FREE SILVER

Serious students of finance are almost unanimous in their belief that the adoption of free silver would have brought into operation the Gresham Law and would have resulted in a reduction of the value of the dollar. But the motives which divided the United States were less economic law than personal interest. The creditor foresaw the shrinkage of his property, and feared it. The debtor saw the lightening of his debt, and easily convinced himself that the ethics of the case required such relief for him.

It appeared to the West that the declining prices of the eighties had been due not so much to overproduction and mechanical invention as to an appreciation of the dollar. The silver advocate claimed that the money supply was inadequate to the demands of increasing business, that the overworked dollars were acquiring a scarcity value, and that their increase in value was placing an unfair burden upon every person with a debt to pay. It was the old attitude of the Greenback Northwest, brought out by a period of debt and depression. In accounting for the scarcity of money the Act of 1873 seemed important to the West. The demonetization of silver became a crime, and justice from the Western standpoint demanded the restoration of the dollar to its old value,—the value of its silver. Before 1893 the discontent was serious, but had not come to be the primary interest of the West. Men were not yet willing to leave their parties for the sake of silver. The panic drove them to the final step.

Through the campaign of 1892 the major parties had dodged the issue of free silver by adopting evasive planks, while the general ignorance respecting the laws of money prevented the evasion from being seen. Until 1890 neither organization had been unfavorably disposed towards free silver and Congressmen catered to the movement when they dared. As its accomplishment became more probable, the selfish interests that would be adversely affected, and the economists who saw its theoretical danger, and the moralists who disliked repudiation, made common cause in a wide campaign of education.

With the exception of extreme inflationists, all had declared that they wanted "honest" or "sound" money, and both parties insisted, in 1892, that all dollars, of whatever sort, must remain equal in value and interchangeable. They insisted, too, that silver must be used as well as gold, and neither platform saw that the demands were either inconsistent or improbable of realization. The pledge of equality pleased the creditor East, while that of equal use of both metals satisfied the debtor West and South.

Bimetallism was a cry of many who disliked free silver, yet feared that a demand for the gold standard would wreck the party. As long as the traditional ratio of sixteen to one remained the commercial ratio, the free use of both metals was theoretically possible, but the experience of the United States showed that a slight variation in the commercial ratio inevitably drove the more valuable dollar into retirement and left the cheaper in use. The truth of Gresham's Law was believed by most economists, who doubted whether the commercial ratio was ever sufficiently permanent to make bimetallism possible. With the silver declining rapidly it was out of the question. If the silver in circulation ever got beyond the power of the government to control it through redemption in gold nothing could avoid the silver standard. No law of the United States could prevent it. There was only a bare possibility that an international agreement always to regard sixteen ounces of silver as worth one ounce of gold might establish the ratio, but to this straw the bimetallist turned, trying to ward off the demand for free silver with his plea for international bimetallism.

silver

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The Flood of Silver
Gold and Silver Output of the World, 1861-1911 In Ounces
(Based on United States Statistical Abstract, 1912, pp. 796, 797)]

The panic of 1893, the decline of silver, and the repeal of the Sherman Law stimulated the activities of those who believed in free silver and produced formal steps to bring it into politics. A silver convention, held in Chicago in August, 1893, denounced the "Crime of 1873," and Governor Waite recommended to the Colorado Legislature that it open a mint of its own for the coinage of legal-tender silver dollars. At state conventions, in 1893 and 1894, both parties adopted silver planks. The Nebraska Democrats rejected such a plank in 1893, but in 1894, after a caucus of free-silver Democrats in Omaha, they adopted a demand for the immediate restoration of free-silver coinage "without waiting for the aid or consent of any nation on earth."At the congressional election of 1894 the Republicans regained control of both Senate and House and many of the silver candidates were left at home. Some thirty, who had sat in the Fifty-third Congress, joined in March, 1895, in a call for the adoption of free silver as a party measure. To the iniquity alleged to exist in the gold standard was added the aggravating fact that its defenders had wealth and were often directors of corporations. The measure had become a class contest. Its textbook was found in Coin's Financial School, a little book with simple dialogue and graphic illustration, that popularized the Western view of free silver and reached hundreds of thousands with its apparent frankness. Free silver had by 1895 outgrown the Populists, and had overshadowed other measures of reform before either party had taken a frank attitude respecting it. "I have been more than usually despondent," wrote the originator of the Wilson Bill, who had lost his seat in 1894, "as I see how the folly of our Southern people, in taking up a false and destructive issue, and assaulting the very foundations of public and private credit, are throwing away the solid fruits of the great victory, solidifying the North as it never was solid in the burning days of reconstruction, and condemning the South to a position of inferiority and lessening influence in the Union she has never before reached."

When the Fifty-fourth Congress met in 1895, Reed was again enthroned as Speaker, but the spread of silver sentiment had undermined party loyalty. Cleveland's annual Message contained the usual range of items upon government and foreign relations, and devoted several pages to a rÉsumÉ of the financial operations of the Treasury and the currency problem. It closed with an appeal to the enthusiastic multitude that approved free coinage to reËxamine their views "in the light of patriotic reason and familiar experience." It gave no hint that any other topic was likely to pass free silver in the public view. Fifteen days later, on December 17, 1895, the President sent a special Message to Congress, in reference to an old dispute between Great Britain and Venezuela, that startled the world, upset the stock markets, and brought to life once more the Monroe Doctrine.

For many years the unsettled boundary between Venezuela and British Guiana had been a source of irritation. The pretensions of both claimants were great and vague, while the continuous encroachment of British miners alarmed the weaker country. For nearly twenty years Venezuela had vainly appealed to the United States, asking that the dispute be arbitrated. The United States had taken a mild interest in the wrangle, but no one before Cleveland had felt vitally concerned. He undertook, in the summer of 1895, to persuade Great Britain to accept an arbitration, and pressed Lord Salisbury in a series of notes drafted by Richard Olney, Secretary of State.

The contention of Olney was that the dispute was suitable for arbitration because of the difference in physical strength between the two countries, and that the United States had an interest in an equitable territorial adjustment. He stated the doctrine that John Quincy Adams had advanced in the Administration of Monroe, that interference with the destiny of the South American Republics affects the United States, and asserted that this was now a part of the public law of the United States. He listed the precedents in which it had been advanced since 1823, finding none in which it had been flatly checked. His long arguments upon the interests and proper supremacy of the United States in all American questions failed to convince the British Foreign Office, which denied both Olney's correctness in applying the Monroe Doctrine and the binding force of the doctrine itself. Arbitration was declined, and Cleveland, in submitting the correspondence to Congress, urged that an American court be created to ascertain the true boundary and that the United States afterward maintain it. "In making these recommendations," he admitted, "I am fully alive to the responsibility incurred and keenly realize all the consequences that may follow."

The threat of war conveyed in the Message drove silver from the public mind. Business was aghast, and judicious publicists either questioned the value of the Monroe Doctrine or denied the propriety of its application. The general public supported the President without question, but many of his closest advisers turned against him. His political enemies charged him with raising a foreign issue to reunite his party, or with creating a scare to help his speculations in stocks. Great Britain blustered in her press, but opened her archives to the American Venezuelan Commission. In 1897 she allowed an arbitration to take place, and the affair passed over.

Whatever Cleveland's motive in the Venezuela Message, it did not establish more than a transient calm in either party. His own was doubly split by silver and the tariff, while Republican plans for 1896 had become badly deranged. That party had organized to play upon protection, but found interest in its chosen subject silenced for the time.

In spite of its defeats in 1890 and 1892, the Republican organization had kept up its fight for protection. Quay had in 1888 completed the partnership between the manufacturers who had a cash interest in the tariff and the Republican voters. In manufacturing communities the doctrine had been accepted that prosperity and protection went together. Ruin was prophesied if the Democrats should win. The panic of 1893 seemed to prove this, and when the Democrats passed the Wilson Bill the Republicans asserted that the fear of this had caused the panic. In private, the leaders agreed with the president of the Home Market Club, who wrote in his memoirs, "The bill ... was much less destructive than there was reason to fear." "Our business was not unprofitable during these lean years, but much less profitable than it had been and ought to have been." Prosperity was clearly lacking and to be desired, and among the candidates for the nomination in 1896 was the author of the McKinley Bill, in whom an Ohio cartoonist had discovered the "Advance Agent of Prosperity."

Associated with the name of William McKinley, of Canton, Ohio, was that of Marcus Alonzo Hanna, a citizen of Cleveland who had acted on the borderland between business and politics since 1880. Hanna had been among the earliest to see the financial interest of the manufacturers in the tariff and to capitalize it for political purposes. For several years he had collected money in Ohio for campaign funds, assessing the manufacturers according to their interests and impressing upon them the duty of paying on demand. It had been a business transaction. Hanna had no extraordinary stake in the result, but combined a genuine interest in politics with business standards of the prevailing type. About 1890 he became a friend of the Ohio protectionist and worked steadily thereafter for his election to the Presidency.

McKinley was a tactful and successful Congressman. He believed in the tariff, spoke convincingly in its favor, had few enemies and many warm friends, and was widely advertised by the Tariff Bill of 1890. In public places after 1893 he was repeatedly hailed as the next candidate, but as the silver issue rose it appeared that there might be great difficulty in adapting his record to the new problem. He had favored bimetallism and free coinage in so many debates that the East, where lay the strongholds of the party, distrusted his soundness on the currency question. Yet if he abandoned free silver it was doubtful if he could hold the West. For months his friends, steered by Hanna, who spent his own money freely, endeavored to keep the tariff in the foreground, while the candidate preserved a discreet and exasperating silence upon the dominant issue of free silver.

The most important rivals of McKinley for the nomination were Harrison and Reed, but neither of these possessed a manager as shrewd and resourceful as Hanna. McKinley was nominated on the first ballot at St. Louis, with Garrett P. Hobart, of New Jersey, a corporation lawyer who believed in the gold standard, as his associate.

The nature of the Republican platform had been in debate throughout the spring of 1896. The organization was reluctant to take up the silver issue and the predetermined candidate was uncertain upon it. In the Platform Committee there was a contest involving the opportunists, who wanted to continue the policy of evasion; the Westerners, who felt that silver meant more to them than the party; and the representatives of the populous commercial East, who were devoted to the gold standard. Bimetallists had progressed in their education until most of them saw that bimetallism must be international if it could be at all. Various committeemen later assumed the credit for the plank that was finally adopted. After castigating the Democrats for producing the panic and renewing the pledge for protection, the party denounced the debasement of currency or credit. It opposed the free coinage of silver, asserted that all money must be kept at a "parity with gold," and pledged itself to work for an international agreement for bimetallism.

The fight for free silver was carried by the silver state delegations to the floor of the convention, where it was defeated by a vote of 818-1/2 to 105-1/2. At this point, led by Senators from Colorado and Utah, thirty-four members withdrew from the convention in protest. Even the Prohibition party had already been broken by the new issue. The humorous weekly, Life, spoke seriously when it declared that "The two great parties in the country at this writing are the Gold party and the Silver party. The old parties are in temporary eclipse." Few were satisfied with the Republican result, for while the platform pointed one way and the candidate's career pointed the other on free silver, the real interest of the party, protection, aroused no enthusiasm.

No Democrat was the predetermined candidate of his party when it met at Chicago in July, 1896. Cleveland, least of all, was not given even the scanty notice of a commendatory plank. He stood alone as no other President had done, at issue with the Republicans on their major policy, yet without followers in his own organization. Slow, patient, courageous, stubborn, he had twice held his party to its promise, and he had refused to be carried away by the transitory demand of the West for dangerous finance. He had guided the National Administration through eight years of expansion and reorganization, and had been a devoted servant of civil service reform. In May, 1896, he had aggravated his offenses in the eyes of the politicians by issuing new rules that extended the classified service to include some 31,000 new employees, making a total of 86,000 out of 178,000 federal employees. He passed out of party politics at least two years before his term expired, and in 1897 he took up his final abode in Princeton. From Princeton he wrote and spoke for eleven years, and before he died in 1908 the animosities of 1896 were forgotten, and he looked large in the American mind as a statesman whose independence and sincerity were beyond reproach.

Forces beyond the control of politicians carried the Democrats toward an alliance with Populism and free silver. As two minority parties they had felt in 1892 a tendency to fuse against the Republicans. By conviction they were both obliged to fight the party of Hanna and McKinley, in which the forces of business, finance, and manufacture were assembled in the joint cause of protection and the gold standard. It was convenient to make this fight in close alliance, the more so because the Populist doctrine of free silver had permeated the Democratic organization in the West and South. In the conventions of 1896 more than thirty States, as Nebraska had done in 1894, asked for immediate free coinage, and a majority of the Democratic delegates were pledged to this before they came to Chicago. They gained control of the convention on the first vote, determined contests in their own favor, and offered a plank demanding "the free and unlimited coinage of both silver and gold at the present legal ratio of sixteen to one without waiting for the aid or consent of any other nation."

The debate on the silver plank was long and bitter, although its passage was certain. It was closed by the leader of the Nebraska delegation, William Jennings Bryan, who had been a former Congressman, and who later said, "An opportunity to close such a debate had never come to me before, and I doubt if as good an opportunity had ever come to any other person during this generation." He took advantage of the moment, in a tired convention that had been wrangling in bitterness for several days, that had deserted the old politicians, and that had no candidate. He was only thirty-six years old, his face was unfamiliar, and his name had rarely been heard outside his State, but he had been preaching free silver with religious intensity and oratorical skill. His speech had grown through repeated speaking, and reached its climax as he pleaded for free silver: "If they dare to come out in the open field and defend the gold standard as a good thing, we will fight them to the uttermost. Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for the gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold." Swept off its feet by the enthusiasm for silver, and having no other candidate in view, the convention nominated Bryan on the fifth ballot, selecting Arthur Sewall, of Maine, as his companion.

The Populists met in St. Louis on July 22. "If we fuse, we are sunk," complained one of the most devoted leaders; "if we don't fuse, all the silver men will leave us for the more powerful Democrats." Fusion controlled the convention, voting down the "Middle-of-the-Road" group that adhered to independence. Bryan was nominated, although Sewall was rejected for Thomas E. Watson, of Georgia. The organization of the People's Party continued after 1896, but its vitality was gone forever.

The campaign of 1896 was an orgy of education, emotion, and panic. McKinley was driven by the opposition to defend the gold standard with increasing intensity. Protection ceased to arouse interest and other issues were forgotten. The Bryan party attracted to itself the silver wings of the Republicans and Prohibitionists, and absorbed the Populists. The gold Democrats, after several weeks of indecision as to tactics, became bolters, held a convention at Indianapolis in September, and nominated John M. Palmer and Simon Buckner. To this ticket, Cleveland and his Cabinet gave their support. Up and down the land Bryan traveled, preaching his new gospel, which millions regarded as "the first great protest of the American people against monopoly—the first great struggle of the masses in our country against the privileged classes." "Probably no man in civil life," said the Nation at the end of the fight, "has succeeded in inspiring so much terror without taking life."

As chairman of the National Committee, Marcus A. Hanna directed the Republican campaign. He encouraged the belief that Bryan was waging a "campaign against the Ten Commandments." He drew his sinews of war from the manufacturers, who were used to such demands, and from a wide range of panic-stricken contributors who feared repudiation. Insurance companies and national banks were assessed and paid with alacrity. The funds went into the broadest campaign of education that the United States had seen.

In contrast to the activity of Bryan, McKinley stayed at home through the summer, and delegations from afar were brought up to his veranda at Canton, Ohio. To these he spoke briefly and with dignity, gaining an assurance that grew with the campaign. His arguments were taken over the country by a horde of speakers whom Hanna organized, who reached and educated every voter whose mind was open on the silver question. In the closing days of the campaign panic struck the conservative classes and produced for Hanna campaign funds such as had never been seen, and cries of corruption met the charges of repudiation.

An English visitor in New York wrote on the Sunday before election: "Of course nothing can be done till Wednesday. All America is aflame with excitement—and New York itself is at fever heat. I have never seen such a sight as yesterday. The whole city was a mass of flags and innumerable Republican and Democratic insignia—with the streets thronged with over two million people. The whole business quarter made a gigantic parade that took seven hours in its passage—and the business men alone amounted to over 100,000. Every one—as, indeed, not only America, but Great Britain and all Europe—is now looking eagerly for the final word on Tuesday night. The larger issues are now clearer: not merely that the Bryanite fifty-cent dollar (instead of the standard hundred-cent) would have far-reaching disastrous effects, but that the whole struggle is one of the anarchic and destructive against the organic and constructive forces."

The vote was taken in forty-five States, Utah having been admitted early in 1896, and no election had evoked a larger proportion of the possible vote. Bryan received 6,500,000 votes, nearly a million more than any elected President had ever received, but he ran 600,000 votes behind McKinley. The Republican list included every State north of Virginia and Tennessee, and east of the Missouri River, except Missouri and South Dakota. The solid South was confronted by a solid North and East, while the West was divided. McKinley received 271 electoral votes; Bryan, 176.

Education played a large part in the result, and economic opinion believes that the better cause prevailed. But cool analysis had less effect than emotion and self-interest at the time. The lowest point of depression had been reached during 1894, while the harvests of 1895 and 1896 were larger and more profitable than had been known for several years. Free silver was a hard-times movement that weakened in the face of better crops. "Give us good times," said Reed to Richard Watson Gilder, "and all will come out right." Inflation was not to be desired by the citizen who had in hand the funds to pay his debts. When he became solvent he could understand the theories of sound finance. It is probable that nature as well as gold was a potent aid to Hanna in procuring the result.William McKinley was advertised as the "Advance Agent of Prosperity," and before he was inaugurated in March, 1897, prosperity was in sight. His election had destroyed all fear that the currency would be upset by legislative act, while the liquidation after the panic of 1893 had nearly run its course. Business was reviving, crops were improving, and the luckless farmers of the Western plains had abandoned their farms or learned how to use them. After 1896 the financial danger was not silver but gold inflation. In that year great mines were opened in Alaska, drawing heavy immigration to the valley of the Yukon and, a little later, to the beach at Nome. Other discoveries increased the gold output and flooded the world with the more precious metal. By 1900 prices were rising instead of falling, and public interest was turned upon the high cost of living rather than the low prices of the previous period. The average annual output of gold for the fifteen years ending in 1896 was $132,000,000. For the fifteen years beginning in 1896, it was $337,000,000. The election of McKinley was in name a victory for the Republican party, but was in reality one for sound money. The organization upon which he stood was an amalgamation of creditors and manufacturers, reËnforced by gold-standard men of all parties. Without the aid of the last element he could hardly have been elected, on this or any other issue. When he took office the Republican party had control in both houses of Congress, had been elected on a money issue, but had a permanent organization based upon the tariff propaganda. Before his inauguration, Hanna declared that the election was a mandate for a new protective tariff, and one of McKinley's earliest official acts was to summon Congress to meet in special session, to fulfill that mandate, on March 15, 1897.

BIBLIOGRAPHICAL NOTE

The most popular document in the free-silver propaganda was W.H. Harvey, Coin's Financial School (c. 1894). This was replied to by Horace White, Coin's Financial Fool; or the Artful Dodger Exposed (c. 1896); and the same author, in Money and Banking (4th ed., 1911), discusses the economics of free silver. The best economic arguments for free silver came from the pens of Francis A. Walker and E. Benjamin Andrews. The Reports of the International Monetary Conferences (at Paris, 1867 and 1881, and at Brussels, 1892) are useful upon the attempt to establish a currency ratio by international agreement. There is no good biography of William McKinley, although the external facts of his career may be obtained in the Annual CyclopÆdia, and in Who's Who in America (a biennial publication which, since its first issue in 1899-1900, has been the standard source of biographical data concerning living Americans). These may be strengthened by D. Magie, Life of Garrett A. Hobart (1910). The best biography of the period is H. Croly, Marcus Alonzo Hanna (1912), which gives an illuminating survey of Republican politics, although based on only the public printed materials and personal recollections. The opposition may be studied in W.J. Bryan, The First Battle (1896). The platforms, as always, are in Stanwood, and there are useful narratives in Dewey, LatanÉ, Andrews, and Peck. From this period the Outlook (January, 1897), and the Independent (July, 1898), take on a modern magazine form and are to be added to the list of valuable newspaper files, while the Literary Digest begins to play the part carried by Niles's Register in the early part of the century. They may generally be trusted as intelligent, honest, and reasonably independent. The Venezuelan affair, besides stimulating diplomatic correspondence (q.v., in Foreign Relations Reports), led to the writing of W.F. Reddaway, The Monroe Doctrine (1898), which is still one of the most judicious discussions of the topic. J.B. Henderson, American Diplomatic Questions (1901), is useful also.