When Republicans Deliberately Sowed a Financial Crisis

HEATHER COX RICHARDSON

The following excerpt from BLOOMBERG discusses the result of the election of 1892 where the Republicans lost unexpectedly to the Democrats. The Republicans and their business allies resolved to destroy the economy to get even and bring themselves to power in the next election. We should be happy that no one would conduct such a nefarious activity today, would they?

In 1892, a dramatic Democratic victory prompted Republicans to sabotage the economy in order to ruin the incoming administration.

Then, as now, Republican insiders couldn’t believe that misguided voters had bucked the wise business leaders who backed the Republican incumbent. At the annual meeting of the Chamber of Commerce, held at the fancy Delmonico’s restaurant shortly after the election, members commiserated over vintage wine and an expensive dinner. Republican railroad baron Chauncey Depew snarled to his comrades about the Democrats who had just taken over Congress and the White House for the first time since the Civil War. “Business interests” were dangerous, he warned, and the Democrats had better be careful.

Outgoing President Benjamin Harrison and his men had presided over what they dubbed a “businessman’s administration.” The nation’s industrial giants ran their corporations without the nuisance of foreign competition, thanks to a high tariff wall the Republicans had maintained since 1861. Safe behind this wall, men like Andrew Carnegie and J.D. Rockefeller could carve up markets and charge whatever prices they wanted. When workers and farmers complained that high prices were ruining them, the Republican Congress responded in 1890 by raising rates even higher. The Harrison administration had been “beyond question the best businessman’s administration the country has ever seen,” the members of one Republican business association insisted.

Farmers and workers agreed, and they turned away from the Republican Party. In 1892, voters re-elected Democrat Grover Cleveland (who had already served a term as president from 1885 to 1889) to the White House on a promise to reform the tariff that protected big business. They also elected a Democratic Congress.

Republicans were outraged. The Democrats would destroy the economy, they predicted. Their policies would throw people out of work. The unemployed would starve in the streets. But, the staunchly Republican Chicago Tribune mused, “perhaps the working classes of the country need such a lesson.”

Businessmen set out to teach it to them. Although economic indicators remained steady, Republicans trumpeted that businessmen feared a coming catastrophe. The Democrats had only won with the votes of “socialists and anarchists,” Republican Senator Henry Teller of Colorado railed. Such men would deliberately create rampant inflation to wipe out their debts. Or they might slice away the tariffs altogether, throwing industry into a global market where foreign competition would instantly undercut it. Businesses would fail overnight. Newspapers warned investors to avoid stocks, which could only plummet under the new administration.

* * * * * * *

On Feb. 20, 1893, Wall Street crashed, taking more than $20 million with it. The next day, the plunge continued. Businesses folded overnight, starting the Panic of 1893. Over the next two years, the country convulsed with riots, strikes, and marches on Washington by farmers and workers demanding relief.

Republicans had set out to sow fear and panic in advance of the transfer of power. It worked. The crisis hit in the last days of the Harrison administration, but the Republicans successfully blamed the chaos of 1893-1894 on the Cleveland administration and the new Congress. The falling wages, unemployment, business failures, strikes and desperation all proved what they had always said: Democrats destroyed the economy.

This is an Excerpt from BLOOMBERG, the full article may be read here — http://www.bloomberg.com/news/2012-11-09/when-republicans-deliberately-sowed-a-financial-crisis.html

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