The American Nation A History of the United States, Combined Volume (14th Edition)

The Depression of 1893 545

1878 the Bland-Allison Silver Purchase Act
authorized the buying of between $2 million and
$4 million of silver a month at the market price,
but this had little inflationary effect because the
government consistently purchased the minimum
amount. The commercial price of silver continued
to fall. In 1890 the Sherman Silver Purchase Act
required the government to buy 4.5 million ounces
of silver monthly, but in the face of increasing sup-
plies the price of silver fell still further. By 1894, a
silver coin weighed thirty-two times more than a
gold one.
The compromises satisfied no one. Silver miners
grumbled because their bullion brought in only half
what it had in the early 1870s. Debtors noted
angrily that because of the general decline in prices,
the dollars they used to meet their obligations were
worth more than twice as much as in 1865.
Advocates of the gold standard feared that unlimited
silver coinage would be authorized, “destroying the
value of the dollar.”

The Depression of 1893

Both the silverites and “gold bugs” warned of eco-
nomic disaster if their policies were not followed.
Then, in 1893, after the London banking house of
Baring Brothers collapsed, a financial panic precipi-
tated a worldwide industrial depression. In the
United States hundreds of cotton mills and iron
foundries closed, never to reopen. During the harsh
winter of 1893–1894, millions were without jobs.
Discontented industrial workers added their voices to
the complaints of the midwestern farmers.
President Cleveland believed that the controversy
over silver had caused the depression by shaking the
confidence of the business community and that all
would be well if the country returned to a single gold
standard. He summoned a special session of Congress,

and by exerting immense political pressure he

obtained the repeal of the Sherman Silver Purchase

Act in October 1893. All that this accomplished was

to split the Democratic party, its southern and western

wings deserting him almost to a man.

During 1894 and 1895, while the nation floun-

dered in the worst depression it had ever experienced,

a series of events further undermined public confi-

dence. In the spring of 1894 several “armies” of the

unemployed, the most imposing led by Jacob S.

Coxey, an eccentric Ohio businessman, marched on

Washington to demand relief. Coxey wanted the gov-

ernment to undertake a program of federal public

works and other projects to hire unemployed workers

to build roads.

When Coxey’s group of demonstrators, perhaps

500 in all, reached Washington, he and two other

leaders were arrested for trespassing on the grounds

of the Capitol. Their followers were dispersed by

club-wielding policemen. This callous treatment con-

vinced many Americans that the government had lit-

tle interest in the suffering of the people, an opinion

strengthened when Cleveland, in July 1894, used fed-

eral troops to crush the Pullman strike.

The next year the Supreme Court handed down

several reactionary decisions. In United States v.

E. C. Knight Company it refused to employ the

Sherman Antitrust Act to break up the Sugar Trust.

The Court also denied a writ of habeas corpus to

Eugene V. Debs of the American Railway Union,

who was languishing in prison for disobeying a fed-

eral injunction during the Pullman strike.

On top of these indications of official conser-

vatism came a desperate financial crisis. Throughout

1894 the Treasury’s supply of gold dwindled as

worried citizens exchanged greenbacks (now con-

vertible into gold) for hard money and foreign

investors cashed in large amounts of American secu-

rities. The government tried to sell bonds for gold

Table 20.1 The Supreme Court Supports Racial Segregation and Corporate Power

Civil Rights Cases^1883 Overturned Civil Rights Act of 1875 Limited Fourteenth Amendment to protecting

blacks from deprivation of rights by states;

allowed individuals to do so

Plessy v. Ferguson 1896 Upheld principle of “separate but equal”

in public accommodations

Allowed southern states and municipalities

to pass laws enforcing separation of whites

and blacks

U.S. v. E. C. Knight Co. 1895 Refused to break up the Sugar Trust for

being a monopoly

Rendered the Sherman Antitrust Act of 1890

nearly meaningless

In Re Debs 1895 Refused to free Eugene V. Debs, president

of the American Railway Union who had

been jailed for leading a strike

Enabled the government to use injunctions to

stop strikes, thereby depriving union leaders of

the chance to plead their case in court