Grover Cleveland, Obama’s Percursor?
I have been thinking about presidential comparisons with Obama. The closest I could imagine was Grover Cleveland’s second administration.
Cleveland was the leader of the pro-business Bourbon Democrats who opposed high tariffs, free silver, inflation, imperialism and subsidies to business, farmers or veterans. His battles for political reform and fiscal conservatism made him an icon for American conservatives. Cleveland was tight with the bankers and the railroad. Maybe he was not so much in love with them as Obama, but it is still pretty disgusting.
Here are my notes from Matthew Josephson’s The Politicos:
Josephson, Matthew. 1969. The Politicos, 1865-1896 (New York: Harcourt, Brace and company).
518-9: The second Cleveland administration was intent on restoring business confidence, in part, by reestablishing the gold standard by repealing the sermon Silver Purchase Back of 1890, and the elimination of silver as a metallic basis of money.
519: Tariffs were to be reduced in order to encourage imports to raise customs revenue.
519: Gold reserves were depleted under Harrison. The government would issue bonds to purchase more gold. Bankers, such as August Belmont, J.P. Morgan, and James Stillman, together with a group of German bankers represented by Henry Villard, had the president’s ear.
527: In early 1893, Austria was accumulating gold for resumption and Russia for suspected war purposes. In Interest rates were rising and bankers were withdrawing gold from the treasury at an alarming rate.
530: A financial panic morphed into a depression.
530-1: Congress did not like Cleveland, who withheld patronage from Congress, in order to wield this scarce resource. Later to get unpopular measures passed.
531: In June of 1893, Cleveland called a special session of Congress to repeal “unwise laws” relative to the currency.
540: By January 1894, and the treasury, moving on its own, announced the issue of $50 million of 5% 10-year bonds to be sold that not less than 117.223 two-year-old 3%.
540-1: The banks did little to increase the treasury’s holdings of gold. They presented their legal tender for redemption, using the gold they received, we loaned the gold back to the treasury.
543: The tariff reduction bill was structured so that it presented little threat to the great trusts.
545: The final tariff bill actually produced significant tariff increases in the most significant industries.
559: By the spring of 1894, people were becoming rebellious. They were even said to have commandeered trains from the southern Pacific and the Union Pacific. The credibility of these claims was an indication of how fearful the ruling class had become.
561: Coxey’s “army” was forming. Coxey was a successful businessman, whose program was to have the federal government use its credit to give jobs to the unemployed, especially for public works.
563: Attorney general Olney enrolled approximately 1000 deputy marshals to track down disturbers.
566: The police violently dispersed Coxey’s demonstration to the great relief of the establishment.
566: Labor injunctions had rarely been used. Olney perfected the legal weapons by which the military and the police would protect capitalist enterprises.
567: In 1894, following the panic of 1893, employers engaged in intensive wage cutting. This time, workers’ resistance became stronger, unlike earlier periods. Almost 750,000 workers engaged in strikes — the great railroad strike being the most dramatic.
588: While Cleveland and Olney were battling the workers to protect the capitalists, the capitalists were withdrawing their gold from the treasury.
589: By the fall of 1894, the depression became more acute.
590: By August of 1894, the government had exhausted the proceeds of his recent loan and the gold reserves sank the $52 million. Secretary of the treasury, Carlyle, begged the bankers, the deposit gold in the subtreasuries in return for legal tender. The bankers grudgingly relented a bit.
592: In November, Carlisle invited public bids for a second loan, but the bankers were dissatisfied with the terms.
593: The bankers relented, but the proceeds of the loan disappeared within 10 weeks, whereas the earlier loan took 10 months. In other words, massive withdrawals of gold occurred.
595: By January 1895, Cleveland agreed to virtually all of the banker’s demands. He asked congress to agree that all new bonds would be gold bonds and that greenbacks and treasury silver notes would be converted into a national bank notes secured by government gold bonds.
596: The bankers, led by Morgan, demanded that the government make sure that the 3.75% bonds be issued abroad and that the gold be purchased with these bonds come from abroad.
599: The administration’s financial bill was overwhelmingly defeated in the house in February 1895.
600: “At one psychological moment of the contest, by telephone, a call came from a treasury official who reported that there was less than $9 million in gold coin at the New York Sub-Treasury. Whereupon Morgan is said to have remarked: “Mr. President, the Secretary of the Treasury knows of one cheque outstanding for twelve million dollars. If that is presented today; it is all over.” The implied threat in Morgan’s words was unmistakable.” [In other words, Morgan could bankrupt the government if it refused to accept his conditions.]
601: “Morgan also supervised and controlled for several months the gold reserve of the Treasury. Every banking house and exchange dealer in New York having important European connections was bound to the undertaking by being given an allotment of the syndicate’s bonds at profitable rates.”