In the following year (1888), however, the Democrats renominated Cleveland, and the Republicans nominated Benjamin Harrison of Indiana. The campaign turned on the tariff issue, and Harrison was elected, receiving 233 electoral votes to 168 for Cleveland, who however received a popular plurality of more than 100,000. Cleveland retired to private life and resumed the practice of the law in New York. He had married on the 2nd of June 1886 Miss Frances Folsom, a daughter of a former law partner in Buffalo.
Congress had passed a law in 1878 requiring the treasury department to purchase a certain amount of silver bullion each month and coin it into silver dollars to be full legal tender. As no time had been fixed for this operation to cease, it amounted to an unlimited increase of a kind of currency that circulated at a nominal value much above its real value. Both political parties were committed to this policy, and strong passions were aroused whenever it was called in question. Cleveland had written a letter for publication before he became president, saying that a financial crisis of great severity must result if this coinage were continued, and expressing the hope that Congress would speedily put an end to it. In 1890 Congress, now controlled by the Republican party, passed the McKinley Bill, by which the revenues of the government were reduced by more than $60,000,000 annually, chiefly through a repeal of the sugar duties. At the same time expenditures were largely increased by liberal pension legislation, and the government's purchase of silver bullion almost doubled by the provisions of the new Sherman Silver Purchase Act of 1890.
In 1892 Cleveland was nominated for president a third time in succession. President Harrison was nominated by the Republicans. Cleveland received 277 electoral votes and Harrison 145, and 22 were cast for James B. Weaver (b. 1833) of Iowa, the candidate of the "People's" party. Cleveland's second term embraced some notable events. The most important was the repeal of the silver legislation, which had been a growing menace for fifteen years. Nearly $600,000,000 of "fiat money" had been thrust into the channels of commerce in addition to $346,000,000 of legal tender notes that had been issued during the Civil War. A reserve of $100,000,000 of gold had been accumulated for the redemption of these notes. In April 1893 the reserve fell below this sum. President Cleveland called an extra session of Congress to repeal the Silver Law. The House promptly passed the repealing act. In the Senate there was a protracted struggle. The Democrats now had a majority of that body and they were more decidedly pro-silver than the Republicans. The president had undertaken to coerce his own party to do something against its will, and it was only by the aid of the Republican minority that the passage of the repealing bill was at last made possible (October 30th). The mischief, however, was not ended. The deficit in the treasury made it inevitable that the gold reserve should be used to meet current expenses. Holders of the government's legal tender notes anticipating this fact presented them for redemption. Borrowing was resorted to by the government. Bonds were issued and sold to the amount of $162,000,000. The business world was in a state of constant agitation. Bank failures were numerous and commercial distress widespread. Among the consequences of the panic was a reduction of wages in many employments, accompanied by labour troubles more or less serious. The centre of disturbance was the Pullman strike at Chicago (q.v.), whence the disorder extended to the Pacific coast, causing riot and bloodshed in many places. President Cleveland waited a reasonable time, as he conceived, for Governor Altgeld of Illinois to put an end to the disorder in that state. On the 6th of July 1894, despite Governor Altgeld's protest, he directed the military forces of the United States to clear the way for trains carrying the mails. The rioters in and around Chicago were dispersed in a single day, and within a week the strike was broken.