders
that Colonel Robert G. Ingersoll declared that each party would like
to beat the other without electing its own candidates. Although the
financial issue was kept in the background, the tariff was fought out
again somewhat as it had been in 1888. The New York _Sun_ shed some
asperity over the contest by calling the friends of Cleveland "the
adorers of fat witted mediocrity," and the nominee himself as the
"perpetual candidate" and the "stuffed prophet"; and then added a ray
of humor by advocating the election of Cleveland. The adoption of the
Australian ballot, before the election, in thirty-four states and
territories constituted an important reform; thereafter it was
impossible for "blocks of five" to march to the polls and deposit their
ballots within the sight of the purchaser. The Homestead strike near
Pittsburg, Pennsylvania, somewhat aided the Democrats. The Carnegie
Steel Company, having reduced wages, precipitated a strike which was
settled only through the use of the state militia. As the steel
industry was highly protected by the tariff, it appeared that the wages
of the laboring man were not so happily affected as Republican orators
had been asserting.[2]

The result of the election was astonishing. Cleveland carried not
merely the South but Connecticut, New York, New Jersey, Indiana,
Illinois, Wisconsin and California, while five of Michigan's fourteen
electoral votes and one of Ohio's twenty-three went to him. In the
last-named state, which had never gone against the Republicans, their
vote exceeded that of the Democrats by only 1,072. For the first time
since Buchanan's day, both Senate and House were to be Democratic. More
surprising and more significant for the future, was the strength of the
People's Party. Over a million ballots, twenty-two electoral votes, two
senators and eleven representatives were included among their trophies.
It was an important fact, moreover, that twenty-nine out of every
thirty votes cast for the People's Party were cast west of Pennsylvania
and south of Maryland. Something apparently was happening, in which the
East was not a sharer. The politician, particularly in the East, was
quite content to dismiss the Populists as "born-tired theorists,"
"quacks," "a clamoring brood of political rainmakers," and "stump
electricians," but the student of politics and history must appraise
the movement less provincially and with more information.

It was in the nature of things that the Populist movement should come
out of the West. From the days of Clay and Jackson the westerner had
been characterized by his self-confidence, his assertiveness and his
energy. He had possessed unlimited confidence in ordinary humanity,
been less inclined to heed authority and more ready to disregard
precedents and experience. He had expressed his ideals concretely, and
with vigor and assurance. He had broken an empire to the plow, suffered
severely from the buffetings of nature and had gradually worked out his
list of grievances. One or another of his complaints had been presented
before 1892 in the platforms of uninfluential third parties, but not
until that year did the dissenting movement reach large proportions.

It has already been seen that the people of the West were in revolt
against the management of the railroads. They saw roads going bankrupt,
to be sure, but the owners were making fortunes; they knew that lawyers
were being corrupted with free passes and the state legislatures
manipulated by lobbyists; and they believed that rates were
extortionate. The seizure and purchase of public land, sometimes
contrary to the letter of the law, more often contrary to its spirit,
was looked upon as an intolerable evil. Moreover, the westerner was in
debt. He had borrowed from the East to buy his farm and his machinery
and to make both ends meet in years when the crops failed. In 1889 it
was estimated that seventy-five per cent. of the farms of Dakota were
mortgaged to a total of $50,000,000. Boston and other cities had scores
of agencies for the negotiation of western farm loans; Philadelphia
alone was said to absorb $15,000,000 annually. The advantage to the
West, if conditions were right, is too manifest to need explanation.
But sometimes the over-optimistic farmer borrowed too heavily;
sometimes the rates demanded of the needy westerners were usurious;
often it seemed as if interest charges were like "a mammoth sponge,"
constantly absorbing the labor of the husbandman. The demand of the
West for a greater currency supply has already been seen, for it
appeared in the platforms of minor parties immediately after the Civil
War. Sometimes it seemed as if nature, also, had entered a conspiracy
to increase the hardships of the farmer. During the eighties a series
of rainy years in the more arid parts of the plains encouraged the idea
that the rain belt was moving westward, and farmers took up land beyond
the line where adequate moisture could be relied upon. Then came drier
years; the corn withered to dry stalks; farms were more heavily
mortgaged or even abandoned; and discontent in the West grew fast.

The complaints of the westerner naturally found expression in the
agricultural organizations which already existed in many parts of the
country. The Grange had attacked some of the farmer's problems, but
interest in it as a political agency had died out. The National
Farmers' Alliance of 1880 and the National Farmers' Alliance and
Industrial Union somewhat later were both preceded and followed by many
smaller societies. Altogether their combined membership began to mount
into the millions. When, therefore, the Alliances began to turn away
from the mere discussion of agricultural grievances and toward the
betterment of conditions by means of legislation, and when their
principles began to be taken up by discontented labor organizations, it
looked as if they might constitute a force to be reckoned with.

The remedies which the Alliances suggested for current ills were
definite. Fundamentally they believed that the government, state and
federal, could remedy the economic distresses of the people and that it
ought to do so. At the present day such a suggestion seems commonplace
enough, but in the eighties the dominant theory was individualism--each
man for himself and let economic law remedy injustices--and the
Alliance program seemed like dreaded "socialism." The counterpart of
the demand for larger governmental activity was a call for the greater
participation of the people in the operation of the machinery of
legislation. This lay back of the demand for the initiative, the
referendum, and the popular election of senators. Currency ills could
be remedied, the farmers believed, by a national currency which should
be issued by the federal government only--not by national banks. They
desired the free coinage of silver and gold until the amount in
circulation should reach fifty dollars per capita. Lesser
recommendations were for an income tax and postal savings banks. In
relation to the transportation system, they declared that "the time has
come when the railroad corporations will either own the people or the
people must own the railroads." In order to prevent the waste of the
public land and to stop its being held for speculative purposes, they
urged that none be allowed to remain in the hands of aliens and that
all be taken away from the railroads and corporations which was in
excess of actual needs.

The power of the new movement first became evident in 1890 and
distinctly disturbed both the Republican and the Democratic leaders.
Determined to right their wrongs, the farmers deserted their parties in
thousands, flocked to conventions and crowded the country schoolhouses
for the discussion of methods and men. Perhaps it was true, as one of
their critics asserted, that they put a "gill of fact and grievance
into a gallon of falsehood and lurid declamation" so as to make an
"intoxicating mixture." If so, the mixture took immediate effect.
Alliance governors were elected in several southern states; many state
legislatures in the South and West had strong farmer delegations; and
several congressmen and senators were sent to Washington. Success in
1890 made the Alliances jubilant and they looked to the possibility of
a countrywide political organization and a share in the campaign of
1892. The first national convention was held in Omaha in July, 1892, at
which many of the farmers' organizations together with the Knights of
Labor and other groups were represented. The name "People's party" was
adopted, the principles just mentioned were set forth in a platform and
candidates nominated. In the ensuing election the party exhibited the
surprising strength which has been seen.

It has taken more time to describe the Populist movement than its
degree of success in 1892 would justify. But it deserves attention for
a variety of reasons. Its reform demands were important; it was a
striking indication of sectional economic interests; it gave evidence
of an effective participation in politics by the small farmers, the
mechanics and the less well-to-do professional people--the "middle
class," in a word; it was a long step toward an expansion of the
activities of the central government in the fields of economic and
social legislation; and finally it emphasized the significance of the
West, as a constructive force in American life. If the Populists should
capture one of the other parties or be captured by it, nobody could
foresee what the results would be on American political history.

The second administration of Grover Cleveland, from 1893 to 1897, was
the most important period of four years for half a century after the
Civil War. For twenty-five years after 1865 American politicians had
been sowing the wind. Issues had rarely been met man-fashion, in direct
combat; instead, they had been evaded, stated with skilful ambiguity,
or beclouded with ignorance and prejudice. Politics had been concerned
with the offices--the plunder of government. It could not be that the
whirlwind would never be reaped.

The situation in 1893 was one that might well have shaken the stoutest
heart. International difficulties were in sight that threatened unusual
dangers; labor troubles of unprecedented complexity and importance were
at hand; the question of the currency remained unsettled, the treasury
was in a critical condition, and an industrial panic had already begun.
Each of these difficulties will demand detailed discussion at a later
point.[3]

To no small degree, the settlement of the political and economic issues
before the country was complicated by the unmistakable drift toward
sectionalism, and by the particular characteristics of the President.
If the administration pressed a tariff reduction policy, it would
please the South and West but bring hostility in the East. The demands
of the West, so far as the Populists represented them, were for the
increased use of the powers of the federal government and the
application of those powers to social and economic problems; but the
party in power was traditionally attached to the doctrine of restricted
activity on the part of the central authority. The sectional aspects of
the silver question were notorious; and only the eastern Democrats
fully supported their leader in his stand on the issue.

The personal characteristics of President Cleveland have already
appeared.[4] He had a burdensome consciousness of his own individual
duty to conduct the business of his office with faithfulness; a
courageous sense of justice which impelled him to fight valiantly for a
cause that he deemed right, however unimportant or hopeless the cause
might be; a reformer's contempt for hypocrisy and shams, and a blunt
directness in freeing his mind about wrong of every kind. He had the
faults of his virtues, likewise. Sure of himself and of the right of
his position, he had the impatience of an unimaginative man with any
other point of view; he was intransigent, unyielding, rarely giving
way a step even to take two forward. It seems likely that his political
experience had accentuated this characteristic. For years he had thrown
aside the advice of his counsellors and had shown himself more nearly
right than they. As Mayor of Buffalo he had used the veto and had been
made Governor of the state; as Governor he had ruggedly made enemies
and had become President; as President he had flown in the face of
caution with his tariff message and his Reform Club letter and had
three times received a larger popular vote than his competitor. And
each time his plurality was greater than it had been before. If he
tended to become over-sure of himself, it should hardly occasion
surprise. Furthermore he looked upon the duties and possibilities of
the presidential office as fixed and stationary, rather than elastic
and developing. He was a strict constructionist and a rigid believer in
the checks and balances of the Constitution. Although constantly aware
of the needs and rights of the common people, such as composed the
Populist movement, his adherence to strict construction was so complete
that he was unable to advocate much of the federal legislation desired
by them. It was only with hesitation and constitutional doubts, for
example, that he had been able to sign even the Interstate Commerce
Act. In brief, then, the western demand for social and economic
legislation on a novel and unusual scale was to take its chances with
an honest, dogged believer in a restricted federal authority.

The experience of the administration with the patronage question
illustrates how much progress had been made in the direction of reform
since the beginning of Cleveland's first term in 1885. In the earlier
year it had required a bitter contest to make even the slightest
advance; in his second term he retained Roosevelt, a Republican
reformer, on the Commission and gradually extended the rules so as to
cover the government printing office, the internal revenue service, the
pension agencies, and messengers and other minor officials in the
departments in Washington. Finally on May 6, 1896, he approved an order
revising the rules, simplifying them and extending them to great
numbers of places not hitherto included, "the most valuable addition
ever made at one stroke to the competitive service." The net result was
that the number of positions in the classified service was more than
doubled between 1893 and 1897, making a total of 81,889 in a service of
somewhat over 200,000.[5] By the latter year the argument against
reform had largely been silenced. The dismal prediction of opponents
who had feared the establishment of an office-holding aristocracy had
turned out to have no foundation. Agreement was widespread that the
government service was greatly improved. There were still branches of
the service for the reformers to work upon but the great fight was over
and won.[6]

Although the Democrats came into power in 1893 largely on the tariff
issue, Cleveland felt that the most urgent need at the beginning of the
administration was the repeal of the part of the Sherman silver law
that provided for the purchase of 4,500,000 ounces of silver each
month. The financial and monetary aspects of this controversy demand
relation at another point.[7] Politically its results were important.
Western and southern Democrats, friendly to silver, fought bitterly
against the repeal, and became thoroughly hostile to Cleveland whom
they began to distrust as allied to the "money-power" of the East. At
the time, then, when the President was most in need of united partisan
support, he found his party crumbling into factions.

Other circumstances which have been mentioned combined to make the time
inauspicious for a revision of the tariff--the slight Democratic
majority in the Senate, the deficit caused by rising expenditure and
falling revenue, the imminent industrial panic and the prevailing labor
unrest. Nevertheless it seemed necessary to make the attempt. If the
results of the election of 1892 meant anything, they meant that the
Democrats were commissioned to revise the tariff.

The chairman of the House Committee on Ways and Means was William L.
Wilson, a sincere and well-read tariff reformer who had been a lawyer
and a college president, in addition to taking a practical interest in
politics. The measure which he presented to the House on December 19,
1893, was not a radical proposal, but it provided for considerable
tariff reductions and a tax on incomes over $4,000. There was a slight
defection in party support, but it was unimportant because of the large
majority which the Democrats possessed, and the bill passed the House
without unusual difficulty.

In the Senate a different situation presented itself. The Democratic
majority over the Republicans, provided the Populists voted with the
former, was only nine; and in case the Populists became disaffected,
the Democrats could outvote the opposition only by the narrow margin of
three, even if every member remained with his party. Such a degree of
unanimity, in the face of prevailing conditions, was extremely
unlikely. The Louisiana senators were insistent upon protection for
their sugar; Maryland, West Virginia and Alabama senators looked out
for coal and iron ore; Senator Hill of New York was unalterably opposed
to an income tax; Senator Murphy, of the same state, obtained high
duties on linen collars and cuffs; and Senators Gorman and Brice were
ready to aid the opposition unless appeased by definite bits of

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