How Economic Turmoil Fueled the 1894 Midterm Landslide

Leading up to the November midterms in 1894, the Democrats were in trouble. Democratic President Grover Cleveland, elected just two years prior, was facing a catastrophic recession, a railroad strike and an army of jobless workers demonstrating in Washington, D.C. for relief.

Party leaders knew the Democrats could have a bad showing—but they did not realize just how bad it would be. In the end, Democrats lost more than 100 seats in the House of Representatives in the largest single turnover of power in American history.

The Republican takeover of Congress was another big defeat for Cleveland, who had been elected for his first term in 1884 only to lose four years later to Benjamin Harrison. He was reelected in 1892 but was facing one of the nation’s worse economic downturns—the Panic of 1893.

Traditionally, congressional midterms serve as a referendum on a president’s performance. Over the past 100 years, only three presidents—Franklin D. Roosevelt, Bill Clinton and George W. Bush—have had their parties actually gain seats in the House during a midterm election. So why was the 1894 election so punishing for a president who had been elected twice?

During the Gilded Age of the late 19th century, there was significant economic growth, but much of it was fueled by high tariffs on imported goods. For half a decade prior, the grain market had suffered from overproduction, storms and then drought. In 1893, wheat prices plunged, and prices for several other agricultural commodities followed.

The transportation industry was heavily dependent on the massive agricultural market, and when commodity prices crashed, it was only a matter of time before financially weaker railroad companies would fall. The first was the critically overextended Philadelphia and Reading Railroad. Twelve days before Cleveland was inaugurated, the company declared bankruptcy. During the Panic of 1893, another 50 railroads would go under. Dozens of steel companies would collapse in their wake.

Upon taking office, President Cleveland tried to stem the bleeding by convincing Congress to repeal the Sherman Silver Purchase Act. This would end the federal government’s mandatory silver purchases, which were threatening to deplete the Treasury’s gold reserves as holders of Treasury notes redeemed them for gold. But the repeal might have come too late. The Treasury’s gold reserves had already fallen below $100 million, a psychological barrier that raised deeper concerns about the health of the economy.

People rushed to get their money, triggering bank runs. This resulted in a credit crunch that rippled through the economy. The financial panic also prompted European investors to sell American stocks, contributing to a stock market crash. Unemployment soon rose to 19 percent, with close to 2.5 million men out of work.

By 1894, President Cleveland’s inability to quickly reverse the economic debacle led many voters to look for alternatives in Congress. The Republican message focused on three issues: tariffs (Republicans were for them; Cleveland was against) the silver standard (Republicans supported it; Cleveland had it repealed), and the Cuban War for Independence (Republicans promoted it; Cleveland stressed neutrality). These were tough positions for Democrats to defend, even without an economic crisis on their watch. The public’s desire for change—any kind of change—was too much for the Democrats to overcome.

Democratic support was also being squeezed by the Populist movement, a political movement that championed farmers and working-class Americans, drawing votes from angry farmers in the West and South. Highly critical of powerful corporations, especially banks and railroads, which many blamed for the depression, the movement also attracted support from some labor groups, traditionally an important Democratic constituency.

The end result was nothing short of devastating. Almost 90 percent of Northeastern and Midwestern House Democrats lost their reelection bids. Even in the Deep South, a bastion of Democratic support since the Civil War, Democrats lost seats in four states. In total, Democrats lost 125 seats in the House and five in the Senate. The scale of the defeat was even more striking given that the House had just 356 seats, compared with 435 today.

The election had a long-term impact on the Democratic Party. Between the Civil War and the 1894 midterms, political power frequently shifted between the two parties. According to Donald A. Ritchie, historian emeritus of the U.S. Senate, “Democrats won the popular vote in 1876 and 1888 while Republicans won the Electoral vote. Democrats often controlled the House while Republicans controlled the Senate. The Supreme Court was filled mostly by Republican presidents.” After the 1894 midterms, Republicans controlled both the House and Senate for the next 16 years.

Grover Cleveland continued to pursue his political agenda during his remaining two years in office. He maintained his support for lower tariffs, the gold standard and neutrality toward Cuba. He was quoted as saying, “A cause worth fighting for is worth fighting for to the end.”

Oddly, he sometimes promoted GOP-like policies such as vetoing “pork-barrel” bills, upgrading the U.S. military and extending the Monroe Doctrine to Venezuela. During the financial crisis, he called out federal troops to stop the violence during the Pullman Strike. This endeared him to big business, but further alienated him from the ranks of labor. At the 1896 National Democratic Convention, the party nominated then little-known Nebraska Representative William Jennings Bryan as president instead of renominating Cleveland. Cleveland left office bitter and depressed and never forgave his party for abandoning him.