History Repeating Itself: Trump, Cleveland, and the Cycles of Leadership and Division
In the annals of American history, only one president has been elected, lost re-election, and then returned to the presidency for a non-consecutive second term—until now. Grover Cleveland, the 22nd and 24th president, achieved this rare political feat, navigating a deeply divided nation in the late 19th century. Today, as Donald Trump begins his second term under similar circumstances, history offers lessons about leadership, division, and the cyclical nature of human progress.
Grover Cleveland, a staunch believer in small government, prioritized fiscal conservatism and sought to keep the federal government out of Americans’ lives. His policies often favored big business, aligning with his belief that a sound economy would benefit all. However, his actions, particularly during the Panic of 1893, polarized the nation and divided his party. The economic crisis, triggered in part by falling gold reserves, exposed the paradox of big business: corporations that demand government intervention during crises while resisting regulation during prosperity. Cleveland’s insistence on the gold standard and his controversial bond deal with J.P. Morgan to replenish gold reserves alienated many Americans, leaving labor and farmers feeling abandoned. The economic crisis, triggered in part by falling gold reserves, exposed the paradox of big business: corporations that demand government intervention during crises while resisting regulation during prosperity. Cleveland’s insistence on the gold standard and his controversial bond deal with J.P. Morgan to replenish gold reserves alienated many Americans, leaving labor and farmers feeling abandoned.
The Panic of 1893 led to a significant economic downturn, marked by business failures, widespread unemployment, and financial instability. Though the Dow Jones Industrial Average (DJIA) was first calculated in May 1896—three years after the panic—it provides valuable insight into the economic climate of the time. Starting at 40.94, the DJIA declined to 28.48 on August 8, 1896, a drop of approximately 30%. This period of financial distress reflected broader economic struggles, including bank failures and unemployment that soared to 20%. However, by July 1897, the DJIA rebounded to 47.88, representing a recovery of over 68% from its lowest point. This recovery signaled the end of one of the most prolonged economic downturns in U.S. history.
Fast forward to Donald Trump, whose presidency has also been defined by a divided nation and an evolving economy. Like Cleveland, Trump’s policies have often leaned toward deregulation and fostering business growth. Yet, his tenure is marked by polarization, with sharp swings in public opinion. As Trump enters his second term, echoes of Cleveland’s time in office reverberate. Trump faces challenges surrounding the rise of digital currency, inflation concerns, and whispers of a move away from paper dollars—rumors that, while unfounded, could trigger market volatility akin to the Panic of 1893.
For investors, these historical cycles offer guidance. Markets, like societies, are influenced by human emotion—fear, greed, and the tendency to repeat patterns. As we approach the spring, caution is warranted. A slightly bullish outlook may hold as the Federal Reserve remains stimulative, but history advises prudence. April could present opportunities, but as May approaches, adopting an underweight position in stocks might align with the time-tested adage: “Sell in May and go away.” By June, a neutral stance may be prudent, allowing flexibility in response to evolving market conditions.
The paradox of government role persists, as it did in Cleveland’s time. Businesses demand freedom in prosperity and assistance in crisis. As Trump navigates his second term, history reminds us that division is not new, and progress often comes with steps backward. By learning from the past, we can strive for a future that balances growth, equity, and resilience. In the end, the market, like society, will find its equilibrium—guided by caution, history, and the enduring belief in upward evolution.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Private Wealth Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning past performance are not intended to be viewed as an indication of future results.