By 1895, Cleveland was almost without a friend in the southern and western wings of the Democratic party. More and more he was identified with the ultraconservative, or Bourbon, faction that dominated the party in the Northeast. Only in matters of foreign policy did his tendency to take an uncompromising stand for what he considered morally right bring him any real popular support.
Shortly before Cleveland's second term began, a group of Americans in the Hawaiian Islands had staged a successful coup, ousting the Hawaiian ruler, Queen Liliuokalani, with the aid of marines from the USS Boston . The new government sought annexation by the United States. American public opinion seemed enthusiastic, and a treaty was negotiated and sent to the Senate shortly before Cleveland's inauguration.
Cleveland asked the Senate to delay action until he had time to study the question. He sent a special commissioner, James H. Blount, to the islands to look into the circumstances surrounding the revolution. When Blount reported that the American minister in Hawaii had cooperated with the rebels and that the native population appeared to oppose the new government, Cleveland withdrew the treaty.
Once again Cleveland had taken an "unpopular" stand as a matter of principle, and once again his political courage paid off. Most Americans may have favored the idea of expansion into the Pacific, but they accepted the president's reasoning that it was wrong to overthrow the Hawaiian government in order to do so. One editor described the so-called revolution as an example of "the cheat-your-washerwoman style of diplomacy."
Cleveland's second important diplomatic foray was of a far different character. For many years the boundary between Venezuela and the South American colony of British Guiana had been in dispute. The British government, insisting that there was no substance to the Venezuelan claim, refused to submit the case to arbitration, despite somewhat sporadic pressure to do so by the United States. The territory in question was an almost uninhabited jungle, but when gold was discovered there, it suddenly became important—in part because pressure for coining silver in the United States might ease if the world supply of gold were significantly increased.
In any case, in 1894 and 1895 the Cleveland administration was taking an increasingly stern tone in its communications on the subject with Great Britain. By early 1895 these messages included such phrases as "palpably unjust" and "call a halt." Finally, in July 1895, Cleveland authorized the dispatch of a note drafted by Richard Olney, who was then secretary of state. This note warned that if Britain took or held any territory that was rightfully part of Venezuela, the United States would consider that act a violation of the Monroe Doctrine. If Britain refused to arbitrate the dispute, Cleveland hinted, the United States might well declare war.
The tone of this message was particularly offensive, but the British government was neither offended nor moved by it. The idea of a war between the United States and Great Britain over a relatively minor piece of South American real estate seemed preposterous. The British delayed answering the note until November and then flatly refused arbitration. They denied that the Monroe Doctrine gave the United States any special interest in the matter.
No president could accept such a slap in the face, least of all one like Cleveland. He therefore took the even more extraordinary step of asking Congress for an appropriation to finance an American investigation to determine the proper boundary between Venezuela and British Guiana. After that had been done, the United States would "resist by every means in its power as a willful aggression . . . the appropriation by Great Britain of any land . . . we have determined of right belongs to Venezuela."
Despite its boldness, this strategy was really quite shrewd. No American superpatriot could have asked for a stronger response. Yet by calling for an investigation, Cleveland was postponing indefinitely the possibility of having to enforce his threat. The affair "cannot become serious for some time," one British official noted.
Nevertheless, the threat was there, and faced with it, the British backed down. Obviously, they had not taken Cleveland's original blustering to heart, in part because they had interpreted it as designed primarily for domestic purposes—an attempt to curry favor among Irish-American voters. When they realized that the president was not bluffing, they agreed to arbitration of the boundary dispute.
In the end the affair had a happy resolution for both the United States and Great Britain, though not for Venezuela, because the arbitration tribunal awarded nearly all the disputed territory to Britain. Cleveland, as his biographer Allan Nevins wrote, had been "determined to get a prompt settlement of the question in harmony with his principles of justice and his interpretation of the Monroe Doctrine, and by his smashing blow on the table he got it." The British learned that they must take the United States seriously as a world power; and the Americans, sobered by the thought of an Anglo-American war, ceased to practice so blithely the political sport known as twisting the British lion's tail. Secretary Olney, with Cleveland's approval, was soon mentioning "our inborn and instinctive English sympathies" in communications with British officials.
Whether or not Cleveland took the position he did on the Venezuela boundary in hopes of restoring his political fortunes and papering over the split that had developed in his party over the silver issue is a question still in dispute among historians. If he did so, the tactic failed. By early 1896 his adamant stand against any plan for inflating the currency was rapidly causing him to lose control over his own party. The prolonged depression, the worst the nation had suffered up to that point, made things difficult for the party in power to begin with. But southern and western Democrats, in debt and suffering heavy losses as the prices of farm products sank lower and lower, were turning to leaders who were calling for the free coinage of silver.
The more strident this call, the more determined Cleveland was to resist it. "The line of battle is drawn between the forces of safe currency and those of silver monometallism," he said. He could draw such a line, but he could not hold it. In July the Democrats nominated Willam Jennings Bryan for president and adopted a campaign platform calling for the free coinage of silver.
The Republicans nominated William McKinley and came out squarely for the gold standard. So profound was Cleveland's opposition to free silver that he preferred to see McKinley elected. He heartily approved of the Bourbon Democrats' decision to form what they called the National Democratic party and nominate their own presidential candidate, Senator John M. Palmer of Illinois. Palmer was seventy-nine years old, and no one, least of all Palmer, expected him to do anything except draw off votes of diehard Democrats who opposed Bryan but who were unwilling to vote for a Republican.
Cleveland expressed relief "that the glorious principles of the party have found defenders who will not permit them to be polluted by impious hands." He made no public statement only because he feared that, if he did, he would "further alienate" the pro-silver Democrats in Congress and limit his effectiveness in dealing with other issues.
After McKinley's election—which, Cleveland said, gave supporters of "the cause of sound money . . . abundant reason for rejoicing"—Cleveland eagerly awaited the end of his term. His last significant act was to veto a bill excluding immigrants who could not read and write some language.