On this day in 1888, President Grover Cleveland, a New York Democrat, running against the Republican nominee, Benjamin Harrison, a former U.S. senator from Indiana, failed to secure a second term. The Republicans had chosen Harrison because of his Civil War record, his popularity with veterans and the fact that he came from a contested swing state — Indiana, with 15 electoral votes, which had gone to Cleveland in 1884.
Despite the fact that the economy was in good shape and the country was at peace, Harrison prevailed in the Electoral College, though by a narrow margin. Cleveland won a plurality of the popular vote. It was one of just four presidential contests in U.S. history in which the candidate who amassed the largest number of popular votes lost. The others occurred in 1824, 1876 and 2000.
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Harrison swept nearly the entire North and Midwest, losing only Connecticut and New Jersey, while narrowly carrying the swing states of New York and Indiana. Harrison’s margins in both states were around 1 percent of the total votes cast. Unlike the election of 1884, the machinations of the Tammany Hall political machine in New York City served to deny Cleveland, a reform-minded chief executive, the crucial electoral votes of his own home state.
By switching from the Democratic to the Republican column, New York and Indiana made the difference. They were the only states to switch. It would not be until the election of 2012 that just two states — North Carolina and Indiana — would again switch parties in consecutive presidential elections.
Tariff policy was the chief issue in the contest. Harrison backed industrialists and factory workers who favored keeping tariffs high, while Cleveland denounced them as unfair to consumers. His opposition to Civil War pensions and inflated currency also alienated many veterans and farmers.
SOURCE: WWW. PRINCETON.EDU/~ACHANEY/TMVE/WIKIK/DOCS/UNITED STATES_PRESIDENTIAL ELECTION,_1888.HTML