Full Text Archive logoFull Text Archive — Books, poems, drama…

The United States Since The Civil War by Charles Ramsdell Lingley

Part 5 out of 9

Adobe PDF icon
Download this document as a .pdf
File size: 1.1 MB
What's this? light bulb idea Many people prefer to read off-line or to print out text and read from the real printed page. Others want to carry documents around with them on their mobile phones and read while they are on the move. We have created .pdf files of all out documents to accommodate all these groups of people. We recommend that you download .pdfs onto your mobile phone when it is connected to a WiFi connection for reading off-line.

protection which they demanded. Many years later Senator Cullom, a
Republican, explained the practical basis on which the Senate
proceeded: "The truth is, we were all--Democrats as well as
Republicans--trying to get in amendments in the interest of protecting
the industries of our respective States."

The 634 changes made in the Senate were, therefore, mainly in the
direction of lessening the reductions made by the House. After the bill
had passed the Senate, it was put into the hands of a conference
committee, where further changes were made. At this stage of the
proceedings, Wilson read to the House a letter from the President
condemning the form which the bill had taken under Senate management,
and branding the abandonment of Democratic principles as an example of
"party perfidy and party dishonor." The communication had no effect
except to intensify differences within the party, and senators made it
evident that they would have their way or kill the measure. The House
thereupon capitulated and accepted what became known as the
Wilson-Gorman act--a law which was only less protectionist than the
McKinley act. The President, chagrined at the breakdown of the party
program, allowed the act to pass without his signature, but expressed
his mingled disappointment and disgust in a letter to Representative
T.C. Catchings:

There are provisions in this bill which are not in line with honest
tariff reform.... Besides, there were ... incidents accompanying the
passage of the bill ... which made every sincere tariff reformer
unhappy.... I take my place with the rank and file of the Democratic
party ... who refuse to accept the results embodied in this bill as
the close of the war, who are not blinded to the fact that the
livery of Democratic tariff reform has been stolen and worn in the
service of Republican protection, and who have marked the places
where the deadly blight of treason has blasted the counsels of the
brave in their hour of might.

A few phases of the attempt at tariff reduction indicate the extent to
which political decay and especially Democratic demoralization had
gone. As it passed the House, the Wilson bill left both raw and refined
sugar on the free list. This was unsatisfactory to the Louisiana sugar
growers, who desired a protective duty on the raw product, and was
objected to by the Louisiana senators. On the other hand, the American
Sugar Refining Company, usually known as the "Sugar Trust," desired
free raw materials but sought protective duties on refined sugar. In
the Senate, a duty was placed on raw sugar, partly for revenue and
partly to satisfy the Louisiana senators. On refined sugar, rates were
fixed which were eminently satisfactory to the Trust. Rumors at once
began to be spread broadcast over the country that the sugar interests
had manipulated the Senate. The people were the more ready to believe
charges of this sort because of experience with previous tariff
legislation and because the Sugar Trust had been one of the earliest
and most feared of the monopolies which had already caused so much
uneasiness. A Senate committee was appointed, composed of two
Democrats, two Republicans and a Populist, to investigate these and
other rumors. Their report, which was agreed to by all the members,
made public a depressing story. It appeared that one lobbyist had
offered large sums of money for votes against the tariff bill on
account of the income tax provision. Henry O. Havermeyer, president of
the American Sugar Refining Company, testified that the company was in
the habit of contributing to the campaign funds of one political party
or the other in the states, depending on which party was in the
ascendancy; that these contributions were carried on the books as
expense; and that they were given because the party in power "could
give us the protection we should have." Further, one or more officers
of the company were in Washington during the entire time when the
tariff act was pending in the Senate and had conferred with senators
and committees. Senator Quay testified that he had bought and sold
sugar stocks while the Senate was engaged in fixing the schedules and
added: "I do not feel that there is anything in my connection with the
Senate to interfere with my buying or selling the stock when I please;
and I propose to do so." Finally the committee summarized the results
of its investigation, taking the occasion to

strongly deprecate the importunity and pressure to which Congress
and its members are subjected by the representatives of great
industrial combinations, whose enormous wealth tends to suggest
undue influence, and to create in the public mind a demoralizing
belief in the existence of corrupt practices.

Yet one more drop remained to fill the cup of Democratic humiliation to
overflowing. The constitutionality of the income tax had been assumed
to have been settled by previous decisions of the Supreme Court,
especially that in the case Springer _v._ United States, which had been
decided in 1880, and in which the Court had upheld the law. The new tax
was brought before the Court in 1894, in Pollock _v._ Farmers' Loan and
Trust Company. The argument against the tax was pressed with great
vigor, not merely on constitutional grounds, but for evident social and
economic reasons. Important financial interests engaged powerful legal
talent and it became clear that the question to be settled was as much
a class and sectional controversy as a constitutional problem. Counsel
urged the Court that the tax scattered to the winds the fundamental
principles of the rights of private property. Justice Field, deciding
against the tax, declared it an "assault upon capital" and a step
toward a war of the poor against the rich. There was fear among some
that the exemption of the smaller incomes might result in placing the
entire burden of taxation on the wealthy. Justice Field, for example,
felt that taxing persons whose income was $4,000 and exempting those
whose income was less than that amount was like taxing Protestants, as
a class, at one rate and Catholics at another. The sectional aspects of
the controversy were brought out in objections that the bulk of the tax
would fall on the Northeast. The most important point involved was the
meaning of the word "direct" as used in the Constitution in the phrase
"direct Taxes shall be apportioned among the several States ... according
to their respective Numbers." If an income tax is a direct tax, it must
be apportioned among the states according to population. Unhappily the
framers of the Constitution were not clear as to what they meant by
the word direct, and specifically they could not have told whether an
income tax was direct or not, because no such tax existed in England
or America at that time. Hence the Supreme Court was placed in the
awkward position of defining a word which the framers themselves could
not define, although the uniform practice hitherto had been to regard
the income tax as indirect and therefore constitutional, even if not
apportioned according to population.

The Pollock case was heard twice. The result of the first trial was
inconclusive and on the central point the Court divided four to four.
After a rehearing, Justice Jackson, who had been ill and not present at
the first trial, gave his vote in favor of constitutionality, but in
the meantime another justice had changed his opinion and voted against
it. By the narrow margin of five to four, then, and under such
circumstances, the income tax provision of the Wilson-Gorman act was
declared null and void. Probably no decision since the Dred Scott case,
with the single exception of the Legal Tender cases, has put the
Supreme Court in so unfortunate a light. Certainly in none has it
seemed more swayed by class prejudice, and so insecure and vacillating
in its opinion.

Before the question regarding the constitutionality of the income tax
was settled, the Democrats reaped the political results of the
Wilson-Gorman tariff act. The law went into force on August 27, 1894;
the congressional elections came in November. The Democrats were almost
utterly swept out of the House, except for those from the southern
states, their number being reduced from 235 to 105. Reed was replaced
in the speaker's chair; tariff reform had turned out to be
indistinguishable from protection; and the Democracy, after its only
opportunity since 1861 to try its hand at government, was demoralized,
discredited, and in opposition again.

BIBLIOGRAPHICAL NOTE

The election of 1892 is described in the standard histories of the
period, and especially well in Peck.

The rise and growth of the Populist movement resulted in a considerable
literature of which the following are best: S.J. Buck, _The Agrarian
Crusade_ (1920), is founded on wide knowledge of the subject and
contains bibliography; F.J. Turner in _The Atlantic Monthly_ (Sept.,
1896), gives a brief but keen account; other articles in periodicals
are F.E. Haynes, in _Quarterly Journal of Economics_, X, 269, W.F.
Mappin, in _Political Science Quarterly_, IV, 433, and F.B. Tracy, in
_Forum_, XVI, 240; F.E. Haynes, _Third Party Movements_ (1916), is
detailed; M.S. Wildman, _Money Inflation in the United States_ (1905),
presents the psychological and economic basis of inflation; J.A.
Woodburn, _Political Parties and Party Problems_ (1914); F.L. Paxson,
_New Nation_ (1915).

Cleveland's administration is well discussed by D.R. Dewey, _National
Problems_ (1907), and by H.T. Peck, who also presents an unusual
analysis of Cleveland in _The Personal Equation_ (1898). The income tax
is best handled by E.R.A. Seligman, _The Income Tax_ (1914).
Cleveland's own account of the chief difficulties of the administration
are in his _Presidential Problems_.

* * * * *

[1] Blaine died on Jan. 27, 1893.

[2] Below, p. 320, for an account of the strike as an industrial
dispute.

[3] Below, Chaps. XIII, XIV, XV.

[4] Above, Chap. VIII.

[5] The sweeping reform order of Cleveland late in his second term
illustrated the most common and effective method of making advance.
Late in his administration the President adds to the classified
service; his successor withdraws part of the additions, but more than
makes up at the end of his term,--a sort of two steps forward and one
backward process.

[6] Cleveland's second cabinet was composed of the following: W.Q.
Gresham, Ill., Secretary of State; J.G. Carlisle, Ky., Secretary of
the Treasury; D.S. Lamont, N.Y., Secretary of War; R. Olney, Mass.,
Attorney-General; W.S. Bissell, N.Y., Postmaster-General; H.A. Herbert,
Ala., Secretary of the Navy; Hoke Smith, Ga., Secretary of the
Interior; J.S. Morton, Neb., Secretary of Agriculture.

[7] Below, pp. 336-340.

CHAPTER XIII

THE TREND OF DIPLOMACY

After the international issues arising from the Civil War were settled,
and before foreign relations began to become more important late in the
nineties, our diplomatic history showed the same lack of definiteness
and continuity that stamped the history of politics during the same
years. Eleven different men held the post of Secretary of State during
the thirty-four years from 1865 to 1898, one of them, Blaine, serving
at two separate times. The political situation in Washington changed
frequently, few men of outstanding capacity as diplomatists were in the
cabinets, and most of the problems which arose were not such as would
excite the interest of great international minds. That any degree of
unity in our foreign relations was attained is due in part to the
continuous service of such men as A.A. Adee, who was connected with the
state department from 1878, and Professor John Bassett Moore, long in
the department and frequently available as a counselor.[1]

Even before the Civil War, Americans had been interested in the affairs
of the nations whose shores were touched by the Pacific Ocean.
Missionaries and traders had long visited China and Japan. During the
years when the transcontinental railroads were built, as has been seen,
the construction companies looked to China for a labor supply, and
there followed a stream of Chinese immigrants who were the cause of
a difficult international problem. Our relations with Japan were
extremely friendly. Until the middle of the nineteenth century the
Japanese had been almost completely cut off from the remainder of the
world, desiring neither to give to the rest of humanity nor to take
from them. In 1854 Commodore Matthew C. Perry of the United States
Navy had succeeded in obtaining permission for American ships to take
coal and provisions at two Japanese ports. Townsend Harris shortly
afterwards had been appointed consul-general to Japan and his knowledge
of the East and his tactful diplomacy had procured increased trade
rights and other privileges. In 1863 a Japanese prince had sought to
close the strait of Shimonoseki which connects the inland sea of Japan
with the outside ocean. American, French and Dutch vessels had been
fired upon, and eventually an international expedition had been sent to
open the strait by force. Seventeen ships of war had quickly brought
the prince to terms. An indemnity had been demanded, of which the
United States had received a share. The fund remained in the treasury
untouched until 1883 when it was returned to Japan. The latter received
the refund as "a strong manifestation of that spirit of justice and
equity which has always animated the United States in its relations
with Japan."

The purchase of Alaska in 1867, stretched a long, curved finger out
towards the Asiatic coast, but there was little interest in the new
acquisition and no knowledge of its size or resources.[2]

The first tangible and permanent indication that the United States
might extend its interests into the sphere of the Pacific Ocean
appeared as early as 1872, when an arrangement with a Samoan chief gave
us the right to use the harbor of Pagopago on the island of Tutuila.
Tutuila is far from American shores, being below the equator on the
under side of the world, but the harbor of Pagopago is an unusually
good one and its relation to the extension of American commerce in the
South Pacific was readily seen. Not long afterward, similar trading
privileges were granted to Germany and Great Britain. Conditions in the
islands had by no means been peaceful even before the advent of the
foreigners with their intrigues and jealousies, and in 1885 the
Germans, taking advantage of a native rebellion, hauled down the Samoan
flag on the government building in Apia and seemed about to take
control. In the following year, at the request of the Samoan king, the
American consul Greenebaum proclaimed a protectorate and hoisted the
United States flag. The act was unauthorized and was disavowed at once
by the government at Washington. In the hope of establishing order in
the islands, Bayard, Secretary of State in President Cleveland's first
administration, suggested a triple conference of Germany, Great Britain
and the United States in Washington. During a recess in the conference
a native rebellion overturned the Samoan government and Germany assumed
virtual control. While civil war raged among native factions, the
Germans landed armed forces for the protection of their interests. The
American and British governments, fearful of danger to their rights,
already had war vessels in the harbor of Apia and armed conflict seemed
almost inevitable when a sudden hurricane on March 16, 1889, destroyed
all the vessels except one. The _Calliope_, (English), steamed out to
sea in the teeth of the great storm and escaped in safety. In the face
of such a catastrophe all smaller ills were forgotten and peace reigned
for the moment in Samoa.

Meanwhile, just as Cleveland was retiring from office for the first
time, another conference of the three powers was arranged which
provided a somewhat complicated triple protectorate. After a few years
of quiet, another native insurrection called attention to the islands.
Cleveland was again in the presidential chair, and in a message to
Congress he expressed his belief that the United States had made a
mistake in departing from its century-old policy of avoiding entangling
alliances with foreign powers. A year later he returned to the subject
more earnestly than ever. A report from the Secretary of State
presented the history of our Samoan relations and ventured a judgment
that the only fruits which had fallen to the United States were
expense, responsibility and entanglement. The President thereupon
invited an expression of opinion from Congress on the advisability of
withdrawing from our engagements with the other powers. For the time
nothing came of Cleveland's recommendation, but the continuance of
native quarrels later necessitated another commission to the islands.
The American member reported that the harbor of Apia was full of war
vessels and the region about covered with armed men, but that "not the
sail or smoke of a single vessel of commerce was to be seen there or
about the coasts of these beautiful islands." In 1899, the triple
protectorate was abandoned, as it had complicated the task of governing
the islands. The United States received Tutuila with the harbor of
Pagopago, Germany took the remainder of the group, and England retired
altogether. The trend of Samoan relations was significant: our
connection with the islands began with the desire to possess a coaling
station; the possession first resulted in entanglements with other
nations, and later in the question whether we ought not to withdraw;
and eventually we withdrew from some of the responsibilities, but not
from all. Despite its traditional policy of not contracting entangling
alliances, the United States was in the Pacific to stay.

When Cleveland came into power the first time, he found a long-standing
disagreement with Canada over the fisheries of the northeastern coast.
An arrangement which had resulted from the Treaty of Washington in 1871
came to an end in 1885, and the rights of American fishermen in
Canadian waters then rested upon a treaty of 1818. This treaty was
inadequate owing to various changes which had taken place during the
nearly seventy years that had elapsed since it was drawn up. Several
difficulties lay in the way of the arrangement of a new treaty, an
important one being the readiness of the Republican Senate to embarrass
the President and thus discredit his administration. Matters came to a
critical point in 1886 when Canadian officials seized two American
vessels engaged in deep-sea fishing. Cleveland then arranged a treaty
which provided for reciprocal favors, and when the Senate withheld its
assent the administration made a temporary agreement, (_modus
vivendi_), under which American ships were allowed to purchase bait and
supplies and to use Canadian bays and harbors by paying a license
fee.[3]

The peculiar geographical configuration of Alaska was, meanwhile,
bringing the United States into another diplomatic controversy. An arm
or peninsula of the possession extends far out into the Pacific and is
continued by the Aleutian Islands, which resemble a series of
stepping-stones reaching toward Siberia.[4] The Bering Sea is almost
enclosed by Alaska and the Islands. Within the Sea and particularly on
the islands of St. Paul and St. George in the Pribilof group, large
numbers of seals gathered during the spring and summer to rear their
young. In the autumn the herds migrated to the south, passing out
through the narrow straits between the members of the Aleutian group,
and were particularly open to attack at these points. As early as 1870
the United States government leased the privilege of hunting fur seals
on St. Paul and St. George to the Alaska Commercial Company, but the
business was so attractive that vessels came to the Aleutian straits
from many parts of the Pacific, and it looked as if the United States
must choose between the annihilation of the herds and the adoption of
some means for protecting them. The revenue service thereupon began the
seizure in 1886 of British sealing vessels, taking three in that year
and six during the next. The British government protested against the
seizures on the ground that they had taken place more than three miles
from shore--three miles being the limit to the jurisdiction of any
nation, according to international law. The Alaskan Court which upheld
the seizures justified itself by the claim that the whole Bering Sea
was part of the territory of Alaska and thus was comparable to a harbor
or closed sea (_mare clausum_), but Secretary Blaine disavowed this
contention. The United States then requested the governments of several
European countries, together with Japan, to cooperate for the better
protection of the fisheries, but no results were reached.

Continuance of the seizures in 1889 brought renewed protests from Lord
Salisbury, who was in charge of foreign affairs. Blaine retorted that
the destruction of the herds was _contra bonos mores_ and that it was
no more defensible even outside the three mile limit than destructive
fishing on the banks of Newfoundland by the explosion of dynamite would
be. Lord Salisbury replied that fur seals were wild animals, _ferae
naturae_, and not the property of any individual until captured. An
extended diplomatic correspondence ensued, which resulted in a treaty
of arbitration in 1892.[5]

A tribunal of seven arbitrators was established, two appointed by the
Queen of England, two by the President, and one each by the rulers of
France, Italy and Sweden and Norway, the last two being under one
sovereign at that time. Several questions were submitted to the
tribunal. What exclusive rights does the United States have in the
Bering Sea? What right of protection or property does the United States
have in the seals frequenting the islands in the Sea? If the United
States has no exclusive rights over the seals, what steps ought to be
taken to protect them? Great Britain also presented to the arbitrators
the question whether the seizures of seal-hunting ships had been made
under the authority of the government of the United States.

The decisions were uniformly against the American contention. It was
decided that our jurisdiction in the Bering Sea did not extend beyond
the three mile limit and that therefore the United States had no right
of protection or property in the seals. A set of regulations for the
protection of the herds was also drawn up. Another negotiation resulted
in the payment of $473,000 damages by the United States for the illegal
seizures of British sealers.[6]

Relations with the Latin American countries south of the Mexican border
had been unstable since the Mexican War, an unhappy controversy that
left an ineradicable prejudice against us. John Quincy Adams and Henry
Clay had hoped for a friendly union of the nations of North and South
America, led by the United States, but this ideal had turned out to
have no more substance than a vision. Moreover, the increasing trade
activity of Great Britain and later of Germany had made a commercial
bond of connection between South America and Europe which was, perhaps,
stronger than that which the United States had established. Yet some
progress was made. Disputes between European governments and the
governments of Latin American countries were frequently referred to the
United States for arbitration. An old claim of some British subjects,
for example, against Colombia was submitted for settlement in 1872 to
commissioners of whom the United States minister at Bogota was the most
important. The problem was studied with great care and the award was
satisfactory to both sides. In 1876 a territorial dispute between
Argentina and Paraguay was referred to the President of the United
States. In the case of a boundary controversy between Costa Rica and
Nicaragua, President Cleveland appointed an arbitrator; Argentina and
Brazil presented a similar problem which received the attention of
Presidents Harrison and Cleveland.

It fell to James. G. Blaine to revive the idea of a Pan-American
conference which had been first conceived by Adams and Clay. As a
diplomat, Blaine was possessed of outstanding patriotism and
enthusiastic imagination, even if not of vast technical capacity or of
an international mind. As Secretary of State under President Garfield
in 1881 he invited the Latin American countries to share with the
United States in a conference for the discussion of arbitration. The
early death of Garfield and the ensuing change in the state department
resulted in the abandonment of the project for the time being. Blaine,
however, and other interested persons continued to press the plan and
in 1888 Congress authorized the President to invite the governments of
the Latin American countries to send delegates to a conference to be
held in Washington in the following year. By that time President
Harrison was in power. Blaine was again Secretary of State and was
chosen president of the conference. Among the subjects for discussion
were the preservation of peace, the creation of a customs union,
uniform systems of weights, measures and coinage, and the promotion of
frequent inter-communication among the American states. Little was
accomplished, beyond a few recommendations, except the establishment of
the International Bureau of American Republics. This was to have no
governmental power, but was to be supported by the various nations
concerned and was to collect and disseminate information about their
laws, products and customs. The Bureau has become permanent under the
name Pan American Union and is a factor in the preservation of friendly
relations among the American republics. The reciprocity measure which
Blaine pressed upon Congress during the pendency of the McKinley tariff
bill was designed partly to further Pan-American intercourse.

In the case of a disagreement with Chile, Blaine was less successful. A
revolution against the Chilean President, Balmaceda, resulted in the
triumph of the insurgents in 1891. The American minister to Chile was
Patrick Egan, an Irish agitator who sympathized with President
Balmaceda against the revolutionists and who was _persona non grata_ to
the strong English and German colonies there. While Chilean affairs
were in this strained condition, the revolutionists sent a vessel, the
_Itata_, to San Diego in California for military supplies, and American
authorities seized it for violating the neutrality laws. While the
vessel was in the hands of our officers, the Chileans took control of
it and made their escape. The cruiser _Charleston_ was sent in pursuit
and thereupon the revolutionists surrendered the _Itata_. Not long
afterward, however, a United States Court decided that the pursuit had
been without justification under international law and ordered the
release of the _Itata_. The result was that the United States seemed to
have been over-ready to take sides against the revolutionists, and the
latter became increasingly hostile to Americans.

Relations finally broke under the strain of a street quarrel in the
city of Valparaiso in the fall of 1891. A number of sailors from the
United States ship _Baltimore_ were on shore leave and fell in with
some Chilean sailors in a saloon. A quarrel resulted--just how it
originated and just who was the aggressor could not be determined--but
at any rate the Americans were outnumbered and one was killed. The
administration pressed the case with vigor, declining to look upon the
incident as a sailors' brawl and considering it a hostile attack upon
the wearers of an American uniform. For a time the outbreak of war was
considered likely, but eventually Chile yielded, apologized for its
acts and made a financial return for the victims of the riot. Later
students of Chilean relations have not praised Egan as minister or
Blaine's conduct of the negotiations, but it is fair to note that the
Chileans were prejudiced against the American Secretary of State
because of an earlier controversy in which he had sided against them,
and that the affair was complicated by the presence of powerful
European colonies and by the passions which the revolution had aroused.

Blaine was compelled to face another embarrassing situation in dealing
with Italy in 1891-1892. In October, 1890, the chief of police of New
Orleans, D.C. Hennessy, had been murdered and circumstances indicated
that the deed had been committed by members of an Italian secret
society called the Mafia. A number of Italians were arrested, of whom
three were acquitted, five were held for trial and three were to be
tried a second time. One morning a mob of citizens, believing that
there had been a miscarriage of justice, seized the eleven and killed
all of them. The Italian government immediately demanded protection for
Italians in New Orleans, as well as punishment of the persons concerned
in the attack, and later somewhat impatiently demanded federal
assurance that the guilty parties would be brought to trial and an
acknowledgment that an indemnity was due to the relatives of the
victims of the mob. Failing to obtain these guarantees, the Italian
government withdrew its minister. When a grand jury in New Orleans
investigated the affair it excused the participants and none of them
was brought to trial.

The government at Washington was hampered by the fact that judicial
action in such a case lies with the individual state under our form of
government, whereas diplomatic action is of course entirely federal. If
the states are tardy or derelict in action, the national government is
almost helpless. President Harrison urged Congress to make offenses
against the treaty rights of foreigners cognizable in the federal
courts, but this was never done. Diplomatic activity, however, brought
better results, and an expression of regret on the part of the United
States, together with the payment of an indemnity of $24,000 closed the
incident.

Among the many troublesome questions that faced President Cleveland
when he entered upon the Presidency in 1893 for the second time, the
status of the Hawaiian Islands was important. Since the development of
the Pacific Coast of the United States in the forties and fifties,
there had been a growing trade between the islands and this country.
Reciprocity and even annexation had been projected. In 1875 a
reciprocity arrangement was consummated, a part of which was a
stipulation that none of the territory of Hawaii should be leased or
disposed of to any other power. In this way a suggestion was made of
ultimate annexation. Moreover the commercial results of the treaty were
such as to make a friendly connection with the United States a matter
of moment to Hawaii. The value of Hawaiian exports had increased,
government revenues enlarged, and many public improvements had been
made. In 1884 the grant of Pearl Harbor to the United States as a naval
station made still another bond of connection between the islands and
their big neighbor.

The King of Hawaii during this period of prosperity was Kalakaua.
During a visit to the United States, and later during a tour of the
world he was royally received, whereupon he returned to his island
kingdom with expanded theories of the position which a king should
occupy. Unhappily he dwelt more on the pleasures which a king might
enjoy than upon the obligations of a ruler to his people. At his death
in 1891 Princess Liliuokalani became Queen and at once gave evidence of
a disposition to rule autocratically. Because of her attempts to revise
the Hawaiian system of government so as to increase the power of the
crown, the more influential citizens assembled, appointed a committee
of public safety and organized for resistance. On January 17, 1893, the
revolutionary elements gathered, proclaimed the end of the monarchical
regime and established a provisional government under the leadership of
Judge S.B. Dole. The new authorities immediately proposed annexation to
the United States and a treaty was promptly drawn up in accord with
President Harrison's wishes, and presented to the Senate. At this point
the Harrison administration ended and Cleveland became President.

Cleveland immediately withdrew the treaty for examination and sent
James H. Blount to the islands to investigate the relation of American
officials to the recent revolution. The appointment of Blount was made
without the advice and consent of the Senate and was denounced by the
President's enemies, although such special missions have been more or
less common since the beginning of our history.[7] Blount reported
that the United States minister to Hawaii, J.L. Stevens, had for some
time been favorably disposed to a revolution in the islands and had
written almost a year before that event asking how far he and the naval
commander might deviate from established international rules in the
contingency of a rebellion. "The Hawaiian pear is now fully ripe,"
Stevens had written to the State Department, early in 1893, "and this
is the golden hour for the United States to pluck it." Blount also
informed the President that the monarchy had been overturned with the
active aid of Stevens and through the intimidation caused by the
presence of an armed naval force of the United States.

The blunt language which Cleveland employed in his message to Congress
on the subject, left no doubt about his opinion of the transaction.
"The control of both sides of a bargain acquired in such a manner is
called by a familiar and unpleasant name when found in private
transactions." Believing that an injustice had been done and that the
only honorable course was to undo the wrong, he sent A.S. Willis as
successor to Stevens to express the President's regret and to attempt
to make amends. One of the conditions however which President Cleveland
placed upon the restoration of the Queen was a promise of amnesty to
all who had shared in the revolution. The Queen was at first unwilling
to bind herself and when she later agreed, a new obstacle appeared in
the refusal of the provisional government to surrender its authority.
Indeed it began to appear that the President's sense of justice was
forcing him to attempt the impossible. The provisional government had
already been recognized by the United States and by other powers, the
deposition of the Queen was a _fait accompli_ and her restoration
partook of the nature of turning back the clock. Moreover, force would
have to be used to supplant the revolutionary authorities,--a task for
which Americans had no desire. The President, in fact, had exhausted
his powers and now referred the whole affair to Congress. The House
condemned Stevens for assisting in the overturn of the monarchy and
went on record as opposed to either annexation or an American
protectorate. Sentiment was less nearly uniform in the upper chamber.
The Democrats tended to uphold the President, the Republicans to
condemn him. Although a majority of the committee on foreign relations
exonerated Stevens, yet no opposition appeared to a declaration which
passed the Senate on May 31, 1894, maintaining that the United States
ought not to intervene in Hawaiian affairs and that interference by any
other government would be regarded as unfriendly to this country.

In the outcome, these events merely delayed annexation; they could not
prevent it. In Hawaii the more influential and the propertied classes
supported the revolution and desired annexation. In the United States
the desire for expansion was stimulated by the fear that some other
nation might seize the prize. The military and naval situation in 1898
increased the demand for annexation, and in the summer of that year the
acquisition was completed by means of a joint resolution of the two
houses of Congress.[8] While negotiations were in progress Japan
protested that her interests in the Pacific were endangered. Assurances
were given, however, that Japanese treaty rights would not be affected
by the annexation and the protest was withdrawn. The United States was
now "half-way across to Asia."

Most dangerous in its possibilities was the controversy with Great
Britain over the boundary between British Guiana and Venezuela. British
Guiana lies on the northern coast of South America, next to Venezuela
and extends inland, with its western boundary roughly parallel to the
valley of the Orinoco River. A long-standing disagreement had existed
about the exact position of the line between the two countries--a
disagreement which harked back to the claims of the Dutch, who had
acquired Guiana in 1613 and had turned it over to the British in 1814.
In 1840 England commissioned a surveyor named Schomburgk to fix the
boundary but his decision was objected to by the Venezuelans who
claimed that he included a great area that rightfully belonged to them.
Gradually the British claims included more and more of the territory
claimed by Venezuela, and the discovery of gold in the disputed region
not only drew attention to the necessity of a settlement of the
boundary but also attracted prospectors who began to occupy the land.
In 1876 Venezuela began negotiations for some means of deciding the
dispute and came to the conclusion that arbitration was her only
recourse. On the refusal of Great Britain to heed her protests, the
Venezuelan government suspended diplomatic relations in 1887, although
the United States attempted to prevent a rupture by suggesting the
submission of the difference to an arbitral tribunal. This offer was
not accepted by Great Britain, and repeated exertions on the part of
both Venezuela and the United States at later times failed to produce
better results. When Cleveland returned to the presidency in 1893 he
again became interested in the Venezuelan matter and Secretary of State
Gresham urged the attention of the British government to the
desirability of arbitration.

President Cleveland was a man of great courage and had a very keen
sense of justice. In his opinion a great nation was playing the bully
with a small one, and the injustice stirred his feelings to the depths.
With the President's approval Secretary Olney, who had succeeded
Gresham on the death of the latter, drew up an exposition of the Monroe
doctrine which was communicated to Lord Salisbury. This despatch, which
was dated July 20, 1895, brought matters to a climax. In brief the
administration took the position that under the Monroe doctrine the
United States adhered to the principle that no European nation might
deprive an American state of the right and power of self-government.
This had been established American policy for seventy years. The
Venezuelan boundary controversy was within the scope of the doctrine
since Great Britain asserted title to disputed territory, substantially
appropriating it, and refused to have her title investigated. At the
same time Secretary Olney disclaimed any intention of taking sides in
the controversy until the merits of the case were authoritatively
ascertained, although the general argument of the despatch seemed to
place the United States on the side of Venezuela. Moreover, Secretary
Olney adopted a swaggering and aggressive, not to say truculent tone.
He drew a contrast between monarchical Europe and self-governing
America, particularly the United States, which "has furnished to the
world the most conspicuous ... example ... of the excellence of free
institutions, whether from the standpoint of national greatness or of
individual happiness." The United States, he asserted, is "practically
sovereign on this continent" because "wisdom and justice and equity are
the invariable characteristics" of its dealings with others and because
"its infinite resources combined with its isolated position render it
master of the situation ... as against any or all other powers."

Lord Salisbury did not reply to Secretary Olney for more than four
months. He then asserted that President Monroe's message of 1823 had
laid down two propositions: that America was no longer to be looked
upon as a field for European colonization; and that Europe must not
attempt to extend its political system to America, or to control the
political condition of any of the American communities. In Lord
Salisbury's opinion Olney was asserting that the Monroe doctrine
conferred upon the United States the right to demand arbitration
whenever a European power had a frontier difference with a South
American community. He suggested that the Monroe doctrine was not a
part of international law, that the boundary dispute had no relation to
the dangers which President Monroe had feared and that the United
States had no "apparent practical concern" with the controversy between
Great Britain and Venezuela. He also raised some objections to
arbitration as a method of settling disputes and asserted the
willingness of Great Britain to arbitrate her title to part of the
lands claimed. The remainder, he declared, could be thought of as
Venezuelan only by extravagant claims based on the pretensions of
Spanish officials in the last century. This area he expressly refused
to submit to arbitration. The language of the Salisbury note was
diplomatically correct, a fact which did not detract from the effect of
the patronizing tone which characterized it.

President Cleveland doggedly proceeded with his demands. On December
17, (1895), he laid before Congress the correspondence with Lord
Salisbury, together with a statement of his own position on the matter.
Disclaiming any preconceived conviction as to the merits of the
dispute, he nevertheless deprecated the possibility that a European
country, by extending its boundaries, might take possession of the
territory of one of its neighbors. Inasmuch as Great Britain had
refused to submit to arbitration, he believed it incumbent upon the
United States to take measures to determine the true divisional line.
He suggested therefore that Congress empower the executive to appoint a
commission to investigate and report. His closing words were so grave
as to arouse the country to a realization of the dangerous pitch to
which negotiations had mounted:

When such report is made and accepted it will in my opinion be the
duty of the United States to resist ... the appropriation by Great
Britain of any ... territory which after investigation we have
determined of right belongs to Venezuela. In making these
recommendations I am fully alive to the responsibility incurred,
and keenly realize all the consequences that may follow. I am
nevertheless firm in my conviction that while it is a grievous thing
to contemplate the two great English-speaking peoples ... as being
otherwise than friendly ... there is no calamity ... which equals
that which follows a supine submission to wrong and injustice.

Congress at once acceded to Cleveland's wishes and appropriated
$100,000 for the proposed investigation. For a brief moment neither
Great Britain nor America quite realized the meaning of the President's
warlike utterance. In America it had generally been felt previously
that his foreign policy was conciliatory rather than aggressive and,
besides, the Venezuelan dispute had but little occupied popular
attention. When it became evident that war was a definite possibility,
public interest followed every step with anxiety. Newspaper sentiment
divided. The press generally judged Cleveland's stand strong and
"American." On the other hand, a few periodicals like the _Nation_
insinuated that the President was actuated by the desire to make
political capital for a third term campaign and characterized his
action as "criminally rash and insensate," "ignorant and reckless,"
"impudent and insulting." Influential citizens in both countries made
energetic attempts to prevent anything that might make war inevitable.
The Prince of Wales and Lord Roseberry threw their influence on the
side of conciliation. A.J. Balfour declared that a conflict with the
United States would carry something of the "horror of civil war" and
looked forward to the time when the country would "feel that they and
we have a common duty to perform, a common office to fulfill among the
nations of the world."

The President appointed a commission which set to work to obtain the
information necessary for a judicial settlement of the boundary, and
both Great Britain and Venezuela tactfully expressed a readiness to
cooperate. Their labors, however, were brought to a close by a treaty
between the two disputants providing for arbitration. A prominent
feature of the treaty was an agreement that fifty years' control or
settlement of an area should be sufficient to constitute a title, a
provision which withdrew from consideration much of the territory to
which Venezuela had laid claim. In October, 1899, the arbitration was
concluded. The award did not meet the extreme claims of either party,
but gave Great Britain the larger share of the disputed area, although
assigning the entire mouth of the Orinoco River to Venezuela.

Besides giving new life to the Monroe doctrine as an integral part of
our foreign policy, the incident served to illustrate the dangers of
settling international disputes in haphazard fashion. In January, 1897,
therefore, Secretary Olney and the British Ambassador at Washington,
Sir Julian Pauncefote, negotiated a general treaty for the settlement
of disputes between the two countries by arbitration. Even with the
example of the possible consequences of the Venezuelan controversy
before it, however, the Senate failed to see the necessity for such an
expedient, defeated the treaty by a narrow margin and left the greatest
problem of international relations--the settlement of controversies on
the basis of justice rather than force--to the care of a future
generation.

On the whole, as has already been noted, the history of American
diplomacy from 1877 to 1897 is scarcely more than an account of a
series of unrelated incidents. Not only did the foreign policy of
Blaine differ sharply from that of Cleveland, but there was no great
question upon which public interest came to a focus, except temporarily
over the Venezuelan matter, and no lesser problems that continued long
enough to challenge attention to the fact that they remained unsolved.
There were visible, nevertheless, several important tendencies. Our
attitude toward Samoa and Hawaii indicated that the instinctive desire
to annex territory had not disappeared with the rounding out of the
continental possessions of the United States; American interest in
arbitration as a method of settling disputes was expressed again and
again; the place of the Monroe doctrine in American international
policy was clearly shown; and the determination of the United States to
be heard in all affairs that touched her interests was demonstrated
without any possibility of doubt.

BIBLIOGRAPHICAL NOTE

The most complete and reliable authority is J.B. Moore, _A Digest of
International Law_ (8 vols. 1906), by one who was intimately connected
with many of the incidents of which he wrote; the text of the treaties
is in W.M. Malloy, _Treaties, Conventions, International Acts, etc.,
between the United States of America and other Powers_ (2 vols., 1910).
Valuable single volumes are: J.B. Moore, _American Diplomacy_ (1905);
and C.B. Fish, _American Diplomacy_ (1915). W.F. Johnson, _America's
Foreign Relations_ (2 vols., 1916), is interesting but somewhat marred
by the author's tendency to take sides on controversial points; see
also J.B. Henderson, _American Diplomatic Questions_ (1901). J.S.
Bassett, _Short History of the United States_ (1913), contains a brief
and compact chapter.

Essential material on particular incidents is found in the following.
On Japan, "Our War with One Gun" in _New England Magazine_, XXVIII,
662; J.M. Callahan, _American Relations in the Pacific and the Far
East_ (1901); W.E. Griffis, _Townsend Harris_ (1896). On Samoa, J.W.
Foster, _American Diplomacy in the Orient_ (1903); R.L. Stevenson,
_Eight Years of Trouble in Samoa_ (1892). On the seal fisheries, J.W.
Foster, _Diplomatic Memoirs_ (2 vols., 1909). On Hawaii, Cleveland's
message in J.D. Richardson, _Messages and Papers of the Presidents_,
IX, 460. On Venezuela, Grover Cleveland, _Presidential Problems_,
Chap. IV.

* * * * *

[1] The development of the United States as a commercial power was
seen in the increased use of consuls as agents for procuring and
publishing industrial and commercial information.

[2] Cf. Fish, _American Diplomacy_, 398.

[3] For later aspects of the controversy, see below, pp. 532-533.

[4] Cf. map p. 10.

[5] J.W. Foster, who was intimately connected with the case, suggests
that the defects in the American argument were due partly to following
briefs prepared by an agent of the Alaska Commercial Company in
Washington. The agent was interested in getting everything possible for
his company but his knowledge of the law in the case was slight. Cf.
Foster, _Memoirs_, II, 26 f.; Moore, _American Diplomacy_, 97-104.

[6] The attempts to protect the herds by government regulation failed
to have any important results. An international arrangement was made in
1911, but the slaughter had proceeded so far that grave question arose
whether any agreement would be effective short of absolute prohibition.
In 1912 Congress passed a law forbidding any killing on the land for a
term of five years; in 1917 when the restrictions were released the
herds had greatly increased. In 1918 the seals numbered 530,480.
_American Year Book_, 1918, 503-4.

[7] Cf. _Political Science Review_, Aug., 1916, 481-499.

[8] Cf. below, p. 387 ff. Hawaii was brought into the Union as a
territory in 1900.

CHAPTER XIV

THE RISE OF THE WAGE EARNER

In their handling of the labor problem, the governments of the states
and the nation showed greater ignorance and less foresight than
characterized their treatment of any of the other issues of the
quarter century following the Civil War. Yet the building of the
railroads and their consolidation into great systems, the development
of manufacturing and its concentration into large concerns, and the
growth of an army of wage earners brought about a problem of such size
and complexity as to demand all the information and vision that the
country could muster.

The phenomenal accumulation of wealth in the fields of mining,
transportation and manufacturing which characterized the new
industrial America formed the basis of a powerful propertied class.
Some of the wealth was amassed by such unscrupulous methods as those
which caused the popular demand for government regulation of the
railroads and trusts. The prizes of success were big. The men who made
their way to the top--men like Gould, Fisk, Vanderbilt, Rockefeller
and Carnegie--were pioneers whose courage, foresight, and daring were
combined with sufficient ruthlessness to enable them to triumph where
others failed. A few of them, like Carnegie, had some slight
conception of the meaning of the labor problem; most of them did not.
Linked to the industrial pioneer by community of interest was the
holder of the war bonds of the federal government. These securities
were purchased with depreciated paper currency but increased very
greatly in value after the successful outcome of the struggle, and
formed an investment whose value it is extremely difficult to
estimate. The owners of the stocks and bonds of the railroads and
manufacturing combinations further swelled the ranks of the propertied
class. Stability, continuous business and large earnings were the
immediate considerations to this group. Anything which interfered was,
naturally, a thing to be fought. Never before, unless in the South in
slavery days, had a more powerful social class existed in the United
States. A large fraction of the group was composed of men who had
risen from poverty to wealth in a short time. From one point of view
such a man is a "self-made" man, industrious, frugal, able, energetic,
bold. From another point of view he is a _parvenu_, narrow,
overbearing, ostentatious, proud, conceited, uncultivated. The
relatively small size of the propertied class and an obvious community
of interest tended to make its members reach a class consciousness
even during the Civil War. The success of the group in preventing all
tariff reduction after 1865 was a striking example of the solidarity
of its membership and its readiness for action.

Class consciousness among the wage earners developed much more slowly,
and in the nature of things was much less definite. Nevertheless the
history of the industrial turmoil of the quarter century after the
Civil War is the history of a class groping for political, social and
economic recognition.

At the close of the war the labor situation was confused and
complicated. A million and a half of men in the North and South had to
be readmitted to the ranks of industry. Approximately another million
had died or been more or less disabled during the conflict. A stream
of immigrants, already large and constantly increasing, was pouring
into the North and seeking a means of livelihood. As has been seen,
most of these settled in the manufacturing and mining sections of the
northern and eastern states, helped to crowd the cities, and
overflowed into the fertile, free lands of the mid-West. Nearly
800,000 of them reached the United States in one year, 1882. Most of
them were men--an overwhelming portion of them men of working age,
unskilled, frequently illiterate and hence compelled to seek
employment in a relatively small number of occupations. Both the
chances of unemployment and the danger of a lowered standard of living
were increased by the immigrants.

The greater use of machinery during the progress of the war has
already been alluded to, but some of its results demand further
mention.[1] Most evident was the huge increase in the volume and
value of the products of the factories. The labor of a single worker
increased in effectiveness many times; in other words, the labor cost
of a unit of production greatly diminished with the improvement of
mechanical devices. The labor cost of making nails by hand in 1813 was
seventy fold the cost of making them by machinery in 1899; loading ore
by hand was seventy-three times as expensive in 1891 as machine
loading was in 1896. Increased production encouraged greater
consumption, enhanced competition for markets, and opened the world to
the products of American labor. Moreover, the introduction of
machinery emphasized the importance of capital. When iron was rolled
by hand, when cloth was produced by the use of the spinning wheel and
hand-loom, when fields were tilled by inexpensive plow and hoe,
relatively small amounts of capital were needed by the man who started
in to work. Mechanical inventions revolutionized the situation. A
costly power-loom enabled its owner to eliminate handworking
competitors. If a workman could raise sufficient money or credit to
purchase a supply of machines he could "set up in business," employ a
number of "hands" and merely direct or manage the enterprise. Under
such a system the employer must make enough profit to pay interest on
his investment and to repair and replace his equipment. His attention
was fixed on these elements of his industrial problem and the
well-being of the laborer sank to a lower plane of importance. If the
employer found the labor supply plentiful he had the upper hand in
setting the wage-scale; the unorganized employee was almost completely
at his mercy, because the employer could find another workman more
easily than the workman could find another job. Meanwhile the workman
knew the increased product which he was turning out, and became
discontented because he did not see a corresponding increase in his
remuneration.

From about 1830, when the rapid development of the use of mechanical
appliances began, to the late eighties and early nineties when the new
regime was meeting its sternest conflicts in the trust problem and the
militant labor unions, the army of the wage earner was growing faster
than the population. Between 1870 and 1890, for example, the
population increased 63 per cent., while the number of laborers
engaged in manufacturing increased nearly 130 per cent. By the latter
year, 6,099,058 persons, about a tenth of the total population, were
employed in transportation, mining and manufacturing.

It was noticeable, also, that the wage earners tended to concentrate.
The laborers engaged in manufacturing were to be found, for the most
part, in the Northeast, and especially in such leading industrial
cities as New York, Chicago and Philadelphia. Furthermore, the
development of the factory system and the consolidation of many small
companies into a few great ones tended to localize the labor problem
still further--in a relatively small number of plants. The
concentration of industry in great factories where large numbers of
workers labored side by side ended the paternal care which the
old-time employer had expended upon his employees. With the
introduction of machinery, the danger of accidents due to the
ignorance or carelessness of fellow workmen increased. The use of
mechanical appliances also gave opportunity for the employment of
women and children, and thus raised the question whether any
restrictions ought to be placed upon the employment of these classes
of people. The construction of factories, their ventilation, sanitary
appliances, and safe-guards for health and comfort became subjects of
importance.

With the example of consolidation before them that was presented by
the railroads and the corporations, it was inevitable that the wage
earners should organize for their protection and advancement. Labor
organizations of wage earners have existed in the United States since
1827, and between that time and 1840 came a considerable awakening
among the laboring classes which was part of a general humanitarian
movement throughout the country. Robert Owen, an English industrial
idealist, had visited this country about 1825 and provided the
initiative for a short-lived communistic settlement at New Harmony,
Indiana. Similar enterprises were established at other points; the
most famous of these was that at Brook Farm in Massachusetts, which
enlisted the interest and support of many of the literary people of
New England. The expanding humanitarian and idealistic movement was
cut short by the Civil War, but the development of industrialism went
on uninfluenced by the spirit of social progress which might have
permeated it. After reconstruction was over, a new generation had to
become impressed with the evils which needed correction and to set
itself to the task which civil strife had thrust aside.

The need of a responsible organization of wage earners was indicated
by the career of the Molly Maguires. The Molly Maguires constituted an
inner circle of Irish Catholics who controlled the activities of the
branches of the Ancient Order of Hibernians in the hard-coal counties
of eastern Pennsylvania. During the war and immediately after it the
group gained a little power in local politics, and also undertook to
punish mine owners, bosses and superintendents who offended members of
the Order. Intimidation became common, and even murder was resorted to
until the region was fairly terrorized. It seemed impossible to combat
the Mollies because their activities were shrouded in secrecy.
Usually, for example, when a murder was to be committed, a member
would be brought in from an outside district in order that he might
not be recognized if discovered, and he would be aided in escaping
after the crime. Finally the president of the Philadelphia and Reading
Railroad procured a Pinkerton detective named James McParlan who went
into the region and remained for two years. During this time he posed
as a fugitive from justice and as a counterfeiter, became a member of
the Order, a confidant of the Molly Maguires, and collected evidence.
Armed with the knowledge acquired by McParlan, the officials were able
to arrest and convict twenty-four criminals, of whom ten were
executed, and the career of the Mollies came to an end.

The activities of the Molly Maguires were symptomatic of what might
occur throughout the ranks of labor during the confused period of
adjustment after the war, and yet they were temporary and local in
their effect on the development of the labor movement. The history of
the great labor controversies after the war properly begins with the
Knights of Labor, an association which originated in Philadelphia in
1869 as the result of the efforts of a garment cutter named Uriah S.
Stephens.[2] In the beginning, the affairs of the Knights were veiled
in dense secrecy; even the name of the society was never mentioned but
was indicated by five stars--*****. As the number of members increased,
however, all manner of disquieting and untruthful rumors spread
concerning its purposes, so that the element of secrecy was done away
with in 1881 and a declaration of principles was made public. The
fundamental purpose of the Knights was the formation of an order which
should include all branches of the wage earners and which should aim
to improve their economic, moral, social and intellectual condition.
Emphasis was placed, that is to say, on the welfare of the laboring
classes as a whole, rather than upon that of any particular trade or
craft. The organization was centralized and the interests of the group
were developed on a national scale. The growth of the association was
extremely rapid at times, reaching a climax in the middle eighties
when about 700,000 members, both men and women, made it a power in
industrial disputes. Some of the members taken in at this time were
extremists--European anarchists, for example--who urged a violent
policy and got almost if not quite out of control of the officers
during 1886. In the late eighties the membership dwindled rapidly,
owing to the failure of strikes instituted by the order, and its place
and influence were largely taken by the American Federation of Labor.

The latter body was the outgrowth of a convention held in Pittsburg in
1881, but it did not adopt its final name until 1886. Its purpose was
to group labor organizations of all kinds, leaving the government of
each affiliated body with the body itself. Each of the members of the
Federation is composed of workers in a given trade or industry, like
the International Typographical Union, the United Mine Workers, and
many others. The annual convention is composed of delegates from the
constituent societies. The growth of the organization was rapid and
continuous. Coincidently with the expansion of the Knights of Labor
and the growth of the American Federation came the great development
of the labor press. Professor Ely estimated late in the eighties that
possibly five hundred newspapers were devoted to the needs of the
labor movement. The numerous farmers' organizations, typified by the
Patrons of Husbandry, are other examples of the growing tendency
toward cohesion among the less powerful classes. Indeed, the Grange
originated only a year earlier than the Knights of Labor, and like it
was a secret order.

The wage earners, then, were rapidly becoming class-conscious. They
had found conditions which seemed to them intolerable, had formed
organizations on a national scale and had drawn up a definite program
of principles and reforms. The exact grievances which inspired the
Knights, the Federation and other less important organizations are
therefore of immediate importance.

In order to secure for the wage earner a sufficient money return for
his work, and sufficient leisure for the education of his intellectual
and religious faculties, and to enable him to understand and perform
his duties as a citizen, the Knights demanded the establishment of
bureaus of labor for the collection of information; the reservation of
the public lands for actual settlers; the abrogation of laws that did
not bear equally on capital and labor; the adoption of measures for
the health and safety of the working classes; indemnity for injuries
due to the lack of proper safeguards; the recognition of the
incorporation of labor unions; laws compelling corporations to pay
laborers weekly; arbitration in labor disputes; and the prohibition of
child labor. The Knights of Labor also favored state ownership of
telegraphs and railroads, as well as an eight hour working day. The
purposes of the American Federation scarcely differed from this
program, although its methods and its form of organization were quite
distinct.

At the present time, when most of these demands have been met in one
degree or another, it is difficult to see why there should have been
delay and contention in agreeing to a program which, so far as it
deals with labor problems pure and simple, appears both modest and
reasonable. But the state of mind of a large fraction of the nation
was not in accord with ambitions which doubtless seemed excessively
radical. Fundamentally a great portion of the propertied classes held
a low estimate of the value and rights of the laboring people, as well
as of the possibilities of their development, and feared that evil
results would follow from attempts to improve their condition. The
employment of children in factories, it was thought, would inculcate
in them the needed habits of industry, and the reduction of the
working hours would merely provide time which would be spent in the
acquirement of vicious practices. If, in addition, the employers
opposed such changes as the abolition of child labor and the reduction
of the working day to eight hours on the ground of the financial
sacrifice which seemed to be involved, their attitude was in keeping
with the ruthless exploitation of the human resources of the country
which was common during this period. It should be remembered, too,
that the lofty conception which most Americans held of the
opportunities and customs of their country stood in the way of a frank
study of conditions and an equally frank admission of abuses. For
decades we had reiterated that America was the land of opportunity,
that economic, political and social equality were the foundations of
American life and that the American workingman was the best fed and
the best clothed workingman in the world. In the face of this view of
industrial affairs it was difficult to be alert to manifold abuses and
needed reforms. To one holding this view of affairs--and it was a
common view--the laborer who demanded better conditions was
unreasonable and unappreciative of how "well off" he was. Hence the
blame for the labor unrest was frequently laid on the foreigner, who
was supposed to bring to America the opposition to government which
had been fostered in him by less democratic institutions abroad.
Undoubtedly immigration greatly complicated industrial conditions, as
has been indicated, yet essentially the labor question arose from the
upward progress of a class in American society and was as inevitable,
foreigner or no foreigner, as the coming of a new century.

Two illustrations will throw light upon some of the demands which the
wage earners frequently presented. Writing in August, 1886, Andrew
Carnegie, the prominent steel manufacturer, discussed the proper
length of the working day. Every ton of pig-iron made in the world,
with the exception of that made in two establishments, he asserted,
was made by men working twelve hours a day, with neither holiday nor
Sunday the year round. Every two weeks it was the practice to change
the day workers to the night shift and at that time the men labored
twenty-four hours consecutively. Moreover, twelve to fifteen hours
constituted a day's work in many other industries. Working hours for
women and children had almost equally slight reference to their
physical well-being.

The "truck-system" was a less widespread abuse, but one that caused
serious trouble at certain points. Under this plan, a corporation
keeps a store at which employees are expected to trade, or are
sometimes forced to do so. Obviously such a store might be operated to
the great benefit of the workman and without loss to the employer, but
the temptation to make an unfair profit and to keep the laborer always
in debt to the company was very great. A congressional committee which
investigated conditions in Pennsylvania in 1888 found that prices
charged in company stores ran from ten per cent. to 160 per cent.
higher than prices in other stores in the vicinity, and that a workman
was more likely to keep his position if he traded with the company.

The most insistent cause of industrial conflict was the question of
wages. Forty-one per cent. of all the strikes between 1881 and 1900
were for more pay; twenty-six per cent., for shorter hours. Between
the close of the war and the early nineties, industrial prosperity was
widespread except for the period of prostration following 1873 and the
less important depression of 1884. Not unnaturally the laborer desired
to have a larger share of the product of his work. The individual,
however, was impotent before a great corporation, when the wage-scale
was being determined; hence workmen found it advantageous to combine
and bargain collectively with their employer, in the expectation that
he would hesitate to risk the loss of all his laboring force, whereas
the loss of one or a few would be a matter of indifference.

In the meanwhile, a little ameliorative labor legislation was being
passed by state legislatures and by Congress. A Massachusetts law of
1866 forbade the employment of children under ten years of age in
manufacturing establishments, prohibited the employment of children
between the ages of ten and fourteen for more than eight hours per
day, and provided that children who worked in factories must attend
school at least six months in the year. In 1868 a federal act
constituted eight hours a day's work for government laborers, workmen
and mechanics, but some doubt arose as to the intent of part of it and
the law was not enforced. In many states eight-hour bills were
introduced, but were defeated in all except six, of which Connecticut,
Illinois and California were examples, and even in these cases the
laws were not properly drawn up or were not enforced. In 1869 a Bureau
of Statistics of Labor was established in Massachusetts which led the
way for similar enterprises in other states. It collected information
concerning labor matters and reported annually to the legislature. In
1874 a Massachusetts ten-hour law forbade the employment of women and
minors under eighteen for more than sixty hours a week, although
refraining from the regulation of working hours for men. In 1879, in
imitation of English factory acts, Massachusetts passed a general law
relating to the inspection of manufacturing establishments. It
provided that dangerous machinery must be guarded, proper ventilation
secured, elevator wells equipped with protective devices and
fire-escapes constructed. Other states followed slowly, but
legislation was frequently negatived by lack of effective
administration. In brief, then, agitation previous to 1877 had
resulted in the passage of a few protective acts, but even these were
restricted to a few states and were not well enforced. It was,
therefore, more than a mere coincidence that the first general strike
movement spread over the country in this same year, 1877.

It will be remembered that the great railroad strikes of that year
extended over many of the northern roads but caused most trouble in
Martinsburg, West Virginia, Pittsburg and other railway centers. Much
property was destroyed, lives were lost, and the strikers failed to
obtain their ends.[3] Other effects of the controversy, moreover,
made it an important landmark in the history of the labor question.
The inconvenience and suffering which the strike caused in cities far
distant from the scene of actual conflict indicated that the
transportation system was already so essential a factor in welding the
country together that any interruption to its operation had become
intolerable. The hostility of some of the railway managers to union
among their laborers and the rumors that they were determined to crush
such organizations augured ill for the future. The hordes of
unemployed workmen and the swarms of tramps which had resulted from
the continued industrial depression of 1873 insured rioting and
violence during the strike, whether the strikers themselves favored it
and shared in it or not. The destruction of property which resulted
from the strike caused many state legislatures to pass conspiracy laws
directed against labor; more attention was paid to the need of trained
soldiers for putting down strikes, and the construction of many
armories followed; and the courts took a more hostile attitude toward
labor unions. Equally important was the effect on the workmen
themselves. When the strike became violent and the state militia
failed to check it, the strikers found themselves face to face with
federal troops. President Hayes could not, of course, refuse to
repress the rioters; nevertheless his action aligned the power of the
central government against the strikers, and seemed to the latter to
align the government against the laborers as a class. Of a sudden,
then, the labor problem took on a new and vital interest; workingmen's
parties "began to spring up like mushrooms"; and the laboring men saw
more clearly than ever the essential unity of their interests.

Industrial unrest increased rather than diminished during the
prosperous eighties; for the first five years of the decade, strikes
and lockouts together averaged somewhat over five hundred annually.
The climax came in "the great upheaval" of 1884 to 1886.[4] In the
latter year nearly 1600 controversies involved 610,024 men and a
financial sacrifice estimated at $34,000,000. Early in May, 1886,
occurred the memorable Haymarket affair in the city of Chicago. The
city was a center of labor agitation, some of it peaceful, some of it
in the hands of radical European anarchists whose methods were shown
in a statement of one of their newspapers, _The Alarm_, on February
21, 1885:

Dynamite! Of all the good stuff, this is the stuff. Stuff several
pounds of this sublime stuff into an inch pipe ... plug up both
ends, insert a cap with a fuse attached, place this in the
immediate neighborhood of a lot of rich loafers ... and light
the fuse. A most cheerful and gratifying result will follow.

On May 1 strikes began for the purpose of obtaining an eight hour day.
During the course of the strike some workmen gathered near the
McCormick Reaper Works; the police approached, were stoned, and
retorted by firing upon the strikers, killing four and wounding many
others. Thereupon the men called a meeting in Haymarket Square to
protest against the action of the police; in the main they were
orderly, for Mayor Carter Harrison was present and found nothing
objectionable. Later in the evening, when the Mayor and most of the
audience had left, remarks of a violent nature seem to have been made,
and at this point a force of 180 police marched forward and ordered the
meeting to disperse. Just then a bomb was thrown into the midst of the
police, killing seven and wounding many others. The entire nation was
shocked and terrified by the event, as hitherto anarchy had seemed to
be a far-away thing, the product of autocratic European governments.
The thrower of the bomb could not be discovered, but numerous
anarchists were found who themselves possessed such weapons or had
urged violence in their speeches or writings. Eight of them, nearly all
Germans, were tried for murder on the ground that the person who threw
the bomb must have read the speeches or writings of the accused
anarchists and have been thereby encouraged to do the act. The
presiding judge, Joseph E. Gary, was of the opinion that the
disposition in the guilty man to throw the bomb was the result of the
teaching and advice of the prisoners. The counsel for the accused
declared that since the guilty person could not be found it was
impossible to know whether he had ever heard or read anything said or
written by the prisoners, or been influenced by their opinions.
Eventually seven anarchists were convicted, of whom four were hanged,
one committed suicide, and three were imprisoned. In 1893 the Governor
of Illinois, John P. Altgeld, pardoned the three prisoners, basing his
action mainly on the ground that no proof had been brought forward to
show that they were in any way acquainted with the unknown
bomb-thrower. The result of the conviction was the break-up of the
radical anarchistic movement and also the temporary discrediting of the
general agitation for an eight hour day, although neither the Knights
of Labor nor the Federation of Labor had any connection with the
anarchists, and both deprecated violence.

In the meanwhile, Congress had concerned itself slightly with the labor
problem. In 1884 a Bureau of Labor had been established to collect
information on the relation of labor and capital. Two years later, just
before the Haymarket affair, President Cleveland had sent a message to
Congress in which he adverted to the many disputes which had recently
arisen between laborers and employers, and urged legislation to meet
the exigency. Considerations of justice and safety, he thought,
demanded that the workingmen as a class be looked upon as especially
entitled to legislative care. Although Cleveland deprecated violence
and condemned unjustifiable disturbance, he believed that the
discontent among the employed was due largely to avarice on the part of
the employing classes and to the feeling among workmen that the
attention of the government was directed in an unfair degree to the
interests of capital. On the other hand, he suggested that federal
action was greatly limited by constitutional restrictions. He
accordingly urged that the Bureau of Labor be enlarged and that
permanent officers be appointed to act as a board of arbitration in
industrial disputes. The legislative branch was not inclined to follow
Cleveland's lead, although he returned to the subject after the
Haymarket affair, for it was commonly felt that his suggestion was too
great a step in the direction of centralization of government. Two
years later, in 1888, a modest act was passed which provided for the
investigation of differences between railroads and their employees, but
only when agreed to by both parties, and no provision was made for the
enforcement of the decision of the investigators. The practical results
were not important. Similar action had already been taken in a few
states. By 1895 fifteen states had laws providing for voluntary
arbitration, but the results were slight in most cases.

Very little progress was being made in the states in the passage of
other industrial legislation. In Alabama and Massachusetts in the
middle eighties acts extended and regulated the liability of employers
for personal injuries suffered by laborers while at work.[5] At the
same time the attitude of the legislatures and the courts in some
states toward strikes underwent a slight modification. In many states
where the legislatures had not passed definite statutes to the
contrary, it had been held by the courts that strikers could be tried
and convicted for conspiracy. In a few cases, states passed acts
attempting to define more exactly the legal position of strikers. A New
York court in 1887, for example, held that the law of the state
permitted workmen to seek an increase of wages by all possible means
that fell short of threats or violence. Before the close of Cleveland's
second administration, considerable progress had been made in state
legislation concerning conditions and hours of labor for women and
children, protection of workers from dangerous machinery, the payment
of wages, employer's liability for accidents to workmen, and other
subjects. On the other hand, in some cases unreasonable or
ill-considered actions on the part of the unions or their active
agents--the "walking delegates"--turned popular sentiment against them.
Particularly was this true in cases of violence and of strikes or
boycotts by unions in support of workmen in other trades at far distant
points.

During the presidential campaign of 1892 a violent strike at the
Carnegie Steel Company's works in Homestead, Pennsylvania, arose from a
reduction in wages and a refusal of the Company to recognize the Iron
and Steel Workers' Union. An important feature of this disturbance was
the use of armed Pinkerton detectives by the Company for the protection
of its buildings. Armed with rifles they fell into conflict with the
workmen, a miniature military campaign was carried on, lives were lost
and large amounts of property destroyed. Eventually the entire militia
of the state had to be called out to maintain peace.

It remained, however, for Chicago and the year 1894 to present one of
the most far-reaching, costly and complex labor upheavals that has ever
disturbed industrial relations in America. So ill understood at the
time were the real facts of the controversy that it is doubtful whether
it is possible even now to distinguish between truth and rumor in
regard to some of its aspects.

The town of Pullman, near Chicago, was the home of the Pullman Palace
Car Company, a prosperous corporation with a capital of $36,000,000. It
provided houses for its employees, kept up open stretches of lawn,
flower beds and lakes. In 1893 and 1894, when general business
conditions were bad, the Company reduced the wages of its workmen about
twenty-five per cent. A committee of the men asked for a return to
former rates, but they were refused, three members of the committee
were laid off, and the employees then struck. Late in June, 1894, the
American Railway Union, to which many of the workmen belonged, took up
the side of the men, and the General Managers' Association, comprising
officials of twenty-four roads entering Chicago, took the side of the
Company. Through the entry of the Union and the Association, the
relatively unimportant Pullman affair expanded to large proportions.
Violence followed; cars were tipped over and burned; property was
stolen and tracks ruined; and eventually the United States government
was drawn into the controversy.

Numerous complaints having reached Washington that the mails were being
obstructed and interstate commerce interfered with, President Cleveland
decided to send troops to Chicago. The Constitution requires that the
United States protect states against domestic violence on the application
of the legislature, or of the executive when the legislature is not
in session. Moreover the statutes of the United States empower the
President to use federal force to execute federal laws. The position
taken by the Governor of Illinois, John P. Altgeld, was expressed in
his telegram to President Cleveland protesting against the action of
the executive:

Should the situation at any time get so serious that we cannot
control it with the State forces, we will promptly and freely ask
for Federal assistance; but until such time I protest with all due
deference against this uncalled-for reflection upon our people,
and again ask for the immediate withdrawal of these troops.

The President replied that troops were being sent in accordance with
federal law upon complaint that commerce and the passage of the mails
were being obstructed. A somewhat acrimonious correspondence between
the Governor and the President resulted but the troops were retained
and assisted in bringing the strike to a conclusion.

The attitude of the courts, meanwhile, had brought up a serious
situation. On July 2 a "blanket injunction" was issued by the United
States District Court of Illinois and posted on the sides of the cars.
It forbade officers, members of the Union and all other persons to
interfere in any way with the operation of trains or to force or
persuade employees to refuse to perform their duties. Under existing
law, anybody who disobeyed the injunction could be brought before the
Court for contempt, and sentenced by the judge without opportunity to
bring witnesses and to be tried before a jury. When Eugene V. Debs, the
president of the Union, and other officers continued to direct the
strike they were arrested for contempt of court and imprisoned.[6]
With federal troops against them and their officers gone, the strikers
could hardly continue and gave up in defeat. The loss in property and
wages had already reached $80,000,000.

The apportionment of the blame for so appalling a controversy was not a
simple task. On the one hand, a writer in the _Forum_ declared that

The one great question was of the ability of this Government to
suppress insurrection. On the one, side was the party of lawlessness,
of murder, of incendiarism, and of defiance of authority. On the
other side was the party of loyalty to the United States.

But this was a superficial view. A commission of investigation
appointed by President Cleveland looked into the matter more deeply.
Its unanimous report made important assertions: the Pullman Company,
while providing a beautiful town for its employees, charged rents
twenty to twenty-five per cent. higher than were charged in surrounding
towns for similar accommodations, and the men felt a compulsion to
reside in the houses if they wished to retain their positions; when
wages were reduced, the salaries of the better paid officers were
untouched, so that the burden of the hard times was placed on the
poorest paid employees; there was no violence or destruction of
property in Pullman, and much of the rowdyism in Chicago, but not all
of it was due to the lawless adventurers and professional criminals who
filled the city at that time;[7] when various public officials and
organizations attempted to get the Company to arbitrate the dispute,
the uniform reply was that the points at issue were matters of fact and
hence not proper subjects for arbitration; and the Managers'
Association selected, armed and paid 3,600 federal deputy marshals who
acted both as railroad employees and as United States officers, under
the direction of the Managers.

In view of the amount of labor disturbance after the Civil War, it was
noteworthy that it attracted the interest of political parties to so
slight a degree previous to 1896. In general the national platforms of
the two large parties reflected an indefinite if not remote concern
with the welfare of the wage earner. It was urged, to be sure, by both
protectionists and tariff reformers that customs duties should be
framed with the welfare of the laborer in mind, but the sincerity of
this concern was sometimes open to question. The smaller parties, as
usual, were far less vague in their demands. The Labor Reformers in
1872 demanded the eight-hour day, for example; the Greenbackers had a
definite program for relief in 1880; the Anti-Monopolists in 1884 and
the Union Labor and the United Labor parties in 1888. By 1892 the great
parties found themselves face to face with a growing labor vote. The
labor planks in the two platforms of that year were strikingly similar.
Each called for federal legislation to protect the employees of
transportation companies, but looked to the states for the relief of
employees engaged in manufacturing. Neither the Socialist Labor party
nor the Populists, however, were greatly troubled by the question of
the proper distribution between state and nation of the responsibility
for the welfare of the wage earner. Both proposed definite action; both
urged the reduction in length of the working day. The Populists
condemned the use of Pinkertons in labor disputes and the Socialists
urged arbitration, the prohibition of child labor, restrictions on the
employment of women in unhealthful industries, employers' liability
laws and the protection of life and limb.

In brief, then, the situation of the wage-earning classes in the middle
nineties was becoming accurately defined. The strike as a weapon was
open to serious objections. The leaders of the two large parties had
given no evidence of an effective and immediate interest in labor
unrest. The other political parties were too small to afford chances of
success. If less reliance was to be placed upon the strike and more
upon political action, either a third party must be constructed or the
leadership in one of the old ones must be seized. When the conference
of labor officials met in Chicago and concluded that the Pullman strike
was lost, it issued an address to the members of the American Railway
Union advising a return to work, closer organization of the laboring
class and the correction of industrial wrongs at the ballot box. If
this advice should be taken, and if the wage earner should attempt to
control legislation for his economic interest, as the propertied class
had long been doing for its benefit, the struggle might be shifted to
the political arena. The interest of the workers in the South and West
in the Populist movement suggested the possibility that such a shift
might occur.

BIBLIOGRAPHICAL NOTE

Surprisingly little attention has been paid to the social aspects of
the growth of the laboring classes before 1896. There is ample
material, however, on the more obvious sides of the labor movement,
such as the growth of the organizations and the use of the strike.

The _Documentary History of American Industrial Society_ (10 vols.,
1910-1911), contains a little documentary material on the period after
1865; J.R. Commons and others, _History of Labour in the United States_
(2 vols., 1918), is the best and most recent historical account; T.S.
Adams and H.L. Sumner, _Labor Problems_ (1905), is useful; consult also
R.T. Ely, _Labor Movement in America_ (3rd ed., 1890); C.D. Wright,
_The Industrial Evolution of the United States_ (1897), by a practical
expert; G.E. McNeill, _The Labor Movement_ (1887); J.R. Buchanan,
_Story of a Labor Agitator_ (1903); S.P. Orth, _The Armies of Labor_
(1919), contains a good bibliography; John Mitchell, _Organized Labor_
(1903); T.V. Powderly, _Thirty Years of Labor_ (1890); _Quarterly
Journal of Economics_ (Jan., 1887), Knights of Labor; J.H. Bridge,
_Inside History of the Carnegie Steel Co._ (1903). On the Haymarket
affair, compare _Century Magazine_ (Apr., 1893), and J.P. Altgeld,
_Reasons for Pardoning Fielden, Neebe and Schwab_; on the Pullman
strike, Grover Cleveland, _Presidential Problems_, and the report of
the commission of investigation in Senate Executive Documents, 53rd
Congress, 3rd session, vol. 2 (Serial Number 3276). Edward Stanwood,
_History of the Presidency_, contains political platform planks on
labor. The reports of the Commissioner of Labor (1886-), and of the
state bureaus of statistics of labor in such states as Massachusetts
(1870-), and New York (1884-), are essential for the investigator.

* * * * *

[1] Cf. above, p. 64

[2] Two earlier organizations had a brief existence, the National
Labor Union and the Industrial Brotherhood.

[3] Above, pp. 133-134.

[4] For the effect on the Knights of Labor, see p. 310.

[5] For the legal side of this matter, consult Wright, _Industrial
Evolution_, 278-282.

[6] The Court based its action mainly on the provisions of Section 2
of the Sherman anti-trust law, which thus had an unforeseen effect. The
Supreme Court upheld the action, although on broader grounds. Above, p.
256, cf. 159 _U.S. Reports_, 564.

[7] In 1893 the "World's Fair" in Chicago had celebrated the four
hundredth anniversary of the landing of Columbus, and many of the
criminals attracted by the event had remained in the city.

CHAPTER XV

MONETARY AND FINANCIAL PROBLEMS

The critical monetary and financial situation during Cleveland's second
administration is understandable only in the light of a series of acts
which were passed between 1878 and 1893. It will be remembered that in
the former year the Bland-Allison act had provided for the purchase and
coinage of two million to four million dollars' worth of silver bullion
per month, and that the force behind the measure had been found chiefly
among westerners who wished to see the volume of the currency increased
and among mine owners who were producing silver.

The passage of the law did not end all opposition to the greater use of
silver, nor did it solve all our monetary difficulties. In the first
place, the United States sent delegates to an International Monetary
Conference in Paris, in conformity with one of the provisions of the
Bland-Allison act, to discuss a project for the utilization of silver
through an agreement among the commercial nations of the world. No
tangible results were obtained, however, so that it was plain that for
the time, at least, the United States would be alone in its attempt to
bring about the greater use of the white metal. In the meantime the law
was put into operation, and the secretary of the treasury exercised his
option by purchasing the minimum amount, two million dollars' worth of
bullion. It was impossible to keep the coins in circulation, however,
mainly because of their weight, and the policy was therefore adopted
of storing part of the silver in the government vaults and issuing
paper "silver certificates" in its place. As these were of small
denominations and circulated on a par with gold, no immediate
difficulty was experienced in making them part of the currency supply
of the country.

The currency question, nevertheless, remained as complicated as ever
and the differences of opinion upon it as diverse as before. The market
price of silver steadily declined through the eighties and the bullion
value of the metal in a dollar sank from ninety-three cents in 1878 to
less than seventy-one cents in 1889. Both Republican and Democratic
secretaries of the treasury gave warning that the inflow of silver into
the currency supply was too great. President Arthur urged the repeal of
the Bland-Allison act in his first annual message; President Cleveland
again and again reiterated the same advice, warning Congress of the
danger that silver would be substituted for gold. The argument of the
opponents of silver could hardly be stated in more concise or complete
terms. As soon as the supply of currency became too great, he asserted,
the unnecessary portion would go out of circulation;[1] it was the
experience of nations that the more desirable coin--gold, in this
case--would be hoarded by banks and speculators; it would then become
apparent that the bullion value of the gold dollar was greater than
that of the silver dollar and the two coins would part company; those
who, in such a contingency, could get gold dollars would demand a
premium for them, while the laboring man, unable to demand gold, would
find his silver dollar sadly shrunken in value.

Although the coinage of silver in the twelve years during which the
Bland-Allison act was in force amounted to $378,000,000, the danger
that Cleveland's prophecy would come to pass was lessened by several
facts. The country was, in the first place, passing through a period of
industrial expansion that required an enlarged circulating medium; the
revenues of the government were exceeding expenditures, and part of the
surplus was being stored in the vaults in Washington; and the volume of
the national bank notes shrank more than $158,000,000 between 1880 and
1890. Falling prices for agricultural products continued to keep
western discontent alive and far from being convinced by Cleveland's
warnings, western conventions and representatives in Congress continued
to urge legislation to increase the amount of silver to be coined, and
free-coinage bills were constantly introduced and frequently near
passage. Manifestly the demand that something more be done for silver
was not at an end.

Although agitation over the use of silver currency resulted in no
further important legislation for the time being, the general financial
situation was complicated by a series of important acts. During the
eighties the federal revenues mounted to an unprecedented height and as
expenses did not increase proportionately, a surplus of large and
finally of embarrassing and dangerous size appeared.

[Illustration:
Financial Operations, 1875-1897 in millions]

Between 1880 and 1890 it averaged more than $100,000,000 annually.
Although part of it was used to reduce the public debt, the remainder
began to accumulate in the treasury and thereby seriously reduced the
amount of currency available for the ordinary needs of business. In
1888, for example, the surplus in the treasury was one-fourth as great
as the entire estimated sum outside. The one device for doing away with
the surplus upon which all leaders could unite was the reduction of the
national debt. Between 1879 and 1890 over $1,000,000,000 were thus
disposed of. Yet even this process raised difficulties. Although a
portion of the debt came due in 1881 and could be redeemed at the
pleasure of the government, other bonds were not redeemable until 1891
and 1907, unless the federal authorities chose to go into the market
and buy at a premium. Eventually this was done for a time, although
prices were thereby forced up to 130 in 1888, and as a result the
redemption of $95,000,000 during the year cost more than $112,000,000.
The treasury also adopted the expedient of depositing surplus funds in
banking institutions, but the plan was open to serious objections. In
order to qualify for receiving government deposits the banks had to
present United States bonds as security, but these were already at a
high premium because of purchase by the treasury itself. There
remained, therefore, two general policies which might be
followed--reduction of revenue or enlargement of expenditure.

Both parties were theoretically committed to the economical conduct of
the nation's business, but Republican advocacy of a high tariff tended
to restrict that party's answer to the surplus problem. The revenue
came largely from tariff and internal taxes. The latter were reduced,
as has been seen, by the tariff act of 1883, but the redundant income
continued. The Republicans then faced the alternative of lowering the
customs or turning to the policy of increased expenditure. The latter
policy would delay the reduction of duties and was in line with the
Republican tendency toward increased federal activity. For the
Democrats the problem was easier. Since the party was tending toward
advocacy of low customs duties, had constantly condemned Republican
extravagance in administration and was traditionally the party of a
restricted national authority, it was logical to turn to severe
reduction of revenue in order to solve the problem of the surplus.

President Cleveland's political and personal philosophy led toward
economy in expenditure and therefore toward revenue reduction. By
nature he was frugal; in politics, a strict constructionist. In vetoing
an appropriation bill he succinctly set forth his creed:

A large surplus in the Treasury is the parent of many ills, and
among them is found a tendency to an extremely liberal, if not
loose, construction of the Constitution. It also attracts the gaze
of States and individuals with a kind of fascination, and gives
rise to plans and pretensions that an uncongested Treasury never
could excite.

The Republicans were becoming committed to the policy of large
expenditures. President Harrison, to be sure, in his first annual
message urged the reduction of receipts, declaring that the collection
of money not needed for public use imposed an unnecessary burden upon
the people and that the presence of a large surplus in the treasury was
a disturbing element in the conduct of private business. Nevertheless
such party leaders as Reed and McKinley, who effectively controlled the
legislation of the Harrison administration, acted on the philosophy of
Senator Dolph:

If we were to take our eyes off the increasing surplus in the
Treasury and stop bemoaning the prosperity of the country, ... and
to devote our energies to the development of the great resources
which the Almighty has placed in our hands, to increasing (our
products) ... to cheapening transportation by the improving of our
rivers and harbors, ... we would act wiser than we do.

Congress was more inclined to follow the policy suggested by Dolph than
that proposed by Cleveland. One project was the return of the direct
tax which had been levied on the states at the outbreak of the Civil
War. At that time Congress had laid a tax of $20,000,000 apportioned
among the states according to population. About $15,000,000 had been
collected, mainly, of course, from the northern states. It was
suggested that the levy be returned, a plan which would give the
northern states a return in actual cash and the southern states "the
empty enjoyment of the remission from a tax which no one now dared to
suggest was ever to be made good." President Cleveland had vetoed such
a bill, during his first administration, believing it unconstitutional
and also objectionable as a "sheer, bald gratuity." Under the Harrison
administration the scheme was revived and carried to completion, March
2, 1891.

Pension legislation was even more successful as a method of reducing
the unwieldy surplus. Garfield had declared in 1872, when introducing
an appropriation bill in the House of Representatives, "We may
reasonably expect that the expenditures for pensions will hereafter
steadily decrease, unless our legislation should be unwarrantably
extravagant," and in fact the cost of pensions for 1878 had been lower
by more than $7,000,000 than in 1871. The Arrears act of 1879 had given
a decided upward tendency to pension expense, which amounted to over
$20,000,000 more in 1880 than in 1879. The surplus was a constant
invitation to careless generosity. Liberality to the veteran was a
patriotic duty which lent itself to the fervid stump oratory of the
time and presented an opportunity to the undeserving applicant to place
his name on the rolls of pensioners along with his more worthy
associates. Besides, an administration which seemed niggardly in its
attitude toward the veterans was certain to lose the soldier vote, and
neither party was willing to incur such a risk. Hence, despite
Cleveland's vetoes of private pension legislation, hundreds of such
measures passed during his first term. The Harrison administration
proceeded upon the President's theory that it "was no time to be
weighing the claims of old soldiers with apothecary's scales." A
dependent pension bill like that which President Cleveland vetoed in
1887 was passed in 1890. The list of pensioners more than doubled in
length; the number of applications for aid increased tenfold in two
years. It became necessary for President Harrison to displace his
over-liberal commissioner of pensions, but the mischief was already
done. The total yearly pension expenditure quickly mounted beyond the
one hundred million mark, where it has remained ever since. Indeed, the
cost of pensions in 1872 when Garfield made his prophecy was less than
one-sixth as great as in 1913. Large pension expenditure was clearly a
permanent charge.

The improvement of the rivers and harbors of the country has always
been a ready means of disposing of any embarrassing surplus and of
assisting Congressmen to get money into their districts. "Promoters of
all sorts of schemes, beggars for the widening of rivulets, the
deepening of rills" clustered about the treasury during the eighties.
During the early seventies expenditure on this account had not reached
$6,500,000 annually, although in 1879 it exceeded $8,000,000. In 1882,
the year of the mammoth surplus, Congress passed over Arthur's veto a
bill carrying appropriations which amounted to almost nineteen million
dollars.[2] Expenditures were somewhat reduced in the years
immediately following, and Cleveland continued the repressive policy of
his predecessor. Harrison in his first message to Congress in December,
1889, recommended appropriations for river and harbor improvement,
although deprecating the prosecution of works not of public advantage.
The recommendation fell upon willing ears and appropriations for
undertakings of this sort at once increased again. Expenditure for
rivers and harbors, like that for pensions, remained at a high level,
the wise and necessary portions of such measures being relied upon to
carry the unwise and unnecessary ones.

A project which lacked many of the unpleasant features of river and
harbor legislation was the Blair educational bill, which proposed to
distribute a considerable portion of the surplus among the states. As
discussion of the Blair bill proceeded, it became clear that its
results might be more far-reaching than had been anticipated. A gift
from the national government seemed sure to retard local efforts at
raising school funds and would initiate a vicious tendency to rely on
federal bounty. Hence although the Senate passed the bill in 1884, 1886
and 1888, it never commended itself sufficiently to the House and
eventually was dropped.

A small portion of the increased expenditure in the eighties was due to
improvements in the navy, in which both parties shared. Presidents
Arthur and Cleveland urged upon Congress the need of modern defences.
Progress was slow and difficult. Although the day of steel ships had
come, the American navy was composed of wooden relics of earlier days.
The manufacture of armor and of large guns had to be developed, and
skill and experience accumulated. Results began to appear in the late
eighties when the number of modern steel war vessels increased from
three to twenty-two in four years. Expenditures mounted from less than
$14,000,000 in 1880 to over $22,000,000 in 1890.

As effective as new expenditure was the McKinley tariff act of 1890,
the details of which from the point of view of tariff history have
already been noted.[3] The extremely high rates levied under that
legislation caused a slight reduction in customs revenue in 1891 and a
sharp decline in 1892. Moreover the coincidence of instability in the
currency system, business depression and the relatively high
Wilson-Gorman tariff schedules of 1894 continued the decline of income
from customs during the middle nineties.

In the meantime the silver agitation, which had been somewhat repressed
by the well-known attitude of Cleveland during his first administration
revived with increased vigor. The election of 1888, it will be
remembered, had turned wholly on the tariff and had been a victory for
the Republicans. The western states had almost uniformly supported
Harrison in the election and during 1889 four more were admitted to the
Union. Their representatives in Congress were mainly silver advocates.
In his first message to Congress the President declared that the evil
anticipations which had accompanied the use of the silver dollar had
not been realized but he feared nevertheless that either free coinage
or any "considerable increase" of the present rate of coinage would be
"disastrous" and "discreditable." He announced that a plan would be
presented by the Secretary of the Treasury, to which he had been able
to give only a hasty examination. The scheme for expanding the silver
coinage which the Secretary, William Windom, presented was not
acceptable to Congress, but the result of the agitation was the law
generally known as the Sherman silver purchase act, which was passed on
July 14, 1890. It directed the secretary of the treasury to purchase
4,500,000 ounces of silver bullion per month and to issue in payment
"Treasury notes of the United States." These notes were legal tender
for all debts and were receivable for customs and all public dues.
Further, the secretary was directed to redeem the notes in gold or
silver at his discretion, "it being the established policy of the
United States to maintain the two metals on a parity with each other."

[Illustration:
Total Silver Coinage, 1873-1894, in millions of dollars]

The silver to be purchased was substantially the total output of the
American mines. Fearing the strength of the silver element in the
Senate and doubtful of the position which the President might take,
former Secretary Sherman, now in the Senate, supported the act,
although confessing that he was ready to vote for repeal at any time
when it could be done without substituting free coinage. The provision
for the purchase of four and one-half million ounces instead of four
and one-half million dollars' worth was introduced at Sherman's
suggestion. This clause kept the amount to be absorbed at a uniform
level, whereas the purchase of a fixed number of dollars' worth would
have increased the coinage when the price of bullion fell. The vote on
the Sherman act was strictly partisan--no Republicans opposing it and
no Democrats favoring it when the measure was finally passed, although
116 members of the House failed to answer to their names on the
roll-call.

In view of the fact that the industrial and commercial countries of
Europe were almost universally reducing their silver coinage, the
passage by the United States of an act which substantially doubled
the amount of silver purchased under the Bland-Allison law seems
extraordinary. Moreover, only six years later a presidential campaign
was fought almost wholly on the silver issue and at that time the
Republican party resolutely opposed free coinage. It is obvious that
powerful forces must have been at work to align the party so unitedly
in behalf of the Sherman law. It was to be expected that western
Republicans would support it, but the eastern members were found
voting for it as well. Doubtless many things contributed to the
result. Some perhaps agreed with Sherman that the silver advocates
were so strong that free coinage would result in case Congress refused
to pass legislation of any kind. Some may have feared with Platt of
Connecticut, that a party split would ensue unless the wishes of the
westerners were acceded to--hence an act which gave liberal assistance
to silver to please the West and South but stopped short of free
coinage so as to please the East. That opportunist politics had an
influence with certain members is indicated by the remarks of a
Massachusetts Republican representative who later favored the gold
standard:

It is pure politics, gentlemen; that is all there is about it.
We Republicans want to come back and we do not want you (to
the Democratic side) to come back in the majority, because,
on the whole, you must excuse us for thinking we are better
fellows than you are. That is human nature, that is all there
is in this silver bill (laughter on the Republican side); pure
politics.

A Democrat who favored free coinage denounced the act as "Janus-Faced,"
moulded so as to look like silver to the West and gold to the East.
Important, also, seems to have been the attitude of the western members
on the tariff. The party had returned to power on the tariff issue and
it seemed necessary to pass some sort of legislation on the subject.
Yet the party majority in Senate and House was slight and the
westerners were understood to be ready to defeat the McKinley bill
which was then pending, unless something was done for silver. Harrison
seems to have been unwilling to endanger successful tariff legislation
by opposing the considerable extension of the coinage of silver.[4]

Contrary to the expectations of the proponents of the act, the price of
silver fell gradually until the value of the bullion in a dollar was
sixty cents in 1893 and forty-nine cents in 1894. They who had opposed
the law saw their fears verified; as they had prophesied, silver began
to replace gold in circulation; the latter was hoarded and used for
foreign shipments; customs duties, which had hitherto been paid largely
in gold, were now paid in paper currency; since gold was now more
desired than silver, large amounts of paper were presented to the
government for redemption in the more valuable metal. To be sure, the
Sherman law allowed the secretary of the treasury to redeem the
treasury notes of 1890 in gold or silver at his discretion, but it
contained a proviso that the established policy of the United States
was to maintain the two metals on a parity or equality. The secretary
believed that if he refused to redeem the treasury notes in whatever
coin the holder desired, that is if he insisted on redemption in silver
only, a discrimination would be made in favor of gold and the equality
of the two metals would be destroyed. Parity would be maintained, the
government held, only when any kind of money could be exchanged for any
other kind, at the option of the holder.

For the redemption of the greenbacks, the government had since 1879
maintained a fund known as the gold reserve. No law fixed its amount,
but custom had set $100,000,000 as the minimum. Hitherto a negligible
amount of paper had been presented for redemption, but as soon as the
Sherman law came into effective operation the demand for gold became
increasingly great and the level of the reserve promptly fell. Between
July 1, 1890, and July 15, 1893, the supply of gold in the treasury
decreased more than $132,000,000, while the stock of silver increased
over $147,000,000. Evidently silver was replacing gold in the treasury,
and it was equally clear that a continuation of the process would
result in forcing the government to pay its obligations in silver and
to refuse to redeem paper in gold--in other words, go upon a silver
standard.

The situation when Cleveland's second administration began on March 4,
1893, was complex and critical. The annual expenditures had increased
by $119,000,000 between 1880 and 1893, while the revenue had expanded
by only half that amount; the surplus had decreased every year during
Harrison's administration and a deficit had been avoided only by the
cessation of payments on the public debt; the supply of currency in
circulation was being heavily increased by the operation of the Sherman
law; and the gold reserve had been kept at the traditional amount only
through extraordinary efforts on the part of Harrison's Secretary of
the Treasury as the administration came to a close.

Cleveland's attitude toward the Sherman law was well-known. He had long
urged the repeal of the Bland-Allison act; before the election of 1892
he had predicted disaster in case the nation entered upon "the
dangerous and reckless experiment of free, unlimited, and independent
silver coinage"; it was his belief that the distresses under which the
country labored were due principally to the Sherman silver purchase
law. He therefore called a special session of Congress for August 7,
(1893), sent a message giving a succinct account of the operation of
the law and urged its immediate repeal.[5] In the House, repeal was
voted with surprising promptness, although a strong free-silver element
fought vigorously to prevent it. That party lines were broken was
indicated by the fact that two-thirds of the Democrats and four-fifth
of the Republicans voted in accord with the President's request.

In the Senate the silver advocates were stronger. The entire history of
coinage was discussed at length. Members who favored repeal disliked to
overturn the tradition of the Senate which allowed unlimited debate,
and the silver senators therefore filibustered through the summer and
early fall. Senator Jones of Nevada made a single speech that filled a
hundred dreary pages of the _Congressional Record_. Senator Allen of
Nebraska quoted more than thirty authorities, ranging from the Pandects
of Justinian to enlivening doggerel poetry. Feeling ran high. In the
West, Jones, Allen and others were looked upon as heroes; in the East,
as villains. To a satirical onlooker it seemed that the nation had
become insanely obsessed with the question of repeal:

All men of virtue and intelligence know that all the ills of
life--scarcity of money, baldness, the comma bacillus, Home
Rule, ... and the Potato Bug--are due to the Sherman Bill. If it
is repealed, sin and death will vanish from the world, ... the
skies will fall, and we shall all catch larks.

Not until October 30 were the silver supporters overcome. Including
members who were paired, twenty-two Democrats and twenty-six
Republicans favored repeal, and twenty-two Democrats, twelve
Republicans and three Populists opposed. Again the West and South were
aligned against the North and East. The Democratic party was divided
and charges and countercharges had been made that augured ill for party
success, as has been seen, in dealing with the tariff and other
important problems.[6] Worst of all, the chief question--the volume
and content of the currency--was still unanswered. Something had been
done for silver--and undone--but there was no scientific settlement of
the problem.

The disastrous financial and industrial crisis of 1893 made yet more
complex the already tangled skein of economic history during President
Cleveland's second administration. The catastrophe has been ascribed to
a variety of causes but the relative importance of the various factors
is still a matter of disagreement. Rash speculation on the part of
industrial interests here and abroad seems to have made weak links in
the international commercial chain; financial conditions both in
Germany and in Great Britain were precarious during the early part of
1890; the collapse of the Philadelphia and Reading Railroad in
February, 1893, and of the National Cordage Company soon afterwards
were warnings of what was to follow; the silver purchase law produced
widespread fear that the United States would not be able to continue
the redemption of paper currency; and the change of political control
had produced the usual feeling of uncertainty. The dwindling of the
gold reserve, which has already been mentioned, assisted in causing a
critical situation. Foreign investors, fearful of financial conditions
here, sold their American railroad and other securities and received
payment in gold. The one place where the yellow metal could be readily
obtained was the United States treasury and upon it the strain
centered. People attempted to turn property of all kinds into gold
before the existing standard should change to a depreciated silver
basis. At the same time there was a rush to the banks to withdraw
funds, and the visible supply of currency therefore was seriously
reduced. "Under these conditions gold seemed scarce. In reality gold
was only relatively scarce in comparison with the abnormal offering of
property for sale on account of the fear of the silver standard." In an
incredibly short time, currency became so scarce as to create a genuine
panic and was purchased like any commodity at premiums ranging from one
to three per cent. In order to enable their families to pay the running
expenses of every day at the summer resorts, business men were
compelled to buy bills and coin and send them in express packages. The
national banks were unable to supply the demand for currency so
quickly, and 158 of them failed in 1893 and hundreds of state and
private financial institutions were forced to close their doors.
Industrial firms were affected by the uncertainty and panic and over
15,000 failures resulted, with liabilities amounting to $347,000,000 in
the single year. Production of coal and iron fell sharply; railway
construction nearly ceased and the value of securities shrank to a
fraction of their former value. The distress among the wage-earners
became extreme; unemployment was common; strikes, like that beginning
in Pullman in 1894, were bitter and prolonged. "Coxey's army," composed
of unemployed workmen, marched to Washington with a petition for
relief.

As is usually the case in our politics, the blame for the industrial
disturbance was laid at the door of the party in power. The argument of
an Ohio congressman in the debate over the repeal of the Sherman law
typified the political use made of the crisis of 1893. Until November,
1892, the orator declared, prosperity was undimmed. "Iron furnaces
throughout the country were in full blast, and their cheerful light was
going up to heaven notifying the people of the United States of
existing prosperity and warning them against change of conditions."
Then came the election of the party "which had declared war on the
system upon which our whole industrial fabric had been erected." "One
by one the furnaces went out, one by one the mines closed up, one after
another the factories shortened their time." Business interests, he
asserted, were fearful of Democratic rule and especially of tariff
reform; hence prosperity and confidence could be renewed only by
leaving the Sherman law intact and by refusing to undertake any
sweeping revision of the protective tariff.

[Illustration:
Net Gold in the Treasury, by months,
Jan., 1883 to Feb., 1896, in millions of dollars]

Book of the day: