The United States Since The Civil War by Charles Ramsdell Lingley

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It remained, however, for Chicago and the year 1894 to present one of
the most far-reaching, costly and complex labor upheavals that has ever
disturbed industrial relations in America. So ill understood at the
time were the real facts of the controversy that it is doubtful whether
it is possible even now to distinguish between truth and rumor in
regard to some of its aspects.

The town of Pullman, near Chicago, was the home of the Pullman Palace
Car Company, a prosperous corporation with a capital of $36,000,000. It
provided houses for its employees, kept up open stretches of lawn,
flower beds and lakes. In 1893 and 1894, when general business
conditions were bad, the Company reduced the wages of its workmen about
twenty-five per cent. A committee of the men asked for a return to
former rates, but they were refused, three members of the committee
were laid off, and the employees then struck. Late in June, 1894, the
American Railway Union, to which many of the workmen belonged, took up
the side of the men, and the General Managers' Association, comprising
officials of twenty-four roads entering Chicago, took the side of the
Company. Through the entry of the Union and the Association, the
relatively unimportant Pullman affair expanded to large proportions.
Violence followed; cars were tipped over and burned; property was
stolen and tracks ruined; and eventually the United States government
was drawn into the controversy.

Numerous complaints having reached Washington that the mails were being
obstructed and interstate commerce interfered with, President Cleveland
decided to send troops to Chicago. The Constitution requires that the
United States protect states against domestic violence on the application
of the legislature, or of the executive when the legislature is not
in session. Moreover the statutes of the United States empower the
President to use federal force to execute federal laws. The position
taken by the Governor of Illinois, John P. Altgeld, was expressed in
his telegram to President Cleveland protesting against the action of
the executive:

Should the situation at any time get so serious that we cannot
control it with the State forces, we will promptly and freely ask
for Federal assistance; but until such time I protest with all due
deference against this uncalled-for reflection upon our people,
and again ask for the immediate withdrawal of these troops.

The President replied that troops were being sent in accordance with
federal law upon complaint that commerce and the passage of the mails
were being obstructed. A somewhat acrimonious correspondence between
the Governor and the President resulted but the troops were retained
and assisted in bringing the strike to a conclusion.

The attitude of the courts, meanwhile, had brought up a serious
situation. On July 2 a "blanket injunction" was issued by the United
States District Court of Illinois and posted on the sides of the cars.
It forbade officers, members of the Union and all other persons to
interfere in any way with the operation of trains or to force or
persuade employees to refuse to perform their duties. Under existing
law, anybody who disobeyed the injunction could be brought before the
Court for contempt, and sentenced by the judge without opportunity to
bring witnesses and to be tried before a jury. When Eugene V. Debs, the
president of the Union, and other officers continued to direct the
strike they were arrested for contempt of court and imprisoned.[6]
With federal troops against them and their officers gone, the strikers
could hardly continue and gave up in defeat. The loss in property and
wages had already reached $80,000,000.

The apportionment of the blame for so appalling a controversy was not a
simple task. On the one hand, a writer in the _Forum_ declared that

The one great question was of the ability of this Government to
suppress insurrection. On the one, side was the party of lawlessness,
of murder, of incendiarism, and of defiance of authority. On the
other side was the party of loyalty to the United States.

But this was a superficial view. A commission of investigation
appointed by President Cleveland looked into the matter more deeply.
Its unanimous report made important assertions: the Pullman Company,
while providing a beautiful town for its employees, charged rents
twenty to twenty-five per cent. higher than were charged in surrounding
towns for similar accommodations, and the men felt a compulsion to
reside in the houses if they wished to retain their positions; when
wages were reduced, the salaries of the better paid officers were
untouched, so that the burden of the hard times was placed on the
poorest paid employees; there was no violence or destruction of
property in Pullman, and much of the rowdyism in Chicago, but not all
of it was due to the lawless adventurers and professional criminals who
filled the city at that time;[7] when various public officials and
organizations attempted to get the Company to arbitrate the dispute,
the uniform reply was that the points at issue were matters of fact and
hence not proper subjects for arbitration; and the Managers'
Association selected, armed and paid 3,600 federal deputy marshals who
acted both as railroad employees and as United States officers, under
the direction of the Managers.

In view of the amount of labor disturbance after the Civil War, it was
noteworthy that it attracted the interest of political parties to so
slight a degree previous to 1896. In general the national platforms of
the two large parties reflected an indefinite if not remote concern
with the welfare of the wage earner. It was urged, to be sure, by both
protectionists and tariff reformers that customs duties should be
framed with the welfare of the laborer in mind, but the sincerity of
this concern was sometimes open to question. The smaller parties, as
usual, were far less vague in their demands. The Labor Reformers in
1872 demanded the eight-hour day, for example; the Greenbackers had a
definite program for relief in 1880; the Anti-Monopolists in 1884 and
the Union Labor and the United Labor parties in 1888. By 1892 the great
parties found themselves face to face with a growing labor vote. The
labor planks in the two platforms of that year were strikingly similar.
Each called for federal legislation to protect the employees of
transportation companies, but looked to the states for the relief of
employees engaged in manufacturing. Neither the Socialist Labor party
nor the Populists, however, were greatly troubled by the question of
the proper distribution between state and nation of the responsibility
for the welfare of the wage earner. Both proposed definite action; both
urged the reduction in length of the working day. The Populists
condemned the use of Pinkertons in labor disputes and the Socialists
urged arbitration, the prohibition of child labor, restrictions on the
employment of women in unhealthful industries, employers' liability
laws and the protection of life and limb.

In brief, then, the situation of the wage-earning classes in the middle
nineties was becoming accurately defined. The strike as a weapon was
open to serious objections. The leaders of the two large parties had
given no evidence of an effective and immediate interest in labor
unrest. The other political parties were too small to afford chances of
success. If less reliance was to be placed upon the strike and more
upon political action, either a third party must be constructed or the
leadership in one of the old ones must be seized. When the conference
of labor officials met in Chicago and concluded that the Pullman strike
was lost, it issued an address to the members of the American Railway
Union advising a return to work, closer organization of the laboring
class and the correction of industrial wrongs at the ballot box. If
this advice should be taken, and if the wage earner should attempt to
control legislation for his economic interest, as the propertied class
had long been doing for its benefit, the struggle might be shifted to
the political arena. The interest of the workers in the South and West
in the Populist movement suggested the possibility that such a shift
might occur.

BIBLIOGRAPHICAL NOTE

Surprisingly little attention has been paid to the social aspects of
the growth of the laboring classes before 1896. There is ample
material, however, on the more obvious sides of the labor movement,
such as the growth of the organizations and the use of the strike.

The _Documentary History of American Industrial Society_ (10 vols.,
1910-1911), contains a little documentary material on the period after
1865; J.R. Commons and others, _History of Labour in the United States_
(2 vols., 1918), is the best and most recent historical account; T.S.
Adams and H.L. Sumner, _Labor Problems_ (1905), is useful; consult also
R.T. Ely, _Labor Movement in America_ (3rd ed., 1890); C.D. Wright,
_The Industrial Evolution of the United States_ (1897), by a practical
expert; G.E. McNeill, _The Labor Movement_ (1887); J.R. Buchanan,
_Story of a Labor Agitator_ (1903); S.P. Orth, _The Armies of Labor_
(1919), contains a good bibliography; John Mitchell, _Organized Labor_
(1903); T.V. Powderly, _Thirty Years of Labor_ (1890); _Quarterly
Journal of Economics_ (Jan., 1887), Knights of Labor; J.H. Bridge,
_Inside History of the Carnegie Steel Co._ (1903). On the Haymarket
affair, compare _Century Magazine_ (Apr., 1893), and J.P. Altgeld,
_Reasons for Pardoning Fielden, Neebe and Schwab_; on the Pullman
strike, Grover Cleveland, _Presidential Problems_, and the report of
the commission of investigation in Senate Executive Documents, 53rd
Congress, 3rd session, vol. 2 (Serial Number 3276). Edward Stanwood,
_History of the Presidency_, contains political platform planks on
labor. The reports of the Commissioner of Labor (1886-), and of the
state bureaus of statistics of labor in such states as Massachusetts
(1870-), and New York (1884-), are essential for the investigator.

* * * * *

[1] Cf. above, p. 64

[2] Two earlier organizations had a brief existence, the National
Labor Union and the Industrial Brotherhood.

[3] Above, pp. 133-134.

[4] For the effect on the Knights of Labor, see p. 310.

[5] For the legal side of this matter, consult Wright, _Industrial
Evolution_, 278-282.

[6] The Court based its action mainly on the provisions of Section 2
of the Sherman anti-trust law, which thus had an unforeseen effect. The
Supreme Court upheld the action, although on broader grounds. Above, p.
256, cf. 159 _U.S. Reports_, 564.

[7] In 1893 the "World's Fair" in Chicago had celebrated the four
hundredth anniversary of the landing of Columbus, and many of the
criminals attracted by the event had remained in the city.

CHAPTER XV

MONETARY AND FINANCIAL PROBLEMS

The critical monetary and financial situation during Cleveland's second
administration is understandable only in the light of a series of acts
which were passed between 1878 and 1893. It will be remembered that in
the former year the Bland-Allison act had provided for the purchase and
coinage of two million to four million dollars' worth of silver bullion
per month, and that the force behind the measure had been found chiefly
among westerners who wished to see the volume of the currency increased
and among mine owners who were producing silver.

The passage of the law did not end all opposition to the greater use of
silver, nor did it solve all our monetary difficulties. In the first
place, the United States sent delegates to an International Monetary
Conference in Paris, in conformity with one of the provisions of the
Bland-Allison act, to discuss a project for the utilization of silver
through an agreement among the commercial nations of the world. No
tangible results were obtained, however, so that it was plain that for
the time, at least, the United States would be alone in its attempt to
bring about the greater use of the white metal. In the meantime the law
was put into operation, and the secretary of the treasury exercised his
option by purchasing the minimum amount, two million dollars' worth of
bullion. It was impossible to keep the coins in circulation, however,
mainly because of their weight, and the policy was therefore adopted
of storing part of the silver in the government vaults and issuing
paper "silver certificates" in its place. As these were of small
denominations and circulated on a par with gold, no immediate
difficulty was experienced in making them part of the currency supply
of the country.

The currency question, nevertheless, remained as complicated as ever
and the differences of opinion upon it as diverse as before. The market
price of silver steadily declined through the eighties and the bullion
value of the metal in a dollar sank from ninety-three cents in 1878 to
less than seventy-one cents in 1889. Both Republican and Democratic
secretaries of the treasury gave warning that the inflow of silver into
the currency supply was too great. President Arthur urged the repeal of
the Bland-Allison act in his first annual message; President Cleveland
again and again reiterated the same advice, warning Congress of the
danger that silver would be substituted for gold. The argument of the
opponents of silver could hardly be stated in more concise or complete
terms. As soon as the supply of currency became too great, he asserted,
the unnecessary portion would go out of circulation;[1] it was the
experience of nations that the more desirable coin--gold, in this
case--would be hoarded by banks and speculators; it would then become
apparent that the bullion value of the gold dollar was greater than
that of the silver dollar and the two coins would part company; those
who, in such a contingency, could get gold dollars would demand a
premium for them, while the laboring man, unable to demand gold, would
find his silver dollar sadly shrunken in value.

Although the coinage of silver in the twelve years during which the
Bland-Allison act was in force amounted to $378,000,000, the danger
that Cleveland's prophecy would come to pass was lessened by several
facts. The country was, in the first place, passing through a period of
industrial expansion that required an enlarged circulating medium; the
revenues of the government were exceeding expenditures, and part of the
surplus was being stored in the vaults in Washington; and the volume of
the national bank notes shrank more than $158,000,000 between 1880 and
1890. Falling prices for agricultural products continued to keep
western discontent alive and far from being convinced by Cleveland's
warnings, western conventions and representatives in Congress continued
to urge legislation to increase the amount of silver to be coined, and
free-coinage bills were constantly introduced and frequently near
passage. Manifestly the demand that something more be done for silver
was not at an end.

Although agitation over the use of silver currency resulted in no
further important legislation for the time being, the general financial
situation was complicated by a series of important acts. During the
eighties the federal revenues mounted to an unprecedented height and as
expenses did not increase proportionately, a surplus of large and
finally of embarrassing and dangerous size appeared.

[Illustration:
Financial Operations, 1875-1897 in millions]

Between 1880 and 1890 it averaged more than $100,000,000 annually.
Although part of it was used to reduce the public debt, the remainder
began to accumulate in the treasury and thereby seriously reduced the
amount of currency available for the ordinary needs of business. In
1888, for example, the surplus in the treasury was one-fourth as great
as the entire estimated sum outside. The one device for doing away with
the surplus upon which all leaders could unite was the reduction of the
national debt. Between 1879 and 1890 over $1,000,000,000 were thus
disposed of. Yet even this process raised difficulties. Although a
portion of the debt came due in 1881 and could be redeemed at the
pleasure of the government, other bonds were not redeemable until 1891
and 1907, unless the federal authorities chose to go into the market
and buy at a premium. Eventually this was done for a time, although
prices were thereby forced up to 130 in 1888, and as a result the
redemption of $95,000,000 during the year cost more than $112,000,000.
The treasury also adopted the expedient of depositing surplus funds in
banking institutions, but the plan was open to serious objections. In
order to qualify for receiving government deposits the banks had to
present United States bonds as security, but these were already at a
high premium because of purchase by the treasury itself. There
remained, therefore, two general policies which might be
followed--reduction of revenue or enlargement of expenditure.

Both parties were theoretically committed to the economical conduct of
the nation's business, but Republican advocacy of a high tariff tended
to restrict that party's answer to the surplus problem. The revenue
came largely from tariff and internal taxes. The latter were reduced,
as has been seen, by the tariff act of 1883, but the redundant income
continued. The Republicans then faced the alternative of lowering the
customs or turning to the policy of increased expenditure. The latter
policy would delay the reduction of duties and was in line with the
Republican tendency toward increased federal activity. For the
Democrats the problem was easier. Since the party was tending toward
advocacy of low customs duties, had constantly condemned Republican
extravagance in administration and was traditionally the party of a
restricted national authority, it was logical to turn to severe
reduction of revenue in order to solve the problem of the surplus.

President Cleveland's political and personal philosophy led toward
economy in expenditure and therefore toward revenue reduction. By
nature he was frugal; in politics, a strict constructionist. In vetoing
an appropriation bill he succinctly set forth his creed:

A large surplus in the Treasury is the parent of many ills, and
among them is found a tendency to an extremely liberal, if not
loose, construction of the Constitution. It also attracts the gaze
of States and individuals with a kind of fascination, and gives
rise to plans and pretensions that an uncongested Treasury never
could excite.

The Republicans were becoming committed to the policy of large
expenditures. President Harrison, to be sure, in his first annual
message urged the reduction of receipts, declaring that the collection
of money not needed for public use imposed an unnecessary burden upon
the people and that the presence of a large surplus in the treasury was
a disturbing element in the conduct of private business. Nevertheless
such party leaders as Reed and McKinley, who effectively controlled the
legislation of the Harrison administration, acted on the philosophy of
Senator Dolph:

If we were to take our eyes off the increasing surplus in the
Treasury and stop bemoaning the prosperity of the country, ... and
to devote our energies to the development of the great resources
which the Almighty has placed in our hands, to increasing (our
products) ... to cheapening transportation by the improving of our
rivers and harbors, ... we would act wiser than we do.

Congress was more inclined to follow the policy suggested by Dolph than
that proposed by Cleveland. One project was the return of the direct
tax which had been levied on the states at the outbreak of the Civil
War. At that time Congress had laid a tax of $20,000,000 apportioned
among the states according to population. About $15,000,000 had been
collected, mainly, of course, from the northern states. It was
suggested that the levy be returned, a plan which would give the
northern states a return in actual cash and the southern states "the
empty enjoyment of the remission from a tax which no one now dared to
suggest was ever to be made good." President Cleveland had vetoed such
a bill, during his first administration, believing it unconstitutional
and also objectionable as a "sheer, bald gratuity." Under the Harrison
administration the scheme was revived and carried to completion, March
2, 1891.

Pension legislation was even more successful as a method of reducing
the unwieldy surplus. Garfield had declared in 1872, when introducing
an appropriation bill in the House of Representatives, "We may
reasonably expect that the expenditures for pensions will hereafter
steadily decrease, unless our legislation should be unwarrantably
extravagant," and in fact the cost of pensions for 1878 had been lower
by more than $7,000,000 than in 1871. The Arrears act of 1879 had given
a decided upward tendency to pension expense, which amounted to over
$20,000,000 more in 1880 than in 1879. The surplus was a constant
invitation to careless generosity. Liberality to the veteran was a
patriotic duty which lent itself to the fervid stump oratory of the
time and presented an opportunity to the undeserving applicant to place
his name on the rolls of pensioners along with his more worthy
associates. Besides, an administration which seemed niggardly in its
attitude toward the veterans was certain to lose the soldier vote, and
neither party was willing to incur such a risk. Hence, despite
Cleveland's vetoes of private pension legislation, hundreds of such
measures passed during his first term. The Harrison administration
proceeded upon the President's theory that it "was no time to be
weighing the claims of old soldiers with apothecary's scales." A
dependent pension bill like that which President Cleveland vetoed in
1887 was passed in 1890. The list of pensioners more than doubled in
length; the number of applications for aid increased tenfold in two
years. It became necessary for President Harrison to displace his
over-liberal commissioner of pensions, but the mischief was already
done. The total yearly pension expenditure quickly mounted beyond the
one hundred million mark, where it has remained ever since. Indeed, the
cost of pensions in 1872 when Garfield made his prophecy was less than
one-sixth as great as in 1913. Large pension expenditure was clearly a
permanent charge.

The improvement of the rivers and harbors of the country has always
been a ready means of disposing of any embarrassing surplus and of
assisting Congressmen to get money into their districts. "Promoters of
all sorts of schemes, beggars for the widening of rivulets, the
deepening of rills" clustered about the treasury during the eighties.
During the early seventies expenditure on this account had not reached
$6,500,000 annually, although in 1879 it exceeded $8,000,000. In 1882,
the year of the mammoth surplus, Congress passed over Arthur's veto a
bill carrying appropriations which amounted to almost nineteen million
dollars.[2] Expenditures were somewhat reduced in the years
immediately following, and Cleveland continued the repressive policy of
his predecessor. Harrison in his first message to Congress in December,
1889, recommended appropriations for river and harbor improvement,
although deprecating the prosecution of works not of public advantage.
The recommendation fell upon willing ears and appropriations for
undertakings of this sort at once increased again. Expenditure for
rivers and harbors, like that for pensions, remained at a high level,
the wise and necessary portions of such measures being relied upon to
carry the unwise and unnecessary ones.

A project which lacked many of the unpleasant features of river and
harbor legislation was the Blair educational bill, which proposed to
distribute a considerable portion of the surplus among the states. As
discussion of the Blair bill proceeded, it became clear that its
results might be more far-reaching than had been anticipated. A gift
from the national government seemed sure to retard local efforts at
raising school funds and would initiate a vicious tendency to rely on
federal bounty. Hence although the Senate passed the bill in 1884, 1886
and 1888, it never commended itself sufficiently to the House and
eventually was dropped.

A small portion of the increased expenditure in the eighties was due to
improvements in the navy, in which both parties shared. Presidents
Arthur and Cleveland urged upon Congress the need of modern defences.
Progress was slow and difficult. Although the day of steel ships had
come, the American navy was composed of wooden relics of earlier days.
The manufacture of armor and of large guns had to be developed, and
skill and experience accumulated. Results began to appear in the late
eighties when the number of modern steel war vessels increased from
three to twenty-two in four years. Expenditures mounted from less than
$14,000,000 in 1880 to over $22,000,000 in 1890.