During his first term in office (1885-1889) Cleveland faced the usual problem of filling government jobs with personal appointments, a deep change in personnel usually accompanying the election of a new president, especially if from a different party than the previous president.  But Cleveland announced that he would not remove office holders because of their political affiliation, though he did intend to reduce the size of a greatly inflated federal bureaucracy (because of the spoils system).  But eventually he bent to pressure from fellow Democrats to replace some of the Republican officeholders with Democrats, though he was even then restrained in doing so by comparison to previous presidential administrations.

He also tackled the job of improving the navy, by getting rid of inferior ships built by corrupt contractors.  He also had much of the railroad land in the West claimed by the railroads, but undeveloped by them, returned to federal government control.  And being a limited-government supporter, he cut back on the government's financial support of veterans and farmers that he felt appeared more like spoils than compassion, and which he was certain would merely set up a form of dependency on continuing government bail-outs.

Another troubling (and persistent) issue he faced was over this matter of the value of the national currency, the U.S. dollar.  The country was caught in deep controversy over the matter of inflation, easy credit, and a cheap dollar – versus a tight money policy. Logically speaking, it would seem that this was a matter for the government's financial experts to handle.  But after the Civil War this issue had become a matter of almost religious dimensions, so much had been printed and proclaimed on the subject.  It had become a matter of simple faith, especially among America's large farming and industrial working-class sectors, that the road to happiness would be easy credit and inflation: to gain higher wages at the workplace or to be able to pay back a loan later in currency that was cheaper in value than when the loan was first assumed.  The best way to do that was simply to have the government print dollars, lots of them.  Industrial owners and financiers however were very concerned about rising labor costs and the relative loss of the value of their investments through just such inflation and therefore they wanted dollars to remain relatively scarce and thus of ever-greater value.

For most ordinary Americans, the monetary theories involved in this matter were far too complex to follow, so they used the symbols of silver and gold to represent their respective positions.  Gold was scarce, and the tight money people insisted that each dollar printed be backed up in the nation's treasury by an equivalent value of gold, and gold alone.  Silver, on the other hand, was considered to be abundant and ever-increasing through the relatively easy possibility of more silver mining, and the easy-money people demanded that instead of gold (or at least in addition to gold) silver be the metallic basis for the nation's dollar supply.

So, silver versus gold became the hot national issue, symbolizing the deeper antagonisms between the industrial workers on the one hand and the business owners on the other, between the much humbler American classes in rural America and the growing numbers of up-East financiers – especially problematic if they happened to be Jewish.

In short, gold and silver became the rallying points in a growing class or social-cultural struggle tearing at the nation.  Of course these tensions had complex causes, but how easy it was to sum it all up in the question of gold versus silver!  And it all made for great conspiracy theories so appealing to the people who struggled to make sense of the difficult times they faced.

Like Grant before him, Cleveland was a gold man. Cleveland responded by attempting to cut back on the silver coinage which the government was required to mint under the Bland-Allison Act of 1878.  This cutback merely put Southerners and Westerners and their representatives in Congress in a deeply angry mood, inspiring Bland, author of the 1878 bill, to try to pass a new bill in 1886 calling for the unlimited minting of silver currency.  The bill did not pass, but left a bitter issue unresolved.

Another issue Cleveland was forced to tackle was the U.S. tariff. Cleveland strongly opposed the high tariffs imposed on foreign goods in order to protect the pricing of goods produced in America.  The tariff revenues collected on imports by the government were so high (about 47 percent of the value of the product itself) that the government was actually registering an embarrassing surplus in its operating budget.  But in trying to reduce those tariffs, Cleveland encountered stiff opposition from congressmen fearing that American industry might be damaged badly if those tariff protections were lowered.  Thus he got nowhere on this issue.

Although Cleveland won the popular vote in the election, he lost the electoral vote and thus his bid for a second term.  A big part of his defeat occurred because of his position on the tariff issue (he lost most of the northern industrial states). Also the team of his Republican opponent, Benjamin Harrison, had conducted a very aggressive (and somewhat questionable) campaign.  Cleveland even lost (narrowly) his home state of New York, because of the opposition organized against him by Tammany Hall.  If a mere 600 New York votes had gone to Cleveland instead of Harrison it would have given Cleveland the New York electoral vote (and the presidency), the voting being so close.

Harrison was the grandson of the Harrison who served only briefly as U.S. president before dying from a cold caught during his long inaugural address; grandson Benjamin's speech was half the length, also conducted in the rain, under an umbrella held by outgoing President Cleveland!

Harrison reversed Cleveland's course with respect to the tariff and veteran pensions, but tried to emulate Cleveland in appointing government personnel on the basis of proven merit rather than mere political connections.  But his idea of merit tended to favor those of his home state of Indiana and his Presbyterian church affiliation, to the anger of politicians from other parts and religious convictions of the nation.  And his generous pension payments to Civil War veterans (regardless of the merit) merely opened the opportunity for graft within the Pension Bureau, and a much-criticized reduction in the federal surplus.  And with the passage of the McKinley Tariff, Congress went even further than Harrison wanted to go, increasing the tariff even more, purposefully making some products impossible to import.

In answer to the clamor of farmers and miners, Harrison stood behind an Act sponsored by Senator John Sherman, thus the Sherman Silver Purchase Act of 1890.  Government purchase of silver had long been a goal of the farming world, and to this was added the voice of the mining world which was panicking because of the oversupply of silver produced by the metal's easy availability.  The price of silver dropped away (making it even more attractive to debtors as currency) putting the silver mining industry in a panic.  Silverites wanted full acceptance of silver as currency backing, at a fixed rate (well above the actual market value of the metal).  Sherman did not meet the full expectations of the Silverites, but did commit the government to a fixed amount of silver purchase, helping to keep the silver market from collapsing and confirming the government's commitment to silver as currency backing.  This was not a good long-term solution to any problem – and would ultimately serve as a major contributor to the Panic of 1893.

On the more positive side of the political ledger during Harrison's presidency was the antitrust legislation sponsored by the same Senator John Sherman (the Sherman Antitrust Act as it has been known subsequently) which Harrison signed into law in 1890.  Actually, the motivation behind the law was originally aimed as much at organized labor (labor unions) as it was at the huge financial trusts that controlled a great deal of the American rail, steel and financial industry.

Harrison also attempted to extend through the Justice Department protection of the civil rights of Black Americans by prosecuting those violating protective legislation already in place.  But this effort was stymied by the unwillingness of White juries to convict these violators.  Harrison's civil rights push for Blacks in other areas also failed in the face of opposition which arose in both Congress and the Supreme Court.

But towards the end of his presidential term the economic picture of the nation was worsening (just ahead of the Panic of 1893).  Things were not looking good for his re-election. Republicans had already lost seats in the 1890 elections and Harrison was experiencing the loss of support by members of his own party (many still upset over the lack of government appointments by Harrison).  Also American producers were awakening to the fact that the McKinley Tariff was hurting themselves badly as consumers. As a consequence, though re-nominated by the Republican Party, Harrison faced the national election without the party support nor the popular enthusiasm needed to retain the presidency.

Harrison found himself facing his old opponent, the Democrat and former President Grover Cleveland, replaying the same issues as four years earlier.  But unlike previous elections this one would be clean, and quiet. In the end, the 1892 election would prove to be a sad event for Harrison, not only in losing the election rather decisively but also his wife to tuberculosis just two weeks prior to the election itself.

A combination of bad economic news that hit at about the same time (early 1893) caused a run on America's scarce gold supply, leaving the federal treasury nearly out of gold and facing financial default.  The Philadelphia and Reading Railroad had become too ambitious and instead found itself in deep debt, so much so that just before Cleveland was sworn into office in March of 1893 the railroad company declared bankruptcy.  This was combined with a huge drop in wheat prices, a major international income earner for the nation.  Nervous investors, both at home and abroad, holding national and corporate bonds began to demand banks, including the U.S. Treasury, to exchange their bonds for gold.  Seeing this trend, others jumped in quickly, including the holders of silver coinage – which was greatly overvalued because of the nation's huge silver production stimulated by the Sherman Silver Purchase Act.

Seeing the Sherman Silver Purchase Act as part of the problem, Cleveland convinced Congress to repeal the Act, ending the requirement of the government to purchase a fixed amount of silver.  This in turn caused the price of silver to drop drastically, hurting people who held cash reserves in silver (which included a lot of people!).

But Cleveland's action did not bring the Panic to an end. Businesses and then banks began to fail, one after another as investors backed out of the world of investment, or simply just failed as stock values crashed.³  Soon unemployment went from 3 percent in 1892 to nearly 12 percent in 1893, to over 18 percent the following year, and then it hung at around the 14 percent figure for the next three years after that.

Labor unrest rocked the nation.  In 1894 Ohio businessman Jacob Coxey led a march of unemployed workers on Washington. Many dropped out along the way and the final demonstration was fairly tame, though it certainly alerted the nation to the growing discontent of the U.S. workforce.  More violent was the Pullman Company strike by workers (organized by the Socialist leader Eugene Debs) demanding an end to the policy of low wages and the twelve-hour work day.  The strike quickly spread to other railway workers until by mid-1894, 125 thousand of them were on strike, virtually shutting down the U.S. rail network.  Since the trains carried the mail, Cleveland went after the strikers for violating federal law, resorting finally to sending troops to various points across the nation to make his point.

Meanwhile, Cleveland's assault on the silver market led the Populists (widely popular among American wheat and cotton farmers) to claim that undercutting silver and trying to rebuild the nation's gold holdings was simply an international conspiracy – predominantly Jewish – designed to destroy the American economy. However, at this point America was bleeding its gold reserves badly, not rebuilding them.

Then the formidable J.P. Morgan proposed to Cleveland that he would join with the Rothschild bankers of Paris to sell the government 3.5 million ounces of gold (about $65 million in value at the time) in exchange for thirty-year bonds.  As previously mentioned, at first U.S. President Cleveland turned down the offer but finally in 1895 accepted Morgan's offer.  Thus the U.S. Treasury was spared default.

Cleveland's efforts to resolve the complexities of the Panic seemed merely to undercut his standing with the agrarian and labor wings of his Democratic Party, which suffered a huge setback in the 1894 Congressional elections.  Then when in the summer of 1896 the Democratic Party gathered to nominate a presidential candidate, Cleveland was faced by William Jennings Bryan, of the strongly populist and Silverite wing of the party – a fiery orator who roused the convention with his challenge, "you shall not crucify mankind upon a cross of gold."  Bryan was subsequently nominated by the Democratic Party, and Cleveland went into political retirement at Princeton, New Jersey (becoming a trustee of the university).

³Estimates are that 500 banks and 15 thousand businesses failed during the 1893-1898 years of the Panic.