When Cleveland took the oath of office in March 1893, hard times were prompting European investors to pull money out of the United States; farm foreclosures and railroad bankruptcies signaled economic trouble. A few weeks later, a Pennsylvania railroad went bankrupt, followed by several other companies. Investors panicked; the stock market crashed. By July, major banks had drained their reserves and “suspended,” unable to give depositors access to their money. By year’s end, five hundred banks and thousands of other businesses had gone under. “Boston,” one man remembered, “grew suddenly old, haggard, and thin.” The unemployment rate in industrial cities soared above 20 percent.

For Americans who had lived through the terrible 1870s, conditions looked grimly familiar. Even fresher in the public mind were recent labor uprisings, including the 1886 Haymarket violence and the 1892 showdown at Homestead — followed, during the depression’s first year, by a massive Pennsylvania coal strike and a Pullman railroad boycott that ended with bloody clashes between angry crowds and the U.S. Army. Prosperous Americans, fearful of Populism, were even more terrified that workers would embrace socialism or Marxism. Reminding Americans of upheavals such as the Paris Commune of 1871 and its bloody aftermath, conservative commentators of the 1890s launched America’s first “Red Scare” — a precursor to similar episodes of hysteria in the 1920s and 1950s.

In the summer of 1894, a further protest jolted affluent Americans. Radical businessman Jacob Coxey of Ohio proposed that the U.S. government hire the unemployed to fix America’s roads. In 1894, he organized hundreds of jobless men — nicknamed Coxey’s Army — to march peacefully to Washington and appeal for the program. Though public employment of the kind Coxey proposed would become central to the New Deal in the 1930s, many Americans in the 1890s viewed Coxey as a dangerous extremist. Public alarm grew when more protesters, inspired by Coxey, started out from Los Angeles, Seattle, and other cities. As they marched east, these men found warm support and offers of aid in Populist-leaning cities and towns. In other places, police and property owners drove marchers away at gunpoint. Coxey was stunned by what happened when he reached Capitol Hill: he was jailed for trespassing on the grass. Some of his men, arrested for vagrancy, ended up in Maryland chain gangs. The rest went home hungry.

As this response suggested, President Grover Cleveland’s administration was increasingly out of step with rural and working-class demands. Any president would have been hard-pressed to cope with the depression, but Cleveland made a particularly bad hash of it. He steadfastly resisted pressure to loosen the money supply by expanding federal coinage to include silver as well as gold. Advocates of this free silver policy (“free” because, under this plan, the U.S. Mint would not charge a fee for minting silver coins) believed the policy would encourage borrowing and stimulate industry. But Cleveland clung to the gold standard; however dire things became, he believed, the money supply must remain tied to the nation’s reserves of gold.

Even collapsing prices and a hemorrhage of gold to Europe did not budge the president. With gold reserves dwindling in 1895, he made a secret arrangement with a syndicate of bankers led by John Pierpont Morgan to arrange gold purchases to replenish the treasury. Morgan helped maintain America’s gold supply — preserving the gold standard — and turned a tidy profit by earning interest on the bonds he provided. Cleveland’s deal, once discovered, enraged fellow Democrats. South Carolina governor Ben Tillman vowed to go to Washington and “poke old Grover with a pitchfork,” earning the nickname “Pitchfork Ben.”

As the 1894 midterm elections loomed, Democratic candidates tried to distance themselves from the president. But on election day, large numbers of voters chose Republicans, who promised to support business, put down social unrest, and bring back prosperity. Western voters turned many Populists out of office. In the next congressional session, Republicans controlled the House by a margin of 245 to 105. The election began sixteen years of Republican national dominance.