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The Commoner.
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Republican Panic Fallacy Exploded
Republican orators and organs liavo habitu
ally charged that democratic tariff legislation
was responsible for the panic of 1893. Time
and again The Commoner has presented the .
facts on this point and although those facts are
clear the false statement has been reiterated in
high places. Speaking in the United States
senato Senator Smoot of Utah charged that the
1893 panic was due to the Wilson tariff law.
Replying to Senator Smoot, Senator La Follette
said: "I never have believed the Wilson tariff law
was the cause of the financial troubles of that
time. Those troubles began before the enact
ment of the Wilson tariff law. It was a period
of general business depression. It began abroad
In 1890 and swept over the whole world. It
culminated in the panic of 1893. It is puerile
to attribute it to the Wilson tariff law of 1894.
I know the claims that have been made by many
republican newspapers and campaign orators,
and I know how labor has been appealed to, and
as election approaches how it has been driven
to the support of the standpat policies and can
didates out of the fears that have been played
upon in the heat and fever of the campaign,
threatening a repetition of those heart-breaking
times if the sacred tariff duties of the Dlngley
and Payne-Aldrlch laws were ever threatened
with revision. I hope, Mr. President, that the
voters of this country are becoming enlightened
enough to know that those appeals are without
any substantial economic basis. There were
other amply sufficient reasons for the depression
and financial distress that swept over this
country at that period."
Thanks to Senator La Follette for aiding in
the correction of this false impression. We had
a panic in 1907 and that was under a republi
can administration and the highest sort of a
republican tariff law. This is a good time for
the presentation of facts and figures on this
point. The simple truth is that the panic of
1907, as well as every other panic since the
Civil war, originated under republican rule and
developed under republican legislation. The
following' facts will be convenient for the use
of Commoner readers in dealing with this
subject:
The great panic which gave "Black Friday"
to history occurred during the month of Septem
ber, 1869, when the republican party was in
power.
The great panic marked by the failure of Jay
Cooke & Co., occurred in, .September, 1873. Then
the republican party was in power, and eleven
months prior to the beginning of that panic that
party nad been re-elected to power.
The "panic of 1893" began long prior to that
year. and, indeed, long prior to the presidential,
election M 89 2; and it is a fact, although re
publican orators and republican organs try to
forget it, that the so-called panic of 1893 began
and played its greatest havoc under that famous
tariff law known as the McKinley bill.
It may be well for Commoner readers to keep
readily at hand some of the facts and figures
relating to this question:
The republican party was restored to power
March 4, 1889.
The McKinley tariff bill became a law October
6, 1890, and remained in effect until August
27, 1894.
The Wilson tariff law, enacted by a demo
cratic congress, went into effect August 27, 1894.
If any one will take the trouble to examine
the republican campaign textbook for 1904,
pages 125, 126 and 127, he will find consider
able space devoted to a statement of business
disasters from July 18, 1893, until November
13, 1894. The republican managers expected
their readers to remember that the Cleveland
administration was inaugurated March 4, 1893,
and that all these disasters occurred under
democratic administration; but thoy expected,
their readers to forget that the republican tariff
law was In force up to August 27, 1894, or
covering more than twelve months of the six
teen months' period of business disasters as
described by the republican text-book.
In their references to the panic of 1893 re
publican orators and organs habitually overlook
the date when the McKinley law ceased and the
Wilson law went into effect. But when in their
tariff discussions they are required to face the
fact that that panic played its greatest havoc.
during the life of the republican tariff law they
answer that it was the anticipation of tariff legis
lation growing out of democratic victory in 1892
which brought on these business disasters. For
this reason in their list of business disasters,
they place July 18, 1893, as marking the be
ginning of that great panic.
Let it be remembered that the McKinley
tariff bill became a law October 6, 1890, and
that the first Indications of the so-called panic
of 1893-4 were given November 11, 1890, A
little more than thirty days after
the Mckinley tariff bill became a
LAW. From that date the panic raged.
The Harrison administration was inaugurated
March 4, 1889, and when the first indications
of this panic were given, President Harrison
had not exhausted the half of the term for which
he was elected. It is admitted by everyone fami
liar with the facts that President Harrison's
administration had plates prepared for the
bonds and Mr. Harrison's secretary of the
treasury made a visit to New York for the pur
pose of negotiating the bond deal. He was wired
by Mr. Harrison to return to Washington. Mr.
Harrison said that he had concluded not to
have any bond issues under his administration
and in order to avoid the stigma the Harrison
administration warded off the bond issue and
unloaded it on the incoming Cleveland ad
ministration. It may not be out of place to point out that
when the democratic administration surrendered
the reins of government, Ttfarch 4, 1889, there
was in the federal treasury the. largest surplus
in history. When the republican party went
out of power, March 4, 1893, there was a' large
deficit and the incoming administration was
finally persuaded to make the bond issues which
its republican predecessor had at one time
thought to be necessary, but had skillfully
avoided.
The claim that the business disasters of the
period referred to were due to the popular fjear
of tariff legislation to be enacted by democrats
is, as has been said, met by the fact that this
panic began two years prior to the presidential
election day of 1892. The following will serve
as reminders on this point:
November 11, 1890, the reports showed finan
cial distress in New York. The New York
Clearing House association voted its certificates
to banks in need of assistance.
The Boston Clearing House association did
the same thing November 17. Barker Bros. &
Co., big bankers in Philadelphia, suspended at
that time, with liabilities placed at $6,000,000.
November 19, 1890, there was a run on the
Citizens' Savings bank of New York, and a re
ceiver was appointed for the North River bank.
November 22, 1890, the United Rolling Stock
company of Chicago assigned, with liabilities
at $6,851,000.
November 28, 1890, B. K. Jamieson & Co.,
the Philadelphia bankers, lailed, with liabilities
at $2,000,000.
December 6, 1890, the Oliver Iron and Steel
mills of Pittsburg shut down, discharging 2,000
employes. On the same date, the cotton firm
of Myer & Co., of New Orleans, failed, with
liabilities at $2,000,000.
January 3, 1891, the Scottdale Rolling mills
and Pike works and the Charlotte Furnace and
Coke works in Pennsylvania closed, throwing
10,000 employes out of work.
January 18, 1891, the American National
bank at Kansas City suspended, with liabilities
at $2,250,000.
May 8, 1891, the Spring Garden National
bank at Philadelphia closed its doors, and the
Pennsylvania Safe Deposit and Trust company
made an assignment.
The Homestead strike and other strikes dur
ing 1892, and prior to election day, are well
remembered by the people.
The record discloses that the first indications
of the so-called panic of 1893 were given No
vember 11, 1890, a little more than thirty days
after the McKinley tariff bill became a law. From
that date the panic raged, and while Its effects
were felt for several years it reached its worst
stage in 1893, and during the early days of
1894, during all of which time the republican
tariff law was in effect.
The late Thomas B. Reed, after his retire
ment from the speakership, delivered a speech
in New York in which he said: "Another thing
which led this whole country Into the error of
1892 was the history of the last thirty years.
During all that time we have been prosperous."
VOLUME 11, NUMBER 3
The New York World called this "cold, colossal
and impudent falsification of history," and said
that it must have astonished those among his
hearers whose memories were more than one
year long. Then this New York paper gave Mr.
Reed these interesting reminders:
"Tho panic of 1S73, under republican rule ana
twelve years of high tariff taxation, was the most
disastrous and the period of business depression
for five years thereafter was tho most severe of
any In history. It was ofilcally estimated that
3,000,000 workingmen wero out of employment.
Bankruptcy was widespread. A tidal wavo of ruin
and distress swept over tho country.
"From 1881 to 188 C, unddr two republican tariffs,
there were labor strikes inolvlng 22,304 establish
ments and 1,323,203 workmen. Of these strikes
9,439 wero for an increaso of wages and 4,311
against reduction of wages.
"Mr. Reed's party tinkered tho tariff in 1883. In
that year there were 5,184 business failures, in
volving $172,874,000. In 1884 thcro wero 10,968
failures, involving $226,343,000. In the next year,
still under the republican tariff and currency lawr,
there was a general business depression. More
than 1,000,000 men wero out of employment.
"In 1890 tho McKinley bill was passed, and there
wero 10.673 failures in that year, and 12,394 the
next, with liabilities in each year amounting to
nearly $200,000,000. The tariff was raised to nearly
fifty per cent, but wages either stood still or de
clined, whilo tho prices of necessaries advanced.
Tho protected manufacturers kept all their 'bonus
as usual.
"Tramps and trusts, tho twin products of a
monopolists' tariff, were practically unknown in
this country until we had endured uninterrupted
republican rulo for a dozen years.
"Tho worst labor troubles, tho bloodiest riots,
tho most destructive strikes, the most brutal lock
outs over known in any country have occurred
here under the high tariffs, bought, made and
paid for by tho contributors of tho republican
campaign funds."
MR. HARRISON PREPARED THE BONDS
It is a fact that during the closing hours of
the Harrison administration in 1893, the re
publican secretary of the treasury caused to be
prepared the plates for a bond issue. This
issue was by the hardest kind of effort post
poned, and it was finally made by the Cleve
land administration. Sometimes republican
politicians deny that the Harrison administra
tion contemplated a bond issue, but they do
this only when there is no one present prepared
to show the truth. The records at Washington
show that Secretary of the Treasury Charles
Foster issued an order February 20, 1893,
directing the chief of the United States bureau
of engraving and printing- to prepare plates for
these bonds. The story is told very briefly in
"Thirty Years of American Finance," a volume
written by Alexander Dana Noyes, financial edi
tor of the New York Evening Post. This volume
may be found in almost any public library.
On page 183 the following appears:
"By tho close of January, 1893, tho treasury's
gold reserve had fallen to a figure barely eight
millions over the legal minimum. "With February's
early withdrawals even larger, Secretary Foster
so far lost hope of warding off the crisis that he
gave orders to preparo the engraved plates for a
bond issue under the resumption act. As a last
resort, however, ho bethought himself of Secre
tary Manning's. sold borrowing operation of 1885.
In February .Mr. Foster came in person to New
York to urge the banks to ivo up gold volun
tarily in exchange for tho treasury's legal tender
surplus. (See New York Financial Chronicle,
February 11 and February 18, 1893.) From a strict
commercial point of view, there was good reason
wljy tho banks should not jnakerany such exchange.
But tho plea that a panic must, at all Jmzards bo
averted, combined witlu-tho argument of patriotic
support of tho government, at length prevailed.
Tho New York banks turned over to tho treasury,
in exchange for notes, six to eight million dollars
in gold. (Seo New York Tribune,' February 9. 10
and 11, 1893; New York Financial Chronicle,
February 11, 1893.)"
HARRISON'S BOND PLATE ORDER
When any one denies that plates for bonds
were ordered under the Harrison administra
te , 0
A CITIZENSHIP OATH
"We will never bring disgrace to this,
our city, by any act of dishonqsty, or
cowardice, nor ever desert our suffering
comrades in the ranks. We will fight for
the ideal and sacred things of the city.
We will revere and obey the city's laws
and do our best to excite a like respect
and reverence in those above us who
are prone to ..annul and set them at
naught. We will strive unceasingly to
quicken the public sense of civic duty,
and thus in all these ways, we will
transmit this city, not only not less, but
greater, better and more beautiful than
it was transmitted to us."
The Epheblc oath taken by the young
Athenians when assuming the responsi
bilities of citizenship.
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