Massachusetts governor William E. Russell, in a December 1893 article published in North American Review, attempts to identify the political underpinnings of the Panic of 1893 and the subsequent depression. The Democratic governor places blame for the crisis on the Republican Party, which he says forced through Congress the Sherman Silver Purchase Act and enacted other laws that entrenched poor economic policies before the Democrats could undo them.

Massachusetts governor William E. Russell, in a December 1893 article published in North American Review, attempts to identify the political underpinnings of the Panic of 1893 and the subsequent depression. The Democratic governor places blame for the crisis on the Republican Party, which he says forced through Congress the Sherman Silver Purchase Act and enacted other laws that entrenched poor economic policies before the Democrats could undo them.

Although the national elections of the latter 1880s were considered by many to be less substantive and contested than other campaign seasons, there were some concerns about the sustainability of the explosive economic growth the United States experienced following the Civil War. Farmers sought debt relief, calling for cheaper paper currency to pay their bills, especially when droughts wiped out much of their crops. Silver mines in new Midwestern and mountain states were flooding the market with their product–the value of silver (not just in the United States, but around the world) dropped as a result.

In 1890, the so-called free silver movement spurred a push in Congress for a solution. In a bipartisan compromise that guaranteed the passing of tariff legislation, Republicans put their support behind a bill known as the Sherman Silver Purchase Act (the Sherman Act), which would require that the government purchase millions of ounces of silver using paper money. The paper notes would be redeemable for either silver or gold coins. In theory, the government’s purchases would drive up the price of silver and inflation and, therefore, satisfy the interests of the mines and farmers, respectively. The government had already been required to purchase millions of ounces of silver in the 1878 Bland-Allison Act–advocates such as Sherman saw the need to expand greatly upon this premise, and the bill was pushed through Congress.

In 1893, however, it became clear to many that the Sherman Silver Purchase Act was not as effective as its proponents had hoped. It did increase the price of silver somewhat, for example, but the fact that silver was so prevalent in the world markets meant that the price increase would not be significant. Additionally, Americans preferred to redeem their silver with gold, in essence making the two metals interchangeable in investors’ eyes and drawing heavily on American gold reserves.

Meanwhile, a crisis was brewing in the American economy. Railroads, which had been built throughout the country, were overextended. The Philadelphia and Reading Railroad, for example, filed for bankruptcy shortly before Grover Cleveland began his second term as president. Other railroads fell to bankruptcy and receivership, and many banks (whose gold supplies had dwindled during this period) also closed their doors. A series of tariffs on imports also contributed to the crisis, experts argued–the protections put in place on American goods were in fact having an ill effect on revenues as well as manufacturing. The Panic of 1893, as it was known, would spur a depression that lasted until 1897.

Whether to repeal the Sherman Act and laws that increased tariffs on imports became a major issue during what was supposed to be a low-key congressional session. However, many experts and leaders pointed at the Sherman Silver Purchase Act as the main culprit. One such leader was Massachusetts governor William E. Russell, who offered his thoughts in an article published in the December 1893 edition of North American Review.

William Eustis Russell was born on January 6, 1857, in Cambridge, Massachusetts. He graduated from Harvard University in 1877 and, in 1879, graduated from Boston University Law School. He worked at his father’s law firm before deciding to enter politics, gaining a seat on the Cambridge Board of Aldermen in 1883. In 1884, he was elected mayor of Cambridge, Massachusetts, a post he held until 1887. After two unsuccessful campaigns for governor, he won his third attempt in 1890, winning as a Democrat in the heavily Republican state. He remained in office until 1894, when he decided not to run for a fourth one-year term. He remained active in Massachusetts politics until his death on July 14, 1896.

Governor Russell’s comments recognize that the United States and the rest of the world, as a result of the Panic of 1893, were entering a severe economic depression, one that would impact every industrial sector. Some of the causes of this depression went beyond the scope of any legislative action, he wrote. However, some of the causes could have been avoided altogether if “unwise” legislation had not been passed into law, he adds.

Russell acknowledged that it was difficult to legislate on matters of business. Striking a balance between passing laws that protect the American economy and interfering in business matters was a vexing endeavor, he writes. Nevertheless, legislators frequently made attempts on this front. The Democratic governor says that the Republican Congress was culpable for the ongoing fiscal crisis, as these leaders–before the elections of 1892–were responsible for passing legislation that negatively affected the business and economic interests of the country. Among these missteps, he claims, were protectionist and monetary policies enacted by the Republican-controlled legislature. Even though Congress returned to Democratic control, it would take time, he writes, to undo the Republican-passed laws that were to blame for the crisis.

Russell cites two major Republican-passed laws that he said contributed to the crisis. The first was a series of bills that increased tariffs and applied taxes on other items. Democrats had criticized such measures (including one filed by Senator William McKinley) on the grounds that, by raising tariff rates, the laws were dramatically impacting revenues, generating fewer imports.

The second law–the Sherman Act–was even more impactful, Russell says. There was a great deal of political posturing when the Senate took up the act’s passage, Russell states. “Silver men” strong-armed both Democrats and Republicans alike into ensuring its passage as well as the admission into the Union of silver-rich states. The debate over the act’s merits and risks, Russell says, was certainly not evenly split along party lines. However, Russell points at the Republicans for their uncompromising approach to passage.

When the aforementioned taxation and silver laws began to have ill effects on the American economy, Russell says, Republicans were quick to place blame not on the Sherman Act but on the laws passed later by Democrats. Russell argues that, while the Republicans sought to escape their culpability, the Democrats were unified in undoing these two measures (the Sherman Act and the McKinley tariff law). Russell cites the testimony of a number of key industry leaders, organizations, and officials (including Sherman himself) who, when these laws were being passed, argued in favor, only to reverse their positions when the economy went sour.

Russell then turns to several industries in his home state as evidence of the need to follow the Democratic course. The wool industry, he said, would benefit greatly from a reduction in tariffs, as would the shoe and leather industries. The oil, coal, and iron industries, he adds, all stood in favor of repealing McKinley’s tariffs. The Democrats, Russell concludes, offered sound policies that included the repeal of both Sherman and McKinley’s respective laws.

Russell was elected governor in a state that was predominantly Republican, and although he had a reputation for attaining bipartisan support on a number of issues in Massachusetts, his experience working in the political minority brought out a sense of defiance. His defiance is evident in this article, wherein he offered his opinions on the causes of the Panic of 1893 and the subsequent depression. He assigned blame for the crisis to the Republicans, whom he said had forced onerous tariff increases and the Sherman Act through Congress and into law.

After the Civil War, Russell argued, the Republicans had introduced a series of tariffs that many (Russell included) believed became too prohibitive for US industries to maintain international business. Meanwhile, the so-called silver men (leaders who strongly advocated for the Sherman Act’s passage on behalf of the silver mines and farmers) refused to compromise on the silver issue, and Republicans simply acquiesced, Russell said. Some Democrats were willing to work with Republicans to establish sound policy, Russell insisted, but the Democrats were in the minority. Even now, he added, with the Democrats finally back in power in Congress, it would take a long time to undo those laws, especially when the Republicans shied away from taking responsibility for them.

Russell’s article is not just replete with political rhetoric. It includes a careful analysis of the depreciation of gold as a result of the Sherman Act. It also includes commentary from a number of leaders of key industries (such as the wool, steel, and coal sectors), all of whom argue that the McKinley tariffs and other tax laws were adversely impacting their businesses. Perhaps most integral to his argument is the inclusion of testimony from industry and political leaders who had originally advocated for Sherman and McKinley’s initiatives and who, when the crisis began, immediately recognized that the Sherman Act and the tariff increases were the main culprits. Russell’s politically charged comments aside, statements such as these were highly influential in bringing about both measures’ repeal as the depression took hold.

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