TH

CHAPTER XIII

First Year as President

HE inauguration of William McKinley as President of the United States, on March 3, 1897, was the opening of a new and vital era in the political and military history of this country. Important events loomed up which no man even then could foresee, and the seeming calm which lay upon the surface of social and political affairs concealed the germs of a series of storms which were destined, before the close of the term, to change the whole policy and international position of the great republic of the West.

While these great events were hidden in the mists of the future, there were questions of high importance that called for immediate solution. There had been not alone a change of administration, but also a change of party control. A Republican had succeeded a Democratic President, a fact which in itself called for radical changes in the management of affairs. But, added to this, the outgoing administration had left to the incoming one an industrial and financial problem strongly calling for solution. The effects of the panic of 1892 had not yet fully passed away. For more than four years the shadow of ruin had lain upon the land, poverty and misery had visited a myriad households, and when McKinley was elected to the Presidency a widespread commercial and industrial depression still prevailed. For years the wheels of a thousand factories practically ceased to revolve, artisans in great numbers found employment impossible to obtain, commerce was in a state of collapse, the public and national finances were seriously depressed, and in many hearts hope had given place to despair.

This gloomy state of affairs, which had existed in its intensity during the opening years of President Cleveland's second administration, had not fully passed away when the election of McKinley took place, and an unsatisfactory condition of business depression continued when the new President took his seat. The lack of business activity was reflected in the state of the national finances, the receipts of the Treasury having fallen off so greatly that there was not money enough to meet the current expenses of the Government, and the expenditures were growing alarmingly in excess of the receipts.

Naturally various explanations were given of this unfortunate state of affairs. The party in power, in accordance with its basic fiscal policy, attributed the depression to the change in the tariff made by the late administration, and President McKinley was in full sympathy with this view. His name had been long associated with the policy of high tariff, and his natural view of the remedy for the public evil was the restoration, in some degree, of the tariff measures which the Democratic Congress had changed.

CALLS CONGRESS IN SPECIAL SESSION

The necessity of some immediate action to relieve the prevailing distress seemed to the President so great, that he felt it incumbent upon him to call Congress together in extra session at once, that it might deliberate upon this pressing problem and take such action as seemed in its wisdom most advisable and best adapted to relieve the financial stringency. He accordingly called the Houses of Congress into extra session on March 15, 1897, and, on their convening, had read before them the following message:

"To the Congress of the United States:

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Regretting the necessity which has required me to call you together, I feel that your assembling in extraordinary session is indispensable because of the condition in which we find the revenues of the Government.

"It is conceded that its current expenditures are greater than its receipts and that such a condition has existed for now more than three years. With unlimited means at our command, we are presenting the remarkable spectacle of increasing our public debt by borrowing money to meet the ordinary outlays incident upon even an economical and prudent administration of the Government. An examination of the subject discloses this fact in every detail, and leads inevitably to the conclusion that the condition of the revenue. which allows it is unjustifiable and should be corrected.

"We find by the reports of the Secretary of the Treasury that the revenues for the fiscal year ending June 30, 1892, from all sources were $425,868,260.22, and the expenditures for all purposes were $415,953,806.56, leaving an excess of receipts over expenditures of $9,914,453.66. During that fiscal year $40,570,467.98 were paid upon the public debt, which had been reduced since March 1, 1889, $259,076,890, and the annual interest charge decreased $11,684,576.60. The receipts of the Government from all sources during the fiscal year ending June 30, 1893, amounted to $461,716,661.94, and its expenditures to $459,374,887.65, showing an excess of receipts over expenditures of $2,341,674.29.

"Since that time the receipts of no fiscal year, and with but few exceptions, of no month of any fiscal year have exceeded the expenditures. The receipts of the Government from all sources during the fiscal year ending June 30, 1894, were $372,802,498.89, and its expendituses $442,605,758.87, leaving a deficit, the first since the resumption of specie payments, of $69,803,260.58. Notwithstanding there was a decrease of $16,769, 128.78 in the ordinary expenses of the Government, as compared with the previous year, its income was still not sufficient to provide for its daily necessities, and the gold reserve in the Treasury for the redemption of greenbacks was drawn upon to meet them. But this did not suffice, and the Government then resorted to loans to replenish the reserve.

"In February, 1894, $50,000,000 in bonds were issued, and in November following a second issue of $50,000,000 was deemed

necessary. The sum of $117,171,795 was realized by the sale of these bonds, but the reserve was steadily decreased until, on February 8, 1895, a third sale of $62,315,400 in bonds for $65,116,244 was announced to Congress.

"The receipts of the Government for the fiscal year ending June 30, 1895, were $390,373,203.30, and the expenditures $433,178,426.45, showing a deficit of $42,805,223.19. A further loan of 100,000,000 was negotiated by the Government in February, 1896, the sale netting $111,166,246, and swelling the aggregate of bonds issued within three years to $262,315,400. For the fiscal year ending June 30, 1896, the revenues of the Government from all sources amounted to $409,475,408.78, while its expenditures were $434,678,654.48, or an excess of expenditures over receipts of $25,203,245.70. In other words, the total receipts for the three fiscal years ending June 30, 1896, were insufficient by $137,811,729.46 to meet the total expenditures.

"Nor has this condition since improved. For the first half of the present fiscal year the receipts of the Government, exclusive of postal revenue, were $157,507,603.76, and its expenditures, exclusive of postal service, $195,410,000. 22, or an excess of expenditures over receipts of $37,902,396.46. In January of this year the receipts, exclusive of postal revenues, were $24,316,994.05, and the expenditures, exclusive of postal service, $30,269,389.29, a deficit of $5,952,395.24 for the month. In February of this year the receipts, exclusive of postal revenues, were $24,400,997.38, and expenditures, exclusive of postal service, $28,796,056.68, a deficit of $4,395,059.28, or a total deficiency of $186,061,580.44 for the three years and eight months ending March 1, 1897. Not only are we without a surplus in the Treasury, but with an increase in public debt there has been a corresponding increase in the annual interest charge from $22,893,883.20 in 1892, the lowest of any year since 1862, to $34,387,297.60 in 1896, or an increase of $11,493,414.40.

"It may be urged that, even if the revenues of the Government had been sufficient to meet all its ordinary expenses during the past three years, the gold reserve would still have been insufficient to meet the demands upon it, and that bonds would necessarily have been issued for its repletion. Be this as it may, it is clearly manifest, without denying or affirming the correctness of such a conclusion, that the debt would have been decreased in at least the amount of the deficiency, and business confidence immeasurably strengthened throughout the country.

"Congress should promptly correct the existing condition. Ample revenues must be supplied, not only for the ordinary expenses of the Government, but for the prompt payment of liberal pensions and the liquidation of the principal and interest of the public debt. In raising revenue, duties should be so levied upon foreign products as to preserve the home market, so far as possible, to our own producers; to revive and increase manufactures; to relieve and encourage agriculture; to increase our domestic and foreign commerce; to aid and develop mining and building, and to render to labor in every field of useful occupation the liberal wages and adequate rewards to which skill and industry are justly entitled. The necessity of the passage of a tariff law which shall provide ample revenue need not be further urged. The imperative demand of the hour is the prompt enactment of such a measure, and to this object I earnestly recommend that Congress shall make every endeavor. Before other business is transacted let us first provide sufficient revenue to faithfully administer the Government without the contracting of further debt or the continued disturbance of our finances.

"EXECUTIVE MANSION, March 15, 1897."

"WILLIAM MCKINLEY.

In anticipation of the extra session of the Fifty-fifth Congress, thus called for, the Committee of Ways and Means, or at least Nelson Dingley, its chairman, and his Republican colleagues in that committee, had been steadily working upon a new tariff measure.