By the time of the presidential election of 1884, the people needed no Marcellus to impress upon them that there was something rotten in the state of their national financial affairs. The nation was in the midst of a business depression, the balance of payments was heavily unfavorable, the silver currency could not be forced into circulation, the national banking system was not fulfilling its purposes, a surplus revenue was piling up in the national Treasury, and the tariff was unsatisfactory both to protectionists and to free traders. Yet the platforms of both parties were practically identical on monetary and financial issues, which were scarcely discussed during the campaign. If any issue was present, it was the issue of honesty and businesslike management in government.
Once elected, the Cleveland administration accomplished a great deal in reforming government administration, but it made little progress toward solving the basic financial problems. Economically, Cleveland believed firmly in laissez faire. His accomplishments and his failures, therefore, offered a good yardstick for measuring the success of the laissez-faire philosophy in the last decades of the nineteenth century.
Resurgence of the Silver Controversy. About a month before Cleveland's inauguration, monetary affairs reached a critical stage. As a result of the unfavorable trade balance, the flight of foreign capital, and the business recession, gold was flowing out of the Treasury at an increasing rate. At the same time a smaller proportion of customs duties were being collected in gold.1 Consequently, the Treasury's gold reserve was declining at the rate of $4 million to $5 million a month and was dangerously close to $100 million, the minimum deemed necessary to maintain specie payments.
Far from being, alarmed over the dwindling gold reserve, the inflationists of the West and the South, representing two-thirds of the Democratic party, tried to persuade Cleveland to support increased government silver purchases. On the other hand, the more conservative members of the party sought to impress upon him that, if the silver program were continued, the Treasury and the banks would most certainly have to suspend gold payments. As Abram Hewitt, chairman of the Ways and Means Committee, expressed it,
The stock of gold in the Treasury is being exhausted, and cannot be replenished, except through purchase, which will soon put gold to a premium--