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 Congress in the largest single turnover of power in American history.
The Republicans taking over 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 biggest economic depressions, the Panic of 1893.
Traditionally, the Congressional midterms serve as a referendum on a president’s performance. Over the past 100 years only two presidents, Franklin D. Roosevelt and George W. Bush, have had their party actually gain seats in a midterm election. So why was the 1894 election so punishing for a president who had been elected twice?
It's the economy, stupid.
During the Gilded Age of the late 19 century, there was ample economic growth, but much of it was dependent on high prices on basic goods. For half a decade prior, the grain market had suffered from over production, storms and then drought. In 1893, the wheat market crashed and several other commodity items followed suit.
The transportation industry was heavily dependent on the massive agricultural market and when that 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 went into bankruptcy. During the panic period, another 50 railroads would go under. Thirty 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 stop the buying of silver, which was threatening to deplete the gold reserve as speculators exchanged one metal for the other. But the repeal might have come too late. The national gold reserve had already fallen below $100 million, a psychological barrier raising deeper concerns for the health of the economy.
People rushed to get their money, causing a bank run. This resulted in a credit crunch that rippled through the economy. The financial panic prompted European investors to sell American stocks causing a stock market crash. Unemployment soon rose to 19 percent as close to 2.5 million men were out of work.
Republicans campaigned on three issues.
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 sentiment to try something else—anything else—was too much for the Democrats to overcome.
Democrat support was also being squeezed by the Populist movement, a left-wing crusade that pulled votes from angry farmers in the West and South. Highly critical of all big business (especially banks and railroads who were perceived to be responsible for the depression) the movement was very popular with labor, a mainstay for the Democratic Party.
The end result was nothing short of devastating. Almost 90 percent of northeastern and Midwestern House Democrats lost re-election. Even in the Deep South, a bastion of Democratic support since the Civil War, seats were lost in four states. In total, Democrats lost 116 seats in the House and five in the Senate. This was made all the worse, by today’s standards, because there were only 44 states in the Union.
The election had long-term impact on the Democratic Party. Between the Civil War and the midterm election of 1894, the influence of the two parties was generally divided. According to Donald A. Ritchie, Historian Emeritus of the United States 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 midterm election, Republicans controlled both the House and Senate for the next 16 years.
Grover Cleveland diligently worked through the loss for his remaining two years in office. He continued to push his policies of low or no tariffs, no silver standard, and neutrality on 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, Cleveland was replaced by then little-known Nebraska Representative William Jennings Bryan. Cleveland left office bitter and depressed and never forgave his party for abandoning him.