These jobs were typically filled under the spoils system, but Cleveland announced that he would not fire any Republican who was doing his job well, and would not appoint anyone solely on the basis of party service.[104] He also used his appointment powers to reduce the number of federal employees, as many departments had become bloated with political time-servers.[105] Later in his term, as his fellow Democrats chafed at being excluded from the spoils, Cleveland began to replace more of the partisan Republican officeholders with Democrats;[106] this was especially the case with policymaking positions.[107] While some of his decisions were influenced by party concerns, more of Cleveland's appointments were decided by merit alone than was the case in his predecessors' administrations.[108]
Cleveland also reformed other parts of the government. In 1887, he signed an act creating the Interstate Commerce Commission.[109] He and Secretary of the Navy William C. Whitney undertook to modernize the navy and canceled construction contracts that had resulted in inferior ships.[110] Cleveland angered railroad investors by ordering an investigation of western lands they held by government grant.