(Note: This is the text of a speech given by Mackinac Center President Lawrence W. Reed on Oct. 28, 2006 at the Durell Colloquium on "The Role of Markets and Governments in Pursuing the Common Good" at Hillsdale College. November marks the 113th anniversary of President Cleveland signing the repeal of the Sherman Silver Purchase Act of 1890, which is referenced below.)
In their assessments of American presidents, a preponderant share of historians and pundits generally give high grades to the ones who expanded the federal establishment, raised taxes and spending, created new bureaucracies for future generations of Americans to contend with, or tortured the Constitution until it confessed to powers the Founders never conceived for the national government. If he broke promises, misled or even lied to his fellow citizens to achieve these things, an "activist" president is likely to be forgiven and those sins excused as the eggs that had to be broken to make an omelet.
Even the presidents whose administrations were rocked by scandal and ineffectiveness are better known today than those who simply and efficiently ran honest governments that sought to limit the growth of centralized power.
Democrat Grover Cleveland, America’s 22nd and 24th chief executive, is one of the least known and most underappreciated of all 43. Historians and pundits usually rate him above average because of his personal character, but they rarely quote him or hold him up as a model president. They often dismiss his defense of the gold standard as quaint or intransigent. Sometimes the most that is said of him is that he weighed more than any president but Taft, sired a child out of wedlock, and was the only man ever elected to nonconsecutive terms as president, in 1884 and 1892.
In my estimation, Cleveland deserves much better. His stance on the most critical economic issue of his second term — the integrity of the nation’s currency — should earn him lasting status as a president wise enough to know what was right and courageous enough to stick by it.
To best appreciate Cleveland and his views on monetary affairs, or his views on any policy issue for that matter, one must recognize a cornerstone of his character. Honesty was his only policy. It was the prism through which he saw the world and conducted his public life. He was known in his day as one of the most honest men in government, a trait that catapulted him from mayor of Buffalo, New York, to president of the United States in the space of four years, with a two-year term as governor of New York in between. When Joseph Pulitzer of The New York World endorsed him for the nation’s highest office in 1884, he declared four reasons to vote for him: "1. He’s an honest man. 2. He’s an honest man. 3. He’s an honest man. 4. He’s an honest man."
He didn’t shmooze and slither his way to political power through smoky backrooms; nor did he exercise power as if he loved it for its own sake.
As the son of a stern Presbyterian minister, Cleveland was raised to always say what he meant and mean what he said. He did not lust for political office and never felt he had to cut corners, equivocate, or flip-flop to get elected. He was so forthright and plain-spoken that he makes Harry Truman seem indecisive. His Pulitzer Prize-winning biographer Allan Nevins summed him up this way: "His honesty was of the undeviating type which never compromised an inch; his courage was immense, rugged, unconquerable; his independence was elemental and self-assertive. . . . Under storms that would have bent any man of lesser strength he ploughed straight forward, never flinching, always following the path that his conscience approved to the end."
Cleveland was a no-nonsense man. He saw attempts to secure special favors, privileges or subsidies from government as fundamentally dishonest. He opposed high tariffs not because he was a learned economist (he had no formal training in economics) but because he saw them as cynical abuses of the political process by the politically well-connected. In his view, taking from some and giving to others was not something an honest man in or out of government would ever do. Because he didn’t accept the notion that government and its purse should be up for grabs by the mob, he vetoed more bills than all previous presidents combined.
Cleveland even broke with the old practice of bloating the federal bureaucracy with political cronies. He maintained the highest standards in choosing the people who served around him, making appointments only when necessary and then, only of people whose character and qualifications were beyond reproach. The White House during his tenure was scandal-free, a model of propriety for the rest of the country. He had no enemies list.
In so many ways, Cleveland was a political oddity even for the Victorian times in which he served. Time and again he refused to do the politically expedient. As another Cleveland biographer, Alyn Brodsky puts it, "Here, indeed, was that rarest of political animals: one who believed his ultimate allegiance was to the nation, not to the party."
Honesty was the source of Grover Cleveland’s political convictions. It was dishonest, he felt, for the government to spend more than it had and send its bills to future generations. So he always worked to produce a balanced budget. He even felt it was dishonest for government to run a large surplus — "ruthless extortion," he called it — because it was a sign that government had taken more from the people than it needed.
It was dishonest, he believed, for government to steal from people by inflating the currency. So he made sure the dollar was "as good as gold." It was dishonest, he argued, for government to pay silver miners twice what their metal was worth in the open market, so he opposed the silverites of his day. It was dishonest, he said, for government to think it could spend money better than the people who first earned it. So he cut taxes. It was dishonest, he argued, to stifle competition and consumer choice by restricting imports. So he fought to reduce tariffs. All of these positions, I might add, represent ingredients needed to ensure fiscal integrity in government. Indeed, he once asserted categorically that "Patriotism is no substitute for a sound currency."
Many a politician was skewered by famed commentator H. L. Mencken. He reserved his rare praise for a very few. One of them was Grover Cleveland, about whom Mencken wrote an essay entitled, "A Good Man in a Bad Trade." He was, by all accounts, as utterly uncorrupted and incorruptible when he left office as he was when he first assumed it. "Public office is a public trust" was an original Cleveland maxim.
Regarding Cleveland’s essential honesty, have I belabored the point? I don’t believe so. It’s the trait that explains why and how he dealt with all policy matters, including the focus of this paper — monetary policy. To put his actions in context, it is necessary to first provide some background.
No crisis of the Cleveland presidencies exceeded the magnitude of the financial panic that gripped the nation at the start of his second term in 1893, and which presaged a depression that still lingered when he left office in March 1897. Charles Albert Collman observed that "Money trouble was the manifest peculiarity" of the period. Indeed, a breakdown of the monetary system and national bankruptcy were narrowly averted within weeks of Cleveland’s assumption of office in March 1893.
In the October 1893 North American Review, Charles S. Smith offered a cogent analysis with which I completely agree. He wrote, "I deem it proper at the outset to state that the recent panic was not the result of over-trading, undue speculation or the violation of business principles throughout the country. In my judgment it is to be attributed to unwise legislation with respect to the silver question; it will be known in history as ‘the Silver Panic,’ and will constitute a reproach and an accusation against the common sense, if not the common honesty, of our legislators who are responsible for our present monetary laws."
How could this be? Wasn’t this the era of laissez faire? Wasn’t government a tiny, insignificant corner of American life, an innocent bystander as capitalists and market forces directed the national economy? To be sure, government was much smaller than it is today, but from the days of George Washington, the federal government and to a lesser degree the state governments have been involved in monetary affairs. Article I, Section 8 of the Constitution granted Congress the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures." In the century preceding 1893, Congress experimented with two central banks, a national banking system, laws regulating so-called "wildcat banks," paper money issues, legalized suspension of specie payments, and fixed ratios of gold and silver.
Long before, gold and silver rose to prominence as the predominant monies of the civilized world largely through a process of natural selection in the marketplace of exchange. Both circulated as money, though gold was (and remains) far more valuable. The market ratio between the metals was roughly 15½ (15½ ounces of silver trading for 1 ounce of gold) in the early years of the Republic. Gold was preferred for large transactions and silver for small ones. The free market had established "parallel standards" of gold and silver (a price of one reckoned in terms of the other), each freely fluctuating within a narrow range in relation to market supplies and demands. But when government decided it would officially fix the price of one in terms of the other, and keep it there in spite of divergences with the real value of the metals in the open marketplace, monetary disturbances arose.
Under the direction of Alexander Hamilton, the federal government adopted an official policy of bimetallism and a fixed ratio of 15 to 1 in 1792. If the market ratio had been the same and had stayed the same for as long as the fixed ratio was in effect, then the fixed ratio would have been superfluous. But the market ratio, like all market prices, changed over time as supply and demand conditions changed. As these changes occurred, the fixed bimetallic ratio became obsolete and "Gresham’s Law" came into operation.
Gresham’s Law holds that "bad money drives out good money" when government fixes the ratio between the two circulating monies. "Bad money" refers to the money which is artificially overvalued. Gresham’s Law began working soon after Hamilton fixed the ratio at 15 to 1, as the market ratio stood at, roughly, 15½ to 1. This meant that if one had an ounce of gold, one could get 15½ ounces of silver on the bullion market, but only 15 ounces for it at the government’s mint. Conversely, if one had 15 ounces of silver, one could get an ounce of gold at the mint but less than an ounce on the market. So silver flowed into the mint and was coined while gold disappeared, went into hiding, or was shipped overseas. The country was thus put on a de facto silver standard, even though it was the declared policy of the government to maintain both metals in circulation.
In 1834 Congress adjusted the ratio to 16 to 1, but the market ratio had not changed much. This time gold was over-valued and silver under-valued. Gold flowed into the mint, silver disappeared from general circulation, and the country found itself increasingly on a de facto gold standard.
With the end of the Civil War and paper money inflation in 1865, and subsequent readjustment in the depression of 1873, the story of the Panic of 1893 begins to unfold. It opens with the inflationist agitation of the 1870s.
In 1875, the newly-formed National Greenback Party called for currency inflation through the issuance of paper money tied, at best, only minimally to the stock of specie. The proposal attracted widespread support in the West and South where many farmers and debtors joined associations to lobby for inflation, knowing that a reduction in the value of the currency unit would alleviate the real burden of their obligations. Most also believed that such a policy would "lubricate" the economy and thereby generate a more broadly-based and lasting prosperity. An eloquent refutation of the idea that the printing press can create economic wealth can be found in the words of Benjamin Bristow, President Grant’s Secretary of the Treasury. In his annual message of 1874, Bristow employed the same arguments that President Grover Cleveland would advance a decade later:
The history of irredeemable paper currency repeats itself whenever and wherever it is used. It increases present prices, deludes the laborer with the idea that he is getting higher wages, and brings a fictitious prosperity from which follow inflation of business and credit and excess of enterprise in ever-increasing ratio, until it is discovered that trade and commerce have become fatally diseased, when confidence is destroyed, and then comes the shock to credit, followed by disaster and depression, and a demand for relief by further issues…The universal use of, and reliance on, such a currency tends to blunt the moral sense and impair the natural self-dependence of the people, and trains them to the belief that the Government must directly assist their individual fortunes and business, help them in their personal affairs, and enable them to discharge their debts by partial payment. This inconvertible paper currency begets the delusion that the remedy for private pecuniary distress is in legislative measures and makes the people unmindful of the fact that the true remedy is in greater production and less spending, and that real prosperity comes only from individual effort and thrift.
The greenback inflation of the Civil War era left Americans suspicious of paper money expansion on behalf of any special interest group. In 1875, Congress passed the Specie Resumption Act, declaring it the policy of the government to redeem the Civil War greenbacks at par in gold on Jan. 1, 1879. It was regarded from this point on that in order to protect the redemption of the greenbacks, the Treasury would be obliged to maintain a minimum of $100 million in gold on reserve. The most that the inflationists secured was pledge that the government would not cancel greenbacks once redeemed, but to reissue them so that the total number outstanding would remain the same.
The attention of the inflationists was then directed at silver, though Congress ratified the obvious by demonetizing it in 1873 that the inflationists would later denounce as the "Crime of ’73." Robert F. Hoxie, in the Journal of Political Economy in 1893, wrote that the inflationists focused their demands on a silver inflation as a matter of expediency. "They had no love for silver as such," revealed Hoxie, "but it was the cheapest and most abundant substance for which they could gain support, its use would result in more legal tender currency, and its metallic character would in a measure shield the advocates from being stigmatized as inflationists."
The inflationists became "silverites" and their rallying cry was "Free Silver at 16 to 1." Their influence was sufficient to secure passage of the Bland-Allison Act in February, 1878 — the first of the acts putting the government in the business of purchasing quantities of silver for coinage. The Act provided for the purchase by the Treasury of not less than two, nor more than four, million dollars’ worth of silver bullion per month, to be coined into dollars each containing 371¼ grains of pure silver (which coincided with the lawful ratio of 16 to 1, since the gold dollar still contained 23.22 grains of pure gold). These dollars were to be legal tender at their nominal value for all debts and dues, public and private. Paper silver certificates were to be issued upon deposit of the bulky silver dollars in the Treasury.
The free silver forces were dissatisfied with Bland-Allison because it did not go far enough — it did not provide for the free and unlimited government purchase and coinage of silver at 16 to 1. The only silver to be coined would be the two to four million dollars’ worth that the government purchased each month and while the law was in effect, successive Treasury Secretaries rarely bought more than the minimum amount.
Silver producers reaped huge dividends from the law. The market price of silver had begun a long-term decline in the 1870s. Securing a government pledge to buy silver at a higher price than could be obtained in the free market was an obviously lucrative arrangement. As the market ratio of silver to gold steadily rose above 16 to 1, the profit potential for silver producers and other holders of silver became enormous.
Bland-Allison was passed over the veto of President Rutherford B. Hayes. The president noted that minting silver coins at the ratio of sixteen ounces of silver to one ounce of gold would drive the yellow metal out of circulation. The decline of the market price of silver had raised the market ratio at the time of passage of the act to nearly 18¼ to 1. If the mint offered to pay one ounce of gold for just sixteen ounces of silver, then only silver would be minted and the country would be on the road back to a de facto silver standard. In Hayes’s belief, "A currency worth less than it purports to be worth will in the end defraud not only creditors, but all who are engaged in legitimate business, and none more surely than those who are dependent on their daily labor for their daily bread."
In an article in the June 1978 issue of The Freeman, this author observed: "When money . . . [governed by the] market, its supply is restricted by its scarcity and costs of production. Its value is thus preserved. The declining price of silver on the free market would have erased the profitability of many mines and hence would have prevented a drastic increase in silver currency. But when the government stepped in and bought large quantities of silver bullion for coinage, and paid more for it in gold than was offered in the market, it forced the quantity of the white metal in circulation to exceed its true demand." It also gradually drained the Treasury of its gold reserve, threatening the required minimal reserve of $100 million.
The silverites achieved their political zenith with the Sherman Silver Purchase Act of 1890, which replaced the Bland-Allison Act. The Sherman Act, passed under President Benjamin Harrison, who served a single term between the two Cleveland terms, forced the Treasury to buy 4.5 million ounces of silver per month, or roughly twice the amount the Treasury had been purchasing under the previous law. Payment was to be made in a new legal tender paper currency, the "Treasury Notes of 1890," redeemable in either gold or silver at the discretion of the Treasury. The 4.5 million ounces of silver mandated by the law represented almost the entire output of American silver mines. This continuing subsidy to silver producers force-fed the American economy with substantial additions to the paper and silver money supply and jeopardized obligations that called for payment of debts in gold.
Cleveland, of course, inherited Bland-Allison when he served as president the first time and then Sherman in his second term. He had warned as a candidate in 1884 that silver subsidies and effusions of paper were harmful and inflationary. In a message to Congress in December 1885, nearly eight years before the silver laws yielded a massive panic and depression, he gave fair warning:
Those who do not fear any disastrous consequences arising from the continued compulsory coinage of silver as now directed by law, and who suppose that the addition to the currency of the country intended as its result will be a public benefit, are reminded that history demonstrates that the point is easily reached in the attempt to float at the same time two sorts of money of different excellence when the better will cease to be in general circulation. The hoarding of gold which has already taken place indicates that we shall not escape the usual experience in such cases.
The pro-silver, anti-gold policy of the Bland-Allison and Sherman Acts was at war with the drift of monetary developments worldwide. Germany, immediately after the Franco-Prussian War in the early 1870s, had withdrawn her silver from circulation and adopted a single gold standard. France, Belgium, Switzerland, Italy, and Greece followed by restricting then eliminating silver coinage altogether. Scandinavian countries embraced a gold standard by 1875. In that year, the government of Holland closed its mints to the silver. A year later, the Russian government suspended the coinage of silver except for use in the Chinese trade. Austria-Hungary ceased to coin silver for individuals in 1879, except for a special trade coin. This rapid worldwide movement from silver to gold prompted the United States Treasury Department in 1879 to note that "since the monetary disturbance of 1873-78 not a mint of Europe has been open to the coinage of silver for individuals." Yet the United States government, at a time when the value of silver was falling dramatically and when the nation’s trading partners were abandoning silver, stepped in to promote silver against gold at the unrealistic ratio of 16 to 1!
Silver’s depreciation in the marketplace was dramatic. Consider the annual average market value of the 371¼ grain silver dollar. In 1878, the bullion value of that much silver was about 89 cents; by 1890 it dropped to 81 cents; by 1893, it was worth 60 cents; and by 1895 it plummeted to a mere 50 cents. A climate of uncertainty permeated American finance, especially after the Sherman Act in 1890. Prominent economist J. Laurence Laughlin wrote at the time, "No one could know that contracts entered into when a dollar stood for 100 cents in gold might not be paid off in silver which stood for 50 cents on a dollar. That was the predicament in which every investor found himself who had an obligation payable only in ‘coin’ and not in gold."
In an article entitled "Thou Shalt Not Steal," Isaac L. Rice penned an eloquent repudiation of the government’s silver coinage policy. His argument evoked the same moral perspective from which Grover Cleveland argued in making his case to the Congress for repeal of silver legislation:
Of the various classes of crime that come under the category of theft none is more odious and despicable than the use of false weights and measures. Stamping a coin containing 371¼ grains of silver as of the weight of one hundred cents, while in truth it is of the weight of fifty-three cents, is a falsification of weights morally not distinguishable from stamping any other kind of weight as of two pounds which in truth is only of one pound. Only the methods by which raud is to be made are different. The thievish individual depends upon secret deceit, the qualities of the sneak thief; the Government on coercion, the qualities of the highwayman.
First the Bland-Allison Act and then the Sherman Act caused a drain of gold from the Treasury and an inflow of silver. The Treasury’s declared policy of redeeming greenbacks and other government obligations in gold was immediately threatened. To make matters worse, the disappearance of gold from circulation and from the reserves of the nation’s banks threatened the sanctity of all contracts made in gold. Professor Laughlin observed that no producer "could feel so entirely sure of the standard of payments that he could, without fear or hesitation, make his estimates a few years ahead."
The confidence of foreigners in the American economy was also undermined. European investors expected devaluation of the dollar at the least, with complete financial collapse predicted by some. Capital flowed out of the country as overseas investors sold American securities. Even Americans began exporting funds for investment in Canada, Europe, and some of the Latin American countries, all of which seemed stronger than the United States.
In 1910 the National Monetary Commission requested O. M. W. Sprague to report on the nation’s finances since the Civil War. In his authoritative report, History of Crises Under the National Banking System, Sprague found that from January 1891 to June 1893, "there was an increase of $68 million in the estimated amount of money in circulation." The effect on bank credit was typical of any "easy money" policy: "During 1892 the low rates for loans were a clear indication that the banks would have been glad to lend more than the demand of borrowers made possible." The classic symptoms of currency inflation were evident, a situation which Sprague argued was unsustainable. He felt that "a situation which demands increasing credits to prevent collapse is certain to arrive at that state in any case, and delay can hardly be expected to improve matters."
The American economy, drugged by the easy money policy of the Sherman Act, turned up at first. Unemployment, which had been about 5 per cent in 1890 and 1891, fell to 3.7 percent in 1892. Crop failures in Europe coupled with exceptional harvest here in the United States boosted agriculture. President Benjamin Harrison announced, "There has never been a time in our history when work was so abundant, or when wages were as high."
Harrison’s boast was naïve and myopic. The boom was destined to be short-lived. The twin evils of inflation and uncertainty as to the fixity of the monetary standard were laying the foundation for a major blow to the nation’s commerce.
Late in January 1893, consumer prices began to recede. Price declines across the board foreshadowed a general cyclical contraction. "General business activity," according to Charles Hoffman, "suffered a severe check that was recognized at once in the business journals. The stock market gave ominous signs of falling prices before any sharp drop took place." Banks became apprehensive over the Treasury’s loss of gold (as well as their own) and began to contract credit. Loans declined almost 10 per cent from February to the beginning of May. One observer in the February, 1893 issue of Forum spoke of "a dangerous state of uneasiness in financial circles," and warned that "Fear is an element in monetary conditions which may be as serious in its effects as reason." The following three paragraphs are drawn from my previously-cited June 1978 Freeman article:
A dramatic event took place on February 20. The Philadelphia and Reading Railroad, a chronic invalid which nonetheless had paid its usual bond dividend the month before, collapsed into bankruptcy. "When the end came," wrote Rendigs Fels, "it had floating debt of $18.5 million compared to cash and bills receivable of little more than $100,000." The failure of the Philadelphia Reading, a firm supported by powerful Wall Street financial houses, caused many businessmen to question the conditions of other railroads and the financial institutions behind them.
When President Harrison left town and Cleveland assumed office on March 4, 1893, the Treasury’s gold reserve stood at the historic low of $100,982,410 — an eyelash above the $100 million minimum deemed necessary for protecting the redemption of greenbacks. Merchants increasingly refused to accept silver in violation of the law and ugly threats of strikes echoed in the nation’s factories.
On April 22 the Treasury’s gold reserve fell below the $100 million minimum for the first time since the resumption of specie payments in 1879. Bankers and investors realized that the Treasury could not indefinitely continue drawing upon the remaining gold reserve to redeem the Treasury notes of 1890 in the attempt to maintain their value. Banks had to break their easy money habits and began calling in their loans at a frantic pace. More and more investors began to fear that before securities could be sold and realized upon, depreciated silver would take the place of gold as the standard of payments.
The Panic of 1893 got underway in earnest when the Treasury’s minimum gold reserve of $100 million was breached in late April, in spite of heroic efforts by the Cleveland administration to staunch the outflow of gold and shore up those reserves. On May 4, when a stock market favorite, National Cordage Trust, fell into receivership, factories throughout America closed their gates and went quickly into bankruptcy at a feverish pace. Unemployment rocketed to 9.6 percent before year-end, nearly three times the rate for 1892. In 1894, an estimated 16.7 percent of industrial wage earners were out of work. In July 1893, The Commercial and Financial Chronicle laid bare the problem:
The country is struggling with disturbed credit and the general derangement of commercial and financial affairs which a forced and over-valued currency has developed. . . . Nothing but corrective legislation which shall remove the disturbing law, can afford any measure of real relief.
With the economy in severe depression, the necessity for eliminating the silver legislation which precipitated the tragedy became increasingly apparent. Enter President Grover Cleveland. He demanded a special session of Congress to repeal the Sherman Silver Purchase Act of 1890. "The present perilous condition," he asserted, "is largely the result of a financial policy which the Executive branch of the government finds embodied in unwise laws which must be executed until repealed by Congress."
Moreover, the president made plain, the absence of monetary order was most hurtful to ordinary workers. In an Aug. 8 message to Congress, he wrote:
The people of the United States are entitled to a sound and stable currency and to money recognized as such on every exchange and in every market of the world. Their Government has no right to injure them by financial experiments opposed to the policy and practice of other civilized states, nor is it justified in permitting an exaggerated and unreasonable reliance on our national strength and ability to jeopardize the soundness of the people’s money.
This matter rises above the plane of party politics. It vitally concerns every business and calling and enters every household in the land. There is one important aspect of the subject which especially should never be overlooked. At times like the present, when the evils of unsound finance threaten us, the speculator may anticipate a harvest gathered from the misfortune of others, the capitalist may protect himself by hoarding or may even find profit in the fluctuation of values; but the wage-earner — the first to be injured by a depreciated currency and the last to receive the benefit of its correction — is practically defenseless. He relies for work up on the ventures of confident and contented capital.
The ensuing debate in the Congress was a contest that pitted the forces of sound, honest money led by Cleveland against the advocates of inflation. When even the Democratic Speaker of the House told Cleveland he would have to vote against repeal or lose his next election, Cleveland shamed him into a change of mind by staring him in the face and thundering that the Speaker’s continuance in office was not worth one second of damage to the cause of a sound currency. The repeal bill passed the House on Aug. 28. Cleveland’s forceful leadership prompted the Senate to do the same later in the fall, on which occasion The New York Times declared, "The Treasury is released this day from the necessity of purchasing a commodity it does not require, out of a money chest already depleted, and at the risk of dangerous encroachment upon the gold reserve." The Times gave its highest praise to Cleveland because he and his administration "stood like a rock for unconditional repeal." The president’s "enlightened conscience" and "iron firmness" had carried the day.
An indispensable pre-condition to recovery was accomplished with the repeal of the Sherman Silver Purchase Act, though the road wasn’t quick and easy. Labor strife combined with continued agitation for renewed silver subsidies and paper money issues deterred foreign and domestic investors for four more years.
In the midst of depression, renewed financial crisis gripped the country in early 1895 when drains on the Treasury’s gold reserve threatened the government’s financial solvency once again. As many in Congress called for resumption of paper and silver inflation, Cleveland worked out a controversial deal with Wall Street bankers to shore up the government’s gold reserves. As in the earlier crisis of 1893, Cleveland believed that honesty was the best policy; any attempts to default on obligations to pay and to pay in gold were to be uncompromisingly resisted. He never flinched, in spite of the demagogues who tried to paint him as a tool of greedy bankers.
Cleveland won the economic argument for sound money, though his own party deserted him on the issue. Not until 1897 did depression give way to prosperity, after silverite Democrat William Jennings Bryan was defeated by gold standard Republican William McKinley the previous year. The Gold Standard Act of 1900 essentially solidified a stable gold standard and before he died in 1908, Cleveland achieved a remarkable degree of popular appreciation for his staunch defense of sound money.
Grover Cleveland’s name ought to be not merely associated with sound currency; it should be synonymous with it. He understood the concept from the beginning, stared down the forces of opposition, and never wavered in his determination. For him, sound currency was more than a policy. It was a commitment to honesty. At a time when America required strong leadership for a strong currency, it got it in the person of Grover Cleveland.
Lawrence W. Reed is president of the Mackinac Center, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.
 Allan Nevins, Grover Cleveland: A Study in Courage (New York: Dodd, Mead & Company, 1948), pp. 4.
 Alyn Brodsky, Grover Cleveland: A Study in Character (New York: St. Martin’s Press, 2000), p. 4.
 Second Annual Message, December 1886.
 Charles Albert Collman, Our Mysterious Panics, 1830-1930 (New York: Greenwood Press, 1968), p. 88.
 Charles S. Smith, "The Business Outlook," North American Review, October 1893, p. 386.
 James A. Barnes, John G. Carlisle, Financial Statesman (New York: Dodd, Mead & Company, 1931; reprint ed., Gloucester, Mass.: Peter Smith, 1967), pp. 32-33.
 Robert F. Hoxie, "The Silver Debate of 1890," Journal of Political Economy (1892-93): p. 561.
 Herman E. Kroos, ed., Documentary History of Banking and Currency in the United States, vol. 2 (New York: Chelsea House Publishers, 1969), pp. 1921-1922.
 Lawrence W. Reed, "The Silver Panic," The Freeman (June 1978), p. 371.
 First Annual Message, December 1885.
 Kroos, p. 1934.
 J. Laurence Laughlin, The History of Bimetallism in the United States, 4th ed. (New York: D. Appleton and Co., 1900), p. 274.
 Isaac L. Rice, "Thou Shalt Not Steal," Forum 22 (September 1896-February 1897): p. 1.
 Laughlin, p. 269.
 O. M. W. Sprague, History of Crises Under the National Banking System (Washington, D.C.: Government Printing Office, 1910; reprinted., New York: Augustus M. Kelley, 1968), p. 158.
 Robert Sobel, Panic on Wall Street: A History of America’s Financial Disasters (New York: Macmillan Co., 1968), p. 243.
 Charles Hoffman, The Depression of the Nineties: An Economic History, Contributions in Economics and Economic History, no. 2 (Westport, Conn.: Greenwood Press, 1970), p. 107.
 Geo. Fred Williams, "Imminent Danger From the Silver Purchase Act," Forum 14 (September 1892-February 1893): p. 789.
 Reed, p. 374.
 Hoffman, p. 229.
 "Congress to Meet August 7," New York Times, 1 July 1893, p. 1.
 Special Session Message, August 8, 1893.
 "Need Buy No More Silver," New York Times, 2 November 1893, p. 1.