The Cleveland administration approached the election of 1896 badly damaged by the results of 1894. In that election Republicans and even a few Populists had routed Democrats across North and West. In 24 states no Democrat won federal office. In retrospect, historians have called 1894 a realigning election, one in which voters ended the Gilded Age's close political competition with a resounding decision in favor of the Republican Party.
Grover Cleveland's economic policies had largely demoralized his party. A conservative Democrat devoted to laissez faire and the gold standard, Cleveland alienated potential Democratic voters in the South and West who applauded the Populist Party's plans for new government intervention on behalf of farmers and other debtors.
Illinois reflected the widening division in the party. Governor John Peter Altgeld established a friendly policy toward workers and unions with his Haymarket pardons and refusal to call out state troops against the Pullman strikers. But President Cleveland acted quickly on behalf of employers to quash the strike with a court injunction and regular Army forces.
In 1895 Altgeld jumped on board the free silver bandwagon by coming out in favor of the white metal's coinage at a state silver convention in Springfield. At this gathering the Illinois native William Jennings Bryan transfixed the audience with a speech in favor of free silver. Bryan had been born in Salem and educated at Illinois College in Jacksonville before migrating west to Nebraska and a career as a journalist. Now he toured the country lecturing in favor of currency reform.
The economic reverses of 1893 had turned into a major depression that pushed the silver question and other economic reforms to the forefront of political debate. In many areas, including Chicago, unemployment neared 20%. Many farmers and other debtors struggled to pay mortgages and other obligations as dollars backed by a limited gold supply became relatively more valuable in an expanding economy. In many areas large numbers of women and children entered the workforce to help support their families; in the late 1890s nearly 20% of children between ten and fifteen went to work. Often these new entrants to the job market found employment because they worked for nearly half the wages of men.
The depression that began in 1894 turned the election two years later into a pivotal event in which American voters decided their future course. Would they ask the federal government to take up a larger role in regulating an industrial economy and providing for social welfare, or would they endorse the Republican order of high tariffs, veterans' pensions and Pullman-style welfare capitalism?
Activists like Altgeld and Florence Kelley clearly envisioned a larger role for state and federal governments in the oversight and regulation of industrial life. Populists called for the federal government to reform its currency policy in dramatic terms on behalf of debtors, sponsor large storage facilities (or sub-treasuries) for farmers and, in some cases, nationalize the railroads. Republicans responded by insisting that the gold standard preserved the savings that hard-working people had accumulated, and as such became a moral obligation. Likewise, a high tariff allowed employers to earn larger profits, pay higher wages and initiate private welfare programs for workers. 1
Republicans nominated William McKinley of Ohio at their St. Louis convention in the summer of 1896. McKinley had served in the House of Representatives, and became the high tariff's principal proponent. But the Democratic Party's shocking successes of 1892 turned him out of the House. Winning election as Governor of his state, McKinley began to lay the groundwork for a presidential campaign with the sponsorship and management of the Ohio industrialist Marcus Hanna. In their convention Republicans expeditiously addressed the concerns of a few free-silver delegates and settled on the gold standard. But most expected to run a campaign based upon McKinley's familiar support of the high tariff.
When the Democrats gathered at Chicago their nominee was not nearly so certain as the popular McKinley. In a convention hosted by Governor Altgeld, William Jennings Bryan succeeded in winning a coveted spot as the last speaker on the subject of free silver. He transfixed the assembled delegates with a speech he had been honing for months as an itinerant lecturer. He knew the arguments and metaphors that resonated with his audiences. Bryan's "Cross of Gold" speech mixed a familiar economic arguments with powerful religious metaphors, and stole the party's nomination away from seasoned politicians. [For audio recording and transcript of Bryan repeating this speech in 1921, please visit http://www.historicalvoices.org/earliest_voices/bryan.html].
Bryan's nomination caught Populists by surprise. They had hoped to nominate a free silver candidate themselves, and now found themselves without a place at the political table. At their convention the Populist delegates proposed to nominate Bryan, but with their own Vice-Presidential nominee. Democrats dismissed the plan, and doomed the Populist Party to oblivion. Without a clear issue differentiating its candidates from the two major parties, the Populist Party ceased to exist as a political organization. 2
Marcus Hanna raised millions of dollars for McKinley's campaign by appealing to eastern industrialists uneasy about the prospect of an inflated currency and a regime friendly to workers. While McKinley delivered dozens of speeches from his front porch in Canton, Ohio and Hanna reprinted them in Republican newspapers around the nation, Bryan traveled the country delivering stemwinding orations. But Bryan's campaign could not match Hanna's organization and resources, and many urban workers decided to cast their lot with the Republicans.
McKinley and the Republicans swept the election of 1896, running particularly well in the industrial Northeast, mid-Atlantic and Midwest. Despite his appeals to urban labor, Bryan only found support in rural areas friendly to the Farmer's Alliance and Populists. John Peter Altgeld also went down to defeat in 1896, although he ran ahead of Bryan in an Illinois turned decisively Republican. His Haymarket pardons had marked Altgeld for Republicans' special ire, and they redoubled efforts to unseat him, with the expected results. 3
In the depression of the mid-1890s many businesses faced bankruptcy. Financiers like J.P. Morgan and E.H. Harriman stepped in to buy them at discounted prices, and in many cases reorganized entire industries through the formation of arrangements that Americans came to call "trusts." In a trust arrangement a single, central holding company often held the stock of many smaller companies "in trust," and effectively coordinated their activities. These firms often ceased to compete with one another by increasing production or cutting prices.
Trust arrangements helped to end much of the ruinous competition that had sent prices and profits plummeting in 1893. As in the case of the1870s, rapid technological advances allowed American industrialists to increase their productive capacity at a far greater rate than the market's ability to consume their products. Their warehouses bulging with unsold stock, many firms responded by slashing prices again and again in a downward competitive spiral. By managing production and ending price competition in many sectors, the trusts began a new era of private economic policymaking and coordination in America.
But the trusts did not bode well for labor. While many of the large corporations took up new charitable and welfare programs, and even came to accept a circumscribed role for labor unions, they zealously retained managers' control of production processes and work rules. Increasingly industrial corporations used new technology to reduce their dependence upon skilled workmen. The result was a new workforce increasingly dominated by unskilled and semiskilled labor. These developments dramatically reduced workers' bargaining leverage in contract negotations. 4
The Supreme Court added its imprimatur to the new arrangements by delivering a narrow definition of interstate commerce, in 1895's Knight Sugar decision, that effectively prohibited the federal government from blocking trust formation in manufacturing. As the Gilded Age drew to a close the proponents of new civilization built and largely administered by private businessmen appeared to have won the day. 5
Despite the Populists' decisive defeat, new political currents swirled around the "System of '96." Within the industrialists' appeal to technology, expertise and efficiency there lay a new critique of an often-corrupt party politics. In 1896 Chicagoans founded the Municipal Voters' League, which investigated aldermen for graft and malfeasance, and succeeded in removing many of them. Many of the social movements that had elected John Peter Altgeld, founded women's political reform clubs, and contributed to the success of Hull House also continued to organize themselves for another attempt to bring the federal government to the defense of workers, women and children. In the future these movements, widely diverse yet somehow related in their attempt to define and forge a modern America, marked a period that Americans came to call the Progressive Era.
Sklar, Kathryn K. Florence Kelley and the Nation's Work. New Haven: Yale University Press, 1995.
2. Goodwyn, Lawrence. Democratic Promise: The Populist Moment in America. New York: Oxford University Press, 1976.
See "1896: Chronology of the Campaign" at http://iberia.vassar.edu/1896/chronology.html.
4. Montgomery, David. The Fall of the House of Labor. New York: Cambridge University Press, 1987; Lamoreaux, Naomi. The Great Merger Movement in American Business, 1895-1904. New York: Cambridge University Press, 1985.
5. McCurdy, Charles. "The Knight Sugar Decision of 1895 and the Modernization of American Corporation Law, 1869-1903." Business History Review 53 no. 3 (1979): 304-343.