 CHAPTER VIII PART II of TWENTY YEARS OF THE REPUBLIC, 1885–1905 by Harry Thurston Peck. This LibriVox recording is in the public domain. STORM AND STRESS PART II No sooner, however, had the Wilson bill become a law, then preparations were made by the Treasury to collect the tax which Senator Hill had so energetically denounced. The necessary blanks and other papers were printed and the collecting officers began their distribution. Opposition to the measure was no less prompt. Several test cases were prepared. Note 14, page 370. These cases presently reached the Supreme Court where they were argued at length and, to anticipate, a partial decision was rendered on April 8, 1895. The court pronounced that part of the law unconstitutional which taxed values derived from land and from state or municipal bonds, but a final decision on the law as a whole was deferred owing to the absence of Mr. Justice Jackson, who was ill. A few weeks later, however, Justice Jackson, having recovered, rendered his opinion so that the decision as finally handed down by a full bench, pronounced the income tax unconstitutional as being a direct tax. Note 15, the court was divided five to four. Note 16, page 370. There were circumstances connected with this decision which caused deep feeling throughout the country. It had been long since a case before the Supreme Court had attracted such general attention. A brilliant array of counsel had submitted arguments among them ex-Senator Edmonds, Mr. James C. Carter, Mr. Joseph H. Chote, and the Attorney General himself. The final judgment as given on May 20 carried with it a reversal of an earlier judgment handed down 15 years before. In 1880, the Supreme Court had decided, note 17, page 371, with no dissenting opinion that an income tax on rents is not a direct tax, within the meaning of the Constitution, but an excise tax, and hence permitted to the general government. That the Supreme Court should reverse a decision which had stood for 15 years was a very unusual occurrence. Note 18, page 371. That it should reverse, by a majority of only one, a decision which had been unanimously reached was still more remarkable. Yet this was not all. On April 8, Mr. Justice Charis had been favorable to the constitutionality of the law. Had he not altered his view, the opinion of Mr. Justice Jackson on May 20 would have made the court stand five to four in support of the income tax. But Justice Charis in the interval had gone over to the other side, and so the result already described was ultimately reached. In expressing their dissent from the decision of the majority of the court, Justice Harlan and Justice White departed wholly from the impassive and impersonal manner which is usual in that high tribunal, and spoke in terms of marked feeling. Mr. Justice Harlan indeed let it be plainly seen that he believed the court to have dealt a severe blow at the stability and safety of American political institutions. Note 19, pages 371 and 372. In this he struck a note which was echoed all over the land, but most of all throughout the West and South. Men said that the influences which had crippled tariff reform in the Senate had proved no less powerful in the highest tribunal of the nation. Populism grew daily stronger, while other events which were coincident with those already told stimulated the new movement and enhanced its power. The slow progress of the Wilson Bill, prolonging as it did the feeling of uncertainty in the business world, had depressed all forms of industry. Thousands of men who had been thrown out of work in the summer and autumn of 1893 found themselves at the beginning of winter holy destitute. Some of them had left their homes in the eastern states and had gone to the Pacific Coast as railway builders. They now turned their faces homeward, intending to trap the long distance and to live upon the charity of the intervening towns and cities. These men were presently joined by others who were out of work and finally by swarms of professional vagabonds and tramps. Through some curious psychological impulse, the notion of a general crusade of squalor spread all through the country, and from every quarter of the West and the Southwest, bands of ragged, hungry, homeless men appeared, fierce of aspect, and terrifying to the people of the Hamlets and sparsely settled districts through which they passed. Theft, rape, and sometimes murder marked the trail of this new jacquery which had at first no conscious purpose as it had no leader. Both purpose and leader were presently provided. Three odd fanatics came to the front and after a fashion to command of the roving bands. These three, Coxy, Kelly, and Fry, styling themselves generals, led the largest groups which were now known as armies of the unemployed and later as industrials and common-wheelers. Coxy was the most conspicuous of the three. He had a definite plan of action. He organized what he styled, the Army of the Common Wheel of Christ, and with it he intended to march on Washington, to enter the capital, and to overall Congress into passing a law providing for the unemployed. His demand was that $500 million in irredeemable paper money should be issued and that this sum should be spent in improving the public highways throughout the country. Which became at last the declared purpose of all the common wheelers, and so the three armies began their march to Washington from different points. Coxy setting out from Massillon, Ohio on March 25th, Fry from Los Angeles, California early in April, and Kelly from San Francisco on April 26th. There was something grotesque and also something very pitiful in the purpose of these poor men, many of whom were honest and well-meaning, but who were driven to desperation by poverty and cold and hunger. Yet among them were also many criminals and vicious characters, so that again and again the industrials came into conflict with the police and sometimes even with a militia which was called to arms in several states because of them. The newspapers made much of Coxy's Army, and naturally viewing its march on Washington as a huge joke began to humor the idea and to treat it with mock seriousness. Hence in Europe, where American humor if unlabeled is seldom understood, the belief spread that the United States had fallen into anarchy. The Republic was to be overthrown by a great uprising of its own citizens. The movement of Coxy's prowling tramps upon Washington was gravely likened to the famous march of the mob from Paris to Versailles. English leader writers waited solemnly for the crash of a widespread and terrible revolution. Coxy and his followers straggled into Washington on April 28th. By that time their numbers had been reduced to about 300 men. The mild spring weather had led most of the Army to roam off as individuals into the pleasant country valleys where they could bask in the sunshine and live by begging. On the 1st of May however, Coxy marched his dwindling host into the grounds of the capital bearing aloft some improvised banners of calico and paper muslin. But by this time public interest in the industrials had waned. The joke had ceased to amuse, and therefore no particular notice was taken of Coxy until he and some of his lieutenants marched across the lawns when the capital police had once arrested them for walking on the grass. Such was the farcical end of the Coxy crusade which foreigners regarded as a dreadful menace to the Republic, but which terminated in a short jail sentence served for the violation of a local ordinance by the would-be Robespierre. While however this pilgrimage of the common wheelers was in itself of no importance, it did reveal a state of restlessness in the industrial world. This was soon to find expression in a tremendous struggle of organized labor against organized capital, the struggle of which the outcome was at last determined by the unprecedented action of Mr. Cleveland and his Attorney General. It involved questions both administrative, judicial, and constitutional of far-reaching consequence. In 1886 the capitalists who controlled or owned the twenty-four railways which then entered the city of Chicago had formed a voluntary association known as the General Managers Association. Note 20, page 375. This body had for its main purpose the effective and arbitrary control of all persons employed by the railways represented in the association. Wages were cut down according to a general agreement. Discharged workmen were blacklisted so that they could not easily get new employment. With no standing whatever in law the Managers Association was establishing a complete control of the independence and even of the livelihood of thousands of railway employees. Note 21, page 376. To offset this combination of the owners the men had organized in 1893 the American Railway Union. The two bodies antagonistic as they were in their special interests came into conflict early in 1894 over a question which did not in its origin directly concern either of them. The Pullman Palace Car Company was not a railway corporation but was engaged in manufacturing cars which had operated through written contracts with the railways. It was a highly prosperous concern and Mr. Pullman, its president, had won much commendation from philanthropic sociologists for having built the pretty little village of Pullman near Chicago where employees of the company could at moderate rentals find houses that were clean, well-lighted and supplied with admirable sanitary arrangements. Lakes, parks and well-kept streets made the place appear to be a poor man's paradise. On the other hand those who lived in Pullman saw another side. Not many residents stayed there long. While they stayed they seemed to be under a singular constraint. If they spoke of the company they did so in half a whisper and with a furtive glance behind them very much as a Russian might mention this are. Note 22, page 376. Everyone felt that he was spied upon and that an unconscious word might lead to his discharge and get his name upon the blacklist. In May 1894 the Pullman company dismissed a large number of its workmen. The wages of such as were retained were lowered by some 20%. Many were now employed for less than what was usually regarded as full-time. A committee of employees waited upon Mr. Pullman to ask that the old wages be restored. Mr. Pullman refused this request but promised that he would not punish any member of the committee for having presented the petition. This promise he apparently violated for on the very next day three of the committee were discharged. Mr. Pullman in fact evidently regarded himself as a personage so sacrosanct as to make even a respectful petition to him a serious offense. Indignant at his action five six of his men went out on strike. Mr. Pullman promptly discharged the other six who had remained faithful to his interest. To justify the Pullman management a general statement was given out on its behalf that the close of the Columbian exposition and the existing business depression had checked the demand for its cars, that it had been employing men at an actual loss, that it could not afford to continue them at work and at the old scale of wages. In reply to this the fact was pointed out that while the wages of the men had been cut the salaries of the officers remained as large as ever and that rents in the town of Pullman had not been lowered. Moreover the stock of the company was selling above par. Its dividends for the preceding year on a capital of thirty six million dollars had been two million five hundred and twenty thousand dollars while it had a surplus of undivided profits amounting to twenty five million dollars. About four thousand Pullman employees were members of the American Railway Union. In June a convention of the union was held in Chicago and this body took up the question of the Pullman strike although the men on strike were not railway employees at all. A committee of the union wished to confer with the Pullman management but were not allowed to do so. The civic federation of Chicago with the approval and support of the mayors of fifty cities urged the company to submit the matter to arbitration. The company answered we have nothing to arbitrate. Then on June second the railway union finding no settlement possible passed a resolution to the effect that unless the Pullman company should come to an agreement with its men before June 26 the members of the railway union would refuse to handle Pullman cars. The company remained obdurate and therefore on the 26th the union fulfilled its promise. From that day on all the roads running out of Chicago no train to which Pullman cars were attached could move. The president of the railway union was Mr. Eugene V. Debs. He had formerly been a locomotive engineer and afterwards a grocer. Going into politics he had served a term in the Indiana legislature. He was a very shrewd, long headed strategist. He understood the strength of his organization. He was equally well aware of the one weak point in all the great labor demonstrations of the past. The one hundred fifty thousand men whom he controlled could by acting together completely paralyze the railway system centering at Chicago. Local public sentiment was on the whole favorable to the Pullman employees. That sentiment would however be alienated if violence and general disorder were to follow on the strike. It was vital that the railway union should employ no lawless means. Mr. Debs therefore issued an address on June 29 in which he said, The contest is now on between the railway corporations united solidly on the one hand and the labor forces on the other. I appeal to the strikers everywhere to refrain from any act of violence. A man who will destroy property or violate law is an enemy and not a friend of the cause of labor. The order of Mr. Debs was implicitly obeyed by the members of the railway union and the peaceable strike which was begun on the 26th proved at once to be remarkably effective. Switchmen refused to attach Pullman cars to any train. When they were discharged for this the rest of the train screw left it in a body. By the end of the fifth day after the strike began all the roads running out of Chicago were practically at a standstill. The railway manager's association was facing absolute defeat. Its resources in the way of men were exhausted and its trains could not be operated. Yet all this had been accomplished by peaceable means. There was no sign of violence or disorder. But the men who made up the manager's association were very able. They had at their command unlimited money and illegal advisors who could conceive daring plans. This struggle against the power of the railways meant to them a struggle for existence. Their chairman therefore issued a bold statement in which he said, We are supported in our stand by the railway managers all over the United States. It is no time for weakness of policy. The fight must be won. It must have been plain to the managers that if the strike remained a peaceful one the railways would be defeated. If however violence and crime were associated with it public sympathy would no longer sustain the strikers and the power of the law would be invoked against them. Singularly enough on June 30th just when this situation became very plain disorder suddenly broke out in Chicago. The close of the world's fair had left in that city a large residuum of vagabonds and semi criminals who had drifted thither during the exposition and who remained to swell the lawless population of the sums. As is usual in times of widespread excitement these men now swarmed by thousands to the railway yards intent upon prospective plunder. It was widely asserted at the time that the manager's association employed agents provocateurs to incite the disorderly elements to acts of violence. Of this there is no convincing proof that thieves and bullies and jailbirds should seize upon so rare an opportunity for mischief was natural enough. But their sudden appearance was certainly most opportune for the railway managers and most fatal to the real interests of the strikers. On June 30th a mail train was stopped in the suburbs of Chicago. The engine was cut off and disabled by a mob ostensibly directed by strikers. At about the same time the mails were completely obstructed on parts of the Southern Pacific system the strike having extended to the Pacific states. Mail trains having Pullman cars attached were not allowed to run. This news brought the United States government into the field at once. Attorney General Olney issued vigorous instructions to the United States district attorneys all over the country. Deputy Marshals were sworn in and other precautionary measures were taken. Writing to Mr. Edwin Walker who acted a special counsel for the government in Chicago Mr. Olney made the novel suggestion that instead of relying upon warrants issued under criminal statutes against persons who had actually committed illegal acts Mr. Walker should apply to the federal courts for injunctions forbidding the commission of such acts. On July 1st the roads were still paralyzed. Disorder had still for the most part been sporadic. There was no evidence that the local authorities were not fully competent to deal with the situation so far as the unruly elements were concerned. On the following day however on motion of the United States district attorney Judge Woods issued a sweeping injunction forbidding the president of the railway union Mr. Debs and also its vice president secretary and others from interfering with the transportation of the males and from obstructing interstate commerce. Mr. Walker also sent word to Washington that in his judgment United States troops would be needed to enforce the order of the court. On that very day President Cleveland ordered General Miles to Chicago to assume personal command of the troops at Fort Sheridan. Mr. Walker seems strangely insistent in his demand for troops and for their immediate use. Note 23 page 381. Mr. Olney telegraphed him July 3rd. I trust use of United States troops will not be necessary. Mr. Walker reiterated his demand and with him were joined Judge Grosscup the district attorney and the United States Marshal. The strikers had indeed been deeply stirred by the injunction which forbade even an attempt to persuade railway employees to strike. They felt that the federal courts were the mere tools of the railway managers and were attempting to deprive men of the right to leave their work. Perhaps because of their indignation at this new move the peaceful strike came to an end and a regime of violence began. Baggage cars were wrecked and strewn along the tracks and a mail train was ditched. The writ of injunction was read to the mob by a Marshal but it was received with jeers and curses. That same afternoon President Cleveland ordered Colonel Crofton in command at Fort Sheridan to enter Chicago with the entire garrison of infantry, artillery and cavalry. This order was promptly carried out and on the following morning the troops were in camp upon the lakefront. Reinforcements were hurried to them and General Miles had presently at his disposal a force of several thousand men. A brigade of state militia was also ordered to the city by the governor at the mayor's request. The story of the next few days is one of perpetual disorder controlled however or greatly lessened by the admirable work of the regular troops whose cool firmness had that indescribable effect which discipline always exercises upon disorder. Yet there was much destruction of railway property both within the city and near it while the temper of the soldiers was often severely tried. The spirit of the mob grew more and more dangerous and at last on July 7th General Miles issued an order to all officers in command of troops directing them to fire upon persons engaged in overt hostile acts. Mr. Debs whose prudence had begun to fail him made an inflammatory address in which he said the first shot fired by regular troops at the mobs here will be a signal for civil war bloodshed will surely follow. Events moved quickly on the following day the president issued a proclamation ordering all persons engaged in unlawful assemblages to disperse on or before 12 o'clock noon of the ninth day of July instant. Those who disregarded the warning were to be viewed as public enemies. There will be no vacillation in the decisive punishment of the guilty. On that same day a mob at Hammond Indiana some 20 miles distant from Chicago set upon several non- strikers killing one and wounding four. Matters grew still more serious and a detachment of regular troops commanded by major hearts was hurried to the Monon station. Under their protection several trains were moved. This infuriated the mob which after exhausting every form of insult began to shower the soldiers with missiles. The troops remained unmoved awaiting orders. Emboldened by this apparent timidity their assailants who now numbered fully three thousand made a wild rush intending to overwhelm the compact company in blue. Major hearts gave a sharp command and the magazine rifles spurred at fire into the yelling mob drilling it through and through with bullets and stirring the ground with dead. Coincidentally with these events Judge Grosskopf delivered a charge to a special federal grand jury which at once found indictments against Debs and three of his associates the charge being one of conspiracy under the Sherman anti-trest law of 1890. On July 10th the four men were arrested and gave bail in ten thousand dollars each. On July 17th the same men were brought before Judge Woods and were charged with contempt of court in having disobeyed the injunction of July 2nd. They refused to give bail upon this charge and were sent to prison under guard. This swift and stern action of the federal government broke the backbone of the strike as Mr. Debs himself afterwards admitted. The movement in which the knights of labor had also taken part had spread over 27 states and territories and had affected the operations of one hundred twenty five thousand miles of railway. But everywhere it was dealt with in the same energetic manner whenever it obstructed the service of the males and after the arrest of Mr. Debs it died speedily away. On July 20th less than a month after the general strike began the United States troops left Chicago their presence being no longer needed. Note 24 page 384. In the opinion of the governor of Illinois Mr. John P. Altgeld their presence there had never been required. Mr. Altgeld was a democratic of the populistic type. In appearance he resembled a typical German agitator fanatical and intense. He had pardoned the anarchists who were sentenced to imprisonment at the time of the Haymarket murders in 1886. Note 25 page 384. Many persons regarded him as no better than an anarchist himself yet this judgment was too harsh. His sympathies were undoubtedly with the strikers and he felt with some reason that the presence of federal troops was essentially provocative. He read over the fourth article of the Constitution which pledges the United States to guarantee to each state protection against domestic violence on application of the legislature or of the executive. As Governor Altgeld interpreted that section it meant that United States troops may be sent into a state only upon application of the legislature or of the executive. He therefore immediately after the arrival of the troops in Chicago telegraphed the president that they were not needed. Waving all question of courtesy I will say that the state of Illinois is not only able to take care of itself but it stands ready today to furnish the federal government any assistance it may need elsewhere. As governor I protest and ask the immediate withdrawal of federal troops from active duty in the state. But Governor Altgeld had missed the point involved in the dispatch of troops. These had not been sent to protect the state of Illinois from domestic violence but to guard the property of the United States to prevent obstruction of the United States males and to enforce the judgments of the United States course as against illegal combinations. Authority for this was found in the law of April 20th 1871. Note 26 page 385. The president answered Governor Altgeld explaining the matter very briefly only to receive another and very long dispatch arguing about the relations of state and federal authority and still missing the point as completely as before. To this second telegram Mr Cleveland sent July 6th a short response which ended the discussion. While I am still persuaded that I have neither transcended my authority or duty in the emergency that confronts us it seems to me that in this hour of danger and public distress discussion may well give way to active efforts on the part of all in authority to restore obedience to law and to protect life and property. President Cleveland's course in sending troops to Chicago against the protest of the state's executive and in using the army elsewhere to prevent obstruction of the male roots was on the whole generally approved by public opinion and by Congress. A great deal of the comment made upon it was however based upon a misapprehension of the facts. Many persons then imagined and many still believe that the president put a new and bold construction upon his own powers in that in consequence the functions of the executive were by his actions substantially enlarged. Such however was not the case. He was merely doing what he was empowered and even required to do by statute, a statute originally enacted under President Grant and aimed at the Ku Klux Klan. Hence both the state's rights Democrats like Governor Altgeld who condemned him and the advocates of centralization who applauded him did so with insufficient knowledge. If he deserved praise at all it was not because of a new president which he established for he established none but for his rude courage and using through a sense of duty his statutory powers in a way that was certain to intensify the hatred of him which had by this time come to be almost a religion in the western states. The serious constitutional question which the strike of 1894 brought into prominence concerned the judiciary rather than the executive. Government by injunction was a phrase that now came into general use. The Interstate Commerce Law of 1887 and the Sherman Antitrust Law of 1890 had both been framed with a view to checking the power of the corporations. Clever lawyers however had most ingeniously converted these two acts into instruments to protect the railway corporations against attack. If an engineer left his post or if the crew of a train deserted it this was held to be a conspiracy in restraint of commerce. A United States circuit court had issued a blanket injunction against all the employees of the Northern Pacific Road forbidding them to strike. As to Mr. Debs and his associates they had been enjoined from inciting men to strike. On December 14th they were brought before Judge Woodson Chicago in sentence. Debs to six months imprisonment and the others to three months for contempt of court. This extension of the enjoining power was contrary to the whole spirit and practice of Anglo-Saxon jurisprudence as hitherto understood. By the new procedure a judge defined in advance the nature of an offense and by injunction forbade the commission of it by certain specified persons. If they disobeyed the injunction they were brought before the judge and fined or imprisoned not directly for the act itself but for contempt of court. In this way the judge became also the accuser and the accused lost the right of a jury trial. Many of the most conservative publicists in the east were alarmed by this alarming stretch of the judicial power. In the case of Mr. Debs the principal at issue was admirably summed up in these words. If Debs has been violating the law let him be indicted, tried by a jury and punished. Let him not be made the victim of an untenable court order and depride of his liberty entirely within the discretion of a judge. If the precedent now established is to stand there is no limit to the power which the judiciary may establish over the citizen. Note 27, page 387. The action of Judge Woods in sentencing Debs was however sustained by a unanimous decision of the Supreme Court handed down on May 27th, 1895 and he served his term in prison. Yet it is to be noted that the indictments for conspiracy found against him in legal form by a federal grand jury were afterwards dismissed. The report of a commission appointed by President Cleveland, note 28, page 388, to investigate the origin of the great strike was full of deep significance. This commission found in the railway managers association an example of the persistent and shrewdly devised plans of corporations to overreach their limitations and to usurp indirectly powers and rights not contemplated in their charters. It found that neither the railway union nor any general combination of railway employees had been planned until the railway managers had set the example. In the judgment of the commission the evils of intensive combination must in the end be met by government control of such corporations as have a public or quasi-public character. The report was widely read and its unquestioned facts and dispassionate deductions impressed themselves upon the minds of thousands. More and more was it becoming evident that the proper form of resistance to the glacier-like power of consolidated capital was not through strikes or other efforts of voluntary associations which tended too readily to promote disorder but rather through the federal government itself using all its latent and immense resources to protect its citizens impartially. End of Chapter 8 Chapter 9 Part 1 of 20 years of the Republic 1885-1905 by Harry Thurston Peck This LibriVox recording is in the public domain. The Bond Sales and Venezuela Part 1 While the Wilson Bill was dragging its slow way through Congress and while the fierce struggle against the railways in the West was being fought out to the bitter end, another highly controversial question had arisen to plague the president and to widen still further the breach between him and the majority of his party. Throughout the entire four years of the second Cleveland administration, the sensitive nerve of the government lay in the condition of the Treasury and it throbbed painfully in response to every event of serious import, whether this related to domestic politics or to international affairs. Here again, the makeshifts and compromises of the past broke down completely and the president was forced to take upon himself the whole burden of a responsibility which his predecessors had managed to evade. The events now to be narrated are those concerning which the sharpest differences of opinion existed at the time. They obscured in the mind of the people all the other acts of administration. They stirred millions of Americans to a pitch of acrimonious frenzy for which there are few parallels in our history and in the end they shivered and rent the Democratic Party until it cast aside its old traditions and while retaining its historic name stood forth transformed into the champion of new causes and new political ideals. It has already been mentioned in these pages that the Treasury's gold reserve of one hundred million dollars was intended to protect an outstanding issue of notes which, by the end of 1893, amounted to nearly five hundred million dollars. This gold reserve had proved adequate in the past until the operation of the Sherman-Silver Purchase Act of 1890 gradually shook public confidence in the Treasury's ability to meet its steadily increasing obligations. The repeal of this act under pressure from President Cleveland, as already described, had to be sure absolve the Secretary from buying two tons of silver every month and paying for it in gold, yet in matters of finance distrust when once aroused dies hard. In April of 1893, when the hoarding of gold was at its height, the Treasury's gold redemption fund had, for the first time, fallen below the hundred million mark, and the circumstance had sent a shiver through the business world. Some had quickly seen in it an opportunity for making money. For the true peril of the Treasury, from the standpoint of conservative finance, lay not so much in the discrepancy between its obligations and its gold reserve, as in the fact that under existing laws, no sooner was a government note presented at the Treasury and redeemed in gold than it must immediately be reissued to become again a new obligation. The situation was admirably and forcibly described to Congress by Mr. Cleveland in several of his later messages. Thus, speaking of the gold reserve fund, he said, even if the claims upon this fund were confined to the obligations originally intended, note 1, page 390, and if the redemption of these obligations meant their cancellation, the fund would be very small. But these obligations, when received and redeemed in gold, are not cancelled, but are reissued and may do duty many times by way of drawing gold from the Treasury. Thus we have an endless chain in operation, constantly depleting the Treasury's gold and never near a final rest. Note 2, page 390. Referring to the statute of May 1878 he remarked with epigrammatic pungency, the government was put in the anomalous situation of owing to the holders of its note's debts payable in gold upon demand, which could neither be retired by receiving such notes in discharge of obligations due the government nor cancelled by actual payment in gold. It was forced to redeem without redemption and to pay without acquittance. Note 3, page 391. These two paragraphs indicate very well the view which Mr. Cleveland and his supporters in the Eastern States took of the financial situation. They held that the Treasury was bound to redeem all its notes of every kind in gold at the discretion of the persons who presented the notes for payment. The corollary to this theory was that when the gold reserve in the Treasury had been unduly lowered by the process, it became the duty of the Secretary of the Treasury to sell bonds of the United States in order to replenish the reserve, note 4, page 391, and thus make it possible for the operation of the endless chain to continue indefinitely. Of course, the issue of more bonds meant an increase of the national debt. But as Mr. Cleveland understood the case, there was no help for this until Congress should enact new currency legislation providing for the retirement and cancellation of all notes when once redeemed. But both bimetalists and all the friends of Silver declared that such a policy was both unreasonable and likely to prove ruinous. They pointed out the fact that of all the government obligations, only the legal tender Treasury notes, greenbacks, were specifically redeemable in gold. The Silver certificates issued under the Bland Allison Act of 1878 were on their phase declared to be redeemable in silver, while the notes issued for the purchase of Silver Bullion under the Sherman Act of 1890 were by the terms of that act redeemable in coin, i.e. in either gold or silver at the option of the Treasury. And as they were issued against the Silver Bullion purchased by them, why should they be redeemed in gold? That the Treasury might pay out Silver for them if it chose was not denied even by Secretary Carlisle himself. On his appearing somewhat later before Committee of the House, note 5, page 392, Mr. Sibley of Pennsylvania asked him, What objection could there be to having the option of redeeming either in silver or gold lie with the Treasury instead of with the note holder? To which Mr. Carlisle made the following reply. If that policy had been adopted at the beginning of resumption, the policy of reserving to the government, the option of redeeming in gold or silver all its paper presented, I believe it would have worked beneficially and there would have been no trouble growing out of it. But the Secretaries of the Treasury, from the beginning of resumption, have pursued a policy of redeeming in gold or silver at the option of the holder of the paper, and if any Secretary had afterwards attempted to change that policy and force silver upon a man who wanted gold or gold upon a man who wanted silver and especially if he had made that attempt at such a critical period as we have had in the last two years, my judgment is that it would have been very disastrous. There is a vast difference between establishing a policy at the beginning and reversing a policy after it has been long established and especially after the situation has been changed. But the silver men would not admit the strength of this position. If, argued they, Republican Secretaries have incorrectly interpreted the law, that is no reason why a democratic administration should not revert to its correct and unquestioned meaning. Redeem the green bags in gold for such as the law, but redeem the silver certificates and coin certificates in the silver in which the statute makes them payable. Why, when the gold in the treasury is low and while the vaults are bursting with silver dollars, why lay open the gold supply to be rated by every speculator and declined to make use of the ample stock of silver? The President, however, took his stand upon the declaration of Congress which had been made a part of the Sherman Act of 1890 to the effect that it was, the established policy of the United States to maintain the two metals at a parity with each other upon the present legal ratio or such ratio as may be provided by law. Mr. Cleveland held that such a parity between gold and silver could not be maintained if the treasury made any discrimination whatsoever between the different kinds of government paper. It must redeem them all alike, green bags, silver certificates and coin notes in gold or else excited suspicion of the good faith and honest intentions of the government's professions or create a suspicion of our country's solvency. Note 6, page 393. Hence he made up his mind that gold should be paid for every note presented and that he would make an unstinted use of the nation's borrowing power rather than reverse the policy of his predecessors. He would buy gold with bonds to any extent that might be necessary. Such too had been the determination of President Harrison and towards the close of his administration he had been almost forced to take such a step for the drain upon the gold reserve had begun even then. Orders in fact had been given to engrave the plates for the printing of such bonds in February 1893 but the necessity had been staved off by Secretary Charles Foster who managed to get a temporary supply of gold about 8 million dollars from a group of New York bankers. Thus the outgoing Republican administration was spared the necessity of doing that to which President Cleveland was soon forced by circumstances. The gold reserve which in April 1893 had fallen to 97 million dollars continued steadily to diminish throughout the year. The general hoarding of gold was one cause of this for persons who wished to hoard could draw gold from the treasury far more easily than from the banks. Note 7 Page 394 Gold was also drawn out freely for export and in the way of trade. On the other hand the customs receipts which are as a rule made in gold were now for the most part paid in paper so that there was no flow of gold back to the treasury to offset the drain. Hence at the beginning of the eventful year 1894 the government's gold fund had sunk to only 70 million dollars against which there was outstanding nearly 500 million dollars of paper money all of it according to the Cleveland policy redeemable upon demand in gold. The discrepancy was a frightful one the more so in view of the general business depression the uncertainties of tariff legislation and the lack of public confidence. Hence by direction of the president January 17th an issue of 50 million dollars in United States bonds was advertised for sale in exchange for gold. Note 8 page 395 Bidders were required to offer a premium of not less than 17%. It was hoped by the president and the secretary that these bonds would be at once oversubscribed and that the mere announcement of their sale would check the run upon the gold fund in the treasury but both these hopes were disappointed. Bids came in so slowly that by February 1st it seemed as though the sale would be a total failure a result to be averted at any risk. To announce that the United States could not borrow 50 million of dollars in the open market would have been at once humiliating and disastrous. Yet such appeared for a time to be the case while the announcement of the bond issue so far from lessening the drain of treasury gold actually hastened it. On January 31st the reserve fund stood at only 66 million dollars. In this crisis secretary Carlisle hurried to New York and called together a number of leading financiers. He pointed out to them that if the loan should fail the shock to the public credit would disastrously affect the interests which they represented that in this event the treasury must inevitably suspend gold payments and the country's finances be placed upon a silver basis. Moved by these considerations the secretary's hearers promised to support the loan and within a week the bonds had been exchanged for sufficient gold to bring the treasury's gold balance up to more than 107 million dollars. Note 9 Page 395 But the incident had been a very trying one a grievous disappointment to the president and very ominous for the future. In fact the relief proved to be only temporary. Some of those who had subscribed for the bonds had drawn the gold to pay for them from the treasury itself thus taking out with one hand what they put back with the other. Furthermore it had now been made plain that the credit of the United States was at the mercy of the great bankers and other heads of financial institutions. They could at will so bleed the treasury of gold as to compel new bond issues and by combining together they could in the future exact such terms from the government as to assure themselves an extraordinary profit. This lesson they resolved to put into practice while the opportunity was still open. Within a little more than two months after the reserve had been reinforced by the purchase gold it had again fallen to 78 million dollars. The government tried every possible means to check the drain but to little purpose. In November the fund stood at only 61 million dollars and it was known that preparations were being made by New York bankers of foreign extraction to draw heavily upon their scanty store for shipment to foreign countries. On the 14th of the month the situation being most serious Secretary Carlisle called for bids and gold for a second issue of 50 million dollars in bonds. This issue was taken up by a syndicate of 33 banking houses and financiers who managed to secure the entire allotment by bidding for all or none. As the other bids did not cover the whole amount and as the acceptance of them would have involved delay at a time when delay might prove disastrous the syndicate was successful. One of its members the President of the United States Trust Company of New York afterwards testified under oath that the transaction was unprofitable to the subscribers an assertion which was received with a very general skepticism. This second bond issue like the first afforded only a momentary relief. Wall Street had now thoroughly learned the lesson and began applying it with a vengeance. In a single month December 1894 the sum of 32 million dollars in gold was taken from the treasury. In the following month January 1895 45 million dollars more was sucked out of the dwindling fund. Early in February there remained only 41 million dollars an alarmingly slanderous tour with which to secure the undiminished 500 million dollars of notes that were still in circulation. Thus within two months after the second bond sale nearly 80 million dollars of gold had vanished from the treasury and the reserve fund touched the lowest point it had ever reached. In this emergency the President invited to a conference at the White House Mr. J. Pierpont Morgan a very eminent and sagacious financier. In a sort of apologia published eight years later Mr. Cleveland wrote with a touch of irony It never occurred to any of us to consult farmers, doctors, lawyers, shoemakers, or even statesmen. We could not escape the belief that the prospect of obtaining what we needed might be somewhat improved by making application to those whose business and surroundings qualified them to intelligently respond. Note 10 page 397 Of course what the President now wanted in the light of vast experience was not merely gold to replenish the reserve but some effective guarantee that the gold so acquired would not be immediately drawn out again. Only a very powerful financial combination could give this guarantee and such a combination was affected as a result of the conference with Mr. Morgan. On February 8th in a special message the President laid before Congress the terms of an agreement entered into by Secretary Carlisle on behalf of the government and by Messers J. P. Morgan and Company and Messers August Belmont and Company. The former banking house was acting also for Messers J. S. Morgan and Company of London the latter for Messers N. M. Rothschild and Sons of London. By the terms of the agreement the subscribing bankers were to take up an issue of United States 4% coin bonds to the amount of $62,315,400 at the rate of $104.5 to be paid for in gold at least half of which was to be brought from Europe. They were also to the extent of their ability to exert all financial influence and make all legitimate efforts to protect the Treasury of the United States against the withdrawal of gold pending the complete performance of this contract. On the other hand the Secretary of the Treasury agreed to give these banking houses the first option upon any further bonds which might be issued before October 1st 1895. So far the contract was one which it was within the legal power of the Secretary to make without referring the matter to Congress at all. But the second clause contained a special provision. If Congress would authorize the payment of principle and interest to be made specifically in gold instead of in coin then the syndicate would accept 3% bonds in place of the proposed bonds at 4%. The difference would mean a saving to the United States of some $16 million in interest in the course of the 30 years during which the bonds were to run. The President therefore laid the contract before Congress and asked for authority to issue 3% bonds payable in gold. Until now Congress had had no opportunity to deal directly with the President's policy regarding the bond issues. In March of 1894 it had passed a bill for coining the seniorage or so much of the silver bullion in the Treasury as represented the difference between its intrinsic value and its value when coined into money. This bill the President had promptly vetoed on the ground that its wording was ambiguous and because in his judgment sound finance does not commend a further infusion of silver into our currency. Note 11, page 399. As a matter of fact the intrinsic value of the silver bullion purchased under the Sherman Act had already decreased so as to represent a loss to the Treasury of more than $10 million. Hence Mr. A. S. Hewitt very neatly described the scheme to coin the seniorage as a plan for coining a vacuum. Again the President had urged upon Congress a bill for currency reform drawn by Secretary Carlisle. Note 12, page 399. The object of this bill was the absolute divorcement of the government from the business of banking by giving greater facilities to national and state banks. Note 13, page 399. But Congress was in no mood to legislate in favor of banks of any kind and the House by a test vote upon a subsidiary motion made this fact so clear that the bill was dropped. But now the whole matter of the bond issues came directly before that body and a Democratic majority had to discuss the financial policy of a Democratic President. A joint resolution authorizing the issue of 3% bonds payable specifically in gold was reported by the Committee on Ways and Means. On February 14th Mr. Brian of Nebraska spoke in opposition to the measure and for the second time attracted widespread attention by the force and pecancy of his style. He gave voice in fact to the rising note of doubt, distrust and discontent which the course of the President had excited throughout the Western States. At the same time the fairness and courtesy of his whole tone and manner could give no personal offense even to Mr. Cleveland's partisans. Speaking of the President Mr. Brian said, The President of the United States is only a man. We entrust the administration of government to men and when we do so we know that they are liable to error. When men are in public office we expect them to make mistakes even so exalted and official as the President is liable to make mistakes. And if the President does make a mistake what should Congress do? Haunted blindly to approve his mistake or do we owe it to the people of the United States and even to the President himself to correct the mistakes so that it will not be made again. But some gentlemen say that the Democratic Party should stand by the President. What has he done for the Party since the last election to earn its gratitude? What gratitude should we feel? The gratitude which a confiding word feels towards his guardian without a bond who has squandered a rich estate. What gratitude should we feel? The gratitude which a passenger feels towards the trainman who has opened a switch and precipitated a wreck. Then coming to the Morgan-Bellmont contract he went on to say What is this contract? I am glad that it has been made public. It is a contract made by the executive of a great nation with the representatives of foreign money-owners. It is a contract made with men who are desirous of changing the foreign policy of this country. They recognize by their actions that the United States has the right to pay coin obligations in either gold or silver and they come to us with the insolent proposition we will give you 16 million dollars paying a proportionate amount each year if the United States will change its financial policy to suit us. Never before has such a bribe been offered to our people by a foreign syndicate and we ought so to act that such a bribe will never be offered again. By this contract we not only negotiate with foreigners for a change in our financial policy but we give them an option on future loans. We can not afford to put ourselves in the hands of the Rothschilds who hold mortgages on most of the thrones of Europe. There is another objection to this contract. It provides for the private sale of coin bonds running 30 years at 104.5 which ought to be worth 119 in the open market and which could have been sold at public auction for 115 without the least effort. Why this sacrifice of the credit of the United States? What excuse was there for selling a 30-year bond for 104.5? What defense can be made for this gift of something like seven million and a half dollars to the bond syndicate? And finally he attacked with much force the fundamental assumption of the president that all the obligations of the government must be paid in gold and in gold alone if the noteholder and bondholder demanded it. So long as the noteholder has the option bonds may be issued over and over again without a veil. Gold will be withdrawn either directly or indirectly for the purpose of buying bonds and an issue of bonds will be compelled again whenever bond buyers have a surplus of money awaiting investment. The only remedy is the restoration of the biometallic principle and the exercise of the option to redeem greenbacks and treasury notes in silver whenever silver is more convenient or whenever such a course is necessary to prevent a run upon the treasury. The government is helpless so long as it refuses to exercise this option. I propose the only policy which will help the government. I propose the only policy which will stop the leak in the treasury. I only ask that the treasury department shall be administered on behalf of the American people and not on behalf of the Rothschilds and other foreign bankers. Mr. Bryan's attack upon the joint resolution was not the only cause of its defeat. Many Democrats who believed that all bonds were and ought to be payable in gold disliked the terms of the Morgan-Bellmont contract as inequitable. The Republican members of the House were for the most part glad to thrust the Democratic administration still further down into the mire of popular disike and therefore the measure was finally defeated by a vote made up of all the populists of two-thirds of the Republicans and of more than half the Democrats. Note 14, page 402. The President's transactions with the Bond Syndicate were thus condemned by the representatives of all the three parties. He carried out the original contract however and delivered bonds to the amount of 62,315,500 dollars in return for gold at the rate of 104 and a half. When he did so the Gold Reserve had fallen to so low an ebb that the sub-treasurer in New York was within 24 hours of suspending gold payments altogether. Then something happened which seemed to many to be full of sinister meaning. No sooner had the Syndicate secured the bonds which it had bought at 104 and a half than it offered them for sale in the open market. Almost at once their price rose to 118. Investors were eager to buy them at this figure. And yet these were the bonds which had been described as of uncertain value because they were not made specifically payable in gold. It is not surprising that the administration was widely and severely centered for the whole transaction. In financial circles Mr. Cleveland found defenders who said that he was not responsible for the vicious legislation of earlier years, that the pressing necessities of the situation gave him no choice safe to get gold where he could as quickly as he could and on the best terms possible and that in a word he had done the very best thing in his power. But there were many loyal followers of the President who were deeply impressed with the belief that the whole affair had been very badly managed. The United States one of the richest countries in the world was apparently dependent upon a little group of bankers for a loan of some $60 million and was forced to make those bankers a gift of nearly $7 million in return for the accommodation. Such usury might be paid by a country like Turkey but hardly by the United States. Why it was asked did the President wait until the gold in the Treasury was almost gone before negotiating a new bond issue? Why were not the bonds offered to the people at large for popular subscription? If the bonds were sold in this way to small investors throughout the country self-interest would make the people anxious to sustain the national credit whereas these favors to foreign bankers created a strong sentiment inimical to the very cause which Mr. Cleveland was upholding. The New York world which had consistently and ably supported the President until this time now attacked the syndicate transaction with unsparing energy. It had opposed all exclusive issues of bonds to bankers who after giving the Treasury a supply of gold would at once siphon it all out again. In less than a year said the world note 15 page 403 the government has had $117 million from the banks and has lost at all and $8 billion more through the financial thimble rigging of Wall Street. Its comment upon the completed syndicate transaction or bank partner negotiations as it called them was made in these words which very fairly expressed the verdict of a majority of Democrats even in the East. It is an excellent arrangement for the bankers. It puts at least $16 million into their pockets. For the nation it means a scandalous surrender of credit and a shameful waste of substance. Note 16 page 404 Scientific by Metalysts pointed to the transaction as an object lesson and as a warning of the financial dangers inherent to the adoption of the single gold standard. Refused to make any use of silver said they and see the position in which you find yourself. The very credit and financial stability of the government are at the mercy of Wall Street money kings who can bleed the gold reserve and force new bond issues at their pleasure. But if the treasury were to make only a very small part of each payment in silver it would thus serve notice upon the speculators that they cannot go on rating the reserve at will and it would induce exporters of gold to depend for their supplies upon the banks. They cited the practice of the Bank of France in support of their contensions. End of Chapter 9 Part 1 Chapter 9 Part 2 of Twenty Years of the Republic 1885 to 1905 by Harry Thurston Peck This LibriVox recording is in the public domain. The Bond Sales and Venezuela Part 2 Such were the opinions most often met with in the East. But all through the West astonishment, disgust, and rage spread like a prairie fire. Here was the President who had been chosen because he was the enemy of privilege, the champion of the people against consolidated wealth, the man who had denounced monopoly and the communism of capital. Here was that President lowering the credit of the nation at the behest of a syndicate of bankers, adding millions upon millions to the national debt and all for what? To prevent the free use of the silver money with which the treasury was overflowing and which both by law and custom was legal tender for all debts. The Democrats of the West felt themselves to be not only injured but betrayed, and in the violence of their resentment they even refused to credit Mr. Cleveland with upright motives. Many believed that he had himself derived personal profit from his negotiations with the syndicate and the bankers with whom he had to do. They pointed to his intimate friendship with a certain Mr. E. C. Benedict, a promoter who had been interested in various syndicates and in the Chicago Gas Trust, and they interpreted this intimacy in a sinister light. From the time of the Third Bond issue Mr. Cleveland's following in the West melted completely away while populism and the cult of free silver were getting a tremendous grip upon the masses. In the country as a whole the unpopularity of the syndicate affair had not been needed to create a tremendous revulsion against democratic rule. This had already found effective and spectacular expression at the congressional elections of 1894. The Democratic Party had then been in possession of the government for 18 months. During that time there had occurred a disastrous panic, banks had failed or had suspended by the score, business was at a standstill and the national debt had been increased by 100 millions. Moreover, the President had lost control of his own party. The Pledge of Tariff Reform had ended in the pitiful fiasco of the emasculated Wilson Bill which the President himself had been ashamed to sign. The sugar scandals in the Senate, the quarrels within the party and the open breach between Mr. Cleveland and other Democratic leaders, these afforded a picture almost unrelieved of unwisdom, incompetence and failure. The losses incurred during the great strikes had exasperated the corporations. The President's actions in using troops to check disorder had made organized labor hostile to him. Mr. Olney's resort to government by injunction was equally obnoxious. Finally, the President's ill-advised Hawaiian policy added still another charge to the general indictment which the Republicans drew against their divided and distracted opponents. As for the people, they as usual judge things in the large, not looking into the causes of what had happened or apportioning the responsibility between the present and the past. They saw only that a year and a half of Democratic rule had been a year and a half of disorder and distress. Hence at the polls they showed their displeasure in a tremendous political avalanche which blotted out the Democratic majority in the Senate note 17, page 406 and almost annihilated that party in the House where the Republicans now had 248 members to 104 Democrats the latter being almost holy from the South. From the Northern States scarcely a dozen Democrats were returned. The state election showed a no less overwhelming reaction. Everywhere the Republicans were jubilant and looked forward to 1896 with eager confidence. We can nominate a rat baby or a yellow dog and elect it was a common boast of theirs. The Democrats were downcast and full of gloom. They charged most of their misfortunes upon Mr. Cleveland yet the party had as yet produced no other leader at whose summons it might once more rally on a new fighting line. It is likely that the President in his heart of hearts regarded with considerable equanimity the Republican resumption of control in Congress. Republicans would of course oppose him as a matter of party policy but the open assaults of avowed enemies were much less vexatious than the treachery and defection of those who should have been his friends. Moreover, the really eminent Republican leaders were more favorably disposed toward the President than they openly admitted. His financial doctrines were very much the same as theirs and they respected the firm way in which he had stood by his convictions. In fact, the more radical Democrats had come to regard him as essentially a Republican. Mr. Bryan had already said of the President in his speech of February 14th. He has attempted to inoculate it, the Democratic Party, with Republican virus and blood poisoning has set in. Hence, while the Republicans in the new Congress which met on December 2nd, 1895 would do nothing to help the President out of his various perplexities, they refrained from a policy of pinpricks and sought merely to accumulate some telling political capital for use in the presidential contest of the coming year. For this purpose, they continued what they had begun some time before, a general criticism of the manner in which the foreign relations of the government had been conducted by Mr. Cleveland. They wished to show that a Democratic President was careless of the country's interests and dignity abroad, that he was just the person to trickle to foreign powers and to think but little of the honor of the flag. His entire course in relation to the Hawaiian question had laid him open to easy censure, but there were many other incidents upon which his Republican critics also seized. Indeed, the foreign relations of the United States during this administration would have themselves have made the period a memorable one. The momentous importance of our domestic problems was in no way so strikingly exhibited as by the fact that they wholly overshadowed a series of most dramatic events of an international character. With one exception, however, these last can be no more than outlined here. In June 1893, a treaty with Russia was ratified. Its third article, relating to the extradition of criminals, was widely denounced even by the Democratic press, for in pledging the United States government to deliver up to Russia all murderers or those who should be accessories to murder, no exception was made in the case of purely political assassinations. Later events lessened among Americans this tenderness toward crimes of a political character. But in 1893, the ambiguity of the treaty was widely condemned as showing the administration's sympathy with monarchical institutions. Again, a prolonged diplomatic correspondence with the French government led to much friction and gave many persons an opportunity to say that the President was indifferent to the rights of American citizens abroad. The French, having invaded and conquered Madagascar, had found an American ex-counsel, Mr. John L. Waller, in the enjoyment of certain valuable concessions formerly granted him by the Queen whom France had just opposed. Mr. Waller was accused of giving military information to the natives. A French court marshal tried and convicted him and sentenced him to twenty years imprisonment. It appeared to many that the charge and the conviction were arranged simply to deprive Mr. Waller of the concessions which French exploiters coveted. Mr. Cleveland's critics said that he had dealt with this matter in a spirit of indifference and at variance with the spirited traditions of the State Department when in Republican hands. With Germany also, there existed causes of irritation. The German Empire had partially excluded American food products especially cattle and pork on the pretense that they were diseased and that the inspection at American ports was so carelessly conducted as to be practically worthless. The true motive was the protection of German landowners and agrarians against American competition. President Cleveland spoke in his messages to Congress of these unfriendly and injurious acts as vexatious and hinted at a policy of retaliation yet this latter he deprecated as leading to consequences of the gravest character. More rasping to American susceptibilities was an incident which arose from a clash between Nicaragua and Great Britain. The Central American Republic had expelled a British Vice Council named Hatch and several other British subjects and had subjected them to indignities for which the British government demanded an apology and the payment of $75,000 as a salatium. Nicaragua returned a flat refusal whereupon a British man of war entered the Nicaraguan port of Corinto, landed marines, hauled down the Nicaraguan flag and took possession of the Custom House for the purpose of collecting the revenues until the amount of the indemnity should be secured. Although this occupation was declared to be only temporary and although Great Britain assured the American government that no infringement of Nicaragua's sovereignty was contemplated, the incident produced a painful impression throughout the United States. Oh, for one day of blame was the cry which went up from the Republican editors who declared quite unreasonably that the Monroe Doctrine had been violated. President Cleveland took no spectacular action in this affair but by putting some friendly pressure upon both governments he persuaded the Nicaraguan President to promise payment of the $75,000 while he induced the British government to terminate the occupation of Corinto. Conservative persons felt that the whole matter had been most admirably managed but sensational newspapers continued to accuse the president of subserviency to Great Britain and of deserving the comprehensive epithet, an American. Some even found fault because he had not interfered to check the Turkish massacres in Armenia. Although as no American citizens were among the victims it was hard to say just why the United States should meddle and land so distant especially when Great Christian powers such as England which were by treaty responsible did not go beyond remonstrance. One minor episode however was viewed with satisfaction by Americans without regard to party. In the Republic of Brazil the Navy had revolted and several of the more southernly states had followed its example. The insurgent leader was Admiral Mello and it was perfectly well understood that the ulterior object of the outbreak was to restore the empire and replace Dom Pedro or one of his family upon the throne. This was made plain in a proclamation issued by Mello's second in command Vice Admiral Degama who in January 1894 with a part of the Brazilian fleet was blockading the harbor and city of Rio de Janeiro. The warships of many European powers were also gathered in the harbor. Their commanders were ostensibly neutral yet secretly willing to aid the rebels in their attempt to overthrow the young republic. Here presently assembled an American squadron under the command of Rear Admiral Benham and consisting of five cruisers. Note 18 page 411. For the first time since the close of the Civil War the United States was represented in a critical situation by an efficient squadron of modern ships armed with modern guns and with an equipment that was wholly modern. The presence of this powerful group of vessels under the American flag led the foreign commanders to remain quiescent. They tacitly admitted the hegemony of the United States in an affair affecting an American republic. What were the intentions of the government at Washington? These were soon to be made clear. The rebel fleet had not received belligerent recognition yet it was blockading a great seaport. Would the blockade be recognized? If so, the success of the revolt was almost certain. For President Peixoto could not hold out against an enemy that was able to bring Brazilian commerce to a standstill. And Peixoto's downfall meant the downfall of the republic. In the outer harbor of Rio de Janeiro were several American merchant vessels. Their captains were anxious to enter with their carcodes but Dagama's ships of war had threatened to fire upon them and had turned them back. On January 28th one of the American skippers got word from Admiral Benham to take his vessel the Bark Amy up to the wharves on the next day. He would be amply protected. A brief note from Benham to Dagama notified the Brazilian that the United States did not recognize the blockade and that American ships must be permitted to come and go quite unmolested. Dagama's answer was to draw up his fleet and battle line. Admiral Benham sent an officer to the commanders of the foreign men of war requesting them to drop down to the lower harbor so as to be out of his own line of fire on the following day. Meanwhile, all the American ships were put into thorough fighting trim. The decks were cleared, the ammunition hoist made ready, and each cruiser beginning with the flagship New York swung around broadside on so as to confront the long line of their dark hulled antagonists. At the time appointed the Detroit steamed down alongside the little merchant ship to escort her from her moorings to the inner port. As the two moved slowly past the first Brazilian cruiser it was a breathless moment. The American gunners stood ready to pour a terrific broadside into Dagama's fleet. Suddenly from one of the Brazilian ships a musket shot was fired at the Amy. In reply a gun boomed on the Detroit and a solid shot screamed angrily along Dagama's line burying itself in the hull of the Brazilian Tahano. But no other shot was heard that day. The Brazilian guns were silent. Dagama's courage had oozed away. The blockade was broken. The revolt was doomed to failure. And the Republic of Brazil was made perpetually safe from foreign interference. But the most striking chapter in the record of American diplomatic relations under President Cleveland is one that marks a distinct epic in our history. Even before the end of the next decade its consequences were seen logically to involve a wholly new and very startling development of American policy on the Western Hemisphere. In the President's first annual message to Congress note 19 page 412 the following sentence had found a place. The boundary dispute between Venezuela and British Guyana is yet unadjusted. A restoration of diplomatic intercourse between that Republic and Great Britain and a reference of the question to impartial arbitration would be a most gratifying consummation. A year later his second annual message note 20 page 413 contained a much longer paragraph upon the same subject again expressing the hope that the question at issue might be settled by reference to arbitration. A resort which Great Britain so conspicuously favors in principle and respects in practice and which is earnestly sought by her weaker adversary. Probably not one American in a million took any notice of these sentences at the time when they were given to the public. Certainly no human being could have guessed that the controversy to which they made illusion held within it mighty potentialities of mischief. The very few persons who knew anything about the subject were aware that for more than half a century there had existed a dispute between Venezuela and Great Britain over the boundary line between the domains of the former and the colony of British Guyana. Certain sections of territory were claimed by both countries. Venezuela's title rested upon the alleged explorations and discoveries of early Spanish adventurers while that of Great Britain was inherited from the Dutch who had ceded the colony to the English in 1810 without however defining its boundary. The whole question of delimitation was so vague as very naturally to give rise to the dispute which began as early as 1841 when the Venezuelan government protested against the hoisting of the British flag upon what it regarded as Venezuelan soil. A request was also made for the drafting of a treaty which should describe and fix a definite boundary line. From this time along in desultory diplomatic correspondence was carried on at intervals sometimes with scant courtesy on the part of the British foreign ministers who often left the Venezuelan notes unanswered or in answering gave no definite promise of satisfaction. Meanwhile the English had themselves caused a survey to be made by Mr. later Sir Robert Schoenberg who established that Lord Aberdeen called boundary posts as a preliminary measure. Great Britain however disclaimed any intentions of encroaching upon the disputed territory and regarded the whole subject as still open to negotiation. Here the matter had rested for many years when in 1876 it was once more revived and Venezuela appealed to the United States government to interest itself in any further steps that might be taken and to concern itself in having due just as done to Venezuela. But something of much importance had occurred. On the territory in dispute rich gold deposits had been discovered. It was no longer a question of getting possession of a tropical wilderness but of securing a great mining field stored with immense and still undeveloped riches. Thence forth English unwillingness to arrange a boundary treaty perceptibly increased. The Venezuelan minister in London pressed for some definite solution of the pending controversy. Lord Derby and later Lord Salisbury delayed giving any answer for two whole years. Meanwhile British settlers, miners and others were entering the territory and were establishing their homes within its bounds. In 1880 after delaying eight months before answering another Venezuelan note Lord Salisbury suddenly put forward as embodying his contention a claim to lands which even by all prior British surveys were Venezuelans. He also mentioned the fact that some 40,000 British settlers were now within the province claimed by Venezuela intimating that this made it impossible for Great Britain to give it up. In other words because the long delay in adjusting the boundary a delay for which Great Britain was largely responsible had led Englishmen to enter lands that were known to be in dispute therefore the title to those lands must be vested in Great Britain. From this time Venezuela argued protested and appealed in vain. The British foreign ministers held back their answers as before. They would agree to nothing. At last February 20th 1887 diplomatic relations between the two countries were broken off. Great Britain had refused to submit the question to arbitration and Venezuela withdrew her minister from London publishing a protest before all civilized nations against the acts of spoliation which the government of Great Britain has committed. During the last 14 years of this controversy the government of the United States had endeavored in a spirit of amity to bring about some equitable adjustment. Under President Arthur's administration the American minister to England Mr. James Russell Lowell had informed Lord Granville that the United States was not without concern as to whatever may affect the interest of a sister Republic of the American continent. During Mr. Cleveland's first presidency the matter had been pressed with much more urgency. At last in 1886 the American minister Mr. Phelps was directed to offer the good offices of the United States in settling the difficulty and to propose its arbitration if acceptable. Note 21 Page 415 To this offer and suggestion Lord Salisbury somewhat curtly replied that arbitration was at that time impossible. Under President Harrison Secretary Blaine had continued the policy of his predecessors and had again pressed upon Lord Salisbury some action which would be a preliminary step to arbitration and to the termination of a wearisome dispute. Note 22 Page 416 Lord Salisbury made to this suggestion a wholly non-committal answer postponing any decision upon the subject. Other communications passed but to them all no definite or satisfactory reply was given. The tone of the British foreign office was one of civil indifference with just a suggestion of boredom and an intimation that while the United States might be listened to out of courtesy that country was regarded as thrusting itself into an affair with which it had no concern. Such was the situation when President Cleveland took office for the second time. A week South American Republic had been trying for 50 years to secure from Great Britain a determination of its boundary. The question at issue was purely geographical and historical, one to be settled properly by a commission of impartial experts. Venezuela was willing to abide by the decision of such a board of arbitrators. On the other hand, Great Britain had practically refused to submit her claims to any arbitration and had at the same time suggested no other way of ending the dispute In July 1894 Secretary Gresham sent a dispatch, Note 23, Page 417, to Mr. Bayard, then Ambassador to England which contained some very pertinent and pungent sentences. Mentioning the fact that the British Foreign Office had since 1881 turned a deaf ear to all offers of arbitration, Mr. Gresham went on to say, In the meantime, successive advances of British settlers in the region admittedly in dispute were followed by similar advances of British colonial administration contesting and supplanting Venezuelan claims to exercise authority therein. Toward the end of 1887 the British territorial claim which had, as it would seem, been silently increased by some 23,000 square miles between 1885 and 1886 took another comprehensive sweep westward. This comprehensive sweep was taken in order to include the district in which the gold mines had been lately founded. Mr. Gresham's dispatch ended with a strong statement of the president's desire to see the respective rights of the two countries settled by arbitration. By this time, general attention in the United States had been drawn to the question even outside of diplomatic circles and after President Cleveland had made a direct allusion to it in his message of December 3rd, 1894, Congress passed a joint resolution, February 3rd, 1895, urging that Great Britain and Venezuela refer their dispute as to boundaries to friendly arbitration. On the following day Lord Salisbury sent a dispatch to the British Ambassador in Washington containing the assertion that although her majesty's government were ready to go to arbitration as to a certain portion of the territory, they could not consent to any departure from the Schomburg line. Now when it is remembered that the Schomburg line was originally drawn only as a tentative one, that at the time when it was drawn the British Foreign Minister Lord Aberdeen had disclaimed its permanency and that he had specifically called it a preliminary measure to discussion, a mere ex-party survey in fact, one can measure the assurance of Lord Salisbury in declaring that the absolute acceptance of this line must be an indispensable preliminary to any negotiation whatsoever. First give me everything I want and then I will arbitrate as to the things which I care nothing about. Thus might Lord Salisbury's position be not unfairly summarized. At this point President Cleveland and his new Secretary of State, Mr. Olney felt their patience breaking down. Hitherto the attitude of the United States had been entirely disinterested. The American State Department had given Venezuela a helping hand out of compassion for a weak and struggling Republic but as to the merits of the controversy no opinion had been held it was for a court of arbitration to pass upon the facts. But now Great Britain refused a genuine arbitration. Its government coolly asserted that a large and immensely valuable expansive territory was British soil although for 50 years the title had been admittedly uncertain. It is ours now because our people have settled there. We shall hold it by force if necessary and we refuse to allow our claim to be examined and adjudicated. This in the view of President Cleveland and his Secretary of State was to traverse directly the doctrine of Monroe. As to whether their view was historically correct there has been an immense amount of discussion. Mr. Cleveland summed up his contention in a sentence written long afterward. We had seen her Great Britain's pretensions in the disputed regions widen and extend in such a manner and upon such pretext as seemed to constitute an actual or threatened violation of a doctrine which our nation long ago established declaring that the American continents are not to be considered subjects for future colonization by any European power. Note 24, page 418. As the President understood the Venezuelan case Great Britain by arbitrary assertion of sovereignty over territory to which an American Republic had a prima facie claim was extending her system over American soil and colonizing new portions of the American continent. At once Secretary Olney at the direction of the President began the draft of a long and most elaborately reasoned argument tracing the history of the Monroe doctrine asserting his direct application to the Venezuelan question declaring the deep concern which the United States felt in the issue as it now shaped itself and concluding with a strong request that Great Britain submit the whole case to arbitration not as before out of regard to Venezuela's interests alone but because the dispute now touched the rights, the honor, and the dignity of the United States. The language of this dispatch was very firm. Note 25, page 419. There was in its tone that which ought to have warned Lord Salisbury of this stern purpose back of it. Mr. Olney wrote that the United States may and should intervene in a controversy primarily concerning only Great Britain and Venezuela. The United States is to decide how far it is bound to see that the integrity of Venezuela is not impaired by the pretensions of its powerful antagonist. The United States is entitled to resent and resist any sequestration of Venezuelan soil by Great Britain. These were not the smooth words of European diplomacy. They smacked of gunpowder. Indeed, had they emanated from the chancelry of a great European power, Lord Salisbury would most certainly have recognized their gravity. But British foreign ministers had been taught to believe and with some reason that American state dispatches are not to be judged by the standards of old world diplomacy, that a certain rhetorical vehemence in them is to be expected and allowed. Note 26, page 420. In the second place, Lord Salisbury, like all European statesmen, made the fatal error of imagining that the Monroe doctrine is a mere panache of American diplomacy, something to flutter in a popular harangue or a newspaper article or a presidential message. In fact, a meaningless though effective catchword, good always for a round of unintelligent applause. He did not know that, next to the passionate devotion which the American people give to their ideal of national unity, there is no political sentiment so deep-rooted and so intense among them, as that which centers in the doctrine first explicitly enunciated by President Monroe. Foreigners may ignore this feeling. They may speak of it as a superstition and of the object of it as a fetish. Some denationalized Americans may even sneer at it. But that the great masses of the people cling to it with an ever-strengthening tenacity cannot be denied by anyone who knows them well. The sagacious student of political psychology may indeed find in this phenomenon evidence of that popular instinct which is often more profoundly wise than the reasoned arguments of statesmen. The extraordinary hold which the Monroe doctrine has always exercised upon the imagination of Americans may well be due to a vague and still unformulated stirring of the national consciousness which discerns however dimly a future wherein the whole of the Western hemisphere shall be held under the flag of the United States. If this be so, then no wonder that a principle first enunciated under special circumstances should have been expanded and perpetuated to borrow all influences which might prevent that splendid dream from coming true. But to Lord Salisbury the Monroe doctrine was merely an old-time bit of diplomatic rubbish of which a few paragraphs from his pen could readily dispose. And he made a third blunder in the estimate which he had formed of President Cleveland and Mr. Olney. He evidently thought that, like certain of their predecessors, they were now engaged in the periodical performance popularly known as Twisting the Lion's Tale, Lord Salisbury remembered Mr. Cleveland's dismissal of Sir Lion or Sackville West because of the exigencies of a political campaign. No doubt he felt that Secretary Olney's stand in the Venezuelan matter was taken to offset the administration's general unpopularity and to win a little cheaper applause. The British Premier had not forgotten his correspondence with Secretary Blaine over the Bering Sea fisheries. In that correspondence Mr. Blaine had used undiplomatic language and had beaten the big drum. But at the critical moment he had yielded rather than take the responsibility of an open rupture with Great Britain. Note 27, page 421. These Americans are all alike, the noble Marquis doubtless told himself, treat them firmly and they will not go beyond a tall talk. Little did he know the two men with whom he now had to do, Americans of the older stock of New England ancestry as dogged in a stiff neck as any of their race who had remained in Britain. Lord Salisbury then wholly failed to recognize the seriousness of the issue which confronted him. He took his time about composing a reply to Mr. Olney's note and indeed when Congress met on December 2nd no answer had yet come from him. In the President's message of that date this fact was noted and the promise was made that the British note should be submitted to Congress when received. When it did come Lord Salisbury's communication was in the form of two separate dispatches addressed to the British Ambassador in Washington but meant to be submitted to the American State Department. The first note dealt with the relation of the Monroe Doctrine to the Venezuelan question and also the matter of arbitration. The second discussed the whole previous history of the boundary dispute. The tone of both these notes was intensely if unintentionally irritating. Something of conscious patronage was there, the air of an intellectual superior trying to make a simple matter playing to an inferior understanding. There was also subtly suggested the attitude of the great nobleman listening with patient condescension to the demands of some intrusive persistent person whom it would be undignified to treat uncivially. It was, in short, the pose of Sir Lester Deadlock submitting to an interview with Mr. Rountzwell, the Iron Master. Lord Salisbury graciously explained that the Monroe Doctrine was a highly respectable principle originally enunciated by a distinguished statesman but that it long ago became obsolete. It bore no relation to the state of things in which we live at the present day. Furthermore, even if it did, Her Majesty's government could not accept it as sound and valid for it had no place in the law of nations. No statesman however eminent and no nation however powerful are competent to insert into the Code of International Law a novel principle which was never recognized before and which has not since been accepted by the government of any other country. Again, his lordship was not prepared to admit that the United States had any concern whatever in disputes which might arise between the states having possessions in the western hemisphere. Still less could he accept the doctrine that the United States possessed the right to demand the arbitration of such disputes. In other words, the sum and substance of this note might be expressed as mind your own business and we will mind ours. Regarding arbitration itself as a mode of settling international differences Lord Salisbury read Mr. Olney a little lesson a sort of political essay on the subject ending in another very obvious snub. Arbitration, said his lordship, is not free from defects. It is hard to find an impartial arbitrator. It is not always easy to enforce the award one made. In short, whether or not to arbitrate in a given case is generally a delicate and difficult question. Only the two parties to the controversy can decide this question. The claim of a third nation to impose this particular procedure on either of the two others cannot be reasonably justified and has no foundation in the law of nations. End of Chapter 9 Part 2 Chapter 9 Part 3 of 20 years of the Republic 1885 to 1905 by Harry Thurston Peck This LibriVox recording is in the public domain. The Bond sales and Venezuela Part 3 Finally, Great Britain had at times offered to arbitrate her claims to a part of the Territorian dispute but she absolutely refused to submit to arbitration the status of lands on which British subjects had for years been settled. Some years after, an intimate friend of Mr. Cleveland's was asked how the President felt when he read these two dispatches. Felt was the reply conveyed in an expressive Americanism. Why he felt mad clear through. On December 17th he sent to Congress a message accompanied by the entire correspondence. It had become generally known in Washington that something out of the ordinary was impending but no one was prepared for so stirring and uncompromising amissive. As the reading of it proceeded a dead silence settled upon the House and every ear was trained to catch the slightest word. The message began by a brief recapitulation of the facts. The nature of the controversy between Venezuela and Great Britain the direct interest of the United States in resisting unproved claims of any European power to American territory. The request of the United States that Great Britain submit its alleged rights to a court of arbitration and the absolute refusal of Great Britain to do so or even to admit that the United States had any just concern in the affair at all. Having thus summed up the facts the President declared the duty of the United States to be a very plain one. Since Great Britain refuses to allow the true boundary to be determined by disinterested arbitration this government must for itself ascertain that boundary through a commission. When the commission shall report that certain territory belongs of right to Venezuela it will be the duty of the United States to resist by every means in its power as a willful aggression upon its rights and interests the appropriation by Great Britain of such territory and then occurred these ominously weighty words. In making these recommendations I am fully alive to the responsibility incurred and keenly realize all the consequences that may follow. The reading of this message was received in each of the two houses with a tumult of wild applause from Republicans and Democrats alike. The former, if anything, were the more enthusiastic. They had long taunted the President with what they called his subserviency to England and to English interests and so they dared not now appear less strenuous than he in behalf of a warlike policy. Yet it is unnecessary to ascribe their attitude at the moment to motives such as this. A vigorous defense of the Monroe Doctrine appeals to all Americans and in any sudden crisis that pits the United States against a foreign power party divisions vanish. Therefore at once Mr. Hit of Illinois the Republican Leader of the House introduced a bill appropriating $100,000 for the expense of such a commission as the President had suggested. This bill was passed in the House without delay and though in the Senate Mr. Sherman of Ohio suggested that it be referred to a committee it became a law within three days. Note 28, page 425 Not a single vote in either House was cast against it. Republicans vied with Democrats in praising the boldness and patriotism of the President. From all over the country came messages of congratulation and approval. The most partisan of Republican papers such as the New York Tribune eulogized the President's action. It is American in letter and spirit and in a calm, dispassionate manner upholds the honor of the nation and ensures its security. When a brief summary of the message was cabled to London on the afternoon of the 17th, the British public refused to take the matter seriously. They had not heard a word of this Venezuelan dispute. What on earth did it all mean? What was it all about? Men rubbed their eyes and puzzled over the cabled news with utter amazement and incredulity. Surely this was only some bit of American nonsense, a political dodge, a touch of sorry bunkum. On the following morning certain members of the London Stock Exchange sent a cablegram to the New York Exchange to express their notion that the affair was wholly humorous. The illusion in it was to the yacht races for the American cup. The cablegram read, When our warships enter New York Harbor we hope that your excursion boats will not interfere with them. Perhaps there was conveyed in this, besides the obvious jest, a hint that the American defenses were practically limited to excursion boats. The New York Brokers were prompt with their reply. They cabled. For your sake it is to be hoped that your warships are better than your yachts. But by this time the full text of the President's message had been published in England and something like a panic followed. It was impossible to doubt the gravity of the situation after reading those grimly measured sentences. In them there was no touch of bluster, no suggestion of anything like jingoism, an unfaltering sense of duty, a profound conviction of right and the note of an inflexible purpose. These were what men found in the words which an English writer described as being full of stateliness and force. When the true meaning of the message dawned upon the British people a wave of consternation swept over the country, not because England shrank from war as war, but because the very thought of war with their own kindred affected Englishman with a moral horror. War with America is unthinkable, was said again and again. clergymen spoke from their pulpits of the criminality of such a thing. The newspapers declared it to be quite impossible. Note 29, page 427. The man in the street puzzled and confused experienced a feeling of bewilderment. Then a most unprecedented incident occurred. On New Year's Day 354 members of the House of Commons signed and sent to the President and to Congress a memorial asking that in the future all questions at issue between Great Britain and the United States be referred to arbitration. There was an amusing lack of logic shown in sending this memorial to the President and Congress in as much as both had striven earnestly to have the Venezuelan question arbitrated, that it might better have been addressed to Lord Salisbury it was fairly obvious. Yet the meaning of it was clear enough, it was indirectly a disclaimer of the Premier's action and also an appeal for peace. In like manner an address was prepared and largely signed by British authors to their American brothers of the pen deprecating the thought of war and asking their influence in behalf of international goodwill. Of course not all Englishmen were anxious for an amicable settlement of the dispute. The jingle and the fire-reacher were here and there in evidence. When the British authors were preparing their address Mr. Morley Roberts wrote and published a very characteristic letter in which he voiced the secret thoughts of many Tories. Said he, No Englishmen with imperial instincts can look with anything but contempt on the Monroe Doctrine. The English and not the inhabitants of the United States are the greatest power in the two Americas and no dog of a Republic can open its mouth to bark without our good leave. Those who sign this precious paper go on to say that we are proud of the United States. Sir, we might be proud of them but to say that we are proud of them is to speak most disingenuously. Who can be proud of a politically corrupt and financially rotten country with no more than a poor minority vainly striving up to health? And the Saturday review while declaring over and over again as though to keep its courage up that of course there would be no war profess to think that if war came the humiliation of the United States would be instantaneous and bitter. Discussing the military resources of the two nations had declared America is now at a greater disadvantage compared with Great Britain that it was in 1812. Note 30, page 428. As a purely academic question it may be permitted to hazard a conjecture as to the probable course and issue of such a war as then seemed for a moment possible. President Cleveland's message with its implied threat had been often spoken of as a colossal bluff and both then and afterwards men said that the United States must have yielded had the verge of war been actually reached. It is true that the national military establishment in 1896 was wretchedly inadequate for any war whatever and most of all for war with the greatest naval power in the world. For a number of years the creation of a system of modern coast defenses had been slowly going on but as yet nothing had been completed. There existed only the nucleus of works which it will still take years to finish. When the president sent his bold message to Congress there had been actually mounted only one high-powered modern gun of really formidable caliber. So far as permanent defenses and scientific fortifications were concerned every city on the entire American seaboard was practically unprotected against the attack of a powerful fleet. Portland, Boston, New York, Baltimore, Charleston, and Savannah in the East and San Francisco in the West together with a score of smaller cities invited capture by their weakness and their wealth. Many an English naval captain and many an English soldier must have thought longingly of this enormous mass of riches echoing perhaps old Blushile's greedy exclamation was full plunder. Note 31, page 429. Nor as yet had the new American Navy reached a gross sufficient to make it a factor in the problem of defense. Not a single first-class battleship had been completed and the cruisers alone were neither numerous enough nor powerful enough to meet the armored squadrons of Britain. Note 32, page 429. These facts must have been carefully conned over in the British war office during the last days of 1895. Perhaps there was a moment when those whose touch could turn the scale may have been tempted to let it incline to war feeling as an Englishman afterwards expressed it that we are likely to suffer in our self-respect our sense of personal security and in our pockets until we have succeeded in convincing some nation of the first class that we are ready for war. Note 33, page 430. On the other hand there were some considerations to offset the disparity of immediate resources. There can be no doubt that in the first months of such a war the American seaboard would have suffered most severely. Some at least of the cities mentioned would have been laid under heavy contribution and some would possibly have been shelled or burned. Yet the military experience of later years has shown that even improvised or hastily constructed means of defense may suffice to hold a fleet and check and even to destroy a part of it. The torpedo, the floating mine and all the other deadly implements of naval warfare would have been developed and used with terrible effect by a people so ingenious, so inventive and so daring as the Americans and these devices supported by the heavily armored double turreted monitors terror, Puritan, Amphritite, Meantanimal, Monatnok and Monterey would probably have saved New York and no doubt other cities for the fortune of war does not usually give all the successes to one side. But granting that the British fleet might have dealt ruin and devastation to the entire Atlantic Seaboard, this would have been only the beginning of the war. The vast interior of the country would have still remained untouched, its resolution unimpaired, its resources unexhausted. Meanwhile, the whole of Canada would have been overrun by American armies. It has been many times asserted and as many times denied that in the event of hostilities the British troops in Canada heavily reinforced were to have commenced a campaign which Sir Redvers Boller had been chosen to direct. The subsequent career of this officer and his proved weakness and incompetence in South Africa give one a criterion by which to judge what he would have done against enemies a hundred fold more numerous than the Boers and 10,000 fold more able to sustain a long and wasting war. Indeed, ere a single troopship could have sailed from England an army of half a million men would have swarmed across the Canadian frontier. The permanent conquest of all British America with the flourishing cities of Victoria, Vancouver, Winnipeg, Toronto, Montreal, Quebec, St. John's and Halifax would have been a more than adequate compensation for the hasty plundering of a few American seaports. Moreover, the loss to Great Britain would have been tremendously augmented by the destruction of her commerce with the United States by the paralysis of her shipping trade which carried so large a share of American products by the cutting off of her abundant food supplies and perhaps by the confiscation of the hundreds of millions of British capital invested in American enterprises Again, as the war went on, the American Navy would have swiftly gained the power of taking the offensive. In Navy yards inaccessible to attack, the battleships and formidable cruisers and torpedo boats already half-completed would have been finished and new ones rapidly laid down until at last a mighty fleet would have issued to give battle on the open seas while swarms of commerce destroyers would have swept the ocean clean of British merchant men. Already in 1895 at the opening of the German ship canal at Kiel, two of the new American cruisers, the New York and the Columbia had won the instant notice of foreign naval experts. The Columbia in particular both for the strength of her armament and her extraordinary speed was an object of curiosity and of some disquietude. Her speed became apparent on her return voyage when she made the passage from Southampton to New York under natural draft and in heavy weather in six days and 23 hours distancing the English-built liner St. Louis and the German-built liner Augusta Victoria. A score of cruisers such as the Columbia able to escape from the more sluggish battleships and fitted to destroy all smaller craft would have put an end to ocean trade in British bottoms and would thus have ruined the great shipping interests of Glasgow, Liverpool and London. But there still remained another element which must have been seriously pondered by the British cabinet. Lord Salisbury at the time may well have repeated Bismarck's saying after Sadoa in 1866. We are not living alone in Europe. Involved in a gigantic war with the United States how would Imperial Britain have safeguarded her prestige in other quarters of the globe? Germany stood ready to grasp eagerly at the scepter of commercial supremacy. France would have extended her African processions with the humiliation of a fashoda. Russian armies could have occupied Constantinople or pushed back the frontiers of India. The boars might have secured their independence without a blow or by setting forward the time for their great struggle have won it gloriously. Indeed, had England and the United States engaged in war they would have taken quite unequal risks. Upon the latter nation the contest must have inflicted vast material losses. Its prosperity would have been crippled and its expansion checked for many a year. Yet in the end the Republic would have emerged with no impairment of its power or prestige. But to Great Britain which had so many hostages to give to fortune defeat would have spelled instant ruin. While even victory if we concede that victory was possible must have been purchased at a price of which no Englishman could think without a shutter. Fortunately, so appalling a catastrophe was averted never perhaps again to be so imminent. In the end public opinion in Great Britain came to recognize that no strip of South American territory even were it piled knee high deep with gold was worth a war between the two great English speaking peoples. The blame of the whole unfortunate embryo was very justly laid upon Lord Salisbury for allowing what was in itself an unimportant question to drift into the magnitude of Akasu's belly. Yet the impasse still continued. However, great the blunder which he had committed the British Premier could scarcely cry Pekavi and asked the American president to forgive him. It was then that the way to peace was made smooth by the American commission which Mr. Cleveland had promptly appointed on January 1st. This body through Secretary Olney asked the governments of Great Britain and Venezuela for such documentary evidence as would aid it in its investigation. In each case a most courteous assent was given. A month later Note 34 Page 433 Ambassador Bayard in view of the public demonstrations in both England and the United States proposed to Lord Salisbury that the Venezuela in question be discussed at Washington with a view to ultimate arbitration. This was a decided proper of the Olive Branch and Lord Salisbury responded five days later in a note in which he cordially agreed to Mr. Bayard's suggestion and concluded with this significant sentence. I have empowered Sir Julian Poncevote to discuss the question either with the representative of Venezuela or with the government of the United States acting as the friend of Venezuela. This little sentence conceded the whole question at issue. It recognized the United States as entitled to interfere on behalf of an American Republic as against a European power and it tacitly withdrew the prior British declaration that such interference had no warrant in the law of nations. In other words Great Britain accepted President Cleveland's new interpretation of the Monroe Doctrine as a principle to be recognized thereafter in Anglo-American relations. Soon after Lord Salisbury not to be gracious by haves withdrew his insistence upon the Schomburg line and agreed to submit the whole question to arbitration. A formal treaty to that effect was signed in Washington on February 2nd, 1897. Note 35, page 434. It would be difficult to exaggerate the profound impression which the Venezuelan affair produced upon the statesmen of continental Europe an impression that was reflected in the press and in many monographs and special publications. The prestige of the United States was enhanced immensely. The fact of which Americans abroad were made aware in many ways. Their country was now spoken of in a tone of grave respect that was altogether new. A thoughtful observer who had carefully studied the drift of European opinion wrote that the best informed French and German journalists though they acknowledged the equity and prudence of the compromise which has been reached think it necessary to point out that it involves possibilities of considerable gravity not merely to England and the United States but also to the civilized world in general. Note 36, page 435 and he cited the very able Colniche Saitung as saying A precedent has been established by the joint action of the two Anglo-Saxon powers the effects of which are likely to be felt long after the British Guyana boundary question has been forgotten. But the most explicit statement of just what Lord Salisbury's concession meant was made by the London Times and these pregnant sentences. From the point of view of the United States the arrangement is a concession by Great Britain of the most far reaching kind. It admits a principle that in respect of South American Republics the United States may not only intervene in disputes but may entirely supersede the original disputant and assume exclusive control of the negotiations. Great Britain cannot of course bind any other nation by her action but she has set up a precedent which may in the future be quoted with great effect against herself and she has greatly strengthened the hands of the United States government in any dispute that may arise in the future between a South American Republic and a European power in which the United States may desire to intervene. Note 37 Page 435 In the United States many and various were the opinions then expressed regarding President Cleveland's bold and somewhat startling course of the unfavorable criticisms uttered at the time it will be necessary to speak hereafter but perhaps the matured judgments of two able men who were not of Mr. Cleveland's party may be cited as embodying the final verdict of his countrymen. Dr. Edward Stanwood a close student of American political history and long and intimate friend of Mr. Blaine summed up very briefly the outcome of the Venezuelan episode as the most signal victory of American diplomacy in modern times. Note 38 Page 436 And Mr. John W. Foster an experienced and sagacious diplomat who succeeded Mr. Blaine as Secretary of State in President Harrison's cabinet gave his deliberate opinion in these words I regard the President's action as a consistent judicious and necessary application of the true intent and spirit of the Monroe Doctrine Note 39 Page 436 But whatever opinion may be held regarding the wisdom of President Cleveland's action or the accuracy with which he then defined a fundamental doctrine of American policy one impressive fact cannot be questioned. The interpretation which he gave was instantly accepted by his countrymen and has been confirmed and extended by his successors. In less than a decade indeed its far reaching significance was to receive a practical demonstration. Had nothing else occurred to make his administration memorable this Venezuelan incident would have sufficed. Since through it President Cleveland left an inaffacable mark upon the history not of the United States alone but of the whole Western hemisphere and of the world. End of Chapter 9