The Cleveland Era [52]
failures during the year, 153 were in the West and South. In addition there went down 172 state banks, 177 private banks, 47 savings banks, 13 loan and trust companies, and 6 mortgage companies.
Even worse than the effect of these numerous failures on the business situation was the derangement which occurred in the currency supply. The circulating medium was almost wholly composed of bank notes, treasury notes, and treasury certificates issued against gold and silver in the Treasury, coin being little in use except as fractional currency. Bank notes were essentially treasury certificates issued upon deposits of government bonds. In effect, the circulating medium was composed of government securities reduced to handy bits. Usually, a bank panic tends to bring note issues into rapid circulation for what they will fetch, but in this new situation, people preferred to impound the notes, which they knew to be good whatever happened so long as the Government held out. Private hoarding became so general that currency tended to disappear. Between September 30, 1892 and October 31, 1893, the amount of deposits in the national banks shrank over $496,000,000. Trade was reduced to making use of the methods of primitive barter, though the emergency was met to some extent by the use of checks and clearinghouse certificates. In many New England manufacturing towns, for example, checks for use in trade were drawn in denominations from one dollar up to twenty. In some cases, corporations paid off their employees in checks drawn on their own treasurers which served as local currency. In some Southern cities, clearing-house certificates in small denominations were issued for general circulation--in Birmingham, Alabama, for sums as small as twenty-five cents. It is worth noting that a premium was paid as readily for notes as for gold; indeed, the New York "Financial Chronicle" reported that the premium on currency was from two to three per cent, while the premium on gold was only one and one half per cent. Before the panic had ended, the extraordinary spectacle was presented of gold coins serving as a medium of trade because treasury notes and bank notes were still hoarded. These peculiarities of the situation had a deep effect upon the popular attitude towards the measures recommended by the Administration.
While this devastating panic was raging over all the country, President Cleveland was beset by troubles that were both public and personal. He was under heavy pressure from the office seekers. They came singly or in groups and under the escort of Congressmen, some of whom performed such service several times a day. The situation became so intolerable that on the 8th of May President Cleveland issued an executive order setting forth that "a due regard for public duty, which must be neglected if present conditions continue, and an observance of the limitations placed upon human endurance, oblige me to decline, from and after this date, all personal interviews with those seeking office."
According to the Washington papers, this sensible decision was received with a tremendous outburst of indignation. The President was denounced for shutting his doors upon the people who had elected him, and he was especially severely criticized for the closing sentence of his order stating that "applicants for office will only prejudice their prospects by repeated importunity and by remaining at Washington to await results." This order was branded as an arbitrary exercise of power compelling free American citizens to choose exile or punishment, and was featured in the newspapers all over the country. The hubbub became sufficient to extract from Cleveland's private secretary an explanatory statement pointing out that in the President's day a regular allotment of time was made for congressional and business callers other than the office seekers, for whom a personal interview was of no value since the details of their cases could not be remembered. "What was said in behalf of one man was driven out of mind by the remarks of the next man in line," whereas
Even worse than the effect of these numerous failures on the business situation was the derangement which occurred in the currency supply. The circulating medium was almost wholly composed of bank notes, treasury notes, and treasury certificates issued against gold and silver in the Treasury, coin being little in use except as fractional currency. Bank notes were essentially treasury certificates issued upon deposits of government bonds. In effect, the circulating medium was composed of government securities reduced to handy bits. Usually, a bank panic tends to bring note issues into rapid circulation for what they will fetch, but in this new situation, people preferred to impound the notes, which they knew to be good whatever happened so long as the Government held out. Private hoarding became so general that currency tended to disappear. Between September 30, 1892 and October 31, 1893, the amount of deposits in the national banks shrank over $496,000,000. Trade was reduced to making use of the methods of primitive barter, though the emergency was met to some extent by the use of checks and clearinghouse certificates. In many New England manufacturing towns, for example, checks for use in trade were drawn in denominations from one dollar up to twenty. In some cases, corporations paid off their employees in checks drawn on their own treasurers which served as local currency. In some Southern cities, clearing-house certificates in small denominations were issued for general circulation--in Birmingham, Alabama, for sums as small as twenty-five cents. It is worth noting that a premium was paid as readily for notes as for gold; indeed, the New York "Financial Chronicle" reported that the premium on currency was from two to three per cent, while the premium on gold was only one and one half per cent. Before the panic had ended, the extraordinary spectacle was presented of gold coins serving as a medium of trade because treasury notes and bank notes were still hoarded. These peculiarities of the situation had a deep effect upon the popular attitude towards the measures recommended by the Administration.
While this devastating panic was raging over all the country, President Cleveland was beset by troubles that were both public and personal. He was under heavy pressure from the office seekers. They came singly or in groups and under the escort of Congressmen, some of whom performed such service several times a day. The situation became so intolerable that on the 8th of May President Cleveland issued an executive order setting forth that "a due regard for public duty, which must be neglected if present conditions continue, and an observance of the limitations placed upon human endurance, oblige me to decline, from and after this date, all personal interviews with those seeking office."
According to the Washington papers, this sensible decision was received with a tremendous outburst of indignation. The President was denounced for shutting his doors upon the people who had elected him, and he was especially severely criticized for the closing sentence of his order stating that "applicants for office will only prejudice their prospects by repeated importunity and by remaining at Washington to await results." This order was branded as an arbitrary exercise of power compelling free American citizens to choose exile or punishment, and was featured in the newspapers all over the country. The hubbub became sufficient to extract from Cleveland's private secretary an explanatory statement pointing out that in the President's day a regular allotment of time was made for congressional and business callers other than the office seekers, for whom a personal interview was of no value since the details of their cases could not be remembered. "What was said in behalf of one man was driven out of mind by the remarks of the next man in line," whereas