After he was elected president, Mrs. Harrison started working immediately to make life in the White House more comfortable for her large family. Neither cleanliness nor cooking were up to her practical standards, which helped her get along with the social duties expected of a First Lady in Washington society. That’s why Americans were shocked when she died two weeks before Harrison was reelected in 1892. Writing their daughter during the campaign, Harrison said, “The anxiety about your mother, makes life just now a burden and ambition a delusion.” 1
But economic problems soon demanded Harrison’s undivided attention. Using gold and silver as monetary instruments, the United States had fixed a mint ratio of sixteen ounces of silver as equal to one ounce of gold in the 1830s. Mine production increased the supply of silver, thus decreasing its value outside of government transactions, a condition exploited by speculators. Opposed to a political movement for free coinage of silver that could have flooded the market, Harrison agreed to a compromise by signing the Sherman Silver Purchase Act of 1890 that required the Treasury to purchase 4.5 million ounces of silver each month at the market price. Despite the his efforts, passage of the Act contributed to a 125% increase in the amount of silver coinage.2
The government’s price floor supporting the silver-mining industry contributed to a surplus of silver, a shortage of gold, and an increasing amount of speculation that lasted until financial distress occurred with an 1892 investment peak.
Three months after Harrison’s presidency ended, speculators panicked when India announced that it would stop minting silver coins. Since the United States was a major supplier of silver, a rush out of investments followed that caused a financial crash, with American silver dollars falling ten percent in value.3
Lessons from the 19th century and Harrison’s presidential experience could be applied to the present time, with government policies distorting price equilibrium in markets, by efforts to manipulate the value of American currency and fixing price floors for politically sensitive goods and services.4
1. Daniel C. Diller, “Biographies of the Presidents,” in Guide to the Presidency, Third Edition, 2 vols., ed. Michael Nelson (Washington: CQ Press, 2002), 2:1537. Harry J. Sievers, Benjamin Harrison: Hoosier President (The White House Years and After, 1889-1901), 3 vols. (Indianapolis: Bobbs-Merrill, 1968), 3:52-55, 3:241-242.
2. John Dobson, Bulls, Bears, Boom, and Bust: A Historical Encyclopedia of American Business Concepts (Santa Barbara: BAC-CLIO, 2007), 156-158.
3. Ibid., 181-182. Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1989), 255.
4. Associated Press, “E.E.C.’s Steel Price Floor,” The New York Times, December 24, 1983, 1:35. Judy Shelton, “Our One-Dollar Dilemma,” The Wall Street Journal, September 27, 2007, A17. Editorial Staff, “The Young and Jobless,” The Wall Street Journal, July 24, 2010, A12.