This great victory was partly the result of a serious economic depression, but that depression did not go away merely because the Democrats now controlled the government. The first weeks of the new administration were marked by bank failures, the collapse of important corporations, and a rapid shrinking of the supply of gold in the treasury as worried citizens exchanged paper currency for the precious metal. Unemployment mounted.
Cleveland believed that all would be well if "confidence" could be restored and that the way to restore it was to repeal the Silver Purchase Act of 1890. The steady addition of silver-based money was, he believed, threatening the country with inflation and inhibiting investment. "You cannot prevent a frightened man from hoarding his money," he said. "I want . . . our currency so safe and reassuring that those who have money will spend and invest it in business and new enterprises, instead of holding it."
In Congress resistance to repeal was strong. The Democratic party was badly split on the question, since many southern and western Democrats were being squeezed by the continued price deflation and saw in silver the one hope of ending it. Particularly in the Senate, where the sparsely populated western silver-mining states had more influence than in the House, pressure on the president to accept some compromise grew rapidly.
Cleveland would not yield an inch. Repeat became for him a matter of principle, and opposition to it "shameful." He, who had so vigorously denounced influence peddling and the use of patronage to compel political obedience, used his power to grant or withhold offices and other favors ruthlessly. When Democratic Congressman Willam Jennings Bryan of Nebraska warned him that repeal of the Silver Purchase Act would "injure the party" in his state, Cleveland responded by refusing to appoint Bryan supporters to local offices. "One thing may as well be distinctly understood by Democrats in Congress who are heedless of the burdens and responsibilities of the incoming administration," he explained to a friend. "They must not expect us to 'turn the other cheek' by rewarding their conduct with patronage." In the end he had his way, but only after splitting his own party and reducing drastically his ability to influence later legislation.
The repeal of the Silver Purchase Act on 30 October 1893 marked as fateful a turning point in Cleveland's career as his election as mayor of Buffalo. What he saw as a stand for principle and a do-or-die defense of sound economic policy, others considered stubbornness and arrogance. One Arkansas Democrat called him a "360-pound tool of plutocracy." The governor of South Carolina compared his "betrayal" of the Democratic party to Judas' betrayal of Jesus. A senator predicted that if Cleveland were running for president at that time, he "could not have carried a single electoral vote south of the Potomac." All these charges were as exaggerated as the Arkansan's estimate of the president's weight, which had never much exceeded 250 pounds. (Cleveland's weight was somewhat below that figure in 1893 because he had recently undergone an operation for cancer of the mouth and had lost a considerable amount during his convalescence.)
Cleveland was conservative and he fought hard for what he believed right, but he was not a tool of the rich or an opinionated tyrant. He was certainly not arrogant. His fault was more narrowness of vision than simple stubbornness. He was unable to grasp the fact that others felt as deeply as he about what should be done—that, for example, the farmers in Willam Jennings Bryan's Nebraska district were far more concerned with how their congressman voted on silver than with whether or not he had a few federal jobs to hand out. He could not see beyond the immediate issue of repeal of a bad law or appreciate the possibility that repeal might, on the one hand, have unforeseen bad effects or, on the other, have no effect at all on the nation's economic problems. The historian Stanley L. Jones goes so far as to say that Cleveland failed "to understand the . . . social and economic changes that were taking place in the nation."
Stopping the purchase of silver did not end the drain of gold from the treasury. Since the silver certificates already in circulation could be exchanged for gold, frightened citizens continued to take advantage of that fact. Several times Cleveland had to authorize the sale of gold bonds by the treasury to replenish the reserve. But the drain continued until early 1895, when Cleveland negotiated the sale of $62 million in gold bonds with a syndicate dominated by J. P. Morgan, one of the terms being Morgan's personal promise to find at least half of the gold abroad. This Morgan bond deal brought down a new wave of criticism on the president, the charge being that it was demeaning to make the credit of the United States dependent on the cooperation of a private banker.
More seriously, repeal of the Silver Purchase Act did not restore the confidence of investors or anyone else. The economic situation got worse instead of better. Cleveland might plausibly have argued that the depression had begun before he took office and was caused by the policies of his predecessor. Instead, he continued to insist that no government could do much about the depression beyond making sure that the nation's currency was "sound." His attitude was not unusual. It was probably shared by a large majority of the citizenry. Certainly most of Cleveland's opponents had no better understanding of what could or should be done about the depression than he, but Cleveland seemed to go out of his way to stress his administration's impotence. In his second inaugural address he said, "While the people should patriotically support their Government its functions do not include the support of the people." This was both trite and bad psychology. Experience in office had taught Cleveland that presidents have a great deal of power. He had learned to wield that power but not how to use it constructively.
In forcing through the repeal bill, Cleveland exhausted a good deal of his influence with members of Congress who disagreed with his policies. His heart was set on lowering the tariff and the unpopularity of the high McKinley Tariff of 1890 seemed to make reduction easy. A new bill that embodied the kind of changes he desired was passed by the House early in 1894. But in the Senate, protectionists attached hundreds of amendments that undermined what the House had accomplished. Though Cleveland strove mightily against these changes, he could not command the support of many Democratic senators. He accused these deserters of "party perfidy and party dishonor," but that only caused them to dig in their heels more firmly. In the end the new Wilson-Gorman Tariff became law without his signature.
Cleveland's political ineptness was also demonstrated by his handling of the great Pullman strike that occurred during the spring and summer of 1894. The Pullman company manufactured and operated sleeping and dining cars used on all the nation's railroads. Its workers went on strike in May, in protest against a wage cut. That strike would not have been of concern to the federal government but for the fact that the American Railway Union, responding to the strikers' appeal, refused to move trains carrying Pullman cars. Soon rail traffic west of Chicago was paralyzed.
Cleveland was deeply involved at the time with efforts to reduce the tariff, so he delegated dealing with the strike to Attorney General Richard Olney. Olney, a former railroad lawyer, considered all labor unions undesirable and was determined to break the strike. After consulting with representatives of the railroads, he sought and obtained from a federal judge an injunction forbidding the strikers from interfering with the movement of mail. But the strike continued. The situation in and around Chicago became increasingly tense. Olney had arranged for army units to be sent to the Chicago area, and on 3 July, the day after the issuance of the injunction, Cleveland ordered these troops into the city to preserve order.
The governor of Illinois, John Peter Altgeld, who was personally sympathetic to the strikers, bitterly resented Cleveland's action. He believed that local and state authorities were capable of preserving order. He dashed off a telegram to the president denying his right to use troops without gubernatorial consent.
Cleveland's response was categorical. "I have neither transcended my authority nor duty.. . . In this hour of danger and public distress, discussion may well give way to active efforts on the part of all in authority to restore obedience to the law and to protect life and property."
Cleveland's action was understandable, and he was not a dupe of Olney, as some historians have claimed. Furthermore, his stern defense of the use of troops won wide public support. But the decision to use force was a mistake on two grounds: it did not preserve order, and it further disrupted the already divided Democratic party. For two days mobs rampaged in Chicago, burning railroad cars and buildings. Governor Altgeld, furious at Cleveland both because the president had failed to consult him before sending in troops and because of the federal government's favoritism toward the rail-road owners, threw his formidable influence against the administration. The strike was effectively broken, as perhaps was necessary after the injunction was ignored by the leader of the union, Eugene V. Debs. But the "solution" was entirely too extreme for anyone's good: Debs was thrown in jail, the American Railway Union collapsed, and middle-class opinion turned sharply against organized labor to the ultimate disadvantage of both labor and the middle class.