1895: U.S. gold supply running dry
The early 1890s were not kind to America's gold reserves. The nation's supplies of the precious metal swooned under the strain of the recently passed Sherman Silver Act as European investors, fearful that America was chucking gold for silver, increasingly sold their gold supplies overseas. Coupled with declining revenues triggered by various protective tariffs, the reserves plummeted, taking a severe toll on the economy. In 1893, the falling gold supply helped spark a debilitating financial crisis. Although President Grover Cleveland had long been urging Congress to abolish the Sherman Act, legislators only moved to kill the law after the crash. In the short term, the repeal did little to solve the nation's fiscal wounds, or to replenish the gold supply. By February 8, 1895, the gold supplies had thinned out to a paltry $41 million. With the U.S. Treasury teetering on the brink of bankruptcy, Cleveland intervened, and using a syndicate led by J.P. Morgan as an intermediary and U.S. bonds as bait, attempted to buy back gold from foreign investors. Cleveland sold roughly sixty-two million dollars worth of bonds, valued at 3.75 percent, to Morgan's syndicate. Morgan and company in turn shopped the issues to foreign parties for a handsome profit. Although clearly borne of desperation, the deal nonetheless provided some badly needed relief: it briefly spelled the gold crunch and saved the Treasury from disaster. However, the public paid no mind to these benefits and howled in protest at Cleveland's seeming willingness to hop into bed with Big Business. -Source: www.history.com
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