Just before President Benjamin Harrison left office in 1893 he claimed, "There has never been a time in our history when work was so abundant or when wages were so high." A few months later, the nation was in the worst depression it had ever experienced. Early in 1893, a chain of events occurred which thrust the U.S. economy into a depression. Many companies and railroads had borrowed heavily to make costly improvements. For instance, railroads began laying new track, building new stations, and improving bridges. Companies, likewise, had tried to increase revenue by automation. However, overexpansion cut into revenues, profits dwindled, and companies were unable to pay their debts resulting in worker layoffs. Neither the company nor its unemployed workers could pay their debts. This in turn effected the nation's banks. As customers defaulted on loans, banks were forced to close. The New York police estimated that 20,000 homeless and jobless people roamed the city's streets. Other cities faced the same situation. Henry Adams wrote of Boston, "Men died like flies under the strain and Boston grew suddenly old, haggard, and thin."
As the depression deepened, currency problems reached a critical stage. The Sherman Silver Purchase Act of 1890 had committed the government to buy 4.5 million ounces of silver each month. Every month the government exchanged gold, whose worth remained fairly constant, for less valuable silver. Fearful that the dollar, based on silver and gold was losing its value, businessmen began to exchange paper money and securities for gold. As a result, the nation's gold reserves dwindled. This action caused a panic and many rushed to redeem their paper money for gold. President Cleveland announced that he would call a special session of Congress in order to repeal the Sherman Silver Purchase Act, but the run on the banks continued. The Democratic Party was split on this issue and even Cleveland's own vice president, Adlai Stevenson opposed the repeal.
