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Autobiography of John Sherman - Part 2
"If Grant intends to run for President I should be willing to come
on, because my duties would then be so clearly defined that I think
I could steer clear of the breakers--but now it would be impossible.
The President would make use of me to beget violence, a condition
of things that ought not to exist now.
"He has no right to use us for such purposes, though he is commander
in chief. I did suppose his passage with Grant would end there,
but now it seems he will fight him as he has been doing Congress.
I don't object if he does so himself and don't rope me in. . . .
"If the President forces me into a false position out of seeming
favor, I must defend myself. It is mortifying, but none the less
inevitable.
"Affectionately,
"W. T. Sherman."
(Telegram.)
"Washington, February 14, 1868.
"From St. Louis, February 14, 1868.
"To General U. S. Grant, Commander U. S. Army:
"Your dispatch informing me that the order for the Atlantic division
was issued, and that I was assigned to its command, is received.
"I was in hopes I had escaped the danger, and now, were I prepared,
should resign on the spot, as it requires no foresight to predict
such must be the inevitable result in the end.
"I will make one more desperate effort by mail, which please await.
(Signed) "W. T. Sherman, Lieutenant General."
(Telegram.)
"Dated St. Louis, February 14, 1868.
"Received at House of Representatives, February 14.
"To Hon. John Sherman:
"Oppose confirmation of myself as brevet general on ground that it
is unprecedented, and that it is better not to extend the system
of brevets above major general. If I can't avoid coming to Washington
I may have to resign.
"W. T. Sherman, Lieutenant-General."
This correspondence, some of which was published, excited a great
deal of attention, and I received many letters in regard to it,
one of which I insert:
"Washington, D. C., February 17, 1868.
"Dear Sherman:--How nobly and magnanimously your gallant brother
has acted. If A. J. was not callous to all that would affect
gentlemen generally, he would feel this rebuke stingingly. But
since he has betrayed the men who elected him he is proof against
such things.
"Yours very truly,
"Schuyler Colfax."
Upon the receipt of General Sherman's telegram I requested the
committee on military affairs to take no action upon his nomination,
as he did not desire, and would not accept, the proposed compliment.
This correspondence then followed:
"Headquarters Military Division of the Missouri.}
"St. Louis, Mo., February 17, 1868. }
"Dear Brother:-- . . . I have not yet got the order for the Atlantic
division, but it is coming by mail, and when received I must act.
I have asked the President to let me make my headquarters at New
York, instead of Washington, making my application of the ground
that my simply being in Washington will be universally construed
as rivalry to General Grant, a position which would be damaging to
me in the extreme.
"If I must come to Washington, it will be with a degree of reluctance
never before experienced. I would leave my family here on the
supposition that the change was temporary. I do not question the
President's right to make the new division, and I think Congress
would make a mistake to qualify his right. It would suffice for
them to nonconfirm the brevet of general. I will notify you by
telegraph when the matter is concluded.
"Affectionately,
"W. T. Sherman."
(Telegram.)
"Received Washington, February 20, 1868.
"From St. Louis, Mo., February 20, 1868.
"To General U. S. Grant:
"The President telegraphs that I may remain in my present command.
I write him a letter of thanks through you to-day. Congress should
not have for publication my letters to the President, unless the
President himself chooses to give them.
(Signed) "W. T. Sherman, Lieut. General."
"Headquarters Army of the United States.}
"Washington, February 21, 1868. }
"Dear Sir:--By General Grant's direction I inclose a copy of a
dispatch from General Sherman, seeming to indicate his preference
that the correspondence in question should not now be made public.
"Respectfully yours,
"C. B. Comstock, B. B. S.
"Hon. John Sherman, United States Senate."
A few days after this, General Sherman went to Washington in response
to the President's order, and while there had several interviews
with the President relating to the change of his command. He
objected very strongly, as has been seen, to any such change,
because he felt that he could not hold a command in Washington
without interfering with Grant's interests, and because he had a
rooted objection to living in Washington in the midst of the turmoil
of politics. These objections were embodied in three letters which
General Sherman wrote and showed to Grant before he sent them to
the President. One of them found its way into the public press,
and created a disturbance which called forth the following letters:
"Headquarters Army of the United States,}
"Washington, D. C., February 22, 1868. }
"Hon. J. Sherman, United States Senate.
"Dear Sir:--The 'National Intelligencer' of this morning contains
a private note which General Sherman sent to the President whilst
he was in Washington, dictated by the purest kindness and a
disposition to preserve harmony, and not intended for publication.
It seems to me that the publication of that letter is calculated
to place the general in a wrong light before the public, taken in
connection with what correspondents have said before, evidently
getting their inspiration from the White House.
"As General Sherman afterwards wrote a semi-official note to the
President, furnishing me a copy, and still later a purely official
one sent through me, which placed him in his true position, and
which have not been published, though called for by the 'House,'
I take the liberty of sending you these letters to give you the
opportunity of consulting General Sherman as to what action to take
upon them. In all matters where I am not personally interested,
I would not hesitate to advise General Sherman how I would act in
his place. But in this instance, after the correspondence I have
had with Mr. Johnson, I may not see General Sherman's interest in
the same light that others see it, or that I would see it in if no
such correspondence had occurred. I am clear in this, however,
the correspondence here inclosed to you should not be made public
except by the President, or with the full sanction of General
Sherman. Probably the letter of the 31st of January, marked
'confidential,' should not be given out at all.
"Yours truly,
"U. S. Grant."
The following letter was addressed to the "National Intelligencer,"
a Washington newspaper:
"United States Senate Chamber, }
"Washington, February 22, 1868.}
"Gentlemen:--The publication in your paper yesterday of General
Sherman's note to the President, and its simultaneous transmission
by telegraph, unaccompanied by subsequent letters withheld by the
President because they were 'private,' is so unfair as to justify
severe censure upon the person who furnished you this letter,
whoever he may be. Upon its face it is an informal private note
dictated by the purest motives--a desire to preserve harmony--and
not intended for publication. How any gentleman receiving such a
note could first allow vague but false suggestions of its contents
to be given out, and then print it, and withhold other letters
because they were 'private,' with a view to create the impression
that General Sherman, in referring to ulterior measures, suggested
the violent expulsion of a high officer from his office, passes my
comprehension. Still I know that General Sherman is so sensitive
upon questions of official propriety in publishing papers, that he
would rather suffer from this false inference than correct it by
publishing another private note, and as I know that this letter
was not the only one written by General Sherman to the President
about Mr. Stanton, I applied to the President for his consent to
publish subsequent letters. This consent was freely given by the
President, and I therefore send copies to you and ask their
publication.
"These copies are furnished me from official sources; for while I
know General Sherman's opinions, yet he did not show me either of
the letters to the President, during his stay here, nervously
anxious to promote harmony, to avoid strife, and certainly never
suggested or countenanced resistance to law--or violence in any
form. He no doubt left Washington with his old repugnance to
politics, politicians, and newspapers very much increased by his
visit here.
"John Sherman."
"United States Senate Chamber, February 23, 1868.
"Dear Brother:--I received your letters and telegrams, and did not
answer because events were moving so rapidly that I could say
nothing but might be upset before you got the letter.
"Now you can congratulate yourself upon being clear of the worst
complications we have ever had. Impeachment seems to be a forgone
conclusion so far as the House of Representatives is concerned,
based upon the alleged _forcible_ expulsion of Stanton. No one
disputes the right of the President to raise a question of law upon
his right to remove Stanton, but the forcible removal of a man in
office, claiming to be in lawfully, is like the forcible ejectment
of a tenant when his right of possession is in dispute. It is a
trespass, an assault, a riot, or a crime, according to the result
of the force. It is strange the President can contemplate such a
thing, when Stanton is already stripped of power, and the courts
are open to the President to try his right of removal. The President
is acting very badly with respect to you. He creates the impression
that you acted disingenuously with him. He has published your
short private note before you went to Annapolis, and yet refuses
to publish your formal one subsequently sent to him, because it
was 'private.' The truth is, he is a slave to his passions and
resentments. No man can confide in him, and you ought to feel
happy at your extrication from all near connection with him. . . .
Grant is anxious to have your letters published, since the note
referred to was published. I will see Grant and the President this
evening, and if the latter freely consents, I will do it informally;
but if he doubts or hesitates, I will not without your expressed
directions. In these times of loose confidence, it is better to
submit for a time to a wrong construction, than to betray confidential
communications. Grant will, unquestionably, be nominated. Chase
acquiesces, and I see no reason to doubt his election. . . .
"Affectionately,
"John Sherman."
"Headquarters Military Division of the Missouri.}
"St. Louis, Mo., February 25, 1868. }
"Dear Brother:-- . . . I am in possession of all the news up to
date--the passage of the impeachment resolution, etc.--but I yet
don't know if the nomination of T. Ewing, Senior, was a real thing
or meant to compromise a difficulty.
"The publication of my short note of January 18, is nothing to me.
I have the original draft which I sent through Grant's hands, with
his indorsement back to me. At the time this note must have been
given to the reporter, the President had an elaborate letter from
me, in which I discussed the whole case, and advised against the
very course he has pursued, but I don't want that letter or any
other to be drawn out to complicate a case already bad enough.
"You may always safely represent me by saying that I will not make
up a final opinion until called on to act, and I want nothing to
do with these controversies until the time comes for the actual
fight, which I hope to God may be avoided. If the Democratic party
intend to fight on this impeachment, which I believe they do not,
you may count 200,000 men against you in the south. The negroes
are no match for them. On this question, the whites there will be
more united than on the old issue of union and secession. I do
not think the President should be suspended during trial, and, if
possible, the Republican party should not vote on all side questions
as a unit. They should act as judges, and not as partisans. The
vote in the House, being a strictly party vote, looks bad, for it
augurs a prejudiced jury. Those who adhere closest to the law in
this crisis are the best patriots. Whilst the floating politicians
here share the excitement at Washington, the people generally
manifest little interest in the game going on at Washington. . . .
"Affectionately yours,
"W. T. Sherman."
"United States Senate Chamber.}
"Washington, March 1, 1868. }
"Dear Brother:--Your letter of the 25th is received. I need not
say to you that the new events transpiring here are narrowly watched
by me. So far as I am concerned, I mean to give Johnson a fair
and impartial trial, and to decide nothing until required to do
so, and after full argument. I regard him as a foolish and stubborn
man, doing even right things in a wrong way, and in a position
where the evil that he does is immensely increased by his manner
of doing it. He clearly designed to have first Grant, and then
you, involved in Lorenzo Thomas' position, and in this he is actuated
by his recent revolt against Stanton. How easy it would have been,
if he had followed your advice, to have made Stanton anxious to
resign, or what is worse, to have made his position ridiculous.
By his infernal folly we are drifting into turbulent waters. The
only way is to keep cool and act conscientiously. I congratulate
you on your lucky extrication. I do not anticipate civil war, for
our proceeding is unquestionably lawful, and if the judgment is
against the President, his term is just as clearly _out_ as if the
4th of March, 1869, was come. The result, if he is convicted,
would cast the undivided responsibility of reconstruction upon the
Republican party, and would unquestionably secure the full admission
of all the states by July next, and avoid the dangerous questions
that may otherwise arise out of the southern vote in the Presidential
election. It is now clear that Grant will be a candidate, and his
election seems quite as clear. The action of North Carolina removed
the last doubt of his nomination.
"Affectionately yours,
"John Sherman."
"Headquarters Military Division of the Missouri,}
"St. Louis, March 14, 1868. }
"Dear Brother:--I don't know what Grant means by his silence in
the midst of the very great indications of his receiving the
nomination in May. Doubtless he intends to hold aloof from the
expression of any opinion, till the actual nomination is made,
when, if he accepts with a strong radical platform, I shall be
surprised. My notion is that he thinks that the Democrats ought
not to succeed to power, and that he would be willing to stand a
sacrifice rather than see that result. . . . I notice that you
Republicans have divided on some of the side questions on impeachment,
and am glad that you concede to the President the largest limits
in his defense that are offered. I don't see what the Republicans
can gain by shoving matters to an extent that looks like a foregone
conclusion.
"No matter what men may think of Mr. Johnson, his office is one
that ought to have a pretty wide latitude of opinion. Nevertheless,
the trial is one that will be closely and sternly criticised by
all the civilized world. . . .
"Your brother,
"W. T. Sherman."
At this time I wrote from Washington:
"You notice the impeachment proceedings have commenced. As a matter
of course, I have nothing to say about them. It is strange that
they have so little effect on prices and business. The struggle
has been so long that the effect has been discounted. . . .
"The President was very anxious to send you to Louisiana, and only
gave it up by reason of your Indian command. He might think that
your visit to Europe now was not consistent with the reason given
for your remaining at St. Louis. Still, on this point you could
readily ask his opinion, and if that agrees with Grant's you need
feel no delicacy in going. No more favorable opportunity or time
to visit Europe will likely occur. . . ."
General Sherman replied:
"I hardly know what to think of the impeachment. Was in hopes Mr.
Johnson would be allowed to live out his term, and doubt if any
good will result by a change for the few months still remaining of
his term. A new cabinet, and the changes foreshadowed by Wade's
friends, though natural enough, would have insufficient time to do
any good. I have a private letter from Grant as late as March 18,
but he says not a word of his political intentions. So far as I
know, he would yet be glad of a change that would enable him to
remain as now. . . ."
On the 27th of February, 1868, Mr. Stevens made the following
report:
"The committee on reconstruction, to whom was referred, on the 27th
of January last, the following resolution:
'_Resolved_, That the committee on reconstruction be authorized
to inquire what combinations have been made or attempted to be made
to obstruct the due execution of the laws; and to that end the
committee have powers to send for persons and papers, and to examine
witnesses on oath, and report to this House what action, if any,
they may deem necessary; and that said committee have leave to
report at any time.'
"And to whom was also referred, on the 21st day of February, instant,
a communication from Hon. Edwin M. Stanton, Secretary of War, dated
on said 21st day of February, together with a copy of a letter from
Andrew Johnson, President of the United States, to the said Edwin
M. Stanton, as follows:
'Executive Mansion, }
'Washington, D. C., February 21, 1868.}
'Sir:--By virtue of the power and authority vested in me, as
President, by the constitution and laws of the United States, you
are hereby removed from office as secretary for the department of
war, and your functions as such will terminate upon the receipt of
this communication.
'You will transfer to Brevet Major General Lorenzo Thomas, Adjutant
General of the Army, who has this day been authorized and empowered
to act as Secretary of War _ad interim_, all records, books, papers,
and other public property now in your custody and charge.
'Respectfully yours,
'Andrew Johnson.
'Hon. Edwin M. Stanton, Washington, D. C.'
"And to whom was also referred by the House of Representatives the
following resolution, namely:
'_Resolved_, That Andrew Johnson, President of the United States,
be impeached of high crimes and misdemeanors.'
"Have considered the several subjects referred to them, and submit
the following report:
"That in addition to the papers referred to the committee, the
committee find that the President, on the 21st day of February,
1868, signed and issued a commission or letter of authority to one
Lorenzo Thomas, directing and authorizing said Thomas to act as
Secretary of War _ad interim_, and to take possession of the books,
records, and papers, and other public property in the war department,
of which the following is a copy:
'Executive Mansion, }
'Washington, February 21, 1868.}
'Sir:--Hon. Edwin M. Stanton having been this day removed from
office as secretary for the department of war, you are hereby
authorized and empowered to act as Secretary of War _ad interim_,
and will immediately enter upon the discharge of the duties pertaining
to that office. Mr. Stanton has been instructed to transfer to
you all the records, books, papers, and other public property now
in his custody and charge.
'Respectfully yours,
'Andrew Johnson.
'To Brevet Major General Lorenzo Thomas, Adjutant General of the
United States Army, Washington, District of Columbia.
'Official copy respectfully furnished to Hon. Edwin M. Stanton.
'L. Thomas
'Secretary of War _ad interim_.'
"Upon the evidence collected by the committee, which is herewith
presented, and in virtue of the powers with which they have been
invested by the House, they are of the opinion that Andrew Johnson,
President of the United States, be impeached of high crimes and
misdemeanors. They therefore recommend to the House the adoption
of the accompanying resolution:
"Thaddeus Stevens,
"George S. Boutwell,
"John A. Bingham,
"C. T. Hulburd,
"John F. Farnsworth,
"F. C. Beaman,
"H. E. Paine.
"Resolution providing for the impeachment of Andrew Johnson,
President of the United States:
'_Resolved_, That Andrew Johnson, President of the United States,
be impeached of high crimes and misdemeanors in office.'"
On the 24th of February the resolution providing for impeachment
was adopted by a vote of 126 yeas and 47 nays.
On the same day Mr. Stevens introduced the following resolution,
which was agreed to:
"_Resolved_, That a committee of two be appointed to go to the
Senate and, at the bar thereof, in the name of the House of
Representatives and of all the people of the United States, to
impeach Andrew Johnson, President of the United States, of high
crimes and misdemeanors in office, and acquaint the Senate that
the House of Representatives will, in due time, exhibit particular
articles of impeachment against him and make good the same; and
that the committee do demand that the Senate take order for the
appearance of said Andrew Johnson to answer to said impeachment.
"2. _Resolved_, That a committee of seven be appointed to prepare
and report articles of impeachment against Andrew Johnson, President
of the United States, with power to send for persons, papers, and
records, and to take testimony under oath."
The speaker then announced the following committees under these
resolutions:
"Committee to communicate to the Senate the action of the House
ordering an impeachment of the President of the United States:--
Thaddeus Stevens, of Pennsylvania, and John A. Bingham, of Ohio.
"Committee to declare articles of impeachment against the President
of the United States:--George S. Boutwell, of Massachusetts; Thaddeus
Stevens, of Pennsylvania; John A. Bingham, of Ohio; James F. Wilson,
of Iowa; John A. Logan, of Illinois; George W. Julian, of Indiana;
and Hamilton Ward, of New York."
The trial of this impeachment by the Senate was an imposing spectacle,
which excited profound interest during its continuance. It was
soon developed that the gravamen of the charges was not the removal
of Stanton, but was the attempt of the President to force General
Lorenzo Thomas into a high office without the advice and consent
of the Senate.
In the trial of this impeachment I wished to be, and I think I was,
absolutely impartial. I liked the President personally and harbored
against him none of the prejudice and animosity of some others.
I knew he was bold and rash, better fitted for the storms of
political life than the grave responsibilities of the chief magistrate
of a great country. His education, such as it was, was acquired
late in life, when his character was formed and his habits fixed.
Still, his mind was vigorous and his body strong, and when thoroughly
aroused he was an able speaker; his language was forcible and apt
and his influence over a popular audience was effective. I disliked
above all things to be a judge in his case. I knew some of my
associates were already against the President, and others were
decided in his favor. I resolutely made up my mind, so far as
human nature would admit, to fairly hear and impartially consider
all the evidence produced and all the arguments made.
The counsel for the President were Henry Stanbery, B. R. Curtis,
Jeremiah S. Black, William M. Evarts, William S. Groesbeck, and
Thomas A. R. Nelson. The managers on the part of the House of
Representatives were John A. Bingham, George S. Boutwell, James F.
Wilson, John A. Logan, Thomas Williams, Benjamin F. Butler and
Thaddeus Stevens. The trial lasted nearly two months, was ably
conducted on both sides, and ended by the acquittal of the President,
on the eleventh article of impeachment, by a vote of 35 guilty and
19 not guilty. Two-thirds of those voting not having pronounced
"guilty," as required by the constitution, the President was
acquitted upon this article. Two other articles were voted on with
the same result. Thereupon, on the 26th day of May, 1868, the
Senate sitting as a court of impeachment adjourned without day.
Mr. Stanton resigned and General Schofield became Secretary of War.
I voted for conviction for the reasons stated in the opinion given
by me. I have carefully reviewed this opinion and am entirely
content with it. I stated in the beginning my desire to consider
the case without bias or feeling. I quote in full the opening
paragraphs:
"This cause must be decided upon the reasons and presumptions which
by law apply to all other criminal accusations. Justice is blind
to the official station of the respondent, and to the attitude of
the accusers speaking in the name of all the people of the United
States. It only demands of the Senate the application to this cause
of the principles and safeguards provided for every human being
accused of crime. For the proper application of these principles
we ourselves are on trial before the bar of public opinion. The
novelty of this proceeding, the historical character of the trial,
and the grave interests involved, only deepen the obligation of
the special oath we have taken to do impartial justice according
to the constitution and laws.
"And this case must be tried upon the charges now made by the House
of Representatives. We cannot consider other offenses. An appeal
is made to the conscience of each Senator of guilty or not guilty
by the President of eleven specific offenses. In answering this
appeal a Senator cannot justify himself by public opinion, or by
political, personal, or partisan demands, or even grave considerations
of public policy. His conscientious conviction of the truth of
these charges is the only test that will justify a verdict of
guilty. God forbid that any other shall prevail here. In forming
this conviction we are not limited merely to the rules of evidence,
which, by the experience of ages, have been found best adapted to
the trial of offenses in the double tribunal of court and jury,
but we may seek light from history, from personal knowledge, and
from all sources that will tend to form a conscientious conviction
of the truth. And we are not bound to technical definitions of
crimes and misdemeanors.
"A willful violation of the law, a gross and palpable breach of
moral obligations tending to unfit an officer for the proper
discharge of his office, or to bring the office into public contempt
and derision, is, when charged and proven, an impeachable offense.
And the nature and criminality of the offense may depend on the
official character of the accused. A judge would be held to higher
official purity, and an executive officer to a stricter observance
of the letter of the law. The President, bound as a citizen to
obey the law, and specially sworn to execute the law, may properly,
in his high office as chief magistrate, be held to a stricter
responsibility than if his example was less dangerous to the public
safety. Still, to justify the conviction of the President there
must be specific allegations of some crime or misdemeanor involving
moral turpitude, gross misconduct, or a willful violation of law,
and the proof must be such as to satisfy the conscience of the
truth of the charge.
"The principal charges against the President are that he willfully
and purposely violated the constitution and the laws, in the order
for the removal of Mr. Stanton, and in the order for the appointment
of General Thomas as Secretary of War _ad interim_. These two
orders were contemporaneous--part of the same transaction--but are
distinct acts, and are made the basis of separate articles of
impeachment."
I stated the grounds of my conviction that the action of the
President, in placing Lorenzo Thomas in charge of the office of
Secretary of War, without the advice and consent of the Senate,
was a clearly illegal act, committed for the purpose of obtaining
control of that office. I held that the President had the power
to remove Secretary Stanton, but that he had not the power to put
anyone in his place unless the person appointed was confirmed by
the Senate.
Did the act of March 2, 1867, commonly known as the "tenure of
office act," confer this authority? On the contrary, it plainly
prohibits all temporary appointments except as specially provided
for. The third section repeats the constitutional authority of
the President to fill all vacancies happening during the recess of
the Senate by death or resignation, and provides that if no
appointment is made during the following session to fill such
vacancy, the office shall remain in abeyance until an appointment
is duly made and confirmed, and provision is made for the discharge
of the duties of the office in the meantime. The second session
provides for the suspension of an officer during the recess, and
for a temporary appointment _during the recess_. This power was
exercised and fully exhausted by the suspension of Mr. Stanton
until restored by the Senate, in compliance with the law. No
authority whatever is conferred by this act for any temporary
appointment during the session of the Senate, but, on the contrary,
such an appointment is plainly inconsistent with the act, and could
not be inferred or implied for it. The sixth section further
provides:
"That every removal, appointment, or employment, made, had, or
exercised, contrary to the provisions of this act, and the making,
signing, sending, countersigning, or issuing of any commission or
letter of authority for, or in respect to, any such appointment or
employment, shall be deemed, and are hereby declared to be, high
misdemeanors, and, upon trial and conviction thereof, every person
guilty thereof shall be punished by a fine not exceeding $10,000,
or by imprisonment not exceeding five years, or both said punishments,
in the discretion of the court."
This language is plain, explicit, and was inserted not only to
prohibit all temporary appointments except during the recess, and
in the mode provided for in the second section, but the unusual
course was taken of affixing a penalty to a law defining the official
duty of the President. The original bill did not contain penal
clauses; but it was objected in the Senate that the President had
already disregarded mandatory provisions of law, and would this;
and therefore, after debate, these penal sections were added to
secure obedience to the law, and to give to it the highest sanction.
I quote my view of the action of the President:
"Was not this act willfully violated by the President during the
session of the Senate?
"It appears, from the letter of the President to General Grant,
from his conversation with General Sherman, and from his answer,
that he had formed a fixed resolve to get rid of Mr. Stanton, and
fill the vacancy without the advice of the Senate. He might have
secured a new Secretary of War by sending a proper nomination to
the Senate. This he neglected and refused to do. He cannot allege
that the Senate refused to relieve him from an obnoxious minister.
He could not say that the Senate refused to confirm a proper
appointee, for he would make no appointment to them. The Senate
had declared that the reasons assigned for suspending Mr. Stanton
did not make the case required by the tenure of office act, but I
affirm as my conviction that the Senate would have confirmed any
one of a great number of patriotic citizens if nominated to the
Senate. I cannot resist the conclusion, from the evidence before
us, that he was resolved to obtain a vacancy in the department of
war in such a way that he might fill the vacancy by an appointment
without the consent of the Senate, and in violation of the constitution
and the law. This was the purpose of the offer to General Sherman.
This was the purpose of the appointment of General Thomas. If he
had succeeded as he hoped, he could have changed his temporary
appointment at pleasure, and thus have defied the authority of the
Senate and the mandatory provisions of the constitution and the
law. I cannot in any other way account for his refusal to send a
nomination to the Senate until after the appointment of General
Thomas. The removal of Mr. Stanton by a new appointment, confirmed
by the Senate, would have complied with the constitution. The
absolute removal of Mr. Stanton would have created a temporary
vacancy, but the Senate was in session to share in the appointment
of another. An _ad interim_ appointment, without authority of law,
during the session of the Senate, would place the department of
war at his control in defiance fo the Senate and the law, and would
have set an evil example, dangerous to the public safety--one which,
if allowed to pass unchallenged, would place the President above
and beyond the law.
"The claim now made, that it was the sole desire of the President
to test the constitutionality of the tenure of office act, is not
supported by reason or by proof. He might, in August last, or at
any time since, without an _ad interim_ appointment, have tested
this law by a writ of _quo warranto_. He might have done so by an
order of removal, and a refusal of Mr. Stanton's requisitions. He
might have done so by assigning a head of department to the place
made vacant by the order of removal. Such was not his purpose or
expectation. He expected by the appointment of General Sherman at
once to get possession of the war department, so when General Thomas
was appointed there was no suggestion of a suit at law, until the
unexpected resistance of Mr. Stanton, supported by the action of
the Senate, indicated that as the only way left."
It is difficult to convey, by extracts, a correct idea of a carefully
prepared opinion, but this statement shows my view of the case,
and, entertaining it, I felt bound, with much regret, to vote
"guilty" in response to my name, but I was entirely satisfied with
the result of the vote, brought about by the action of several
Republican Senators. There was some disposition to arraign these
Senators and to attribute their action to corrupt motives, but
there was not the slightest ground for the imputations. Johnson
was allowed to serve out his term, but there was a sense of relief
when General Grant was sworn into office as President of the United
States.
CHAPTER XX.
THE FORTIETH CONGRESS.
Legislation During the Two Years--Further Reduction of the Currency
by the Secretary Prohibited--Report of the Committee of Conference
--Bill for Refunding the National Debt--Amounted to $2,639,382,572.68
on December 1, 1867--Resumption of Specie Payments Recommended--
Refunding Bill in the Senate--Change in My Views--Debate Participated
in by Nearly Every Senator--Why the Bill Failed to Become a Law--
Breach Between Congress and the President Paralyzes Legislation--
Nomination and Election of Grant for President--His Correspondence
with General Sherman.
During the 40th Congress, extending from the 4th of March, 1867,
to the 4th of March, 1869, the chief subjects of debate were the
contraction of the currency, the refunding of the public debt, the
payment of United States notes in coin, and a revision of the laws
imposing internal taxation and duties on imported goods.
Early in the first session of this Congress, the opposition of the
people to the policy of contraction, constantly pressed by Secretary
McCulloch, became so imperative that both Houses determined to take
from him all power to diminish the volume of currency then in
circulation. On the 5th of December, 1867, Robert C. Schenck,
chairman of the committee of ways and means, reported a bill in
the following words:
"_Be it enacted, etc._, That so much of an act entitled 'An act to
amend an act to provide ways and means to support the government,'
approved April 12, 1866, as authorizes the Secretary of the Treasury
to retire United States notes to an amount not exceeding $4,000,000
in any one month, is hereby repealed.
"Sec. 2. _And be it further enacted_, That from and after the
passage of this act the further reduction of the currency by retiring
or canceling United States notes shall be, and hereby is,
prohibited."
This bill was taken up for consideration on the 7th of December,
and, after a brief debate, with little opposition, passed the House
by the vote of 127 yeas and 32 nays. It was sent to the Senate,
referred to the committee on finance, and was carefully considered.
That committee, with but two dissenting voices, directed me to
report the bill to the Senate with a single amendment. On the 9th
of January, 1868, I called up the bill for consideration, and made
a brief explanation, in which I said the committee, after full
reflection, had thought proper to recommend the passage of the bill
of the House of Representatives, in substance as it was sent to
us, only changing the phraseology. I said that the bill contemplated
further legislation during that session. It was understood by all
that some more comprehensive measures must be adopted during that
session, but until further legislation there should be no more
contraction of the currency. I thus stated the reasons which, in
my opinion, justified the passage of the bill:
"_First_. It will satisfy the public mind that no further contraction
will be made when industry is in a measure paralyzed. We hear the
complaint from all parts of the country, from all branches of
industry, from every state in the Union, that industry for some
reason is paralyzed, and that trade and enterprise are not so well
rewarded as they were. Many, perhaps erroneous, attribute all this
to the contraction of the currency--a contraction that I believe
is unexampled in the history of any nation. $140,000,000 has been
withdrawn out of $737,000,000 in less than two years. There is no
example, that I know of, of such rapid contraction. It may be
wise, it may be beneficial, but still it has been so rapid as to
excite a stringency that is causing complaint, and I think the
people have a right to be relieved from that.
"_Second_. This bill will restore to the legislature their power
over the currency, a power too important to be delegated to any
single officer of the government. I do not wish to renew the
discussion that occurred here two years ago on the passage of the
law of April 12, 1866; but it is still my opinion, as it has been
always, that the question of the amount of currency ought to be
fixed by Congress. We have the power to coin money, and to regulate
the value thereof. We have coined money in the form of paper money,
and certainly the power of Congress in this respect ought not to
be delegated to any single officer. If contraction ought to be
established as a policy it should be by Congress, not by the
Secretary of the Treasury, and it is not wise to confer upon any
officer of the government a power of this kind, which can be and
may be properly controlled and limited by Congress.
"_Third_. This will strongly impress upon Congress the imperative
duty of acting wisely upon financial measures, for the responsibility
will then rest entirely upon Congress, and will not be shared with
them by the Secretary of the Treasury.
"_Fourth_. It will encourage business men to continue old, and
embark in new, enterprises, when they are assured that no change
will be made in the measure of value without the open and deliberate
consent of their representatives.
"These considerations are amply sufficient to justify this measure,
but it is only preliminary to others of far greater importance that
must command our attention. These involve--
"1. The existence of the banking system of the United States.
"2. The time and manner of resuming specie payments.
"3. The mode of redeeming the debt of the United States and the
kind of money in which it may be redeemed; and, in this connection,
the taxes, if any, that may be levied upon the public creditors.
"4. Such a reduction of our expenditures and taxes as will relieve
our constituents, as far as practicable, from the burdens resulting
from the recent war."
This led to a long debate, which continued until the 15th of January,
when the bill, as amended, passed by a vote of 33 years and 4 nays.
These decisive votes against contraction definitely settled the
policy of the government to retain in circulation the then existing
volume of United States notes. The disagreement between the two
Houses was referred to a committee of conference, and the conferees
reported the bill in the following form:
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_,
"That, from and after the passage of this act, the authority of
the Secretary of the Treasury to make any reduction of the currency,
by retiring or canceling United States notes, shall be, and is
hereby, suspended; but nothing herein contained shall prevent the
cancellation and destruction of mutilated United States notes, and
the replacing of the same with notes of the same character and
amount."
This bill was sent to the President, and, not having been returned
by him within ten days, it became a law without his approval, under
the constitution of the United States.
On the 17th of December, 1867, I reported from the committee on
finance a bill for refunding the national debt and for a conversion
of the notes of the United States. This bill was accompanied by
an elaborate report. This report was carefully prepared by me,
and met, I believe, the general approval of the committee on finance.
In that Congress there were but five Democratic Senators, and it
so happened that all the members of the committee on finance were
Republicans, but these represented widely different opinions on
financial subjects. I undertook, in this report, to deal in a
general way with these topics. Upon a careful reading of it now
I find but little that I do not approve. The general policy set
out in this report was subsequently embodied into laws, but the
measures relating to refunding the debt and the resumption of specie
payments were not adopted until several years after the date of
the report.
The ascertained debt on the first day of December, 1867, as stated
by the Secretary of the Treasury, was $2,639,382,572.68, divided
as follows:
Debt bearing coin interest.
5 per cent. bonds, 10-40's, and old fives $205,532,580.00
6 per cent. bonds of 1867 and 1868 . . . . 14,690,941.80
6 per cent. bonds, 1881 . . . . . . . . . 282,731,550.00
6 per cent. 5-20 bonds . . . . . . . . . . 1,324,412,550.00
Navy pension fund . . . . . . . . . . . . 13,000,000.00
----------------
$1,840,367,891.80
Debt bearing currency interest.
6 per cent. bonds . . . . . . . . . . . . $18,601,000.00
3-year compound interest notes . . . . . . 62,249,360.00
3-year 7-30 notes . . . . . . . . . . . . 285,587,100.00
3 per cent. certificates . . . . . . . . . 12,855,000.00
----------------
$379,292,460.00
Matured debt not presented for payment.
3 year 7-30 notes, due August 15, 1867 . . $2,855,400.00
Compound interest notes, matured June 10,
July 15, August 15, and October 15, 1867 7,065,750.00
Bonds, Texas indemnity . . . . . . . . . . 260,000.00
Treasury notes, acts July 17, 1861 and
prior thereto . . . . . . . . . . . . . 163,011.64
Bonds, April 15, 1842 . . . . . . . . . . 54,061.64
Treasury notes, March 3, 1863 . . . . . . 868,240.00
Temporary loan . . . . . . . . . . . . . . 2,880,900.55
Certificates of indebtedness . . . . . . . 31,000.00
----------------
$14,178,363.83
Debt bearing no interest.
United States notes . . . . . . . . . . . $356,212,473.00
Fractional currency . . . . . . . . . . . 30,929,984.05
Gold certificates of deposit . . . . . . . 18,401,400.00
----------------
$405,543,857.05
Total debt . . . . . . . . . . . . . . . . . . . . . . .
$2,639,382,572.68
Amount in treasury, coin . . . . . . . . . $100,690,645.69
Amount in treasury, currency . . . . . . . 37,486,175.24
Amount of debt less cash in treasury . . . . . . . . . . .
$2,501,205,751.75
Besides the amounts thus stated there were large balances due to
loyal states, upon accounts not then rendered or ascertained, and
to individuals for losses sustained during the war.
The ascertained debt consisted of twenty different forms of liability,
some payable in coin and some in lawful money. Much of this debt
was due on demand, but the great body of it was payable in from
one to twenty years, while the unascertained debt was being stated
from time to time and had to be met from accruing revenues. Nearly
$300,000,000 of debt had been paid out of current revenue since
the close of the war. The first recommendation of the committee
was that the debt should be refunded as rapidly as practicable into
bonds bearing as low a rate of interest as possible, payable in
twenty or thirty years, but redeemable at the pleasure of the United
States in five or ten years. This recommendation was based on the
fixed policy of the government to limit the duration of a bond
within its lifetime, and thus leave it to the option of the government
to pay its indebtedness and to reduce the rate of interest after
a brief period, if the condition of the public revenues and of the
money market should enable it to do so.
Here the question arose whether the bonds known as the 5-20 bonds
could be paid in lawful money after the period of five years, when,
by their terms, they were redeemable. These bonds promised to pay
so many dollars. Other bonds were specifically payable in coin,
and still other bonds were payable in lawful money; that is, in
United States notes. These notes were then at a discount, being
worth in the market about 88 cents in coin. But the notes were
obligations of the United States, and it was the duty, and then
within the power of the United States, to advance these notes to
par in coin.
The majority of the committee, I among them, believed that the
United States should not take advantage of its own wrong, in not
redeeming its notes in coin, but should either advance these notes
to par in coin, or pay its bonds in coin. The committee, therefore,
recommended that both the notes and bonds should be received in
exchange for the funding bonds, and that the notes should be reissued
and maintained at par with coin, and be supported by a reserve of
coin ample to maintain the notes at par with coin. In other words,
the United States would resume specie payments. The committee
expressed the opinion that, with the system of taxation then in
existence, this policy of refunding and resumption could be
maintained, and that the rate of interest then paid could be reduced
to four or five per cent., and the money then in circulation would
be kept at par with coin at the cost only of the interest on the
bullion and coin held to meet any notes presented for redemption.
The committee also recommended that the internal and tariff taxes
be revised to correct irregularities or defects, and to repeal such
as were oppressive.
While the committee opposed any contraction of the currency it also
opposed any increase of it. The general theory of the report was
to advance both bonds and notes to par in coin, and to issue bonds
in such form and terms that the government could redeem them, or
renew them at lower rates of interest.
The report states:
"Your committee are therefore of opinion that no legal tender notes,
beyond the amount now limited by law, should be issued under any
pressure of financial or political necessity until they are
convertible into gold and silver. Our duty is to elevate the
'greenback,' the standard of national credit, to the standard of
gold, the money of the world. Until then we are not on a substantial
foundation. Let us make the dollar of our promise in the pocket
of a laboring man equal to the dollar of our mint. The rapidity
of the process is a question of public policy. It may be by
gradually diminishing the volume of currency, or be left at its
present amount until increased business or improved credit bring
it up to the specie standard."
The refunding bill was taken up by the Senate on the 27th of
February, 1868, and was fully discussed by me. After stating its
general objects I said:
"It is with this view, and actuated by this principle, that the
committee on finance have endeavored to make this a bill of relief,
reducing, if possible, consistent with the public faith, the interest
of the public debt, and giving increased value to United States
notes. We have endeavored in this bill to accomplish three results:
First, to reduce the rate of interest with the voluntary consent
of the holders of our securities; second, to make a distinct
provision for the payment of the public debt; and third, to give
increased value to United States notes, and to provide for a gradual
resumption of specie payments. All these are objects admitted to
be of the highest importance. The only question is, whether the
measure proposed tends to accomplish them."
I then quoted the example of the United States and Great Britain
in reducing the rate of interest on public securities. I do not
approve all I said in that speech. It has been frequently quoted
as being inconsistent with my opinions and action at a later period.
It is more important to be right than to be consistent. I then
proposed to use the doubt expressed by many people as to the right
of the government to redeem the 5-20 bonds in the legal tender
money in circulation when the bonds were sold, as an inducement to
the holders of bonds to convert them into securities bearing a less
rate of interest but specifically payable in coin. Upon this policy
I changed my opinion. I became convinced that it was neither right
nor expedient to pay these bonds in money less valuable than coin,
that the government ought not to take advantage of its neglect to
resume specie payments after the war was over, by refusing the
payment of the bonds with coin. I acted on this conviction when
years afterwards the resumption act was adopted, and the beneficial
results from this action fully justified my change of opinion.
The debate on this bill was participated in by nearly every Senator,
and was conceded to be the most comprehensive and instructive debate
on financial questions for many years.
The bill, as it then stood, authorized the Secretary of the Treasury
to issue registered or coupon bonds of the United States, in such
form and of such denominations as he might prescribe, payable,
principal and interest, in coin, and bearing interest at the rate
of five per cent. per annum, payable semi-annually, such bonds to
be payable forty years from date and to be redeemable in coin after
ten years.
It authorized the exchange of the bonds commonly known as the 5-20
bonds for the bonds authorized by that bill. It also authorized
the holders of United States notes to the amount of $1,000, or any
multiple of that sum, to convert them into the five per cent. bonds
provided for by the bill. This bill passed the Senate on the 14th
of July, 1868. It passed the House of Representatives soon after,
with amendments that were disagreed to by the Senate. The bill
and amendments were referred to a conference committee which reported
a modified bill which passed both Houses and was sent to President
Johnson, but at so late a period of the session that it was not
approved by him and thus failed to become a law.
The committee on finance at the next and closing session of that
Congress deemed it useless to report another funding bill, and on
the 16th of December, 1868, I reported, by direction of that
committee, the following resolution:
"_Resolved by the Senate_, That neither public policy nor the good
faith of the nation will allow the redemption of the 5-20 bonds
until the United States shall perform its primary duty of paying
its notes in coin or making them equivalent thereto; and measures
shall be adopted by Congress to secure the resumption of specie
payments at as early a period as practicable."
This resolution was the foundation of the act "to strengthen the
public credit," the first act subsequently adopted in General
Grant's administration. Neither this nor any other financial
measure was pressed to a conclusion, as we knew that any measure
that would be sanctioned by Congress would probably be vetoed by
the President. This, however, did not stop the almost continuous
financial debate which extended to the currency, banking, funding
and taxation. The drift of opinion was in favor of resumption
without contraction, and funding at low rates of interest on a coin
basis. The wide breach between Congress and the President paralyzed
legislation. But one vital question had been settled, that no
further contraction of the currency should occur; and it was well
settled, though not embodied in law, that no question would be made
as to the payment of bonds in coin.
While Congress was drifting to a sound financial policy, the
President and his Secretary of the Treasury were widely divergent,
the former in favor of repudiation, and the latter in favor of
paying and canceling all United States notes.
President Johnson, in his last annual message to Congress, on the
9th of December, 1868, substantially recommended a repudiation of
the bonds of the United States, as follows:
"Upon this statement of facts it would seem but just and equitable
that the six per cent. interest now paid by the government should
be applied to the reduction of the principal in semi-annual
installments, which in sixteen years and eight months would liquidate
the entire national debt. Six per cent. in gold would, at present
rates, be equal to nine per cent. in currency, and equivalent to
the payment of the debt one and half times in a fraction less than
seventeen years. This, in connection with the other advantages
derived from their investment, would afford to the public creditors
a fair and liberal compensation for the use of their capital, and
with this they should be satisfied. The lessons of the past admonish
the lender that it is not well to be over anxious in exacting from
the borrower rigid compliance with the letter of the bond."
While the President wished to apply the interest on the United
States bonds to the redemption of the principal, the Secretary of
the Treasury was pressing for the restoration of the specie standard.
I quote from his report to Congress, made on the same day the
message of the President was sent us:
"The first and most important of these measures are those which
shall bring about, without unnecessary delay, the restoration of
the specie standard. The financial difficulties under which the
country is laboring may be traced directly to the issue, and
continuance in circulation, of irredeemable promises as lawful
money. The country will not be really and reliably prosperous
until there is a return to specie payments. The question of a
solvent, convertible currency, underlies all the other financial
and economical questions. It is, in fact, a fundamental question;
and until it is settled, and settled in accordance with the teachings
of experience, all attempts in other financial and economical
reforms will either fail absolutely, or be but partially successful.
A sound economy is the lifeblood of a commercial nation. If this
is debased the whole current of its commercial life must be disordered
and irregular. The starting point in reformatory legislation must
be here. Our debased currency must be retired or raised to the
par of specie, or cease to be lawful money, before substantial
progress can be made with other reforms."
Under these circumstances, it was manifest that no wise financial
legislation could be secured until General Grant should become
President of the United States.
The Republican national convention met at the city of Chicago, on
the 20th of May, 1868. It declared its approval of the reconstruction
policy of Congress, denounced all forms of repudiation as a national
crime, and pledged the national good faith to all creditors at home
and abroad, to pay all public indebtedness, not only according to
the letter, but the spirit, of the law. It favored the extension
of the national debt over a fair period for redemption, and the
reduction of the rate of interest whenever it could be honestly
made. It arraigned, with severity, the treachery of Andrew Johnson,
and deplored the tragic death of Abraham Lincoln. The entire
resolutions were temperate in tone; they embodied the recognized
policy of the Republican party, and made no issue on which Republicans
were divided.
The real issue was not one of measures, but of men. The nomination
of General Grant for President, and Schuyler Colfax for Vice
President, upon the basis of reconstruction by loyal men, was
antagonized by the nomination, by the Democratic convention, of
Horatio Seymour for President, and Francis P. Blair for Vice
President, upon the basis of universal amnesty, and immediate
restoration to power, in the states lately in rebellion, of the
men who had waged war against the government.
In this contest, Grant was the representative Union soldier of the
war, and Seymour was the special representative of the opponents
in the north to the war. Grant received 197 electoral votes, and
Seymour 72.
A few hours in advance of the meeting of the national convention,
there was a great mass meeting of soldiers and sailors of the war,
a delegation from whom, headed by General Lucius Fairchild, of
Wisconsin, entered the convention after its organization and
presented this resolution:
"_Resolved_, That as the soldiers and sailors, steadfast now as
ever to the Union and the flag, fully recognize the claims of Gen.
Ulysses S. Grant to the confidence of the American people, and
believing that the victories won under his guidance in war will be
illustrated by him in peace by such measures as will secure the
fruits of our exertions and restore the Union upon a loyal basis,
we declare our deliberate conviction that he is the choice of the
soldiers and sailors of the Union for the office of President of
the United States."
This resolution was received with great applause. Henry S. Lane,
of Indiana, leaped upon a chair, and moved to nominate Grant by
acclamation. This was done without rules and amid great excitement.
I need not say that I gave to General Grant my cordial and active
support. From the beginning of the canvass to the end, there was
no doubt about the result. I spoke on his behalf in several states
and had frequent letters from him. Assuming that his election was
already foreordained, I invited him to stop with me in Mansfield,
on his way to Washington, and received from him the following
autograph letter, which, though dated at Headquarters Army of the
United States, was written at Galena, Illinois:
"Headquarters Army of the United States,}
"Washington, D. C., October 26, 1868. }
"Dear Senator:--Your invitation to Mrs. Grant and myself to break
our journey east and spend a day or two with you was duly received,
and should have been sooner acknowledged. I thank you for the
invitation and would gladly accept it, but my party will be large
and having a special car it will inconvenience so many people to
stop over. Mrs. Grant too and her father are anxious, when they
start, to get through to Washington before they unpack.
"Yours truly,
"U. S. Grant.
"Hon. J. Sherman, U. S. S."
On the same day he wrote a letter to General Sherman, which was
referred to me by the latter. I regard this letter, which exhibits
closely the cordial relations existing, at the time, between the
two men, as of sufficient interest to justify its publication:
"Headquarters Army of the United States,}
"Washington, D. C., October 26, 1868. }
"Dear General:--Your letter inclosing one from your brother was
duly received. As I did not want to change your determination in
regard to the publication of the correspondence between us, and am
getting to be a little lazy, I have been slow in answering. I had
forgotten what my letter to you said but did remember that you
spoke of the probable course the Ewings would take, or something
about them which you would not probably want published with the
letters. The fact is, general, I never wanted the letters published
half so much on my own account as yours. There are a great many
people who do not understand as I do your friendship for me. I do
not believe it will make any difference to you in the end, but I
do fear that, in case I am elected, there will be men to advocate
the 'abolition of the general' bill who will charge, in support of
their motion, lack of evidence that you supported the Union cause
in the canvass. I would do all I could to prevent any such
legislation, and believe that without my doing anything the confidence
in you is too genuine with the great majority of Congress for any
such legislation to succeed. If anything more should be necessary
to prove the falsity of such an assumption the correspondence
between us heretofore could then be produced.
"I agree with you that Sheridan should be left alone to prosecute
the Indian War to its end. If no treaty is made with the Indians
until they can hold out no longer we can dictate terms, and they
will then keep them. This is the course that was pursued in the
northwest, where Crook has prosecuted war in his own way, and now
a white man can travel through all that country with as much security
as if there was not an Indian in it.
"I have concluded not to return to Washington until after the
election. I shall go very soon after that event, however. My
family are all well and join me in respects to Mrs. Sherman and
the children.
"Yours truly,
"U. S. Grant.
"Lt. Gen. W. T. Sherman, U. S. Army."
In the spring of 1871 there was a good deal of feeling against
Grant, and some opposition indicated to his renomination for the
presidency. Several influential papers had recommended the nomination
of General Sherman, who then, as always afterwards, had resolutely
announced his purpose not to allow his name to be used in connection
with the office of President. This suggestion arose out of the
feeling that injustice had been done to General Sherman by the
Secretary of War, Mr. Belknap, who practically ignored him, and
issued orders in the name of the President, greatly interfering
with the personnel of the army. This led to the transfer of General
Sherman from Washington to St. Louis. General Sherman made no
complaint of Grant, who had the power to control the action of the
Secretary of War, but the general impression prevailed that the
friendly relations that had always subsisted between the President
and General Sherman had been disturbed, but this was not true. I
have no doubt that Grant, in the following letter, stated truthfully
his perfect willingness that General Sherman should, if he wished,
be made his successor as President:
"Long Branch, N. J., June 14, 1871.
"Dear Senator:--Being absent at West Point until last evening, for
the last week, your letter of the 5th inst., inclosing one to you
from General Sherman, is only just received. Under no circumstances
would I publish it; and now that the 'New York Herald' has published
like statements from him it is particularly unnecessary. I think
his determination never to give up his present position a wise one,
for his own comfort, and the public, knowing it, will relieve him
from the suspicion of acting and speaking with reference to the
effect his acts and sayings may have had upon his claims for
political preferment. If he should ever change his mind, however,
no one has a better right than he has to aspire to anything within
the gift of the American people.
"Very truly yours,
"U. S. Grant.
"Hon. J. Sherman, U. S. S."
CHAPTER XXI.
BEGINNING OF GRANT'S ADMINISTRATION.
His Arrival at Washington in 1864 to Take Command of the Armies of
the United States--Inaugural Address as President--"An Act to
Strengthen the Public Credit"--Becomes a Law on March 19, 1869--
Formation of the President's Cabinet--Fifteenth Amendment to the
Constitution--Bill to Fund the Public Debt and Aid in the Resumption
of Specie Payments--Bill Finally Agreed to by the House and Senate
--A Redemption Stipulation Omitted--Reduction of the Public Debt--
Problem of Advancing United States Notes to Par with Coin.
President Grant entered into his high office without any experience
in civil life. In his training he was a soldier. His education
at West Point, his services as a subordinate officer in the Mexican
War, and as the principal officer in the Civil War of the Rebellion,
had demonstrated his capacity as a soldier, but he was yet to be
tested in civil life, where his duties required him to deal with
problems widely differing from those he had successfully performed
in military life. I do not recall when I first met him, but was
confident it was before his coming to Washington, in March, 1864,
to take command of the armies of the United States. His arrival
in Washington then was not generally known until he entered the
dining hall at Willard's hotel. He came in alone, and was modestly
looking for a vacant seat when I recognized him and went to him
and invited him to a seat at my table. He quietly accepted, and
then the word soon passed among the many guests to the tables, that
General Grant was there, and something like an ovation was given
him. His face was unknown, but his name and praise had been sounded
for two years throughout the civilized world. His coming to take
full command of the Union forces was an augury of success to every
loyal citizen of the United States. His personal memoirs, written
in the face of death, tell the story of his life in a modest way,
without pretension or guile. I am not sure that he added to his
fame by his eight years of service as President of the United
States, but what he did in subduing the Rebellion will always keep
his name among those of the greatest benefactors of his country.
He was elected because of his military services, and would have
been elected in 1868 by any party that put him in nomination,
without respect to platform or creed.
He opened his inaugural address with these words:
"Your suffrages, having elected me to the office of President of
the United States, I have, in conformity with the constitution of
our country, taken the oath of office prescribed therein. I have
taken this oath without mental reservation and with the determination
to do to the best of my ability all that it requires of me. The
responsibilities of the position I feel but accept them without
fear. The office has come to me unsought. I commence its duties
untrammeled. I bring to it a conscientious desire and determination
to fill it to the best of my ability to the satisfaction of the
people.
"On all leading questions agitating the public mind I will always
express my views to Congress, and urge them according to my judgment;
and when I think it advisable will exercise the constitutional
privilege of interposing a veto to defeat measures which I oppose.
But all laws will be faithfully executed whether they meet my
approval or not.
"I shall on all subjects have a policy to recommend, but none to
enforce against the will of the people. Laws are to govern all
alike, those opposed as well as those who favor them. I know no
method to secure the repeal of bad or obnoxious laws so effective
as their stringent execution."
And closed with these words:
"In conclusion I ask patient forbearance one toward another throughout
the land, and a determined effort on the part of every citizen to
do his share toward cementing a happy Union; and I ask the prayers
of the nation to Almighty God in behalf of this consummation."
I believe he strictly performed what he thought was his duty, and
if he erred, it was from a want of experience in the complicated
problems of our form of government. The executive department of
a republic like ours should be subordinate to the legislative
department. The President should obey and enforce the laws, leaving
to the people the duty of correcting any errors committed by their
representatives in Congress.
The first act of the 41st Congress, entitled "An act to strengthen
the public credit," was introduced in the House of Representatives
by General Schenck, on the 12th of March, 1869, and was passed the
same day. It came to the Senate on the 15th of March, and, on my
motion, was substituted for a similar bill, reported from the
committee on finance, and, after a brief debate, was passed by the
decisive vote of 42 yeas and 13 nays, as follows:
"That in order to remove any doubt as to the purpose of the government
to discharge all just obligations to the public creditors, and to
settle conflicting questions and interpretations of the law by
virtue of which said obligations have been contracted, it is hereby
provided and declared that the faith of the United States is solemnly
pledged to the payment in coin, or its equivalent, of all obligations
of the United States not bearing interest, known as United States
notes, and of all interest-bearing obligations of the United States,
except in cases where the law authorizing the issue of any such
obligations has expressly provided that the same may be paid in
lawful money or other currency than gold and silver. But none of
said interest-bearing obligations not already due shall be redeemed
or paid before maturity, unless at such time United States notes
shall be convertible into coin at the option of the holder, or
unless at such time bonds of the United States bearing a lower rate
of interest than the bonds to be redeemed can be sold at par in
coin. And the United States also solemnly pledges its faith to
make provision, at the earliest practicable period, for the redemption
of United States notes in coin."
It was approved by the President and became a law on the 19th of
March. Thus the controversy as to the payment of bonds in coin
was definitely decided.
But little else of importance was done by Congress during this
session. The usual general appropriation bill for the Indian
department having failed in the previous Congress, a bill for that
purpose was introduced in the House of Representatives and became
a law on the 10th of April. The bill to provide for deficiencies
was passed on the same day. A change was made in the tax on
distilled spirits and tobacco, and provision was made for submitting
the constitutions of Virginia, Mississippi and Texas to a vote of
the people. A number of measures of local importance were passed,
and, on the 10th of April, the Congress adjourned without day.
The Senate convened in pursuance of a proclamation of the President
immediately on the adjournment of Congress, and after a few days,
confined mainly to executive business, adjourned.
The early movements of Grant as President were very discouraging.
His attempt to form a cabinet without consultation with anyone,
and with very little knowledge, except social intercourse with the
persons appointed, created a doubt that he would not be as successful
as a President as he had been as a general, a doubt that increased
and became a conviction in the minds of many of his best friends.
The appointments of Stewart and Borie were especially objectionable.
George S. Boutwell was well fitted for the office of Secretary of
the Treasury, to which he was appointed after Stewart was excluded
by the law. Washburne was a man of ability and experience, but he
was appointed Secretary of State only for a brief time, and was
succeeded by Hamilton Fish. Mr. Fish was eminently qualified for
the office, and during both of the terms of Grant discharged the
duties of it with great ability and success. Jacob D. Cox, of
Ohio, was an educated gentleman, a soldier of great merit, and an
industrious and competent Secretary of the Interior.
The impression prevailed that the President regarded these heads
of departments, invested by law with specific and independent
duties, as mere subordinates, whose function he might assume. This
is not the true theory of our government. The President is intrusted
by the constitution and laws with important powers, and so by law
are the heads of departments. The President has no more right to
control or exercise the powers conferred by law upon them than they
have to control him in the discharge of his duties. It is especially
the custom of Congress to intrust to the Secretary of the Treasury
specific powers over the currency, the public debt and the collection
of the revenue. If he violates or neglects his duty he is subject
to removal by the President, or impeachment by the House of
Representatives, but the President cannot exercise or control the
discretion reposed by law in the Secretary of the Treasury, or in
any head or subordinate in any department of the government. This
limitation of the power of the President, and the distribution of
power among the departments, is an essential requisite of a republican
government, and it is one that an army officer, accustomed to give
or receive orders, finds it difficult to understand and to observe
when elected President.
Congress convened on the 6th of December, 1869. The chief
recommendations submitted to Congress by the President related to
the gradual reconstruction of the states lately in rebellion, to
the resumption of specie payments and the reduction of taxation.
The relations of Great Britain and the United States growing out
of the war were treated as a grave question, and a hope was expressed
that both governments would give immediate attention to a solution
of the just claims of the United States growing out of the Civil
War. The message was brief, modest, conservative and clear. He
closed by saying that on his part he promised a rigid adherence to
the laws and their strict enforcement.
The most important measure consummated during this Congress was
the adoption of the 15th amendment of the constitution of the United
States, declared, in a proclamation of the Secretary of State,
dated March 30, 1870, to have been ratified by the legislatures of
twenty-nine of the thirty-seven states, as follows:
"The right of citizens of the United States to vote shall not be
denied or abridged by the United States, or by any state, on account
of race, color, or previous condition of servitude."
It is a question of grave doubt whether this amendment, though
right in principle, was wise or expedient. The declared object
was to secure impartial suffrage to the negro race. The practical
result has been that the wise provisions of the 14th amendment have
been modified by the 15th amendment. The latter amendment has been
practically nullified by the action of most of the states where
the great body of this race live and will probably always remain.
This is done, not by an express denial to them of the right of
suffrage, but by ingenious provisions, which exclude them on the
alleged ground of ignorance, while permitting all of the white
race, however ignorant, to vote at all elections. No way is pointed
out by which Congress can enforce this amendment. If the principle
of the 14th amendment had remained in full force, Congress could
have reduced the representation of any state, in the proportion
which the number of the male inhabitants of such state, denied the
right of suffrage, might bear to the whole number of male citizens
twenty-one years of age, in such state. This simple remedy, easily
enforced by Congress, would have secured the right of all persons,
without distinction of race or color, to vote at all elections.
The reduction of representation would have deterred every state
from excluding the vote of any portion of the male population above
twenty-one years of age. As the result of the 15th amendment, the
political power of the states lately in rebellion has been increased,
while the population, conferring this increase, is practically
denied all political power. I see no remedy for this wrong except
the growing intelligence of the negro race, which, in time, I trust,
will enable them to demand and to receive the right of suffrage.
The most important financial measure of that Congress was the act
to refund the national debt. The bonds known as the 5-20's, bearing
interest at six per cent., became redeemable, and the public credit
had so advanced that a bond bearing a less rate of interest could
be sold at par. The committee on finance of the Senate, on the
3rd day of February, 1870, after more care and deliberation, than,
so far as I know, it has ever bestowed on any other bill, finally
reported a bill to fund the public debt, to aid in the resumption
of specie payments, and to advance the public credit.
The first section authorized the issue of $400,000,000 of bonds,
redeemable in coin at the pleasure of the United States, at any
time after ten years, bearing interest at five per cent.
The second section authorized the issue of bonds to the amount of
$400,000,000, redeemable at the pleasure of the government, at any
time after fifteen years, and bearing interest at four and a half
per cent.
The third section authorized the issue of $400,000,000 of bonds,
redeemable at any time after twenty years, and bearing interest at
the rate of four per cent.
The proceeds of all these bonds were to be applied to the redemption
of 5-20 and 10-40 bonds, and other obligations of the United States
then outstanding.
It will be perceived that this bill provided for the issue of
securities, all of which were redeemable within twenty years, and
two-thirds of which were redeemable within fifteen years, so that
if the bill, as reported by the committee on finance, had become
the law, no such difficulty as we labored under eighteen years
later, when we had a large surplus revenue, would have existed.
The bill passed the Senate, in substantially the form reported from
the committee on finance, by the large vote of 33 to 10, and was,
perhaps, the most carefully prepared of any of the financial measures
of the government.
In opening the debate, I called the attention of the Senate to the
great advantage the government had derived from making its bonds
redeemable at brief periods, like the 5-20 bonds, the 10-40 bonds,
and the treasury notes. I also called attention to the fact that
the same principle of maintaining the right to redeem had been
ingrafted in the bill then before the Senate, that the duration of
the bonds was divided into three periods of ten, fifteen, and twenty
years, during which time, by the gradual application of the surplus
revenue, the whole debt might be paid. This was the bill sent by
the Senate to the House of Representatives, and if it had been
adopted by the House, there would have been no trouble about the
application of the surplus revenue, but by common consent it would
have been used in the speedy extinction of the public debt.
The bill was sent to the House of Representatives on the 11th of
March, and there seems to have slept for nearly three months without
any action on the part of the House.
On the 6th of June the committee on ways and means reported House
bill 2167, covering the same subject-matters as were contained in
the Senate bill. The consideration of this bill was commenced, by
sections, on the 30th of June. The material part of the first
section of this bill is as follows:
"That the Secretary of the Treasury is hereby authorized to issue,
in a sum or sums not exceeding in the aggregate $1,000,000,000,
coupon or registered bonds of the United States, in such form as
he may prescribe, and of denomination of $50, or some multiple of
that sum, redeemable in coin of the present standard value at the
pleasure of the United States after thirty years from the date of
their issue, and bearing interest payable semi-annually in such
coin at the rate of four per cent. per annum."
Thus it will be perceived that instead of the three series of bonds
provided by the Senate, the House proposed to authorize the issue
of $1,000,000,000, redeemable in coin after thirty years from the
date of their issue, with interest at four per cent. This difference
in the description of the bonds was the chief difference between
the propositions of the House and the Senate. To emphasize this
difference I quote what was said by the chairman of the House
committee, Mr. Schenck, in reporting the bill:
"It is a proposition to refund a portion of the public debt of the
country at a very much lower rate of interest. It is a proposition
that $1,000,000,000 of that debt shall take the form of bonds, upon
which the United States will agree to pay only four per cent. per
annum. But, in order to make those bonds acceptable to capitalists
at home and abroad, further provision is made that the bonds
themselves shall have a longer time to run, not merely for thirty
years, but that they shall only be redeemable after thirty years;
thus giving them, without the objections, the advantages which in
a great degree attach to a perpetual loan."
This bill, with a very limited debate, passed the House on the 1st
of July, and then immediately was offered as a substitute for the
Senate bill, and was adopted.
Those two rival propositions, differing mainly upon the question
of the character of the bonds to be issued, were sent to a committee
of conference, composed on the part of the Senate of Messrs. Sherman,
Sumner and Davis. The chief controversy in the conference was as
to the description of funding bonds to be provided for. After many
meetings it was finally agreed that the bonds authorized should be
$200,000,000 five per cent. bonds, $300,000,000 four and a half
per cent. bonds, of the character described in the Senate bill,
and $1,000,000,000 of four per cent. bonds, as described in the
House bill. In other words, it was a compromise which, like many
other compromises, was in its results an injury of great magnitude,
but it was an honest difference of opinion between the Senate and
the House, in which, tested by the march of time, the Senate was
right and the House was wrong. But it was perfectly manifest that
without this concession by the Senate to the House, the bill could
not have passed, and even with this concession, the first report
of the committee of conference was disagreed to by the House,
because of certain provisions requiring the national banks to
substitute the new bonds as the basis of banking circulation.
This disagreement by the House compelled a second committee of
conference, in which the contested banking section was stricken
out, and the bill agreed to as it now stands on the statute books.
And thus thirty-year securities, subsequently at a premium of more
than twenty-five per cent., were forced into the law by the determined
action of the House.
This proved to be an error. No bonds should have been authorized
that did not contain a stipulation that the government might pay
them at pleasure, after a brief period and before they became due.
This stipulation during the war was inserted in the 5-20 and the
10-40 bonds. Its wisdom and importance were demonstrated by the
early substitution of bonds bearing a lower rate of interest for
the 5-20 six per cent. bonds. When this precedent was cited, and
its saving to the government shown, it was strongly urged by the
House conferees that such a provision would prevent the sale of
bonds, and that there was no probability that bonds bearing less
than four per cent. could be sold at any time at par. This was
proven to be an error within a short period, for securities of the
United States bearing three per cent. interest have been sold at
par.
Some years later, Senator Beck, of Kentucky, arraigned me for
consenting to the issue of bonds running thirty years, but I was
able to show by the public records that I resisted this long duration
of the four per cent. bonds, that the House insisted upon it, and
that Mr. Beck, then a Member of the House, voted for it. The same
objection was made by the Senate conferees to the bonds bearing
four and a half and five per cent., that no stipulation was made
authorizing the government to anticipate the payment of these bonds.
Under the Senate bill the bonds would have been redeemable in a
brief period, and would, no doubt, have been redeemed by bonds
bearing four, three and a half, or three per cent. interest.
The bill, as it passed, authorized the conversion of all forms of
securities, then outstanding, into the bonds provided for by the
refunding act at par one with the other. The Secretary of the
Treasury could sell the bonds provided for by the refunding act at
par, and with the proceeds pay off the then existing securities as
they became redeemable. In the discussion of this bill in the
Senate, on the 28th of February, 1870, I made a carefully prepared
speech, giving a detailed history of the various securities
outstanding, and expressed the confident opinion that the existing
coin bonds bearing six per cent. interest, and other securities
bearing interest in lawful money, could be refunded into bonds
running for a short period, bearing a reduced rate of interest.
I said:
"After a long and memorable debate of over two months in both Houses
of Congress, the act of February 25, 1862, was adopted. That was
a revolutionary act. It was a departure from every principle of
the financial policy of this government from its foundation. It
overthrew, not only the mode and manner of borrowing money, but
the character of our public securities, and was the beginning of
a new financial system, unlike anything that had been ventured upon
by any people in the world before. This new policy was adopted
under the pressure of the severest necessities, and only because
of those necessities, and was intended to meet a state of affairs
never foreseen by the framers of the constitution.
"Now, sir, it is important to understand the principles of this
act; for this act was the foundation of all the financial measures
during the war. It was upon the basis of this act, enlarged and
modified from time to time, that we were enabled to borrow
$3,000,000,000 in three years and to put down the most formidable
rebellion in modern history. This act was based upon certain
fundamental conditions.
"Extraordinary power was conferred upon the Secretary of the Treasury
to borrow money in almost any form, at home or abroad, practically
without limitation as to amount, or with limits repeatedly enlarged.
Every form of security which the ingenuity of man could devise was
provided for by this act or the acts amending it. Under these acts
bonds were issued, payable in twenty years, treasury notes were
issued, certificates of indebtedness, compound-interest notes, and
other forms of indebtedness, with varying rates of interest. There
were, however, distinct limitations upon the nature and character
of these loans. It was stipulated first, that more than six per
cent. interest in gold should not be paid on the bonds issued, nor
more than seven and three-tenths interest in currency should be paid
on the notes issued; and _second, all the loans provided by this
act were short loans_, redeemable within a short period of time at
the pleasure of the United States. Thus the gold bonds were
redeemable after five years, the treasury notes were redeemable
after three years, and all forms of security were within the power
of the United States at the end of five years at furthest. And
third, no securities were to be sold at less than par. Their
unavoidable depreciation was measured, not by the rate of their
discount, but by the depreciation of the currency. We held our
bonds at par in paper money, though at times they were worth only
forty per cent. of gold. . . .
"Now, Mr. president, it may be proper to state the reasons for this
policy. Short loans were adopted that we might not bind the future
to the payment of usurious rates of interest. We recognized the
existence of a great pressing necessity that would tend to depreciate
the public credit; and we took care, therefore, not to make these
loans for a long period, so as to bind the future to the payment
of the rates which we were then compelled to pay.
"We provided for gold interest and gold revenue, to avoid the
extreme inflations of an irredeemable currency. We wished to rest
our paper fabric on a coin basis, and to keep constantly in view
ultimate specie payments. I believe but for that provision in the
loan act of February 25, 1862, that in 1864 our financial system
would have been utterly overthrown. There was nothing to anchor
it to the earth except the collection of duties in coin and the
payment of the interest on our bonds in coin.
"But, sir, the most important and the most revolutionary principle
of the act of February 25, 1862, was the legal tender clause. This
was a measure of imperious and pressing necessity. I can recall
very well the debates in the Senate and in the House of Representatives
upon the legal tender clause. We were then standing in the face
of a deficit of some $70,000,000 of unpaid requisitions to our
soldiers. Creditors in all parts of the country, among them the
most powerful corporations of this country, had refused our demand
notes, then very slightly depressed. We were under the necessity
of raising two or three million dollars per day. We were then
organizing armies unheard of before. We stood also in the presence
of defeat, constant and imminent, which fell upon our armies in
all parts of the country. It was before daylight was shed upon
any part of our military operations. We adopted the legal tender
clause then as an absolute expedient. Remembering the debate, I
know with what slow steps the majority of the Senate came to the
necessity of adopting legal tenders."
The debt of the United States on the 31st of August, 1866, when it
reached its maximum, amounted to $2,844,649,627. On the 1st of
March, 1870, the debt had been reduced to less than $2,500,000,000,
of which about $400,000,000 was in United States notes, for the
redemption of which no provision was made. It was the confident
expectation of Congress, which proved to be correct, that before
the refunding operations were complete, the debt would be gradually
reduced, so that the sum of $1,500,000,000, provided for in the
law, would be sufficient to refund all existing debts, except United
States notes, into the new securities.
The process of refunding progressed slowly, was confined to the
five per cent. bonds, and was somewhat interrupted by the financial
stringency of 1873.
By the act approved January 20, 1871, the amount of five per cent.
bonds authorized by the act approved July 14, 1870, was increased
to $500,000,000, but the act was not to be construed to authorize
any increase of bonds provided for by the refunding act.
Prior to the 24th of August, 1876, there had been sold, for refunding
purposes, the whole of the $500,000,000 five per cents. authorized
by that act, and on that day Lot M. Morrill, Secretary of the
Treasury, entered into a contract for the sale of $40,000,000 of
the four and a half per cent. bonds authorized by the refunding
act. By this process of refunding an annual saving had been made
of $5,400,000 a year, by the reduction of interest in the sale of
$540,000,000 bonds. On the 9th day of June, 1877, I, as Secretary
of the Treasury, terminated the contract made by Mr. Morrill, my
predecessor, and placed on the market the four per cent. bonds
provided for by the refunding act. The subsequent proceedings
under this act will be more appropriately referred to hereafter.
The more difficult problem remained of advancing United States
notes to par in coin. This could be accomplished by reducing the
amount of these notes outstanding, and, thus, by their scarcity,
add to their value. They were a legal tender in payment for all
debts, public and private, except for duties on imported goods and
interest on the public debt. As long as these notes were at a
discount for coin they could circulate only in the United States,
and until they were at par with coin, coin would not circulate as
money in the United States, except to pay coin liabilities. The
notes were a dishonored, depreciated promise, the purchasing power
of which varied day by day, the football of "bulls and bears." In
many respects these notes were better than any other form of
depreciated paper money, for the people of the United States had
full confidence in their ultimate redemption. They were much better
and in higher favor with the people than the state bank notes which
they replaced and which were not only depreciated like United States
notes but had been often proven worthless in the hands of innocent
holders. They were as good as national bank notes, however well
secured, for these notes were not payable in coin, but could be
redeemed by United States notes. Still, with all their defects
the United States notes were the favorite money of the people, and
any attempt to contract their volume was met by a strong popular
opposition.
As already stated, the gradual reduction of the volume of United
States notes, urged so strongly by Secretary McCulloch, and provided
for by the resumption act, met with popular opposition and was
repealed by Congress. Under these conditions it became necessary
to approach the specie standard of value without a contraction of
the currency. The act to strengthen the public credit, already
referred to, was the beginning of this struggle. The government
was, by this act, committed to the payment of the United States
notes in coin or its equivalent. But when and how was not stated
or even considered. The extent to which Congress would then go,
and to which popular opinion would then consent, was the declaration
that the "United States solemnly pledges its faith to make provision
at the earliest practicable period for the redemption of United
States notes, in coin." Many events must occur before the fulfillment
of this promise could be attempted.
CHAPTER XXII.
OUR COINAGE BEFORE AND AFTER THE WAR.
But Little Coin in Circulation in 1869--General Use of Spanish
Pieces--No Mention of the Dollar Piece in the Act of 1853--Free
Circulation of Gold After the 1853 Act--No Truth in the "Demonetization"
Charge--Account of the Bill Revising the Laws Relative to the Mint,
Assay Offices and Coinage of the United States--Why the Dollar was
Dropped from the Coins--Then Known Only as a Coin for the Foreign
Market--Establishment of the "Trade Dollar"--A Legal Tender for
Only Five Dollars--Repeated Attempts to Have Congress Pass a Free
Coinage Act--How It Would Affect Us--Controversy Between Senator
Sumner and Secretary Fish.
At the date of the passage of the act "to strengthen the public
credit," on March 19, 1869, there was but little coin in circulation
in the United States except gold coin, and that was chiefly confined
to the Pacific coast, or to the large ports of entry, to be used
in payment of duties on imported goods. Silver coins were not in
circulation. The amount of silver coined in 1869 was less than
one million dollars and that mainly for exportation. Fractional
notes of different denominations, from ten to fifty cents, were
issued by the treasury to the amount of $160,000,000, of which
$120,000,000 had been redeemed, and $40,000,000 were outstanding
in circulation or had been destroyed. These fractional notes
superseded silver coin as United States notes superseded gold coin.
The coinage laws as they then existed were scattered through the
laws of the United States from 1793 to 1853, and were in many
respects imperfect and conflicting.
The ratio fixed by Alexander Hamilton, of fifteen ounces of silver
as the equivalent of one ounce of gold, was, at the time it was
adopted, substantially the market ratio, but the constant tendency
of silver to decline in relative value to gold had been going on
for years and it continued to decline, almost imperceptibly perhaps,
and the legal ratio in France having been fixed at fifteen and a
half to one, there was an advantage in shipping gold to that country
from this, and consequently very little if any of our gold, even
if coined, came into circulation. By the act of 1793 foreign coins
were made a legal tender for circulation in this country, and the
Spanish silver dollar, on which ours was founded, with the 8th or
"real" pieces, found great favor. Singularly enough, in Mexico
and the West Indies, the Spanish population would exchange their
dollars for ours, dollar for dollar, although their pieces, if not
worn, were each three grains heavier. This led to an exchange of
our dollars for the Spanish ones, which were promptly recoined at
the mint at a fair profit to the depositor.
This put upon the government the expense of manufacturing coins
with no advantage. The evil grew so great that in 1806 the further
coinage of our silver dollars was prohibited by President Jefferson,
in an order issued through the state department, as follows:
"Department of State, May 1, 1806.
"Sir:--In consequence of a representation from the director of the
Bank of the United States, that considerable purchases have been
made of dollars coined at the mint for the purpose of exporting
them, and as it is probable further purchases and exportations will
be made, the President directs that all the silver to be coined at
the mint shall be of small denominations, so that the value of the
largest pieces shall not exceed half a dollar.
"I am, etc.,
"James Madison.
"Robert Patterson, Esq., Director of the Mint."
The coinage of the silver dollar at our mint was not resumed until
1836. The small and worn Spanish pieces, being legal tender, also
drove from circulation our fractional coins coming bright and plump
from the mint. Bank notes and these worn pieces furnished the
circulation of the country.
The condition of the currency became so objectionable that in 1830
the subject was taken up by a special committee of the House of
Representatives, appointed for the purpose. Three reports were
submitted, in one of which the committee stated that of $37,000,000
coined at our mints only $5,000,000 remained in circulation. A
bill was submitted to the House fixing the ratio at 15.625 to one,
and was strongly urged. There appeared no special opposition to
the measure for a time, but the feeling of opposition to the
circulation of bank bills had become very strong among the people
and was reflected by the administration.
In the Senate the opposition to bank bills was headed by Thomas H.
Benton, who openly advocated so changing the coinage ratio that
gold would circulate to the exclusion of the notes, and perhaps
incidentally of silver also. The matter of providing for silver,
however, received little attention. The ratio was changed to
sixteen to one, John Quincy Adams and Daniel Webster joining with
Calhoun and Benton in bringing it about. It was well understood
at the time that the operation of this act would banish silver.
The object of the change was distinctly stated, especially by Mr.
Benton, who said:
"To enable the friends of gold to go to work at the right place to
effect the recovery of that precious metal, which their fathers
once possessed; which the subjects of European kings now possess;
which the citizens of the young republics to the south all possess;
which even the free negroes of San Domingo possess; but of which
the yeomanry of America have been deprived for more than twenty
years, and will be deprived forever, unless they discover the cause
of the evil and apply the remedy to its root."
By the act of 1834, superadded to by the act of 1837, the ratio of
sixteen to one instead of fifteen to one was adopted. The result
was that gold coins were largely introduced and circulated; but as
sixteen ounces of silver were worth more than one ounce of gold,
the silver coins disappeared, except the depreciated silver coin
of other countries, then a legal tender. To correct this evil,
Congress, on the 21st of February, 1853, provided for the purchase
of silver bullion by the government, to be coined by it and not
for the owners of the bullion. That was the first time the government
had ever undertaken to buy bullion for coinage purposes. It provided
for the purchase of silver bullion and the coinage of subsidiary
silver coins at the ratio of less than fifteen to one. No mention
was made of the dollar in the act of 1853. It had fallen into
disuse and when coined was exported, being more valuable as bullion
than as coin.
As the value of the minor coins was less that gold at the coinage
ratio, they were limited as a legal tender to five dollars in any
one payment. They were, in fact, a subsidiary coin made on government
account, and, from their convenience and necessity, were maintained
in circulation. They were similar to the coins now in use, revived
and re-enacted by the resumption act of 1875.
It was not the intention of the framers of this law to demonetize
silver, because they were openly avowed bimetallists, but it limited
coinage to silver bought by the government at market price. They
saw, in this expedient, a way in which silver could be more generally
utilized than in any other. Mr. R. M. T. Hunter, an avowed
bimetallist, in a report to the United States Senate, said:
"The mischief would be great indeed if all the world were to adopt
but one of the precious metals as the standard of value. To adopt
gold alone would diminish the specie currency more than one-half;
and the reduction the other way, should silver be taken as the only
standard, would be large enough to prove highly disastrous to the
human race."
He evidently did not consider the purchase of silver bullion at
its coinage value by the government, instead of the free coinage
of silver, as monometallism.
After the passage of the act of 1853, gold in great quantities,
the produce of the mines of California, was freely coined at the
ratio of sixteen to one, and was in general circulation. If, then,
the purchase of silver, instead of the free coinage of silver, is
the demonetization of silver, it was demonetized practically in
1834, and certainly in 1853, when the purchase of silver and its
use as money increased enormously. In 1852 the coinage of silver
was less than $1,000,000. In the next year the coinage of silver
rose to over $9,000,000, and reached the aggregate of nearly
$50,000,000 before the beginning of the Civil War. Then, as now,
the purchase of silver bullion led to a greater coinage than free
coinage.
This was the condition of our coinage until the war, like all other
great wars in history, drove all coins into hoarding or exportation,
and paper promises, great and small, from five cents to a thousand
dollars, supplanted both silver and gold.
When, therefore, it became necessary to prepare for the coinage of
gold and silver to meet the requirements of the act of 1869, "to
strengthen the public credit," it was deemed by the treasury
department advisable to revise and codify the coinage laws of the
United States. Mr. Boutwell, then Secretary of the Treasury, with
the assistance of John Jay Knox, deputy comptroller, afterwards
comptroller, of the currency, and the officers of the mints of the
United States, prepared a complete code of the coinage laws. It
was submitted to experts, not only to those in the treasury but
also to all persons familiar with the subject. The bill was
entitled, "An act revising and amending the laws relative to the
mint, assay offices, and coinage of the United States."
The law, tested by experience, is conceded to be an excellent
measure. A single provision of the bill has been the subject of
charges and imputations that the silver dollar was, in a fraudulent
and surreptitious way, "demonetized" by this act. There is not
the slightest foundation for this imputation. The bill was sent
to me as chairman of the committee on finance, and submitted to
the Senate with this letter:
"Treasury Department, April 25, 1870.
"Sir:--I have the honor to transmit herewith a bill revising the
laws relative to the mint, assay offices, and coinage of the United
States, and accompanying report. The bill has been prepared under
the supervision of John Jay Knox, deputy comptroller of the currency,
and its passage is recommended in the form presented. It includes,
in a condensed form, all the important legislation upon the coinage,
not now obsolete, since the first mint was established, in 1792;
and the report gives a concise statement of the various amendments
proposed to existing laws and the necessity for the change recommended.
There has been no revision of the laws pertaining to the mint and
coinage since 1837, and it is believed that the passage of the
inclosed bill will conduce greatly to the efficiency and economy
of this important branch of the government service.
"I am, very respectfully, your obedient servant,
"Geo. S. Boutwell, Secretary of the Treasury.
"Hon. John Sherman,
"Chairman Finance Committee, United States Senate."
Section 15 of the original bill omitted the silver dollar. It was
as follows:
"Sec. 15. _And be it further enacted_, That of the silver coin,
the weight of the half dollar, or piece of 50 cents, shall be 192
grains; and that of the quarter dollar and dime shall be, respectively,
one-half and one-fifth of the weight of said half dollar. That
the silver coin issued in conformity with the above section shall
be a legal tender in any one payment of debts for all sums less
than one dollar."
Section 18 prohibited all coins except those named, as follows:
"Sec. 18. _And be it further enacted_, That no coins, either gold,
silver, or minor coinage, shall hereafter be issued from the mint
other than those of the denominations, standards, and weights herein
set forth."
Special attention was called to the dropping out of the silver
dollar, both by Secretary Boutwell and Mr. Knox, and the opinion
of experts was invited and given on this special matter and
communicated to Congress. These sections, in the three years that
the bill was pending in Congress, were changed either in the House
or Senate in only one or two unimportant particulars.
Accompanying the report of Mr. Knox were the statements of Robert
Patterson, of Philadelphia, confessedly one of the ablest scientists
and metallists in the United States, in favor of dropping from our
coinage the silver dollar. Dr. Linderman, the director of the
mint, made the same recommendation. In the report accompanying
the introduction of the bill, under date of April 25, 1870,
Comptroller Knox gives the history of the silver dollar and the
reasons for its discontinuance as follows:
"The dollar unit, as money of account, was established by the act
of Congress April 2, 1792, and the same act provides for the coinage
of a silver dollar, 'of the value of a Spanish milled or pillar
dollar, as the same is now current.' The silver dollar was first
coined in 1794, weighing 416 grains, of which 371¼ grains were pure
silver, the fineness being 892.4. The act of January 18, 1837,
reduces the standard weight to 412½ grains, but increases the
fineness to 900, the quantity of pure silver remaining 371¼ grains
as before, and at these rates it is still coined in limited
amounts."
He then says:
"The coinage of the silver dollar piece, the history of which is
here given, is discontinued in the proposed bill. It is, by existing
law, the dollar unit, and assuming the value of gold to be fifteen
and one-half times that of silver, being about the mean ratio for
the past six years, is worth in gold a premium of about three per
cent. (its value being 103.12) and intrinsically more than seven
per cent. premium in our other silver coin, its value thus being
107.42. The present laws consequently authorize both a gold dollar
unit and a silver dollar unit, differing from each other in intrinsic
value. The present gold dollar piece is made the dollar unit in
the proposed bill, and the silver dollar piece is discontinued.
If, however, such a coin is authorized, it should be issued only
as a commercial dollar, not as a standard unit of account, and of
the exact value of the Mexican dollar, which is the favorite for
circulation in China and Japan and other oriental countries.
"Note.--Assuming the value of gold to be fifteen and one-half times
that of silver, the French 5-franc piece is worth about 96½ cents
(96.4784); the standard Mexican dollar 104.90, our silver dollar
piece 103.12, and two of our half-dollar pieces 96 cents."
The finance committee carefully examined the bill. We were not in
any hurry about it. It was sent to us in April, 1870, and was
printed and sent, by order of the Senate, to everyone who desired
to read it or look over it.
That committee was composed of Messrs. Sherman, Williams, Cattell,
Morrill, Warner, Fenton and Bayard.
The bill was reported unanimously to the Senate December 19, 1870,
after lying in the committee room for eight months.
The dollar was dropped from the coins in the bill framed in the
treasury department. It was then an unknown coin. Although I was
quite active in business which brought under my eye different forms
of money, I do not remember at that time ever to have seen a silver
dollar. Probably if it had been mentioned to the committee and
discussed it would have been thought, as a matter of course, scarcely
worthy of inquiry. If it was known at all, it was known as a coin
for the foreign market.
No one proposed to reissue it. The Pacific coast had six intelligent,
able, and competent Senators on the floor of the Senate. They
would have carefully looked out for the interest of silver, if the
bill affected them injuriously. The authority given in the bill
as it finally passed for coining the so-called trade dollar, met
all the demands of the silver producing states. But the silver
dollar at that time was worth more than the gold dollar. California
and Nevada were on the gold standard.
The bill was printed over and over again, finally reported, and
brought before the Senate. It was debated there for three days.
Every Senator from the Pacific coast spoke upon the measure.
Representing the committee, I presented the questions as they
occurred from time to time, until finally we differed quite seriously
upon the question of a charge for the coinage of gold. The only
yea and nay vote in the Senate on the passage of that bill, after
two days debate, occurred on the 10th of January, 1871. Those who
voted in favor of the bill were Messrs. Bayard, Boreman, Brownlow,
Casserly, Cole, Conkling, Corbett, Davis, Gilbert, Hamlin, Harlan,
Jewett, Johnston, Kellogg, McCreary, Morton, Nye, Patterson, Pomeroy,
Pool, Ramsey, Rice, Saulsbury, Spencer, Stewart, Stockton, Sumner,
Thurman, Tipton, Trumbull, Vickers, Warner, Willey, Williams, Wilson
and Yates--36.
Every one of the six members of the Pacific coast voted for the
bill after full debate.
Against this bill were Messrs. Abbott, Ames, Anthony, Buckingham,
Carpenter, Chandler, Fenton, Hamiliton, of Texas, Harris, Howell,
Morrill, of Vermont, Pratt, Scott and Sherman--14.
So on the only yea and nay vote which was ever taken upon the bill
I voted against it. It was not on account of demonetizing the
silver dollar. I did not do it because of that, but I did it
because gold was then only coined for the benefit of private
depositors; we were not using gold except for limited purposes.
Gold was the standard in California, and we thought the people of
that state ought to continue to pay the old and reasonable rate
for coinage of one-fifth of one cent to the dollar. No action was
taken on the bill in the House of Representatives, and it failed
to pass during that Congress. At the beginning of the next Congress
the bill was introduced by Wm. D. Kelley, and reported by him
favorably to the House of Representatives. It gave rise to
considerable debate, especially the section defining the silver
coins. No one proposed to restore the old silver dollar, but the
House inserted a coin precisely the equivalent of five francs, or
two half dollars of our subsidiary coin, and this franc dollar, as
it was called, was made, like other subsidiary coins, a legal tender
only for five dollars. On the 9th of April, 1872, Mr. Hooper,
having charge of the bill, called especial attention to the dropping
of the old dollar and the substitution of the French dollar. He
said, on April 9, 1872:
"Section 16 re-enacts the provisions of existing laws defining the
silver coins and their weights, respectively, except in relation
to the silver dollar, which is reduced in weight from 412½ to 384
grains; thus making it a subsidiary coin in harmony with the silver
coins of less denomination, to secure its concurrent circulation
with them. The silver dollar of 412½ grains, by reason of its
bullion and intrinsic value being greater than its nominal value,
long since ceased to be a coin of circulation, and is melted by
manufacturers of silverware. It does not circulate now in commercial
transactions with any country, and the convenience of those
manufacturers, in this respect, can better be met by supplying
small stamped bars of the same standard, avoiding the useless
expense of coining the dollar for that purpose. The coinage of
the half dime is discontinued for the reason that its place is
supplied by the copper nickel five-cent piece, of which a large
issue has been made, and which, by the provisions of the act
authorizing its issue, is redeemable in United States currency."
When the bill was sent to the Senate it, in compliance with the
memorial of the legislature of the State of California, inserted
in place of the French dollar, of 384 grains of standard silver,
a dollar containing 420 grains of standard silver, called the "trade
dollar." This was urged upon the ground that, as the Mexican dollar
contained 416 grains, or 3½ grains more than the old silver dollar,
it had an advantage in trade with China and Japan over our dollar,
and that a coin containing a few grains more than the Mexican dollar
would give our people the benefit of this use for silver. This
dollar was, in conference, agreed to by the House, but was a legal
tender for only five dollars. On final action on that bill, the
conferees on the part of the Senate were Messrs. Sherman, Scott
and Bayard. The amendment of the Senate adopting the trade dollar
was agreed to by the House, and the bill passed in both Houses
without a division.
There never was a bill proposed in the Congress of the United States
which was so publicly and openly presented and agitated. I know
of no bill in my experience which was printed, as this was, thirteen
times, in order to invite attention to it. I know no bill which
was freer than any immoral or wrong influence than this act of 1873.
During the pendency of this bill, the Senators and Representatives
from the Pacific coast were in favor of the single standard of gold
alone. This was repeatedly shown during the debates, but now they
complain that the silver dollar was demonetized, and that, though
present, taking the most active interest in the consideration of
the bill, they did not observe that the silver dollar was dropped
from the coinage. The public records are conclusive against this
pretense. Mr. Stewart, Senator from Nevada, and all the Senators
from the Pacific coast, who took an active part in the debate on
the bill, must have known of the dropping of the silver dollar from
the coinage. It appears from the "Congressional Record" that, on
the 11th of February, 1874, Mr. Stewart said:
"I want the standard gold, and no paper money not redeemable in
gold; no paper money the value of which is not ascertained; no
paper money that will organize a gold board to speculate in it."
Again, only a few days after this, on the 20th of February, when
he was speaking in favor of the resolution, instructing the committee
on finance to report a bill providing for the convertibility of
treasury notes into gold coin of five per cent. bonds, he said:
"By this process we shall come to a specie basis, and when the
laboring man receives a dollar it will have the purchasing power
of a dollar, and he will not be called upon to do what is impossible
for him or the producing classes to do, figure upon the exchanges,
figure upon the fluctuations, figure upon the gambling in New York;
but he will know what his money is worth. Gold is the universal
standard of the world. Everybody knows what a dollar in gold is
worth."
To review the history of the act of 1873: It was framed in the
treasury department after a thorough examination by experts,
transmitted to both Houses of Congress, thoroughly examined and
debated during four consecutive sessions, with information called
for by the House of Representatives, printed thirteen times by
order and broadly circulated, and many amendments were proposed,
but no material changes were made in the coinage clause from the
beginning to the end of the controversy. It added the French dollar
for a time, but that was superseded by the trade dollar, and neither
was made a legal tender but for five dollars. It passed the Senate
on the 10th of January, 1871--36 yeas and 14 nays--every Senator
from the Pacific coast voting for it.
It was introduced in the House of Representatives by Mr. Kelley,
at the next session. It was debated, scrutinized, and passed
unanimously, dropping the silver dollar, as directly stated by Mr.
Hooper. It was reported, debated, amended, and passed by the Senate
unanimously. In every stage of the bill, and every print, the
dollar of 412½ grains was prohibited, and the single gold standard
recognized, proclaimed, and understood. It was not until silver
was a cheaper dollar that anyone demanded it, and then it was to
take advantage of a creditor.
It has always been within the power of Congress to correct this
error, if error was made; but Congress has refused over and over
again to do it. When the controversy arose, in 1878, on the Bland
bill, and the House of Representatives proposed the free coinage
of silver, the Senate rejected it after a deliberate contest, and
substituted in place of it what is called the Bland-Allison act,
which required the purchase, by the government, of silver bullion
at its market value, and its coinage to a limited amount. Every
effort has been made, from that time to this, to have the Congress
of the United States pass a free coinage act.
If this is done, it will be to secure a cheaper dollar of less
purchasing power, with the view to enable debtors to pay debts,
contracted on the basis of gold coin, with silver coins, worth,
with free coinage, less than one-half of gold coins.
In reviewing, at this distance of time, the legislation of 1873,
in respect to the coinage of silver, I am of the opinion that it
was fortunate that the United States then dropped the coinage of
the old silver dollar. No one then contemplated the enormous yield
of silver from the mines, and the resulting fall in the market
value of silver, but, acting upon the experience of the past, that
a parity between silver and gold could not be maintained at any
fixed value, Congress adopted gold as the standard of value, and
coined silver as a subsidiary coin, to be received and maintained
at a parity with gold, but only a legal tender for small sums.
This was the principle adopted in the act of 1853, when silver was
more valuable than gold at the legal ratio. Silver was not then
coined into dollars, because it was then worth more as bullion than
as coin. It was needed for change, and, under the law of 1853, it
was furnished in abundance. Similar laws are now in force in all
countries where gold is the sole standard. Under these laws, a
larger amount of silver is employed as subsidiary coins than when
the coinage of silver was free.
The same condition of coinage now exists in the United States.
While silver is reduced in market value nearly one-half, silver
coins are maintained at par with gold at the old ratio, by fiat of
the government. It is true that the purchase of silver, under
recent laws, involved a heavy loss to the government, but the free
coinage of silver, under the ratio of sixteen to one, would exclude
gold from our currency, detach the United States from the monetary
standard of all the chief commercial nations of the world, and
change all existing contracts between individuals and with the
government. In view of these results, certain to come from the
free coinage of silver, I am convinced that until some international
arrangement can be made, the present system of coinage should
continue in force. This has now became a political, or, rather a
monetary question, to be decided sooner or later, by popular opinion,
at the polls. This subject will be further discussed at a later
period, when efforts were made to adopt the free coinage of silver
at the old ratio.
Prior to the meeting of Congress in December, 1870, a controversy
had arisen between Senator Sumner and Secretary Fish, which created
serious embarrassment, and I think had a very injurious influence
during that and succeeding sessions of Congress. Mr. Sumner had
long been chairman of the committee on foreign relations, and no
doubt exercised a domineering power in this branch of the public
service. Mr. Fish and Mr. Sumner had differed widely in respect
to the annexation of San Domingo and certain diplomatic appointments
and former treaties, among them the highly important English
negotiations for the settlement of claims growing out of the war.
On these topics the President and Mr. Sumner could not agree. Mr.
Sumner insisted that the hasty proclamation by Great Britain of
neutrality between the United States and the Southern Confederacy
was the gravamen of the Alabama claims. The President and Mr. Fish
contended that this proclamation was an act of which we could not
complain, except as an indication of an unfriendly spirit by Great
Britain, and that the true basis of the Alabama claims was that
Great Britain, after proclaiming neutrality, did not enforce it,
but allowed her subjects to build cruisers, and man, arm and use
them, under cover of the rebel flag, to the destruction of our
commercial navy.
This difference of opinion between the President and Mr. Sumner
led to the removal of John L. Motley, our minister to England, who
sided with Sumner, and unquestionably intensified the feeling that
had arisen from the San Domingo treaty.
As to that treaty it was a conceded fact that before the President
had become publicly committed to it he had, waiving his official
rank, sought the advice and counsel of Mr. Sumner, and was evidently
misled as to Mr. Sumner's views on this subject. The subsequent
debating, in both open and executive session, led to Mr. Sumner's
taking the most extreme and active opposition to the treaty, in
which he arraigned with great severity the conduct of the naval
officers, the Secretary of the Navy, Mr. Fish and the President.
This was aggravated by alleged public conversations with Mr. Sumner
by "interviewers," in which the motives of the President and others
were impugned.
In the meantime, social relations between the Secretary of State
and Mr. Sumner had become impossible; and--considering human passion,
prejudice and feeling--anything like frank and confidential
communication between the President and Mr. Sumner was out of the
question.
A majority of the Republican Senators sided with the President. We
generally agreed that it was a false-pretended neutrality, and not
a too hasty proclamation of neutrality, that gave us an unquestionable
right to demand indemnity from Great Britain for the depredations
of the Alabama and other English cruisers. And as for the San
Domingo treaty, a large majority of Republican Senators had voted
for it--though I did not; and nearly all of us had voted for the
commission of inquiry of which Mr. Wade was the chief member.
When we met in March, it was known that both these important subjects
would necessarily be referred to the committee on foreign relations,
and that, aside from the hostile personal relations of Mr. Sumner
and the Secretary of State, he did not, and could not, and would
not, represent the views of a majority of his Republican colleagues
in the Senate, and that a majority of his committee agreed with
him. Committees are and ought to be organized to represent the
body, giving a majority of the members to the prevailing opinion,
but fairly representing the views of the minority. It has been
the custom in the Senate to allow each party to choose its own
representatives in each committee, and in proportion to its numbers.
In the Republican conference the first question that arose was as
to Mr. Sumner. He was the oldest Senator in consecutive service.
He was eminent not only as a faithful representative of Republican
principles, but as especially qualified to be chairman of our
foreign relations. He had long held that position, and it was not
usual in the Senate to change the committees, but to follow the
rule of seniority, placing Senators of the majority party in the
order of their coming into the Senate and those of the minority at
the foot of the list.
In deciding Mr. Sumner's case, in view of the facts I have stated,
two plans were urged;
First--To place him at the head of the new and important committee
of privileges and elections, leaving the rest of the committee on
foreign relations to stand in the precise order it had been, with
one vacancy to be filled in harmony with the majority.
Second--To leave Mr. Sumner to stand in his old place as chairman,
and to make a change in the body of the committee by transferring
one of its members to another committee, and fill the vacancy by a
Senator in harmony with the majority.
My own opinion was that the latter course was the most polite and
just; but the majority decided, after full consideration and debate,
upon the first alternative.
Simon Cameron was next to Mr. Sumner on the list of Republican
members of the committee, and, by uniform usage, became its
chairman.
This affair created feeling in the Senate which it is difficult
now to realize, but it was decided in a Republican caucus, in which
there was an honest difference of opinion. We foresaw, whichever
way it should be decided, that it would create--and it did create
--bad feeling among Senators, which existed as long as Mr. Sumner
lived. I think it proper to make this statement of my own views
at the time, though by the happening of great events this incident
has almost passed out of memory.
Mr. Sumner died in Washington, March 11, 1874. He was distinguished
for his literary attainments, and his strong opposition to the
institution of slavery and his severe arraignment of it. The brutal
attack made upon him by Preston S. Brooks created profound sympathy
for him.
CHAPTER XXIII.
SOME EVENTS IN MY PRIVATE LIFE.
Feuds and Jealousies During Grant's Administration--Attack on Me
by the Cincinnati "Enquirer"--Reply and Statement Regarding My
Worldly Possessions--I Am Elected to the Senate for the Third Term
--Trip to the Pacific with Colonel Scott and Party--Visit to the
Yosemite Valley--San Diego in 1872--Return via Carson City and Salt
Lake--We call on Brigham Young--Arrival Home to Enter Into the
Greeley-Grant Canvass--Election of General Grant for the Second
Term.
I have purposely followed the legislation of Congress on financial
questions until the passage of the act of 1873, passing over other
events in my personal history and that of President Grant.
It can hardly be said that we had a strictly Republican administration,
during his two terms. While Republicans were selected to fill the
leading offices, the policy adopted and the controlling influence
around him were purely personal. He consulted but few of the
Senators or Members, and they were known as his personal friends.
Mr. Conkling, by his imperious will, soon gained a strong influence
over the President, and from this came feuds, jealousies and
enmities, that greatly weakened the Republican party and threatened
its ascendency. This was a period of bitter accusations, extending
from the President to almost everyone in public life. During the
entire period of Grant's administration, I was chairman of the
committee on finance of the Senate, and had to act upon all questions
of taxation, debt, banking or finance, and had occasion to talk
with the President upon such measures, but he rarely expressed any
opinion or took any interest in them. His veto of the bill to
increase the amount of United States notes, on the 22nd of April,
1874, was an exception, but on this he changed his mind, as he had
expressed his approval of the bill when pending. He was charged
with being in a whisky ring and with other offensive imputations,
all of which were without the slightest foundation. General Grant
was, in every sense of the word, an honest man. He was so honest
that he did not suspect others, and no doubt confided in, and was
friendly with, those who abused his confidence. It was a period
of slander and scandal.
I did not escape the general crimination. I usually met accusations
with silence, as my accusers were answered by others. In March,
1871, the Cincinnati "Enquirer" contained the following imputation:
"We are informed that a gentleman who lately filled a responsible
office in this city, who has recently returned from Washington,
says that the Southern Railroad bill would have passed the United
States Senate if it had not, unfortunately, happened that Senator
Sherman had no direct pecuniary interest in it. In these days,
and with such Congresses, it takes grease to oil the wheels of
legislation."
On the 12th of March I wrote to the editors of the "Enquirer" the
following note, after quoting the editorial:
"United States Senate Chamber,}
"Washington, March 12, 1871. }
"To the Editors of the 'Enquirer:'
"Gentlemen:--Some one, perhaps in your office, sends me the following
editorial, cut from your paper:
* * * * *
"All I can say in reply is that it contains a falsehood and a
calumny. I introduced the bill for the Southern Railroad; am
strongly in favor of it, and pressed it at every stage as rapidly
as the rules of the Senate and the strong opposition to it would
allow. This is known by every Senator, and I am quite sure Judge
Thurman and Mr. Davis would say so. I alone took an active interest
in the bill, and at the very moment your editorial was received I
was pressing a Republican caucus to make it an exception to a
resolution not to take up general legislation at this session.
Everyone familiar with our rules knew that it was the sheerest
folly to try to pass the bill on the last day of the session,
especially as against our appropriation bills. When it does pass
it will take days of debate, and will not receive support from any
of your political associates, who think Kentucky can block up all
intercourse between the north and south. Still I yielded to the
earnest desire of the trustees to try to get a vote, but failed to
get the floor at 3 o'clock in the morning, the only moment it was
possible to submit even the motion to take it up. The bill to
abolish the duty of coal was taken up and was not acted on, nor
would the railroad bill, or any other contested bill, have passed
at that stage of the session.
"As to the base imputation you attribute to 'a gentleman who lately
filled a responsible office in this city,' I can only say that,
whether it originates with you or anyone else, it is utterly false.
Neither in this nor in any measure that has passed Congress, or is
pending, have I had any direct pecuniary interest. I respectfully
ask that you print this, and also the name of the 'gentleman' you
refer to.
"I intend, in the interests of the city of Cincinnati and of the
whole country, to press the Southern Railroad bill, and to secure
its passage as soon as possible, but it is rather poor encouragement
to read such libels in a prominent paper in your city.
"Yours etc.,
"John Sherman."
This was followed by an article in the "Enquirer" embodied in my
reply, as follows:
"Washington, March 20, 1871.
"Gentlemen:--In your editorial in the 'Enquirer' of March 17, in
commenting on my card to you as to my action on the Cincinnati
Southern Railroad bill, you repeat my statement that 'neither in
this nor in any measure that has passed Congress, or is pending,
have I any pecuniary interest,' and you say:
'If this is true, he has certainly been a very badly slandered
gentleman. Somehow or other there is a popular impression that
Mr. Sherman has contrived to make his connection with politics a
highly lucrative business, and that he has exhibited, since he has
been in Congress, a worldly thrift that is remarkable. There is
a further impression that he is now a very rich man, whereas, a
few years ago, before he was in public affairs, his circumstances
were decidedly moderate. Perhaps our senatorial friend may not be
aware of the existence of these derogatory reports, and will thank
us for giving him an opportunity, now that he knows of their
existence, to disprove them.'
"I have not been ignorant that there has been a studied effort--
ascribed by me to the common tactics of political warfare--to create
the impression, by vague innuendo, that I have used my official
position to make money for myself. I know that this charge or
imputation is without the slightest foundation, and I now repeat
that I never was pecuniarily interested in any question, bill or
matter before Congress; that I never received anything in money,
or property, or promise, directly or indirectly, for my vote or
influence in Congress or in the departments; that I have studiously
avoided engaging in any business depending upon legislation in
Congress. The only enterprise in which I ever engaged, which rests
upon an act of Congress, is that in 1862, after the bill passed
authorizing the construction of a street railroad in this city, I,
with others, openly subscribed stock, and undertook to build it in
pursuance of the act of Congress.
"From the position assigned me here, I have had to deal with great
questions involving our financial system of currency, taxes and
debt, and I can appeal to all my associates in Congress, to each
of the eminent men with whom, as Secretaries of the Treasury, I
have been intimate, and to every man of the multitude with whom I
have been brought into contact, to say whether I have ever been
influenced in my course by pecuniary interest.
"But you say that the impression is that I am a very rich man,
whereas, before I was in public affairs, my circumstances were
decidedly moderate. This allegation contains two gross exaggerations.
When I entered public life, I was largely engaged in my profession
and other lucrative business. If I had not engaged in politics,
I might have been the rich man you suppose. I am not this day
relatively richer, considering the changed value of property, than
I was when I entered the Senate. Some time ago it was stated in
your paper that I was worth millions. A very small fraction,
indeed, of one million dollars will cover all I am worth. My
property consists mainly of real estate, palpable to the eye, and
the rest of it is chiefly in a railroad with which I was connected
before I entered public life.
"I have managed my business affairs with reasonable care, prudence,
economy and success. What I have is the result of this.
"You kindly offer me an opportunity to disprove to you these reports.
Well, how can I? What charge is made against me? How can I fight
shadows? How can a man prove himself innocent against an innuendo?
"But as you offer me the opportunity, I now invite Mr. Faran to
come to my home at Mansfield, and I will show him all I possess
there, and render him a full account of all I have elsewhere, and
if I can't fairly account for it without being suspected of receiving
bribes, or gifts, or stealing, then he can repeat these baseless
accusations with an easy conscience.
"You may ask why I have not met these derogatory reports before.
Perhaps I ought, but I feel the humiliation of such a controversy,
and thought it time enough when a specific charge was made. And
I am told by Mr. Hedges, my former law partner, that in my absence,
last summer, he corrected some gross misstatements in your paper
about me, and that you refused or neglected to publish it--even to
notice it. As, however, you now, in a courteous way, invite this
letter, I take great pleasure in accepting your offer.
"Very truly yours,
"John Sherman.
"Messrs. Faran & McLean, editors of the 'Enquirer.'"
I doubted the policy of my publishing such a letter, or of taking
any notice of so indefinite a charge, but the response from the
press was fair, especially from the "Shield and Banner," a Democratic
paper printed in Mansfield, as follows:
"We publish a letter of Hon. John Sherman to the editors the
Cincinnati 'Enquirer.' It is hardly necessary that we should say
that we have no sympathy with the political creed of John Sherman.
Between him and us there is a vast and wide difference; but we are
not, we trust, so much of the partisan that we cannot do justice
to a neighbor, if that neighbor differs with us. We have known
John Sherman, not only during all his public life, but from the
time we became a resident of Mansfield, now covering a period of
thirty years, and we have always known him as industrious, prudent
and careful in his profession, and economical and thrifty in his
business. We placed very little credence in the rumors that he
was a man of immense wealth. His property is mostly in real estate.
He was fortunate in getting hold of very desirable property in and
around our city, and the advance in that has doubtless given him
a competence; but it is folly to charge him with being a millionaire.
We have, in common with our neighbors, enjoyed his hospitality,
and his style of living is neither extravagant nor ostentatious.
"Mr. Sherman is one of our townsmen, and although all wrong as a
politician and statesman, and holding to a creed we utterly
disapprove, he is a highminded and honorable man, and we are bound
to accept his statement about his pecuniary affairs as true."
I have often since been accused of the crime of "being rich," but
as nearly all my possessions are visible to the naked eye, and
their history and acquisition are known to so many, I think I am
not required to prove that I have not made them as the result of
legislation or my holding public trusts.
My second term in the Senate expired on the 4th of March, 1873.
The election of my successor devolved upon the legislature that
convened on the first Monday of January, 1872.
The canvass in Ohio, in the summer and fall of 1871, was an active
and exciting one and attracted great interest in other states.
The result would indicate the strength or weakness of Grant's
administration. I felt it was necessary, not only for my re-
election, but for the success of the Republican party, that every
effort should be made to elect a Republican majority in the
legislature, and I, therefore, at the state convention and in most
of the congressional districts of Ohio, made earnest speeches in
behalf of the state ticket and members of the legislature. I
received many letters of encouragement, one of which, from Senator
Carpenter in reference to my speech in the convention, I insert:
"Washington, D. C., July 20, 1871.
"Hon. John Sherman.
"Dear Sir:--I have just read your speech to the state convention
of Ohio. _It is splendid_. The only fault I have to find with it
is, that you have covered the whole ground and reduced us 'lesser
lights' to the necessity of repeating and elaborating. This is
_very mean of you;_ you might have left some topic of the next
campaign untouched, for us to dwell upon. But you have pre-empted
everything and we must follow after.
"Very truly yours,
"Matt H. Carpenter."
The legislature was elected in October, 1871, but the majority for
the Republicans was so small that the election of a Republican
Senator was in doubt.
I received many hearty letters of congratulation on our success in
Ohio from my colleagues in the Senate, among them one from Senator
Conkling as follows:
"Utica, N. Y., October 13, 1871.
"Hon. John Sherman, Mansfield, Ohio.
"My Dear Sir:--Having waited for certainties touching your election
and the legislature, and having watched the canvass with sincere
solicitude, I congratulate you most heartily upon the result.
"Your own speeches have been among the best you ever made, and your
canvass has been full of the pluck without which no canvass and no
political contest is thorough or truthful.
"This state is ours unless the people are discouraged from voting
in the country by the belief that with Tammany to count, it matters
not what majority rolls up above the Highlands.
"Notwithstanding the grievous statements of the 'Tribune' and inspired
by the 'Tribune,' we have done nothing harsh to the anti-administration
minority, but the least and mildest thing which would prevent a
split in our organization with trouble for the future, and probably
a double delegation in the next national convention.
"Yours sincerely,
"Roscoe Conkling."
It was conceded that a decided majority of the Republican members
of the legislature were in favor of my re-election, but it was
believed that an effort would be made by five Republican members
to combine with the Democratic members and thus secure the election
of ex-Governor Jacob D. Cox.
A Republican legislative caucus was convened on the evening of
January 4th, to nominate a candidate. The first and informal ballot
gave me 61 votes to 14 scattering and the second ballot 71 votes
to 4 scattering. This settled the matter unless the few dissenting
votes could combine with the solid Democratic vote upon some other
candidate. It was soon found that this attempt would be abortive,
as several Democrats, and especially those from Richland and
Fairfield counties, would vote for me it the choice came between
Cox and myself. Every effort was made by General Ashley and the
few others who were opposed to my nomination to combine upon anyone
who could defeat me. They offered their support to Governor Hayes,
but this was promptly refused by him. The same effort was made
with Governor Dennison, General Garfield and General Schenck, and
failed.
The joint convention for the election of a Senator was held on the
second Tuesday of January. It was an open meeting. The voting
was soon over on roll call, and the result was as follows: Sherman
73; Morgan 64; Cox 1; Schenck 1; Perry 1. Thus I was elected by
six majority over all. When this result was known five Democrats
changed from Morgan to Cox, and others were preparing to do so when
Lieutenant Governor Mueller announced the result of the vote. He
was an educated German of high standing, but his English was very
imperfect. His decision that I, having received a majority of the
votes cast, was duly elected, was clearly right, and this was
conceded, but his imperfect English created great noise and merriment.
It was printed in the "Ohio Statesman," on the same day, as follows:
"John Sherman, having received seventy-three votes for President
in Congress [laughter], I mean for Senator in Congress, which being
a majority over all them others, I declares John Sherman duly
elected Senator in Congress from Ohio."
If the changing of the minority vote had proceeded, some of the
Democratic votes would have been cast for me, and my majority would
have been increased, but I preferred the election as it occurred.
My election for the third term was after a hot political contest,
but it left no wounds unhealed. Most of the gentlemen opposed to
me became afterwards my warm friends.
In July, 1872, two months after the close of the session of Congress,
I received the following letter from Thomas A. Scott, President of
the Texas and Pacific Railroad Company:
"Philadelphia, July 19, 1872.
"Hon. John Sherman, Mansfield, Ohio.
"My Dear Sir:--A few gentlemen connected with the Texas and Pacific
road, and myself, propose to go to the Pacific coast, leaving
Philadelphia about the 12th to the 15th of August.
"If your engagements will permit, I shall be very glad indeed to
have you go with us.
"I am going from San Francisco to San Diego, and shall return by
way of San Francisco; the trip will occupy about thirty days.
"Please let me hear from you, and, if possible, let me have the
pleasure of your company.
"Very truly yours,
"Thomas A. Scott, President."
I accepted the invitation, and with a very agreeable party of ladies
and gentlemen, among whom were Mr. W. T. Walters, of Baltimore,
and his daughter, made my first voyage to the Pacific coast. Mr.
Scott, as president of the Pennsylvania Railroad Company, had
command, by courtesy, of every convenience of travel. We had a
dining car which we could attach to any train, with ample room for
beds, and a full supply of provisions. The journey to San Francisco
was broken by several stops on the way at places that we thought
interesting.
Great changes had occurred in the brief period since my trip in an
ambulance with General Sherman. The Indians and buffaloes had
disappeared from the plains, the former placed on reservations
distant from the railroad, and the latter by gradual extinction.
When we crossed the Laramie plains I was in, to me, a "terra
incognita." The great basin of Salt Lake, with the varied and
picturesque scenery to the east and west of it, attracted our
attention, but the want of water, the dry air, the dust and the
absence of tress and vegetation of any kind, condemn all that
country to waste and desolation, except in a few places where
irrigation can be had. The Nevada range of mountains was crossed
at night, but we were to explore them on our return. When the
broad valley of the Sacramento opened to our view, we could hardly
express our delight. Here, indeed, was the land of gold, with its
clear air, its grand mountains, its rich plains.
Aside from the wonderful variety of its scenery, the history of
California has always excited poetic interest--its long settlement
by mixed races living in quiet peaceful harmony, mainly as herdsmen
and shepherds, suddenly disturbed and conquered without firing a
gun, by an aggressive race who soon revolutionized the habits of
the natives, and planted a new civilization, with all the bad as
well as the good elements of our race. Then the discovery of gold,
immediately following the conquest of California, drew to it, from
all parts of the United States, the most restless and adventurous
of our population, some of the worst and many of the best. The
rapid admixture of these diverse elements threatened for a time
hostile conflicts, in which criminals, under cover of law, committed
murder and other crimes, and peaceful, law-abiding citizens were
compelled to appeal to force and mob law to preserve civilization.
The railway soon brought us through Sacramento to San Francisco,
where we remained several days. We were kindly received and
entertained. The enterprise of Scott was not then favored in San
Francisco, but this did not prevent our hearty welcome. Here I
met Mr. Hollister, whom I had known in Ohio. He was the great
shepherd of California. I was informed that he owned 100,000 sheep,
divided into flocks of about 3,000 each. These flocks were wintered
at a large ranch near the Pacific coast belonging to him. The
climate was mild, and the sheep could live without shelter during
the winter. The flocks would start eastwardly over the great
valley, each flock cared for by a shepherd, a boy and a dog, feeding
in the open country, some of the flocks reaching the Mariposa
valley, one hundred miles away. When the grass failed they were
turned to the west to their home. Whether this tale is an exaggeration
I cannot say, but certain it is that at that time sheep raising
and the production of wool was one of the chief industries of
California. Hollister was also interested in woolen manufacture,
especially of blankets, equal to any in the world. When I knew
him in Ohio, he and his brother were the owners, by inheritance,
of a large and valuable farm in Licking county. When gold was
discovered in California, Hollister sold to his brother one-half
of the farm, and with the proceeds purchased a large flock of the
best Ohio sheep, and drove them to California, taking two years
for the journey. He was fond of telling his adventures, and proud
of his success. He died a few years since in California, but
whether his good fortune followed him to the close of his life I
do not know. He was very kind to our party and accompanied us to
San Diego.
From San Francisco we made a trip to the Mariposa Grove, and the
Yosemite valley. We traveled by rail to a small station nearest
the grove. Then by stage we rode to the terminus of the line.
From there we went but a short distance to the grove. This majestic
survivor of the forest has been so often been described that details
are not necessary. We measured the trees, and rode on horseback
nearly one hundred feet through one of the fallen monsters. We
also attempted to form a ring with hands and arms extended around
one of these trees, but our party was not numerous enough to encircle
it. I felt a sense of insignificance when I realized the long life
of some of these trees, estimated to span forty generations of men,
and still in health and strength. We returned to the stage station
and again mounted our horses and mules for the perilous adventure
of a descent into the Yosemite valley. It so happened that Mr.
Bell, the keeper of the station, was a former resident of Bellville,
in Richland county, Ohio, in which I live. He knew me well, and
his wife I knew as the daughter of a leading farmer of that county.
I thought I might utilize this acquaintance by asking him to see
that I was well mounted to descend to the valley. Much to my
surprise a spirited horse, well accoutered, was brought out for
Colonel Scott, and a shaggy short-legged mule, with a California
saddle and a common but stout bridle, was brought out for me. I
felt that Bell had disregarded the obligation of "auld acquaintance,"
but said nothing.
My mount started at the heels of the cavalcade in a steady walk,
but I noticed he was sure-footed, and that, at the end of two or
three weary hours, he had passed most of the party and soon after
was close in the wake of Colonel Scott. In the meantime, I had
noticed that I was the subject of merriment. My feet were in close
proximity to the ground. The length of my legs was out of proportion
to that of the legs of the mule. When we came to descend the
mountain, however, at an angle of nearly forty-five degrees, on a
very narrow path, I found that my mule could turn the bends of the
track, and, by a peculiar gathering of his feet, could slide down
difficult places, while Colonel Scott, on his already jaded horse,
was troubled and worried. He dismounted when the path widened and
asked me to go ahead. He then followed me, leading his horse.
After that, I made up my mind that my Richland county friend had
not failed me in my hour of need.
As for the scenery through which we were passing, no language could
describe it. We saw, four thousand feet below, a beautiful little
valley about half a mile wide at the widest part, with what appeared
to be a very small stream dancing along from side to side of the
valley, and surrounded by precipitous mountains in every direction.
The eye and mind can now vividly recall the picture of the scenes
than around me. My mule had my confidence, but I feared lest some
fatal mishap might befall some of my companions, and especially I
feared for a lady who ventured the journey, but she fortunately
displayed pluck and coolness, and at the end of the day we all
arrived at the hut in the valley safe and sound, but very weary.
Since that time, I understand that a good road has been made up
the valley, by which tourists can enjoy the grandest scenery in
nature, without the risk we took.
We enjoyed a hearty supper of plain food, and a sound sleep on corn-
husk mattresses. The next day we explored the valley, and enjoyed
the changing views of near and distant mountains. These have often
been described, but they can only be appreciated by a personal
visit. We left the valley by another route to the north, and
reached the railroad by a different line of stages.
Returning to San Francisco, we took the boat for San Diego, stopping,
on the way, at Santa Barbara and San Pedro. From this place we
drove to Los Angeles, then a typical Mexican town of great interest.
The good people hoped for the railroad, but Colonel Scott expected
the road of which he was president would be able to reach San Diego.
Our arrival at San Diego was an event of interest to the few people
of that town. We inspected the remarkable harbor and the surrounding
country. It was apparently a good site for a great city. Fresh
water was the great want and rain-falls were rare, but it was
claimed that an ample supply of water could be had from the hills.
The real obstacle to that site, as a terminus for the railroad,
was the mountains east of San Diego, which, upon a survey, were
found to be extremely difficult, and this turned the route to Los
Angeles, over natural passes and through the beautiful region of
San Bernardino.
We returned, by boat, to San Francisco, and soon after turned our
way eastward. We stopped at Reno, and went by rail to Carson City,
the capital of Nevada. It was then an embryo town. From there we
went to Lake Tahoe, one of the finest bodies of water on the earth.
Its clear, cold waters filled a natural basin in the midst of the
Nevada range of mountains, which was supplied by the melting snows.
We then returned to Carson City, ascended, by rail, an inclined
plane of high grade, to Virginia City. Most of the party descended
into the mines, but I was prevented from doing so by an attack of
neuralgia, a complaint from which I never suffered before or since,
caused, as it was said, by the high altitude and thin air. Here
I met several natives of Ohio, who had sought their fortunes in
the far west. They were very kind to the party and to myself. It
got to be a common remark, that Ohio has everything good in the
west. I could answer that they all seemed to deserve what they
had. I was disposed to be proud of them and of my native state,
but soon after, on the way east, we heard of an atrocious murder
committed by two Ohio men. This turned the tables on my native
state, and I was compelled to confess that bad men came from Ohio
as well as from other states; but, if so, Ohio people excelled in
the atrocity of their crimes as well as in the excellence of their
merits!
Our next stopping place was at Salt Lake City. Whatever opinion
we may have of the religious creed and dogmas of the Mormons, we
cannot deny the industry and courage of that sect in building up
a city in a wilderness where natural conditions seemed to forbid
all hope of success in such an enterprise. And yet there it was,
a well-ordered city laid out with squares, avenues, streets, and
reservations for schools, churches and other public uses, with
water introduced in great abundance. All the needs of city life
were provided, such as stores, markets and shops. We were invited
by the delegate to Congress, from Utah, to call on Brigham Young,
and did so. He was a large, well-built man, then about sixty years
old. He took great interest in the enterprise of Colonel Scott
and seemed familiar with all the railways built or projected in
the western country. There was nothing in his conversation or
manner that indicated the "crank," nor did he exhibit any of the
signs of a zealot or fanatic. He made no allusions to his creed
or the habits of his followers and betrayed no egotism or pride.
He has died since but the organization he left behind him is still
in existence, and the Mormon faith is still the creed and guide of
the great body of those who followed Brigham Young into the
wilderness, and of their numerous descendants. It is to be hoped
that the government and people of the United States will let the
Mormons severely alone, allowing them to believe what they will,
and to do in the way of worship what they choose. In this way only
can their confidence in alleged revelations be shaken, and Mormonism
will disappear among the many vain attempts of humanity to explore
the mysteries of life and death. Persecution never weakens delusions,
nor disturbs faith, however ignorant and groundless.
From Salt Lake our party went to Cheyenne and thence to Denver.
This city was growing rapidly and was plainly destined to be the
principal center of the mineral development of several states. I
had, on a previous trip, visited the interesting region of the
"Garden of the Gods," Colorado Springs and Pike's Peak. Our party
left Denver for home. On the long stretch via Kansas City, St.
Louis and Indianapolis we saw nothing new, as we were traveling
over familiar ground. It was early in September, when corn, the
great western staple, was approaching maturity, and the earth was
giving forth its increase. We were crossing the largest and perhaps
most fertile valley of the world. All of it had been redeemed from
nature and the Indians, within one hundred years. During our trip
we had passed through great cities, prosperous towns and amidst
wonderful scenery. All of the route except through the Yosemite
valley was passed over in a palace car. The ocean voyage was in
a steamboat even more luxurious then the palace car. All this
rapid development did not satisfy the desire of Colonel Scott and
Mr. Walters. Their minds were occupied with vast railroad projects,
some of which were accomplished before their death. I also had my
dreams but they related to public policies rather than internal
improvements and some of these have been realized.
I was awakened one bright morning in September and told that the
car was in Ohio. This was enough to drive sleep from my eyelids.
I looked out upon the rich lands of the Miami valley, the comfortable
homesteads on every farm, the fat cattle and herds of sheep, the
broad fields of yellow corn, and every sign of fertility. All
these, and perhaps a little admixture of state pride, led me to
say that, after all, the people of Ohio need not go beyond the
bounds of that state with any hope to improve their condition or
to secure a better opportunity for a happy life. I soon parted
with my friends with sincere regrets, for in our journeyings we
were in truth a happy family.
The canvass in Ohio was then progressing for the election of a
President and Members of Congress, in which I was expected, as
usual, to take a part. The strange anomaly of Horace Greeley
running on a Democratic ticket was enough in itself to excite
opposition, especially in the southern states. The result was that
General Grant, in November, 1872, was elected President by 31 states
with 286 electoral votes. Greeley died after the election, and
before the electors voted, so that no electoral vote was counted
for him. If he had lived he would probably have received 60
electoral votes.
CHAPTER XXIV.
THE PANIC OF 1873 AND ITS RESULTS.
Failure of Jay Cooke and Co.--Wild Schemes "for the Relief of the
People"--Congress Called Upon for Help--Finance Committee's Report
for the Redemption of United States Notes in Coin--Extracts from
My Speech in Favor of the Report--Bill to Fix the Amount of United
States Notes--Finally Passed by the Senate and House--Vetoed by
President Grant and Failure to Pass Over His Objection--General
Effect Throughout the Country of the Struggle for Resumption--
Imperative Necessity for Providing Some Measure of Relief.
During the first four years of General Grant's administration the
financial condition of the United States was eminently prosperous.
The total reduction of the national debt, from the 1st of March,
1869, to the 1st of November, 1873, was $383,629,783, the annual
saving of interest resulting therefrom being $27,432,932. During
this period the value of United States notes compared with coin
steadily increased. The funding of the six per cent. bonds into
five per cent. bonds, under the refunding act, continued at the
rate of about $85,000,000 a year. The credit of the United States
steadily advanced during this period, so that the Secretary of the
Treasury, in his report of 1873, stated that it had not stood higher
since the close of the Rebellion than it did at that time. This
improvement of the public credit was accompanied with a large
reduction of internal taxes and duties on imported goods. The
business of the country was prosperous, the increase and extension
of railroads and the development of new industries was marked,
indicating great prosperity.
All this was subsequently changed by the happening of a panic in
September, 1873. The cause of this was attributed to over-trading,
to the expansion of credits, and to rash investment made in advance
of public needs. This panic commenced by the failure of Jay Cooke
& Co., of Philadelphia, an enterprising firm of high standing, then
engaged in selling the bonds of the Northern Pacific Railroad
Company. I was engaged at that time, with a committee of the
Senate, of which William Windom was chairman, in examining many
plans of public improvements, especially in the increase of facilities
for water transportation at the mouth of the Mississippi river,
and at the great lakes on our northern boundary, improvements since
then made with great benefit to the commerce of the United States.
Roscoe Conkling, of New York, was a member of that committee. We
were at Buffalo when the failure of Cooke & Co. was announced. We
all felt that for the present, at least, our duties as a committee
were at an end. The panic spread so that in a month all industries
were in a measure suspended. The wildest schemes for relief were
proposed, in and out of Congress. The panic spread to the banks,
which were compelled in self-defense to call in their loans, to
withhold their circulating notes, and contract their business. As
usual on the happening of such a panic, an appeal was made to the
treasury for relief, a demand was made for an increase in the volume
of the United States notes, and that the Secretary of the Treasury
should use the money of the government to buy exchange.
The New York Produce Exchange applied to the Secretary of the
Treasury on the 29th of September, 1873, in resolutions, as follows:
"Whereas, The critical condition of the commercial interests of
the country requires immediate relief by the removal of the block
in negotiating foreign exchange; therefore be it
"_Resolved_, That we respectfully suggest to the Secretary of the
Treasury the following plans for relief in this extraordinary
emergency:
"First, That currency be immediately issued to banks or bankers,
upon satisfactory evidence that gold has been placed upon special
deposit in the Bank of England, by their correspondents in London,
to the credit of the United States, to be used solely in purchasing
commercial bills of exchange.
"Second, That the President of the United States and the Secretary
of the Treasury are respectfully requested to order the immediate
prepayment of the outstanding loan of the United States due January
1, 1874."
This request had, as a matter of course, to be denied. But the
secretary did purchase $13,000,000 of bonds for the sinking fund,
to the full extent the condition of the treasury allowed. It is
difficult to realize or to convey by description the wild ideas
developed by such a panic. The government for the time being is
expected to provide a remedy for a condition it did not create,
but, instead of aiding, the government is most likely to need aid.
The revenues from importations fell off and the value of United
States notes declined.
When Congress convened in December, 1873, the wildest schemes for
relief to the people were proposed. A large increase of United
States notes was demanded. More than sixty bills, resolutions and
propositions were introduced in the Senate in respect to the
currency, the public debt and national banks, all bearing upon the
financial condition of the country, expressing every variety of
opinion, from immediate coin payments to the wildest inflation of
irredeemable paper money. All these were referred to the committee
on finance, then composed as follows: Messrs. Sherman (chairman),
Morrill, of Vermont, Scott, Wright, Ferry, of Michigan, Fenton and
Bayard.
The several measures referred to the committee were taken up and
considered, but the same wide divergence of opinion was developed
in the committee as existed outside of Congress among the people.
The majority of the committee reported to the Senate the following
resolution:
"_Resolved_, That it is the duty of Congress during its present
session to adopt definite measures to redeem the pledge made in
the act approved March 18, 1869, entitled 'An act to strengthen
the public credit,' as follows: 'And the United States also pledges
its faith to make provision, at the earliest practicable period,
for the redemption of United States notes in coin;' and the committee
on finance is directed to report to the Senate, at as early a day
as practicable, such measures as will not only redeem the pledge
of the public faith, but will also furnish a currency of uniform
value, always redeemable in gold or its equivalent, and so adjusted
as to meet the changing wants of trade and commerce."
Mr. Ferry, of Michigan, a member of the committee, offered the
following substitute for the pending resolution:
"That the committee on finance is directed to report to the Senate,
at as early a day as practicable, such measures as will restore
commercial confidence and give stability and elasticity to the
circulating medium through a moderate increase of currency."
Upon these adverse propositions a long debate followed without
practical results. I made a long speech on the 16th day of January,
1874, in favor of the resolution of the committee. I then said:
"At the outset of my remarks I wish to state some general propositions
established by experience, and the concurring opinions of all
writers on political economy. They may not be disputed, but are
constantly overlooked. They ought to be ever present in this
discussion as axioms, the truth of which has been so often proven
that proof is no longer requisite.
"The most obvious of these axioms, which lies at the foundation of
the argument I wish to make to-day, is that a specie standard is
the best and the only true standard of all values, recognized as
such by all civilized nations of our generation, and established
as such by the experience of all commercial nations that have
existed from the earliest period of recorded time. While the United
States, as well as all other nations, have for a time, under the
pressure of war or other calamity, been driven to establish other
standards of value, yet they have all been impelled to return to
the true standard; and even while other standards of value have
been legalized for the time, specie has measured their value as it
now measures the value of our legal tender notes.
"This axiom is as immutable as the law of gravitation or the laws
of the planetary system, and every device to evade it or avoid it
has, by its failure, only demonstrated the universal law that specie
measures all values as certainly as the surface of the ocean measures
the level of the earth.
"It is idle for us to try to discuss with intelligence the currency
question until we are impressed with the truth, the universality,
and the immutability, of this axiom. Many of the crude ideas now
advanced spring from ignoring it. The most ingenious sophistries
are answered by it. It is the governing principle of finance. It
is proved by experience, is stated clearly by every leading writer
on political economy, and is now here, in our own country, proving
its truth by measuring daily the value of our currency and of all
we have or produce. I might, to establish this axiom, repeat the
history of finance, from the shekels of silver, 'current money with
the merchant,' paid by Abraham, to the last sale of stock in New
York. I might quote Aristotle and Pliny, as well as all the writers
on political economy of our own time, and trace the failure of the
innumerable efforts to establish some other standard of value, from
the oxen that measured the value of the armor of Homeric heroes to
the beautifully engraved promise of our day; but this would only
be the hundred-times-told tale which every student may find recorded,
not only in schoolbooks, but in the writings of Humboldt, Chevalier,
Adam Smith, and others of the most advanced scientific authorities.
They all recognize the precious metals as the universal standard
of value. Neither governments, nor parliaments, nor congresses
can change this law. It defies every form of authority, but silently
and surely asserts itself as a law of necessity, beyond the
jurisdiction of municipal law.
* * * * *
"Of late years much difficulty has grown out of the slightly varying
value of silver and gold, as compared with each other, and the
tendency of opinion has been to adopt gold alone as the standard
of value. The United States has twice changed the relative value
of these metals, and other modern nations have been driven to
similar expedients. At the Paris monetary conference, held in
1867, which I had the honor to attend, the delegates of twenty
nations represented agreed to recommend gold alone as the standard
of value. The United States, and nearly all the commercial nations,
have adopted this standard, and reduced the use of silver to a mere
token coinage of less intrinsic value than gold, but maintained at
par with gold by the right to be converted into gold at the will
of the holder. So that for all practical purposes we may regard
gold as the only true standard, the true money of the world, by
which the value of all property, of all productions, of all credits,
and of every medium of exchange, and especially of all paper money,
is tested.
"Specie, in former times, was not only the universal standard of
value, but it was the general medium of all exchanges. In modern
times this is greatly changed. Specie is still the universal
standard of value, but it has ceased to be even the usual medium
of exchange. The failure to distinguish between the standard of
value and the medium of exchanges occasions many of the errors into
which so many fall, and nearly every Senator who has spoken on one
side of the question has fallen into this error. Specie has lost
a portion of its sovereign power, for with the enormous increase
of exchanges it was found that, valuable as it is, it is too heavy
to transport from place to place as a medium of exchange. The
perils of the sea, the dangers of theft and robbery, led to devices
to substitute promises to pay gold in place of the actual gold.
* * * * *
"Mr. president, thus far my remarks are founded upon the experience
of ages, applicable to all countries and to all commercial nations
of our time. I present them now as axioms of universal recognition.
And yet I have heard these axioms denounced in this debate as
'platitudes,' useless for this discussion in the Senate of the
United States. The wisdom of ages, the experience of three thousand
years, the writings of political economists, are whistled down the
wind as if we in the Senate were wiser than all who have reasoned
and thought and legislated upon financial problems--that all this
accumulated wisdom consists of 'platitudes' unworthy to influence
an American Senate in the consideration of the affairs of our day
and generation.
"Sir, I do not think so. If we disregard these 'platitudes,' we
only demonstrate our own ignorance and punish our constituents with
evils that we ought to avoid. I purpose now to pursue the argument
further, and to prove that we are bound, both by public faith and
good policy, to bring our currency to the gold standard; that such
a result was provided for by the financial policy adopted when the
currency was authorized; that a departure from this policy was
adopted after the war was over, and after the necessity for a
depreciated currency ceased; and that we have only to restore the
old policy to bring us safely, surely, and easily to a specie
standard.
"First, I present to you the pledge of the United States to pay
these notes in coin 'at the earliest practicable period.' In the
'act to strengthen the public credit,' passed on the 18th day of
March, 1869, I find this obligation:
'And the United States also solemnly pledges its public faith to
make provision, at the earliest practicable period, for the redemption
of the United States notes in coin.'
* * * * *
"The Congress of the United States, in order to put into form its
sense of this obligation, passed the act 'to strengthen the public
credit,' and the last and most important clause of this act is the
promise which I have just read, that these notes should be paid,
'at the earliest practicable period,' in coin.
* * * * *
"On the day we made that promise, the 18th of March, 1869, the
greenbacks, the notes of the United States, were worth 75¾ cents
in gold; or in other words, gold was at a premium of thirty-two
per cent. . . . What was the result? After you enacted that law--
the faith of the people of the United States that you would redeem
this pledge--the value of your greenbacks advanced, not rapidly,
but gradually, and in one year, to within twelve per cent. of par
in gold.
* * * * *
"Mr. president, we see, then, the effect of this promise. And I
here come to what I regard as a painful feature to discuss--how
have we redeemed our promise? It was Congress that made it, in
obedience to the public voice; and no act of Congress ever met with
a more hearty and generous approbation. But I say to you, with
sorrow, that Congress has done no single act the tendency of which
has been to advance the value of these notes to a gold standard;
and I shall make that clearer before I get through. Congress made
this promise five years ago. The people believed it and business
men believed it. Four years have passed away since then, and your
dollar in greenbacks is worth no more to-day than it was on the
18th of March, 1870; and no act of yours has even tended to advance
the value of that greenback to par in gold, while every affirmative
act of yours since that time has tended to depreciate its value
and to violate your promise.
* * * * *
"Every bond that was issued was issued only upon the sacred pledge
contained in this act, that the interest of that bond should be
paid in coin; and the principal should be paid, when due, in coin.
The fifth section of the act provides that all duties on imported
goods shall be paid in coin; and that this money shall be set aside
as a special fund to pay the interest on the bonded debt in coin.
Then, in order to secure the greenbacks, it authorized any holder
of greenbacks to pay any government debt with them; it authorized
the holder of greenbacks to pay any debt, public or private, with
them; and every citizen of the United States was bound to take
them. Then it authorized them to be converted into six per cent.
bonds of the United States--those bonds payable, principal and
interest, in gold. If the policy provided for by this act had been
maintained, we would long since have been at specie payments,
without any serious disturbance of our monetary affairs.
* * * * *
"Now, Mr. president, I come to show the Senate how this provision,
the convertible clause of the act of February 25, 1862, was repealed.
On the 3rd of March, 1863, Congress passed 'An act to provide ways
and means for the support of the government.' This act was passed
during the dark hours of the war. The currency of the country did
not flow into the treasury rapidly enough to pay our army. I
remember that at about the time this act was passed there were very
large unpaid requisitions. The Secretary of the Treasury, instead
of issuing any more six per cent. bonds, desired to float a 10-40
five per cent. bond; in other words, to reduce the burden of interest
upon the public debt. At this time there were three hundred millions
of circulation outstanding, and with all the rights, and all the
privileges, conferred upon the greenbacks, they did not flow into
the treasury fast enough to furnish means to carry on the operations
of the war.
* * * * *
"In other words, the suspension of this convertibility clause was
passed with a view to promote conversion; to encourage conversion;
to induce conversion; and, if possible, to induce a conversion into
a five per cent. gold bond instead of into a six per cent. bond.
When the Secretary of the Treasury presented this view to Congress
he was at once met with the pledge of the public faith; with the
promise printed upon the back of the greenbacks that they could be
converted into six per cent. bonds at the pleasure of the holder;
and that we could not take away that right. This difficulty was
met by the ingenuity of the then Senator from Vermont (Mr. Collamer).
He said that no man ever exercised a right which could not properly
be barred by a statute of limitations; and if this right was
injurious to the people of the United States, and prevented the
conversion of these notes into bonds, we might require the holder
of these notes to convert them within a given time; that we could
give them a reasonable time within which they could convert them
into six per cent. bonds, and after that take away the right.
"The act of March 3, 1863, was amended by inserting this clause:
'And the holders of United States notes, issued under or by virtue
of said acts, shall present the same for the purpose of exchanging
the same for bonds, as therein provided, on or before the 1st day
of July, 1863; and thereafter the right so to exchange the same
shall cease and determine.'
* * * * *
"Now, Mr. president, I have shown you that the greenbacks were
based upon coin bonds; that they had the right to be converted into
coin bonds; that that right was taken away as to the 5-20 bonds;
but that, in practice and in effect, the greenback was convertible
into an interest-bearing bond of the United States up to 1866, and
until the passage of the law to which I will now refer.
* * * * *
"If this act had contained a simple provision restoring to the
holder of the greenback the right to convert his note into bonds
there would have been no trouble. Why should it not have been
done? Simply because the then Secretary of the Treasury believed
that the only way to advance the greenbacks was by reducing the
amount of them; that the only way to get back to specie payments
was by the system of contraction. If the legal tender notes could
have been wedded to any form of gold bond by being made convertible
into it, they would have been lifted, by the gradual advance of
our public credit, to par in gold, leaving the question of contraction
to depend upon the amount of notes needed for currency. Sir, it
was the separation of our greenbacks from the funding system that
created the difficulty we have upon our hands to-day; and I say
now that, in my judgment, the only true way to approach specie
payments is to restore this principle, and give to the holder of
the greenback, who is your creditor, the same right that you give
to any other creditor. If he has a note which you promised to pay
and cannot, and he desires interest on that note by surrendering
it, why should you not give it to him? No man can answer that.
It is just as much a debt as any other portion of the debt of the
United States."
Finally, after more than three months study and debate, a majority
of the committee agreed upon a measure and directed me to report
it to the Senate. It fixed the maximum limit of the United States
notes at $382,000,000. It provided for a gradual payment of these
notes in coin or in five per cent. bonds, at the option of the
Secretary of the Treasury, from the 1st of January, 1876. It was
entitled "An act to provide for the redemption and reissue of United
States notes and for free banking."
In obedience to the instructions of the committee, on the 23rd of
March, 1874, I reported the bill as an original measure, and said:
"It is due to the members of the committee on finance that I should
say that the bill which I have just reported, as it appears on its
face, is in the nature of a compromise measure, which is more or
less acceptable all around, but at the same time there are certain
features of the bill which members of the committee on finance will
feel at liberty to express their opposition to, and also to propose
amendments to. It is due to them that I should make this statement.
The bill itself, as appears on its face, is the result of great
labor, long consideration, and the consequence of compromise. In
many cases we were not able, however, to reconcile conflicting
opinions; and on those points, of course, members of the committee
will feel themselves at liberty to oppose certain features of the
bill."
Mr. Thurman said:
"I should like to inquire of my colleague whether he proposes to-
day or to-morrow, when he makes the motion that he indicated, to
state what, in the opinion of the committee reporting this bill,
will be its practical effect, so that we may have the views of the
committee as to the workings of the bill should it become a law.
I am sure I, for one, should like very much to know what the
committee, who have devoted so much time to this subject, think
will be the practical working of the measure, at any time that it
suits the convenience of the chairman of the committee to make such
statement."
I replied:
"When the subject is introduced, if it be convenient, to-morrow,
I propose to make a very brief statement of the effect of each
section, as we understand it; but I do not intend, by any long
speeches or any remarks, to prolong this matter unnecessarily. I
have expressed my own individual views, and each member of the
committee, I suppose, stands to the opinion expressed by him in
the speeches he has made in the Senate--speeches that were carefully
considered, and by which the position of each Senator was stated;
but undoubtedly I shall feel it my duty, when the bill is called
up, to state what I regard as the actual practical effect of these
different propositions; and some of them, I will now say, I assented
to with great reluctance."
On the next day the bill was taken up in the Senate, and I then
stated the general provisions of the bill. I insert extracts from
my speech, which indicate the difficulties we encountered:
"Mr. president, some complaint has been made in the Senate and in
the country at the delay in the presentation, by the committee on
finance, of some bill covering the financial question; but a moment's
reflection will, I am sure, convince every Senator that there has
been no fault on the part of that committee. From the beginning
of the session to this hour that committee, under the direction of
the Senate, has been studying and discussing the various plans and
propositions which were referred to the committee; and I may say
that over sixty different propositions, either coming in the form
of petitions or in the form of bills, have been sent to the committee,
all of these suggesting different plans and ideas. It was impossible
to consider all these and to agree upon any comprehensive measures
until within a day or two.
"There was another consideration. The committee found itself
divided in opinion, precisely as the country is, and precisely as
the Senate is, into as many as three different classes of opinion.
There were, first, those who desired to take a definite and positive
step toward the resumption of specie payments. There were, second,
those who desired an enlargement of the currency, or what we commonly
call an inflation of the currency. There were, third, those who,
while willing to see the amount of bank notes increased and the
question of the legal tender settled in some form, were also desirous
that some definite step should be taken toward a specie standard.
There were these differences of opinion.
"For the purpose of ascertaining the views of the Senate, and not
involving ourselves in reporting a bill that would be defeated as
the bill of the last session was, we presented, early in the session,
resolutions of a general character which stated these three ideas:
First, the resolution of the majority of the committee that some
definite step should be taken toward specie payments. Then there
was the amendment offered by the gentleman who now occupies the
chair [Mr. Ferry, of Michigan], that there ought to be an increase
of the currency without reference to any plan of redemption. Third,
there was the proposition made by the Senator from Delaware [Mr.
Bayard], that measures should be taken at once looking to the
resumption of specie payments.
"These propositions were discussed, and the committee were enlightened
by that discussion; at least they obtained the opinions of Members
of the Senate. Subsequently, in the course of our investigation,
a question about the $25,000,000 section (section 6 of the act of
July 12, 1870) came up, and the committee deemed it right, by a
unanimous vote, to ascertain the sense of the Senate as to whether
they wished this section carried into execution. As it stood upon
the statute book it was a law without force. It was a law so
expressed that the comptroller said he could not execute it.
Therefore the committee reported a bill which would have provided
the necessary details to carry into execution that section of the
existing law. But in the present temper of the public mind, in
the Senate and in the country, that bill was discussed, and has
been discussed day after day, without approaching the question at
all. During all this time the committee have been pursuing their
inquiries, and finally they have reported the bill which is now
before us.
"The measure that is reported is not a satisfactory one to any of
us in all its details. Probably it is not such as the mind of any
single Member of the Senate would propose. It is in the nature of
a compromise bill, and therefore, while it has the strength of a
compromise bill, it has also the weakness of a compromise bill.
There are ideas in it which, while meeting the views of a majority,
taken separately will be opposed by others. I am quite sure I say
nothing new to the Senate when I say it does not in all respects
meet my own views. But there is a necessity for us to yield some
of our opinions. We cannot reconcile or pass any measure that will
be satisfactory to the country unless we do so. Any positive
victory by either extreme of this controversy will be an absolute
injury to the business of the country. Therefore, any measure that
is adopted ought to be so moderate, pursuing such a middle course,
such a middle ground, that it will give satisfaction to the country.
It must be taken as a whole; and therefore the effect of amending
this proposition will be simply to destroy it. If an amendment in
the direction of expansion is inserted, it will drive away some
who would be willing to support it as is. If an amendment in the
way of contraction is proposed and carried by a majority of the
Senate, it will drive away those who might be willing to take this
measure as a compromise. The only question before the Senate now
is, whether this is a fair compromise between the ideas that have
divided the people of this country and the Members of the Senate;
whether it will surely improve our currency while giving the relief
that is hoped for by a moderate increase of the currency. Now I
ask the secretary to read the first section of the bill."
The chief clerk read section 1, as follows:
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That the maximum
limit of United States notes is hereby fixed at $382,000,000, at
which amount it shall remain until reduced as hereinafter provided."
I then continued:
"It is manifest to every Senator that the initial step in this
controversy is to fix the aggregate limit of United States notes.
The United States notes, although they are very popular, and justly
so, in this country, are at this moment inconvertible; they are
irredeemable, and they are depreciated. These are facts admitted
on all hands. In making that statement I do not intend at all to
deny that the United States notes have served a great and useful
purpose; and though I was here at the birth of them and advocated
them in all stages of their history, yet I am compelled to say at
this moment, twelve years after their issue, that they are
inconvertible; they are irredeemable; and they are depreciated this
day at the rate of twelve per cent. They have been legally
inconvertible since July 1, 1863, and practically inconvertible
since the close of the war; that is, the government refuses to
receive them, either in payment of customs or in payment at par of
any bond of the United States offered by it. They are irredeemable
on their very face. They have depreciated almost from the date of
their issue, at one time being worth only forty cents in gold, and
to-day only worth ninety cents. That is the condition of the United
States notes.
"Now, there is another thing admitted by all Senators. I do not
trespass on any disputed ground when I say that every addition to
the volume of these notes, while they thus stand depreciated,
irredeemable, and inconvertible, is as certain to further depreciate
them, as it is that to pour water into an overflowing bucket will
cause it still more to overflow; as certain as the law of gravitation;
as certain as anything human or divine. It is equally true that
any contraction of this currency, any withdrawal of the amount of
it, is undoubtedly an appreciation of its value, making it nearer
and nearer to the standard of gold.
"This is so plain a proposition that it is not necessary to discuss
it; and the whole people of the country understand it; the plainest
and simplest people understand it as well as the wisest. Those
who desire to increase prices, to start and put in operation new
enterprises, desire an increase of the currency without any plan
of redemption. Those, on the other hand, who want to get back to
the specie standard, to appreciate the value of these notes, desire
to withdraw them, get them out of the way, or give new uses and
new values to them so as to advance them nearer and nearer the
standard of gold. Therefore it is that I say the very first step
at the outset of this controversy is to settle what is the legal
limit of these notes; how many are there now authorized by law;
how many are there outstanding. And here it is a strange thing
that on this very point, a purely legal question, the most important
one in our financial discussion, there is a great difference of
opinion. There ought not to be uncertainty or room for a difference
of opinion upon a question of this kind. It ought to be settled.
On the one hand it is insisted by Senators who compose the majority
of the committee on finance that the legal limit of United States
notes is $356,000,000; that the amount which has been already
issued, of what is known as the $44,000,000 reserve, was unlawfully
issued, although under great press of circumstances and without
any intention on the part of the secretary to do more than he
thought he had a lawful right to do. On the other hand it is
insisted by other Senators that the legal limit of United States
notes is $400,000,000; and here is a margin of $44,000,000 upon
which there is a dispute of law as to the power of the secretary
to issue it. That dispute ought to be settled at once. It is a
question that ought not to be in doubt a moment, because the power
to issue that $44,000,000 places it in the discretion of the
Secretary of the Treasury either to advance or to lower the value
of all property in the United States, of all debts in the United
States, of everything that is measured by United States notes.
"Should we undertake to say that the secretary did wrong in exceeding
the limit at $356,000,000? A majority of the committee believe
that that is now the legal limit, and believe it conscientiously.
But should be undertake to fix that as the legal limit? Twenty-
six million dollars of the $44,000,000 are outstanding. They are
now issued; they are now a part of the currency of the country.
They are just as much the currency as that which was issued before.
You cannot distinguish between them. You cannot say which of the
$382,000,000 now outstanding is legal and which is illegal. So
far as the United States are concerned, they are all debts of the
United States which we are bound to pay, whether they have been
issued legally or illegally. I do not understand even my friend
from Delaware to dispute the duty and obligation of the United
States to pay these notes, even if they have been illegally issued.
There can be no question about it. It is impossible to distinguish
between them. The only question is whether our agent exceeded his
authority or not. Therefore, without raising the question as to
the legality of this issue, reserving to each Senator his own
opinion on the subject, we have adopted as the _status quo_
$382,000,000, the amount now outstanding; and we recognize that
amount as the maximum legal obligation of the United States in the
form of notes, and we propose upon that basis to erect our
superstructure. We therefore say that we will raise no question
as to the mode of retiring the $26,000,000; we will simply say that
the amount now outstanding shall never be exceeded. That is a
recognition, at least, that they are outstanding lawfully and
properly; at any rate, so far as the obligation of the United States
to pay them is concerned.
"Mr. president, a limit ought to be fixed. But there is a difference
of opinion as to what should be the limit. If I had the power to
fix this limit I should say that the limit which was fixed by the
old law should remain at $356,000,000; and I would provide a mode
and manner of issuing United States bonds to retire the $26,000,000
slowly and gradually, without disturbing the ordinary business of
the country. I would thereby seek to recover the ground we have
lost by what has occurred since the panic, and go back to the
standard prior to that time. But I know that would be very difficult;
that would involve an increase of the bonded debt. Our revenues
are not sufficient to call in this $26,000,000. We have no surplus
revenue now as we had a year or two ago. We could only do it by
the issue of bonds, and the process itself would be a very hard
one. Besides, it is probable that public opinion and the judgment
of Congress would not sustain such a proposition; and therefore it
is hardly worth while to recommend it. We assume, therefore, that
the $382,000,000 is the present limit, and we say that shall be
the maximum limit.
* * * * *
"I said it was a compromise by the committee. I speak of a majority
of the committee. As a matter of course my friend is at liberty
to dissent from any of its propositions. On question of this kind
committees are very rarely unanimous; but I will say that on this
point a very decided majority of the committee concurred in the
section.
"To the second section I wish to invite the careful and earnest
attention of the Senate. This section is an honest effort to deal
with the great problem of redemption. Every Senator who has spoken
contemplates that a time must come when all the United States notes
must be redeemed in coin. The public faith of the United States
is so pledged. The notes were issued with the understanding that
they should be paid in coin. No man could survive politically in
this country who would declare that it was his purpose never to
pay these notes in coin. My friend who now presides [Mr. Ferry,
of Michigan], speaks always of his measure of inflation as a means
of bringing about at some time specie payments; and I will say that
in the Senate I have not heard any Senator deny that it is the duty
of the United States at some time to pay these notes in coin. In
all this discussion there is at least that one point agreed upon.
If I state this too strongly I hope I will be here corrected.
"Now, Mr. president, how shall it be done, and when shall it be
done? I say that now, nine years after the close of our Civil War,
twelve years after these notes have been authorized and issued,
five years after the dominant party has declared its purpose to
pay them at the earliest day practicable, there should be no longer
delay. The United States ought to do something toward the fulfillment
of that pledge and the performance of that duty. There must be
something very peculiar in the condition of our country that will
justify a longer delay; a longer procrastination in the performance
of this solemn pledge, this public policy--our own political
obligation.
"Mr. president, this section is the result of the patient consideration
of the committee on finance as to how this result is to be brought
about; and upon this very section there is most likely to be a
contrariety and difference of opinion among Senators, because the
mode and manner of redemption is the thing which has excited the
public mind and upon which men all over the country differ. I
wish, therefore, to deal with this question. We have got to pay
these notes in coin. The time when is not defined by the law.
Are we prepared now to fix a day when we will pay these notes in
coin? If the condition of our country was such as to justify it,
I would greatly prefer fixing the time when these notes should be
paid in coin; but I am disposed to agree with what has been stated
by the Senator from Indiana, and by other Senators, that in the
present condition of our coinage, the present condition of our
foreign trade, we are not prepared to fix a definite day when we
will pay in coin. Why? I find, by reference to official documents,
that we now have in gold and silver coin in this country about
$140,000,000. This statement of Dr. Linderman does not include
the bullion on hand. How much that is I am not prepared to state.
The whole amount of gold and silver coin in the country, however,
is about $140,000,000. Some of that is in circulation in the
Pacific states, but the bulk of it is in the treasury of the United
States, the property of individuals and the property of the United
States. The total annual production of gold and silver in this
country cannot be estimated at over $70,000,000; and heretofore,
at least $50,000,000 of this has been exported over and above the
amount that has been imported. The balance of trade has been
against us; and although I do not regard that as entering much into
the calculation, yet it is a fact that until recently, perhaps,
the balance of trade has been against us. The annual coinage of
the United States for the last year or two has been largely
increasing, and last year the coinage of the United States was
$38,689,183, besides stamping into fine bars, which operate as a
kind of coinage, of $27,517,000. So that there has been in fact
converted, of gold and silver, into coin, or bars stamped by the
United States, $66,000,000 during the last year, showing a use and
employment of gold in this country that is now rapidly increasing.
"But still this state of affairs would not justify us in saying
that we are prepared to declare a resumption of specie payments
absolutely upon the basis of $800,000,000 of paper money, including
our fractional currency. I am, therefore, not prepared to say that
the United States can, on a fixed day, within a reasonable time--
within such a time as would give confidence in our ability to
perform it--say that we will absolutely redeem our notes in coin.
"I know that Senators here, for whose opinion I have the highest
respect, who are probably more sanguine of our ability and capacity
to do this than I am--many of those who have agreed with me and co-
operated with me--think we are able and strong enough to fix the
time for the absolute resumption of specie payments; but I have
always doubted it. Indeed I have thought there was a better way
to reach the great result. But if we cannot fix the time when we
will redeem in coin, can we not give additional value to our United
States noes, so as to gradually appreciate them to the coin standard,
and thus advance toward specie payments if we cannot reach the
goal? Because we cannot accomplish all that we have agreed to do
in a given time, does that relieve us from the necessity of
progressing in that direction? When we have before us a long
journey that will take months to pass, perhaps years, shall we
delay starting on that journey because we cannot reach the end of
it in a year or two? Not at all. I therefore say that the time
has arrived this moment when the United States ought to do something
to advance its notes to the specie standard.
"Now what is that something? There are two propositions, and only
two propositions, that have been made, aside from absolute coin
redemption, that have had any strength whatever. One is to allow
the United States notes to be received in payment of customs duties,
the other is to allow United States notes to be converted into
bonds. In regard to the first, I agree entirely that if the matter
was open now to our choice and selection, one of the best methods
we could adopt to advance our notes to par in gold would be by
repealing that restriction which prevents the receiving of them
for customs duties; but we are met there by the sacred pledge of
the United States; we are met there by the fact that customs duties
are, by the law of 1862, agreed to be collected in coin."
Mr. Bayard inquired:
"Does not the law provide that the customs duties shall be paid in
coin or in notes of the United States? Is not the alternative
given by the law?"
I replied:
"O, no. If the Senator will look at section 5 of the act of February
25, 1862--my friend from Vermont can turn to it in a moment--he
will find that there is an express stipulation that the customs
duties shall be collected in coin, and that this coin shall be set
aside as a pledge--legal language is used--and shall only be applied,
first, to the payment of the interest on the public debt, and,
secondly, to the establishment of a sinking fund of one per cent.
That was the basis of the obligation of the United States to pay
in coin, and but for the fact that we collected our customs duties
in coin during the war we could not have paid the interest on our
public debt in coin, and therefore our bonds would have sunk out
of sight. That pledge we cannot now violate; and I never have yet
been able to bring my mind to the consideration of any proposition
whatever which would ever shock or excite the fear of the public
creditors in that respect. The safety of the public creditors
consists in having a specific fund for the payment of their interest;
the principal will take care of itself; and that fund has always
been maintained in the darkest hours of the war. Except the
propositions that have been made here and there to impair that fund
by allowing a portion of the customs duties to be paid in currency,
it has never been either invaded or threatened; but all such
propositions have been voted down. I, therefore, while I see the
policy and the expedience of allowing these notes to be used in
payment of customs duties, simply say we are precluded from that
remedy because we have mortgaged that fund, and we have no power
to take them for any purpose except that which the mortgage
stipulates.
* * * * *
"We then come to the redemption in bonds. There is the moral
obligation, on the part of the United States, which has issued its
notes payable in coin, but for reasons of public policy does not
pay in coin, to give to its creditors its notes bearing interest
in place of coin. The United States cannot plead inability to pay
interest on its notes if it will not or cannot pay the principal.
Why should not the United States give its obligation bearing interest
just as any individual would have to do? There is a moral obligation
which rests upon the United States every day of the year to every
holder of these notes, because, although the United States has not
said when it will redeem these notes in coin, yet it is bound to
do what it can to give them additional value. Although it may not
receive these notes for customs duties, why can it not receive
these notes in payment of bonds? Why discriminate against these
notes in the sale of bonds? The answer is, that during the war we
were compelled to do it; and so we were. I very reluctantly yielded
to that necessity. We were compelled to do it; but, sir, it was
only expected that that would continue to the close of the war;
and, practically, during the whole of the war these notes were
received at par for bonds at par.
"If, therefore, we are to take any step toward specie payments,
why not give to the holder of United States notes who demands it,
a bond of the United States bearing a reasonable rate of interest
in exchange for his notes? This should only be done after a
reasonable time, so as to prevent any injury to the private contracts
between debtor and creditor. When we cannot pay the coin, we are
honorably and sacredly bound to pay in a bond of the United States,
which in ordinary times would approximate to par in gold. In other
words, this is a qualified redemption. The Senator from Indiana
calls it a 'half-way measure.' It is a half-way measure in the
right direction, and indeed it is practical specie payment."
The bill led to a long continuous debate which extended to the 6th
of April, 1874. Several amendments were offered and adopted which
enlarged the maximum of notes to $400,000,000, and greatly weakened
the bill as a measure of resumption of specie payments. By reason
of these amendments many of those who would have supported the bill
as introduced voted against it on its passage, I among the number.
The bill, however, passed the Senate by a vote of yeas 29 and nays
24. The title of the bill was changed to "A bill to fix the amount
of United States notes and the circulation of national banks, and
for other purposes." This change of title indicates the radical
change in the provisions of the bill. Instead of a return to specie
payments, it provided for an expansion of an irredeemable currency.
The bill, as it passed the Senate, was as follows:
"_Be it enacted, etc.,_, That the maximum amount of United States
notes is hereby fixed at $400,000,000.
"Sec. 2. That forty-six millions in notes for circulation, in
addition to such circulation now allowed by law, shall be issued
to national banking associations now organized and which may be
organized hereafter, and such increased circulation shall be
distributed among the several states as provided in section 1 of
the act entitled 'An act to provide for the redemption of the three
per cent. temporary loan certificates and for an increase of national
bank notes,' approved July 12, 1870. And each national banking
association, now organized or hereafter to be organized, shall keep
and maintain, as a part of its reserve required by law, one-fourth
part of the coin received by it as interest on bonds of the United
States deposited as security for circulating notes or government
deposits; and that hereafter only one-fourth of the reserve now
prescribed by law for national banking associations shall consist
of balances due to an association available for the redemption of
the circulating notes from associations in cities of redemption,
and upon which balances no interest shall be paid."
The bill was taken up in the House of Representatives on the 14th
of April, 1874, and, without any debate on its merits, was passed
by the vote of 140 yeas and 102 nays.
On the 22nd of April, President Grant returned the bill to the
Senate with his veto, and the Senate, upon the question, "Shall
the bill pass notwithstanding the objections of the President of
the United States," voted 34 yeas and 30 nays. I voted nay. The
president of the Senate declared "that two-thirds of the Senators
present not having voted in the affirmative the Senate refuses to
pass the bill."
Thus, for that session, the struggle for resumption ended; but the
debate in both Houses attracted popular discussion, and tended in
the right direction. The evil effects of the stringency in monetary
affairs, the want of confidence, the reduction of the national
revenue, the decline of domestic productions, all these contributed
to impress Congress with the imperative necessity of providing some
measure of relief. Instead of inflation, of large issues of paper
money by the United States and the national banks, there grew up
a conviction that the better policy was to limit and reduce the
volume of such money to an amount that could be maintained at par
with coin.
During the canvass that followed I spoke in many parts of Ohio,
confining myself chiefly to financial questions. The stringency
of the money market which occurred the preceding year still continued,
and great interest was manifested in the measures proposed during
the preceding session, especially in the defeat of the bill to
prevent the contraction of the currency. At the request of General
Garfield I spoke in Warren in his Congressional district, where he
met, for the first time, a decided opposition. I insert his
autograph letter, the original being in his familiar hand writing:
"Hiram, Ohio, September 25, 1874.
"Dear Senator:--In accordance with the arrangement which I made
with you and with the central committee, we have posted you for a
mass meeting at Warren, on Saturday afternoon, October 10. I hope
I shall not embarrass you by suggesting that in your speech you
take occasion to say a few words in reference to my standing and
public service as a representative. It will do much to counteract
the prejudice that a small knob of persistent assailants have
created against me. I write also to inquire if you will be willing
to speak at another place the same evening. If so, we are very
anxious to have you do so. Please telegraph me to Garrettsville,
Ohio, and oblige,
"Very truly yours,
"J. A. Garfield."
CHAPTER XXV.
BILL FOR THE RESUMPTION OF SPECIE PAYMENTS.
Decline in Value of Paper Money--Meeting of Congress in December,
1874--Senate Committee of Eleven to Formulate a Bill to Advance
United States Notes to Par in Coin--Widely Differing Views of the
Members--Redemption of Fractional Currency Readily Agreed to--Other
Sections Finally Adopted--Means to Prepare for and Maintain Resumption
--Report of the Bill by the Committee on Finance--Its Passage by
the Senate by a Vote of 32 to 14--Full Text of the Measure and an
Explanation of What It Was Expected to Accomplish--Approval by the
House and the President.
When Congress met in December, 1874, the amount of United States
notes outstanding was $382,000,000. The fractional notes outstanding
convertible into legal tenders amounted to $44,000,000, and the
amount of national bank notes redeemable in lawful money was
$354,000,000, in all $780,000,000. Each dollar was worth a fraction
less than 89 cents in coin. While these notes were at a discount
coin did not and could not circulate as money. The government
exacted coin for customs duties and paid coin for interest on its
bonds. If there was an excess of coin received from customs to
pay interest then the excess was sold at a premium. If the receipts
from customs were insufficient to pay the interest on bonds, the
government had to buy the coin and pay the premium. The people
who were demanding more money to relieve the stringency did not
see that the best way to get more money into circulation was to
adopt measures that would make United States notes and bank notes
equal to coin, when all three forms of money would enter into
circulation and thus give them more money and all kinds of equal
value.
While our paper money was depreciated the gold and silver bullion
from our mines went abroad and was converted into foreign coin,
while a large portion and perhaps a majority of our people demanded
more paper money, which declined in value in exact proportion to
its increase. During the war vast expenditures compelled us to
use paper money; the return of peace and the excess of revenue over
expenditures should have been promptly followed by coin payments
or notes payable in coin. We delayed this process so long that
the popular mind rested content with depreciated money, but the
panic of 1873, and the feverish speculation which preceded it,
convinced the great body of our business men that there was no
remedy for existing evils but a return to specie payments.
Another bill concerning currency and free banking was reported by
Horace Maynard, of Tennessee, on the 29th of January, 1874, from
the committee on banking and currency of the House of Representatives,
which provided for free banking and a gradual reduction and
cancellation of United States notes by the issue of notes payable
in gold in two years from the passage of the bill. This was fully
debated in the House of Representatives and amended and passed.
In the Senate it was reported by me from the committee on finance,
with a substitute which provided for free banking and that on and
after the 1st of January, 1877, and holder of United States notes
might present them for payment either in coin or five per cent.
bonds of the United States, at the suggestion of the Secretary of
the Treasury. This substitute was amended in the Senate by striking
out all provisions for the redemption of United States notes,
leaving the measure one for free banking alone. The House disagreed
to the amendments and a committee of conference was appointed,
which resulted in a measure fixing the amount of United States
notes outstanding at $382,000,000, and making no provision for
their redemption. It was a crude and imperfect measure. I voted
for it because it provided for a redistribution of national banks
among the states. I said: "Because I cannot get a majority of
both Houses of Congress to agree to specie resumption I ought not
therefore to refuse to vote for a bill on the subject of banking
and currency." The bill was approved by the President on the 20th
of June, 1874. This long struggle prepared the way for the result
accomplished at the next session.
When Congress met in December, 1874, the feeling that the remedy
for existing evils was the return to specie payments, was general
among Republican Senators and Members. The abortive efforts of
the previous session and the veto of President Grant of one of the
bills referred to contributed to it. At the first Republican
conference I called attention to the necessity of our uniting, if
possible, on some measure that would advance United States notes
to par in coin and moved that a committee of eleven Senators be
created to formulate a bill for that purpose. It was agreed to,
and, as the names of the Senators composing the committee have
already been published, I feel justified in repeating them: The
committee consisted of Senators John Sherman (chairman), William
B. Allison, George S. Boutwell, Roscoe Conkling, George F. Edmunds,
Thomas W. Ferry, F. T. Freylinghuysen, Timothy O. Howe, John A.
Logan, Oliver P. Morton, and Aaron A. Sargent.
When the committee met it was agreed that each member should state
how far he would go in the direction of specie resumption. When
these statements were made it was manifest that the divergence of
opinion was so great that an agreement was almost impossible. Yet,
the necessity of an agreement was so absolute that a failure to
agree was a disruption of the Republican party.
The first section of the act to provide for the resumption of specie
payments, which related to the coinage and issue of fractional
silver under the act of February 21, 1853, and the redemption of
an equal amount of fractional currency outstanding should be
redeemed, and was readily agreed to. This fractional currency was
so worn and filthy, and it cost so much to reissue, that by general
consent its destruction was agreed to, and its replacement by bright
new silver coin, which followed, was heartily welcomed.
The second section was an unjust concession to the miners of gold.
It repealed the coinage charge for converting standard gold bullion
into coin. This charge had been maintained, not only to cover the
cost of coining, but to prevent the exportation of American coins.
If the coins were of less value than the bullion of which they were
made, however small the difference, they would not be exported
while bullion could be had for exportation. The concession was
made and the charge for coinage of gold was prohibited.
The free banking provisions in the third section were not seriously
contested. The contraction of the volume of United States notes
as national bank notes increased, was one of the chief subjects of
disagreement. It was finally agreed that this contraction should
extend only to the retirement of United States notes in excess of
$300,000,000.
The most serious dispute was upon the question whether United States
notes presented for redemption and redeemed could be reissued. On
the one side it was urged that, being redeemed, they could not be
reissued without an express provision of law. The inflationists,
as all those who favored United States notes as part of our permanent
currency were called, refused to vote for the bill if any such
provision was inserted, while those who favored coin payments were
equally positive that they would vote for no bill that permitted
notes once redeemed to be reissued. This appeared to be the rock
upon which the party in power was to split. I had no doubt under
existing law, without any further provision, but that United States
notes could be reissued. It was finally agreed that no mention
should be made by me for or against the reissue of notes, and that
I must not commit either side in presenting the bill.
The date for general resumption of specie payments on all United
States notes was fixed on the first of January, 1879, four years
from the framing of this bill. The important and closing clause
of the bill was referred to Mr. Edmunds and myself. It provided
the means to prepare for and to maintain resumption. It placed
under the control of the Secretary of the Treasury all the surplus
revenue in the treasury, and gave him full power to issue, sell
and dispose of, at not less than par in coin, any of the bonds
described in the refunding act. We were careful to select phraseology
so comprehensive that all the resources and credit of the government
were pledged to redeem the notes of the United States, as fully
and completely as our Revolutionary fathers pledged to each other
their lives, their fortunes, and their sacred honor, in support of
the declaration of American independence.
After every sentence and word of this bill had been carefully
scrutinized, I was authorized by every member of the committee to
submit it to the committee on finance, and to report it from that
committee as the unanimous act of the Republican Senators. We
naturally expected some support from Mr. Bayard and other Democratic
Senators, who, no doubt, were in favor of specie payments, but they
perhaps thought it best not to share the risk of the measure.
I reported the bill from the committee on finance on the 21st of
December, 1874, and gave notice that on the next day I would call
it up with a view to immediate action. On the 22nd, after the
morning business, I moved to proceed to the consideration of the
bill, and gave notice that I intended to press it to its passage,
from that hour forward, at the earliest moment practicable. It
was well understood that the bill was the result of a Republican
conference. It was taken up by the decisive vote of 39 yeas to 18
nays.
It was not my purpose to do more than to present the provisions of
the bill. My brief statement led to a desultory debate, participated
in almost exclusively by Democratic Senators, the Republican Senators
remaining silent. Several votes were taken, each showing a majority
of more than two-thirds in favor of the bill and against all
amendments. It passed the Senate without change by the vote of 32
yeas to 14 nays.
I here insert the bill as introduced and passed, with my statement
in support of its provisions:
"AN ACT TO PROVIDE FOR THE RESUMPTION OF SPECIE PAYMENTS.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That the Secretary
of the Treasury is hereby authorized and required, as rapidly as
practicable, to cause to be coined, at the mints of the United
States, silver coins of the denominations of ten, twenty-five, and
fifty cents, of standard value, and to issue them in redemption of
an equal number and amount of fractional currency of similar
denominations, or, at his discretion, he may issue such silver
coins through the mints, the sub-treasuries, public depositaries,
and post offices of the United States; and, upon such issue, he is
hereby authorized and required to redeem an equal amount of such
fractional currency, until the whole amount of such fractional
currency outstanding shall be redeemed.
"Sec. 2. That so much of section three thousand five hundred and
twenty-four of the Revised Statutes of the United States as provides
for a charge of one-fifth of one per centum for converting standard
gold bullion into coin is hereby repealed; and hereafter no charge
shall be made for that service.
"Sec. 3. That section five thousand one hundred and seventy-seven
of the Revised Statutes, limiting the aggregate amount of circulating
notes of national banking associations, be, and hereby is, repealed;
and each existing banking association may increase its circulating
notes in accordance with existing law, without respect to said
aggregate limit; and new banking associations may be organized in
accordance with existing law, without respect to said aggregate
limit; and the provisions of law for the withdrawal and redistribution
of national bank currency among the several states and territories
are hereby repealed. And whenever, and so often, as circulating
notes shall be issued to any such banking association, so increasing
its capital or circulating notes, or so newly organized as aforesaid,
it shall be the duty of the Secretary of the Treasury to redeem
the legal tender United States notes in excess only of three hundred
millions of dollars, to the amount of eighty per centum of the sum
of national bank notes so issued to any banking association as
aforesaid, and to continue such redemption as such circulating
notes are issued until there shall be outstanding the sum of three
hundred million dollars of such legal tender United States notes,
and no more. And on and after the first day of January, anno Domini
eighteen hundred and seventy-nine, the Secretary of the Treasury
shall redeem in coin the United States legal tender notes then
outstanding, on their presentation for redemption at the office of
the assistant treasurer of the United States in the city of New
York, in sums of not less than fifty dollars. And to enable the
Secretary of the Treasury to prepare and provide for the redemption
in this act authorized or required, he is authorized to use any
surplus revenues from time to time in the treasury not otherwise
appropriated, and to issue, sell, and dispose of, at not less than
par in coin, either of the descriptions of bonds of the United
States described in the act of Congress approved July fourteenth,
eighteen hundred and seventy, entitled 'An act to authorize the
refunding of the national debt,' with like qualities, privileges,
and exemptions, to the extent necessary to carry this act into full
effect, and to use the proceeds thereof for the purposes aforesaid.
And all provisions of law inconsistent with the provisions of this
act are hereby repealed."
I said:
"Mr. president, I do not intend to reopen the debate on financial
topics of last session. That debate was carried to such great
length that it was not only exhaustive, but it was exhausting, not
only mentally but physically. The Senate is composed of the same
persons who shared in that debate, and it is utterly idle for us,
in this short session, to reopen it and to invite the discussion
of the various topics presented in that debate. The Senate is now
within less than three months, a little more than two months, of
its adjournment, and there is a general feeling throughout the
country, shared by all classes of people, that this Congress ought
to give some definite notice to the people of this country as to
their purpose in the important topics embraced in this bill; and
I say to Senators on all sides of the House that this bill contains
enough to accomplish the important object declared by the title of
the bill, and this without reviving all the troublesome and difficult
questions which were discussed at the last session. It contains
a few simple propositions which may be separated from the mass of
financial topics discussed at the last session. Its purpose is
declared upon the title of the bill, 'An act to provide for the
resumption of specie payments.' Every word, every line, and every
provision, of this bill is in harmony with that title. It will
tend to promote the resumption of specie payments. It may fall
short in many particulars of the desire of some Senators; and it
does go further in that direction than some Senators were willing
to support at the last session. It is a bill which demands reasonable
concession from every Member of the Senate. If we undertake now
to seek to carry out the individual views of any Senator, we cannot
accomplish the passage of any bill to promote this object, and
therefore this bill has demanded of everyone who has consented to
it thus far a surrender of some portions of his opinions as to
measures and means to accomplish the great purpose. I will consider
my duty done, so far as this bill is concerned, by simply stating
its provisions and calling attention to the character of those
provisions, without entering into a single topic that gave rise to
the long discussion at the last session.
"The bill is intended to provide for the resumption of specie
payments. The first section of the bill provides for the resumption
of specie payments on the fractional currency. It is confined to
that subject alone. It so happens that at this particular period
of time the state of the money market, the state of the demand for
silver bullion, and more especially the recent action of the German
Empire, which has demonetized silver and thus cheapened that product,
enables us now, without any loss of revenue, without any sacrifice,
to enter the market for the purchase of bullion and resume specie
payments on our fractional currency. The market price of bullion
to-day will justify the government of the United States, without
any sacrifice, at a price about equivalent to, or perhaps a trifle
above, our fractional currency--scarcely a shadow above our fractional
currency--to purchase silver bullion in the money markets of the
world, mostly of our own production, perhaps entirely of our own
production. This bill simply directs that the Secretary of the
Treasury shall purchase this bullion and shall coin silver coin
and substitute that in the place of fractional currency. This
section is recommended not only by the Secretary of the Treasury
and the President of the United States, but I believe will meet
the general concurrence of every Member of the Senate, and we
fortunately are enabled to embrace the present time to commence
this operations without any loss to the government, except perhaps
the cost of the coinage of this silver may have to be paid out of
the treasury of the United States. That coinage may be done in
the ordinary course of business without any increase of expenditures.
The mints of the United States are now prepared, immediately upon
the passage of this bill, to resume the coinage of silver coins
of all the legal denominations. Therefore the committee has provided
that the Secretary of the Treasury shall proceed to coin the silver
coins, and in one of several ways to issue them in place of fractional
currency.
"I need not dwell further upon this section, because I believe it
will meet with the general assent of the Senate. It provides for
the immediate resumption of specie payments upon the fractional
currency, or at least as immediate as possible; that is, as soon
as the government of the United States can, in the mints of the
United States, coin the silver coin. That process may continue
one, two, or three years, how long we cannot tell, depending entirely
upon the force that may be employed in that direction. It takes
a much longer time to coin these small coins than gold coins, and
the operation will probably take more time than it would to coin
any considerable amount of gold coin."
Mr. Hamilton, of Maryland, inquired:
"I would ask the Senator if there is authority to reissue that
fractional currency?"
I said:
"I will come to that in a moment. The second section of this bill
simply removes an inducement that now exists to export our gold
bullion from the United States to Great Britain, where, by the long
established laws of that country, they coin money free of charge.
This section involves the surrender of about $85,000 a year of
revenue; that is, the government of the United States received last
year for coining gold coins, $85,000, or one-fifth of one per cent.
on forty-five millions of gold coined. The only sacrifice of
revenue, therefore, by the second section of the bill, is the
sacrifice or surrender of $85,000, which heretofore has been levied
upon those who produce gold bullion in order to convert it into
coin. In the opinion of many men, among them the Secretary of the
Treasury, the director of the mint, and perhaps a large number of
Senators heretofore, this will tend, in a slight degree at any
rate, to prevent the exportation of the gold of our own country
into foreign parts, because when the government of the United States
undertakes to put gold bullion in the form of gold coin without
additional charge the tendency will inevitably be for the gold
bullion to flow into the mints for coinage, and being put into the
form of American coin, it is thought by a great many people that
this will tend to prevent its exportation. To the extent it does
so it prepares us for specie payments. That is the whole of the
second section.
"The third section of the bill contains only two or three affirmative
propositions. The first is that after the passage of this act
banking shall be free. Perhaps there is no idea stronger in the
minds of the American people than a feeling of hostility against
a monopoly--a privilege that one man or set of men can enjoy which
is denied to another man or set of men. Under the law as it now
stands banking is substantially free in the southern and some of
the western states; but banking is not free in the great commercial
states, in the older states, where wealth has accumulated for ages.
This may be a mere sentimental point, but it is well enough to meet
it; and by the operation of this bill banking is made free, so that
there will be no difficulty hereafter for any corporation organized
as a national bank either to increase its circulation or for banks,
to be organized under the provisions of existing law, to issue
circulating notes to any extent within the limits and upon the
terms and provisions of the banking law. This section, therefore,
by making banking free, provides for an enlargement of the currency
in case the business of the community demands it, and in case any
bank in the United States may think it advisable or profitable to
issue circulating medium in the form of bank notes, under the
conditions and limitations of the banking law. Coupled with that
is a provision, an undertaking, on the part of the United States,
that as banks are organized or as circulating notes are issued,
either by old or new banks, the government of the United States
undertakes to retire eighty per cent. of that amount of United
States notes. In other words, it proposes to redeem the United
States notes to the extent of eighty per cent. of the amount of bank
notes that may be issued; and here is the first controversial
question that arises on this bill and the first that is settled.
"It may be asked if we provide for the issue of circulating notes
to banks, why not provide for the retirement of an equal amount of
United States notes. The answer is that under the provisions of
the banking act, by the law as it now stands, a bank cannot be
organized and maintained in existence unless the reserve which is
in that bank, or required for that bank in the ordinary course of
business, either on its deposits or circulation, is at least equal
to twenty per cent. of the amount of its circulating notes, so that
it was believed, according to the judgment of the best business
men of the country, and I may say with the comptroller of the
currency, that the retirement of eighty per cent. of the amount of
bank notes is fully equivalent to keeping the amount of circulating
medium in actual circulation on the same footing, so that this
provision of the bill neither provides for a contraction nor
expansion of the currency, but leaves the amount to be regulated
by the business wants of the community, so that when notes are
issued to a bank eighty per cent. of the amount in United States
notes is redeemed, and this process continued until United States
notes are reduced to three hundred millions."
Mr. Schurz asked:
"Will the Senator permit me to ask him a question in reference to
this section? When the eighty per cent. of greenbacks are retired
will they be destroyed and never used again?"
I replied:
"I will speak of that in a moment in connection with other sections.
Now, Mr. president, that is all there is in regard to banking in
this bill and also in regard to the retirement of the United States
notes until the time for the resumption of specie payments comes,
when this bill provides for actual redemption in coin of all notes
presented. It has always been a question in the minds of many
people as to whether it is wise to fix a day for specie payments.
That matter was discussed at the last session of Congress by many
Senators, and the general opinion seemed to be that if we would
provide the means by which specie payments would be resumed it
might not be necessary to fix the day; but, on the other hand, it
is important to have our laws in regard to the currency fix a
probable time, or a certain time, when everybody may know that his
contracts will be measured by the coin standard. We also know, by
the example of other nations which have found themselves in the
condition in which we are now placed, and by some of the states
when specie payments were suspended, that they have adopted a
specific day for the resumption of specie payments. In England,
by the bank act of 1819, they provided for the resumption of specie
payments in 1823, making four years. In our own states--in New
York, in Ohio, in nearly all the states--when there has been a
temporary suspension of specie payments a time has been fixed when
the banks were compelled to resume, and this bill simply follows
the example that has been set by the states, by England, and by
other nations, when they have been involved in a like condition.
"This bill also provides ample means to prepare for and to maintain
resumption. I may say the whole credit and money of the United
States is placed by this bill under the direction of the proper
executive officers, not only to prepare for but to maintain
resumption, and no man can doubt that if this bill stands the law
of the land from this time until the 1st day of January, 1879,
specie payments will be resumed, and that our United States notes
will be converted at the will of the holder into gold and silver
coin.
"These are all the provisions contained in this bill. They are
simple and easily understood, and every Senator can pass his judgment
upon them readily.
"Now I desire to approach a class of questions that are not embraced
in this bill. Many such, and I could name fifty, are not included
in this bill, and I may say this: That if there should be a
successful effort, by the Senate of the United States, to ingraft
any of this multitude of doubtful or contested questions upon the
face of this bill it would inevitably tend to its defeat. I am
free to say that if I were called upon to frame a bill to accomplish
the purpose declared in the title of this bill, I would have provided
some means of gradual redemption between this and the time fixed
for final specie payments. All these means are open to objection.
"There have been three different plans proposed to prepare for
specie payments, and only three. They are all grouped in three
classes. One is what is called the contraction plan. The simplest
and most direct way to specie payments is, undoubtedly, the gradual
withdrawal of United States notes or the contraction of the currency.
Now, we know very well the feeling with which that idea is regarded,
not only in this Senate, but all through the country. It is believed
to operate as a disturbing element in all the business relations
of life; to add to the burden of the debtor by making scare that
article in which he is bound to pay his debts; and there has been
an honest, sincere opposition to this theory of contraction.
Therefore, although it may be the simplest and the best way to
reach specie payments, it is entirely omitted from this bill.
"The second plan, that I have favored myself often, and would favor
now, if I had my own way, and had no opinion to consult but my own,
is the plan of converting United States notes into a bond that would
gradually appreciate our notes to par in gold. That has always
been a favorite idea of mine. There is nothing of that kind in
this bill, except those provisions which authorize the Secretary
of the Treasury to issue bonds to retire the greenbacks as bank
notes are issued; and it also authorizes the Secretary of the
Treasury to issue bonds to provide for and to maintain resumption.
I therefore have been compelled to surrender my ideas on this bill
in order to accomplish a good object without using these means that
have been held objectionable by many Senators.
"The third plan of resumption has been favored very extensively in
this country, which is the plan of a graduated scale for resumption
in coin or bullion; what I call the English plan. That is, that
we provide now for the redemption, at a fixed rate or scale or
rates, of so much gold for a specific sum of United States notes.
At present rates we would give about $90 of gold for $100 of
greenbacks, and then provide for a graduated scale by which we would
approach specie payments constantly, and reach it at a fixed day.
This may be called a gradual redemption. This, also, is objectionable
to many persons, from the idea that it compels us to enter the
money markets of the world to discount our own paper. It is an
ideal objection, but a very strong objection; an objection that
has force with a great many people. We have undertaken to redeem
these notes in coin, and it is at least a question of doubtful
ethics whether we ought to enter into the markets of the world and
buy our own notes at a discount. Although that plan has been
adopted in England and successfully carried into execution, yet
there is a strong objection to it in this country, and therefore
that mode is abandoned.
"Either of these plans I could readily support; but they have met
and will meet with such opposition that we cannot hope to carry
them or ingraft them in this bill without defeating it. We have
then fallen back on these gradual steps: First, to retire the
fractional currency; second, to reduce United States notes as bank
notes are increased; and then to rest our plan of redemption upon
the declaration, made on the faith of the United States, that at
the time fixed by the bill we will resume the payment of the United
States notes in coin at par. That is the whole of this bill."
On the 7th of January, 1875, the bill was considered in the House
of Representatives and, after a very brief conversational debate,
passed by the vote of yeas 136, nays 98.
On the 14th day of January, 1875, the President sent a message to
the Senate approving the bill but also containing recommendations
of further legislation upon matters that had been carefully excluded
from the bill. He added at the close of the message this paragraph:
"I have ventured upon this subject with great diffidence, because
it is so unusual to approve a measure--as I most heartily do this,
even if no further legislation is attainable at this time--and to
announce the fact by message. But I do so, because I feel that it
is a subject of such vital importance to the whole country, that
it should receive the attention of, and be discussed by, Congress
and the people, through the press and in every way, to the end that
the best and most satisfactory course may be reached of executing
what I deem most beneficial legislation on a most vital question
to the interests and the prosperity of the nation."
Thus, after a memorable debate, extending through two sessions of
Congress, a measure of vital importance became a law, and when
executed completely accomplished the great object proposed by its
authors. The narrative of the steps leading to resumption under
this act will be more appropriate hereafter.
CHAPTER XXVI.
RESUMPTION ACT RECEIVED WITH DISFAVOR.
It Is Not Well Received by Those Who Wished Immediate Resumption
of Specie Payments--Letter to "The Financier" in Reply to a Charge
That It Was a "Political Trick," etc.--The Ohio Canvass of 1875--
Finance Resolutions in the Democratic and Republican Platforms--R.
B. Hayes and Myself Talk in Favor of Resumption--My Recommendation
of Him for President--A Democrat Elected as Speaker of the House--
The Senate Still Republican--My Speech in Support of Specie Payments
Made March 6, 1876--What the Financial Policy of the Government
Should Be.
The resumption act was generally received with disfavor by those
who wished the immediate resumption of specie payments. It was
the subject of much criticism in the financial journals, among
others "The Financier," which described it as a political trick,
an evasion of a public duty, and as totally inadequate for the
purpose sought to be accomplished. I took occasion to reply to
this article in the following letter:
"United States Senate Chamber,}
"Washington, January 10, 1875.}
"Dear Sir:--As I am a subscriber to 'The Financier,' you will
probably allow me to express my surprise at the course you have
pursued in respect to the finance bill recently passed by Congress.
Claiming as you do to be a 'monetary and business' journal, you
might be expected to treat fairly a measure affecting so greatly
the interests you represent; but you have not done so. You have
treated it as a political trick, an evasion, a disgrace to Congress.
You complained that it was passed without debate and that its
inception and passage were shameful. But as you say in your last
number 'that it is well to examine it hopefully, to find _what good
may have been done, if any_, although from a _bad motive_,' I take
the liberty to correct errors even in your 'hopeful' view of the
law, so that you may be more hopeful still. You assume that the
Secretary of the Treasury is not authorized to issue five per cent.
gold bonds to prepare for and to maintain resumption, because the
amount of five per cent. bonds authorized in the act of 1870 is
nearly exhausted. This is an error. The secretary can issue either
four and a half or five per cent. gold bonds to an amount sufficient
to execute the law. The act of 1870 is only referred to for the
'description' of the bonds to be issued, and the only limit to
their amount is the sum necessary, and the only limit to their sale
is that they must not be sold at less than par in coin.
"You say that _one trick_ of the bill is 'that there is no provision
for carrying on the withdrawal of legal tenders after their maximum
reaches $300,000,000.' Now this 'trick' was advocated by you one
year ago; it was voted for by every specie paying Member of Congress
at the last session, and nearly every writer on the subject has
contended that if the legal tenders were reduced to $300,000,000,
and the treasury was supported by a reasonable reserve, specie
payments could be resumed and maintained. Besides, no one believes
that $100,000,000 of bank notes will be issued under this act, and
this provision only relieves some people from an idle fear of an
improbable event. You must have noticed that when banks retire
their notes, as they have done and will do rapidly, this is a
reduction of the currency, while every issue of notes to new or
old banks involves a retirement of a ratable amount of United States
notes. What you say about playing with a movable 'reserve' is
equally wrong. Neither the fractional currency nor the 'eighty-
two million' redeemed can be reissued, and I stated so when the
bill was pending under debate, and no lawyer could put a different
construction upon the bill. As to United States notes, a part of
the $300,000,000 redeemed after resumption of specie payments, we
did refuse to provide whether they could be reissued or not, and
we acted wisely. When the question is hereafter determined by
Congress, the controversy will be whether the notes _when reissued_
shall have the _legal tender_ quality, or be simple treasury notes
receivable for public dues.
"Last session the public press scolded at our long and fruitless
debate on finances, and I agreed with the press. This session the
same Senators, enlightened by the long debate and heeding the call
of the press, gave to the subject the most careful and deliberate
consideration, and agreed upon this bill without much debate, and
yet the press is not happy. The act does not go as far as I wished,
but everything in it is right in itself, and is in the right
direction. Its chief merit is that it establishes a public policy
which no political party or faction will be strong enough to
overthrow, and which if it had not been adopted now, the Democratic
party in the next Congress would have defeated. The pretense that
the Democratic party, as represented in the next House, would have
favored any bill for specie payments is utterly false. Therefore
the measure grants to the Secretary of the Treasury powers enough
to execute it, but if we can secure the aid of a Democratic House
we can make it certain and effective.
"Very truly yours,
"John Sherman.
"Editor of 'Financier.'"
In the Ohio canvass of 1875 the resumption act became the chief
subject of controversy. R. B. Hayes, after having previously served
for four years as governor of the state, was against nominated for
that office. William Allen, then governor, was renominated upon
the Democratic ticket, in opposition to the resumption act and in
favor of fiat money, upon which issue the election mainly turned.
The eighth resolution of the Democratic platform was as follows;
"That the contraction of the currency heretofore made by the
Republican party, and the further contraction proposed by it, with
a view to the forced resumption of specie payment, have already
brought disaster to the business of the country, and threaten it
with general bankruptcy and ruin. We demand that this policy be
abandoned, and that the volume of currency be made and kept equal
to the wants of trade, leaving the restoration of legal tenders to
par with gold, to be brought about by promoting the industries of
the people and not by destroying them."
The Republican convention in their second resolution declared:
"That a policy of finance be steadily pursued, which, without
unnecessary shock to business or trade, will ultimately equalize
the purchasing capacity of the coin and paper dollar."
Ex-Governor Hayes and I opened the state canvass in the county of
Lawrence on July 31, 1875, and took strong ground in favor of the
resumption act. At the beginning it appeared that the people were
not quite prepared for any measure looking to resumption, but as
the contest progressed and the subject was fully and boldly presented
by Mr. Hayes and myself, the tide of opinion ran in our favor and
Hayes was elected by a small majority. The ex-governor did not
evade the issue, but in every speech supported and urged the policy
of resumption as a matter of the highest interest.
In the approaching nomination for President, Governor Hayes was
frequently spoken of as a candidate to succeed General Grant, and
I also was mentioned in the same connection, but, feeling confident
that Mr. Hayes would be a stronger candidate than myself, and fully
determined not to stand in his way, on the 21st of January, 1876,
I wrote a letter to a personal friends, and the Member of the Senate
from the district in which I live, in which I urged the nomination
of Governor Hayes as the most available candidate in the approaching
presidential canvass. This letter no doubt contributed to his
strength and prevented any possibility of the division of the vote
of Ohio in the convention. The letter I give in full:
"Washington, D. C., January 21, 1876.
"Dear Sir:--Your letters of the 2nd and 10th inst. were duly
received, and I delayed answering the first sooner partly from
personal reasons, but mainly that I might fully consider the
questions raised by you as to the approaching presidential contest,
the importance of which cannot be overstated. The election of a
Democratic President means a restoration to full power in the
government of the worst elements of the rebel Confederacy.
"The southern states are to be organized, by violence and intimidation,
into a compact political power only needing a small fragment of
the northern states to give it absolute control where, by a majority
rule of the party, it will govern the country as it did in the time
of Pierce and Buchanan.
"If it should elect a President and both Houses of Congress, the
constitutional amendments would be disregarded, the freedmen would
be nominally citizens but really slaves; innumerable claims, swollen
by perjury, would be saddled upon the treasury, the power of the
general government would be crippled, and the honors won by our
people in subduing rebellion would be a subject of reproach rather
than of pride. The only safeguard from these evils is the election
of a Republican President, and the adoption of a liberal Republican
policy which should be fair and even generous in the south, but
firm in the maintenance of all the rights won by the war. Our
election in Ohio last fall shows that even under the most adverse
circumstances we can win on this basis.
"Every movement made by this Democratic House of Representatives
is an appeal to every man who ever voted with the Republican party
to rally to its support again, and to every man who fought in the
Union army to vote with us to preserve the results of his victory.
"All we need is such a presidential ticket as will give assurance
that we mean to stand by our principles, and that will administer
the government honestly and economically.
"As to candidates, the drift of public opinion is rapidly reducing
the list and has already settled adversely the chances of many of
them. Above all, it has positively closed the question of a third
term. The conviction that it is not safe to continue in one man
for too long a period the vast powers of a President, is based upon
the strongest reasons, and this conviction is supported by so many
precedents set by the voluntary retirement at the end of a second
term of so many Presidents that it would be criminal folly to
disregard it. I do not believe General Grant ever seriously
entertained the thought of a third term, but even if he did, the
established usage against it would make his nomination an act of
suicide.
"It would disrupt our party in every Republican state.
"Happily for us we do not need to look for the contingency of his
nomination.
"Among the candidates now generally named, I have no such preference
that I could not heartily support either of them. They are men of
marked ability, who have rendered important public services, but,
considering all things, I believe the nomination of Governor Hayes
would give us the more strength, taking the whole country at large,
than any other man. He is better known in Ohio than elsewhere,
and is stronger there than elsewhere, but the qualities that have
made him strong in Ohio will, as the canvass progresses, make him
stronger in every state. He was a good soldier, and, though not
greatly distinguished as such, he performed his full duty, and I
noticed, when traveling with him in Ohio, that the soldiers who
served under him loved and respected him. As a Member of Congress
he was not a leading debater, or manager in party tactics, but he
was always sensible, industrious, and true to his convictions and
the principles and tendencies of his party, and commanded the
sincere respect of his colleagues. As a governor, thrice elected,
he has shown good executive abilities and gained great popularity,
not only with Republicans but with our adversaries. On the currency
question, which is likely to enter largely into the canvass, he is
thoroughly sound, but is not committed to any particular measure,
so as to be disabled from co-operating with any plan that may
promise success. On the main questions, protection for all in
equal rights, and the observance of the public faith, he is as
trustworthy as any one named. He is fortunately free from the
personal enmities and antagonisms that would weaken some of his
competitors, and he is unblemished in name, character or conduct,
and a native citizen of our state.
"I have thus, as you requested, given you my view of the presidential
question, taken as dispassionately as if I were examining a
proposition in geometry, and the result drawn from these facts,
not too strongly stated, is that the Republican party in Ohio ought,
in their state convention, to give Governor Hayes a united delegation
instructed to support him in the national convention, not that we
have any special claim to have the candidate taken from Ohio, but
that in General Hayes we honestly believe the Republican party of
the United States will have a candidate for President who can
combine greater popular strength and a greater assurance of success
than other candidates, and with equal ability to discharge the
duties of President of the United States in case of election. Let
this nomination be thus presented, without any wire pulling or
depreciation of others and as a conviction upon established facts,
and I believe Governor Hayes can be and ought to be nominated.
But if our state is divided or is not in earnest in this matter it
is far better for Governor Hayes and the state that his name be
not presented at all. We have never sufficiently cultivated our
state pride, with every reason for indulging it, and thus our proper
influence has been wasted and lost. Now we have a good opportunity
to gratify it, and at the same time contribute to the common good.
Remember me kindly to personal friends in the Senate.
"Very truly yours,
"John Sherman.
"Hon. A. M. Burns."
The election of Members of Congress in 1874 resulted in the choice
of a large majority of Democrats in the House of Representatives
of the 44th Congress, the term of which commenced on the 4th of
March, 1875. A majority of the Senate being still largely Republican,
it became difficult to pass any measure of a political character
during that Congress. President Grant, on the 17th of February,
1875, issued his proclamation convening the Senate at 12 o'clock
on the 5th of March following, to receive and act upon such
communications as might be made to it on the part of the Executive.
The session continued until the 24th of March. It was largely
engaged in questions affecting the State of Louisiana, which had
been the scene of violent tumult and almost civil war. As these
events are a part of the public history of the country I do not
deem it necessary to refer to them at length. These disturbances
continued during the whole of that Congress, and, in 1876, approached
the condition of civil war.
The regular meeting occurred on the 6th of December, 1875, when
Thomas W. Ferry, of Michigan, was elected president _pro tempore_
of the Senate, and Michael C. Kerr, a Democratic Representative
from the State of Indiana, was elected by a large majority as
speaker of the House.
This political revolution was no doubt caused largely by the
financial panic of 1873, and by the severe stringency in monetary
affairs that followed and continued for several years. Many
financial measures of the highest importance in respect to the
public credit were acted upon, but were generally lost by a
disagreement between the two Houses. I do not deem it necessary
to refer to the political questions that greatly excited the public
mind during that session. Congress was largely occupied in political
debate on questions in respect to the reconstruction of the states
lately in rebellion, upon which the two Houses disagreed. Among
other measures which failed was the act amendatory of the acts
authorizing the refunding of the national debt, which passed the
Senate but was not considered by the House.
During this session of Congress all sorts of financial plans were
presented in each House, but all were aimed, directly or indirectly,
at the resumption act, although that act itself was adopted as a
remedy for existing financial evils, and especially to deal with
and prevent the recurrence of such a panic as that of 1873. I took
occasion, on the presentation of the resolution of the New York
Chamber of Commerce in favor of the resumption of specie payments,
at the time provided by the resumption act, to discuss the policy
of that measure more fully than I thought it expedient to do so
when, as a bill, it was pending in the previous Congress. This
speech was made in the Senate on the 6th of March, 1876. It was
the result of great labor and care, and was intended by me to be,
and I believe it is now, the best presentation I have ever been
able to offer in support of the financial policy of the government,
and especially in support of the resumption of specie payments.
I said:
"Mr. president, I have taken the unusual course of arresting the
reference to the committee of finance of the memorial of the Chamber
of Commerce of New York, in order to discuss, in an impersonal and
nonpartisan way, one of the questions presented by that memorial,
and one which now fills the public mind and must necessarily soon
occupy our attention. That question is, 'Ought the resumption act
of 1875 be repealed?' The memorial strongly opposes such repeal,
while other memorials, and notably those from the boards of trade
of New York and Toledo, advocate it. These opposing views are
supported in each House of Congress, and will, when our time is
more occupied than now, demand our vote.
"And, sir, we are forced to consider this question when the law it
is proposed to repeal is only commencing to operate, now, three
years before it can have full effect--during all which time its
operation will be under your eye and within your power--and while
the passions of men are heated by a presidential combat, when a
grave questions, affecting the interests of every citizen of the
United States, will be influenced by motives entirely foreign to
the merits of the proposition. And the question presented is not
as to the best means of securing the resumption of a specie standard,
but solely whether the only measure that promises that result shall
be repealed. We know there is a wide and honest diversity of
opinion as to the agency and means to secure a specie standard.
"When any practicable scheme to that end is proposed I am ready to
examine it on its merits; but we are not considering the best mode
of doing the thing, but whether we will recede from the promise
made by the law as it stands, as well as refuse all means to execute
that promise. If the law is deficient in any respect it is open
to amendment. If the powers vested in the secretary are not
sufficient, or you wish to limit or enlarge them, he is your servant,
and you have but to speak and he obeys. It is not whether we will
accumulate gold or greenbacks or convert our notes into bonds, nor
whether the time to resume is too early or too late. All these
are subjects of legislation. But the question now is whether we
will repudiate the legislative declaration, made in the act of
1875, to redeem the promise made and printed on the face of every
United States note, a promise made in the midst of war, when our
nation was struggling for existence, a promise renewed in March,
1869, in the most unequivocal language, and finally made specific
as to time by the act of 1875.
"And let us not deceive ourselves by supposing that those who oppose
this repeal are in favor of a purely metallic currency, to the
exclusion of paper currency, for all intelligent men agree that
every commercial nation must have both; the one as the standard of
value by which all things are measured, which daily measures your
bonds and notes as it measures wheat, cotton, and land; and also
a paper or credit currency, which, from its convenience of handling
or transfer, must be the medium of exchanges in the great body of
the business of life. Statistics show that in commercial countries
a very large proportion of all transfers is by book accounts and
notes, and more than nine-tenths of all the residue of payments is
by checks, drafts, and such paper tools of exchange.
"Of the vast business done in New York and London not five per
cent. is done with either paper money or gold or silver, but by
the mere balancing of accounts or the exchange of credits. And
this will be so whether your paper money is worth forty per cent.
or one hundred per cent. in gold. The only question is whether,
in using paper money, we will have that which is as good as it
promises, as good as that of Great Britain, France, or Germany; as
good as the coin issued from your mints; or whether we will content
ourselves with depreciated paper money, worth ten per cent. less
than it promises, every dollar of which daily tells your constituents
that the United States in not rich enough to pay more than ninety
per cent. on the dollar for its three hundred and seventy millions
of promises to pay, or that you have not courage enough to stand
by your promise to do it.
"Nor are we to decide whether our paper money shall be issued
directly by the government or by banks created by the government;
nor whether at a future time the legal tender quality of United
States notes shall continue. I am one of those who believe that
a United States note issued directly by the government, and
convertible on demand into gold coin, or a government bond equal
in value to gold, is the best currency we can adopt; that it is to
be the currency of the future, not only in the United States, but
in Great Britain as well; and that such a currency might properly
continue to be a legal tender, except when coin is specifically
stipulated for it.
"But these are not the questions we are to deal with. It is whether
the promise of the law shall be fulfilled, that the United States
shall pay such of its notes as are presented on and after the 1st
day of January, 1879, in coin; and whether the national banks will,
at the same time, redeem their notes either in coin or United States
notes made equal to coin; or whether the United States shall revoke
its promise and continue, for an indefinite period, to still longer
force upon the people a depreciated currency, always below the
legal standard of gold, and fluctuating daily in its depreciation
as Congress may threaten or promise, or speculators may hoard, or
corner, or throw out your broken promises. It is the turning point
in our financial history, which will greatly affect the life of
individuals and the fate of parties, but, more than all, the honor
and good faith of our country.
"At the beginning of our national existence, our ancestors boldly
and hopefully assumed the burden of a great national debt, formed
of the debts of the old confederation and of the states that composed
it; and, with a scattered population and feeble resources, honestly
met and paid, in good solid coin, every obligation. After the War
of 1812, which exhausted our resources, destroyed our commerce,
and greatly increased our debt, a Republican administration boldly
funded our debt, placed its currency upon the coin basis, promptly
paid its interest, and reduced the principal; and within twenty
years after that war was over, under the first Democratic President,
paid in coin the last dollar, both principal and interest, of the
debt. And now, eleven years after a greater war, of grander
proportions, in which, not merely foreign domination threatened
us, but the very existence of our nation was at stake, and after
our cause has been blessed with unexampled success, with a country
teeming with wealth, with our credit equal to that of any nation,
we are debating whether we will redeem our promises, according to
their legal tenor and effect, or whether we will refuse to do so
and repeal and cancel them.
"I would invoke, in the consideration of this question, the example
of those who won our independence and preserved it to us, to inspire
us so to decide this question that those who come after us may
point to our example of standing by the public faith now solemnly
pledged, even though to do so may not run current with the temporary
pressure of the hour, or may entail some sacrifice and hardship.
"What then is the law it is proposed to repeal? I will state its
provisions fully in detail, but the main proposition--the essential
core of the whole--is the promise, to which the public faith is
pledged, that the United States will redeem in gold coin any of
its notes that may be presented to the treasury on and after the
1st day of January, 1879. This is the vital object of the law.
It does not undertake to settle the nature of our paper money after
than, whether it shall be reissued again, whether it shall thereafter
be a legal tender, nor whether it shall or shall not supersede bank
notes. All this is purposely left to the future. But it does say
that on and after that day the United States note promising to pay
one dollar shall be equal to the gold dollar of the mint.
"The questions then arise--
"First. Ought this promise be performed?
"Second. Can we perform it?
"Third. Are the agencies and measures prescribed in the law
sufficient for the purpose?
"Fourth. If not, what additional measures should be executed?
"Let us consider these questions in their order, with all the
serious deliberation that their conceded importance demands.
"And first, ought this promise be fulfilled?
"To answer this we must fully understand the legal and moral
obligations contained in the notes of the United States. The
purport of the note is as follows:
'THE UNITED STATES PROMISES TO PAY THE BEARER ONE DOLLAR.'
"This note is a promise to pay one dollar. The legal effect of
this note has been announced by the unanimous opinion of the Supreme
Court of the United States, the highest and final judicial authority
in our government.
"The legal tender attribute given to the note has been the subject
of conflicting decisions in that court, but the nature and purport
of it is not only plain on its face, but is concurred in by every
judge of that court and by every judicial tribunal before which
that question has been presented.
"In the case of Bank vs. Supervisors, 7 Wallace, 31, Chief Justice
Chase says:
'But, on the other hand, it is equally clear that these notes are
obligations of the United States. Their name imports obligation.
Every one of them expresses upon its face an engagement of the
nation to pay to the bearer a certain sum. The dollar note is an
engagement to pay a dollar, and the dollar intended is the _coined_
dollar of the United States, a certain quantity in weight and
fineness of gold or silver, authenticated as such by the stamp of
the government. No other dollars had before been recognized by
the legislation of the national government as lawful money.'
"Again, in the case of Bronson vs. Rhodes, 7 Wallace, 251, Chief
Justice Chase says:
'The note dollar was the promise to pay a coined dollar.'
"In the Legal Tender Cases, 12 Wallace, 560, Justice Bradley says:
'It is not an attempt to _coin_ money out of a valueless material,
like the coinage of leather, or ivory, or cowrie shells. _It is
a pledge of the national credit_. It is a _promise_ by the government
to _pay dollars;_ it is not an attempt to _make_ dollars. The
standard of value is not changed. The government simply demands
that its credit shall be accepted and received by public and private
creditors during the pending exigency. . . .
'No one supposes that these government certificates are never to
be paid, that the day of specie payments is never to return. And
it matters not in what form they are issued. . . . Through whatever
changes they pass, their ultimate destiny is _to be_ paid.'
"In all these legal tender cases there is not a word in conflict
with these opinions.
"Thus, then, it is settled that this note is not a dollar, but a
debt due; a promise to pay a dollar in gold coin. Congress may
define the weight and fineness of a dollar, and it has been done
so by providing a gold coin weighing twenty-five and eight-tenths
grains of standard gold nine-tenths fine. The promise is specific
and exact, and its nature is fixed by the law and announced by the
court. Here I might rest as to the nature of the United States
note; but it is proper that I state the law under which it was
issued and the subsequent laws relating to it.
"The act of February 25, 1862, gave birth to this note as well as
the whole financial policy of the war. The first section of that
act authorizes the Secretary of the Treasury to issue, upon the
credit of the United States, United States notes to the amount of
$150,000,000, payable to bearer at the treasury of the United
States. The amount of these notes was subsequently increased during
the war to the maximum sum of $450,000,000, but the nature and
character of the notes was the same as the first ones. The
enlargement of the issue did not in the least affect the obligation
of the United States to pay them in coin. This obligation was
recognized in every loan law passed during the war; and to secure
the note from depreciation the amount was carefully limited, and
every quality was given to it to maintain its value that was possible
during the exigencies of the war. I might show you, from the
contemporaneous debates in Congress, that at every step of the war
the notes were regarded as a temporary loan, in the nature of a
forced loan, but a loan cheerfully borne, and to be redeemed soon
after the war was over.
"It was not until two years after the war, when the advancing value
of the note created an interest to depreciate it in order to advance
prices for the purpose of speculation, that there was any talk
about putting off the payment of the note. The policy of a gradual
contraction of the currency with a view to specie payments was, in
December, 1865, concurred in by the almost unanimous vote of the
House of Representatives, and the act of April 12, 1866, authorized
$4,000,000 of notes a month to be retired and canceled. No one
then questioned either the policy, the duty, or the obligation of
the United States to redeem these notes in coin.
"Why has not this obligation been performed? How comes it that
fourteen years after these notes were issued, and eleven years
after the exigency was over, we are debating whether they shall be
paid, and when they shall be paid? We may well pause to examine
how this plain and positive obligation has so long been deferred
by a nation always sensitive to the public honor.
"The fatal commencement of this long delay was in this provision
of the act, approved March 3, 1863, as follows:
'And the holders of United States notes issued under, and by virtue
of, said acts, shall present the same, for the purpose of exchanging
the same for bonds as therein provided, on or before the 1st day
of July, 1863, and thereafter the right so to exchange the same
shall cease and determine.'
"Thus, under the pressure of war, and the plausible pretext of a
statute of limitations, the most essential legal attribute of the
note was taken away. This act, though convenient in its temporary
results, was a most fatal step, and for my part in acquiescing in,
and voting for it, I have felt more regret than for any act of my
official life. But it must be remembered that the object of this
provision was not to prevent the conversion of notes into bonds,
but to induce their conversion. It was the policy and need of the
government to induce its citizens to exchange the notes freely for
the bonds, so that the notes might again be paid out to meet the
pressing demands of the war. It was believed that if this right
to convert them was limited, in time this would cause them to be
more freely funded; and Mr. Chase, then Secretary of the Treasury,
anxious to prevent a too large increase of the interest of the
public debt, desired to place in the market a five per cent. bond
instead of a six per cent. bond. The fatal error was in not changing
the right to convert the note into a five per cent. bond instead
of a six per cent. bond. This was, in fact, proposed in the
committee on finance, but it was said that a right to convert a
note into a bond at any time, was not so likely to be exercised as
if it could only be exercised at the pleasure of the government.
And this plausible theory to induce the conversion of notes into
bonds was made the basis, after the war was over, for the refusal
of the United States to allow the conversion of its notes into
bonds, and has been the fruitful cause of the continued depreciation
and dishonor of United States notes for the last five years, during
which, our five per cent. bonds have been at par with gold, while
our notes rise and fall in the gamut of depreciation from six to
twenty per cent. below gold.
"Notwithstanding that the right to convert notes into bonds was
taken away, yet, in fact, they were, during the war, received par
for par for bonds; and after the war was over all the interest-
bearing securities were converted into bonds; but the notes--the
money of the people--the artificial measure of value, the most
sacred obligation, because it was past due, was refused either
payment or conversion, thus cutting it off from the full benefit
of the advancing credit of the government, and leaving to it only
the forced quality of legal tender in payment of debts.
"Shortly after the war was over, and notably during the presidential
campaign of 1868, the question arose whether the bonds of the United
States were payable in coin or United States notes. Both notes
and bonds were then below par in coin, the notes ranging from sixty-
seven to seventy-five cents in coin; and five per cent. bonds from
seventy-two to eighty cents in coin. Here again the opportunity
was lost to secure the easy and natural appreciation of our notes
to the gold standard. Had Congress then authorized the conversion
of notes into bonds, when both were depreciated, both would have
advanced to par in gold; but, on the one hand, it was urged that
this would cause a rapid contraction, and, on the other, that the
right to convert the note into a bond was not specie payment; it
was only the exchange of one promise for another. It was specie
payment they very much favored, but did not have the wisdom then
to secure. If the advocates for specie payment had then supported
a restoration of the right to convert notes into bonds, they would
have secured their object with but little opposition. But all
measures to fund the notes at the pleasure of the holder were
defeated, and, instead, there was ingrafted into the act to strengthen
the public credit--
"First, a declaration 'that the faith of the United States is
already pledged to the payment in coin, or its equivalent, of all
the obligations of the United States not bearing interest, known
as United States notes, and of all the interest-bearing obligations
of the United States,' except such as by the law could be paid in
other currency than gold and silver.
"Second, 'and the United States also solemnly pledges its faith to
make provision, at the earliest practicable period, for the redemption
of the United States notes in coin.'
"Here again, the obligation of the government to pay these notes
in coin was recognized, its purpose declared, and the time fixed
'as early as practicable.' What was the effect of this important
act of Congress? Without adding one dollar to the public debt, or
the burden of the debt, both bonds and notes rose in value. Within
one year, the bonds rose to par in gold, making it practicable to
commence the refunding of six per cent. bonds into five per cent.
bonds. The notes rose under the stimulus of this new promise, in
one year, from seventy-six cents to eighty-nine cents in gold, but
no steps whatever were made to redeem them.
"The amount of bank notes authorized was increased fifty-four
millions. The executive department pursued the policy of redeeming
debts not due, and did, from an overflowing treasury, reduce very
largely the public debt, but no steps whatever were taken to advance
the value of our notes. The effect of the act of 1869 was exhausted
on the adjournment of Congress in March, 1870, when the United
States notes were worth eighty-nine cents in gold; and thereabouts,
up and down, with many fluctuations, they have remained to this
day. The bondholder, secure in the promise to him, is happy in
receiving his interest in gold, with his bond above par in gold.
The note holder, the farmer, the artisan, the laborer, whose labor
and production is measured in greenbacks, still receives your
depreciated notes, worth ten per cent. less than gold you promised
him 'at the earliest day practicable.' The one has a promise
performed and the other a promise postponed.
"Thus we stood when the panic of 1873 came upon us; with more paper
money afloat than ever circulated before in any country of the
world. Even then, had we stood firmly, the hoarding tendency of
the panic would have advanced our notes toward the gold standard,
and, in fact, did so during the months of September and October,
until the premium on gold had fallen to eight per cent. But, sir,
at this critical moment, the Secretary of the Treasury, acting, no
doubt, in good faith, but I think without authority of law, issued
twenty-six millions more United States notes--part of the notes
retired and canceled under previous acts. And now, notwithstanding
all the talk about the contraction of the currency, we have not
withdrawn one-half of this illegal issue. On the 1st of September,
1873, we had three hundred and fifty-six million notes outstanding.
Three months afterward, we had three hundred and eighty-two million;
and now we have three hundred and seventy-one million.
"Sir, it was under the light of these events, after the fullest
discussion ever given in Congress, of any question--after debate
before the people during the recess of Congress, and full deliberation
last winter--this act was passed. There was and is now great
difference of opinion as to the details, but the vital promise made
to the note holder to make his note as good as gold in January,
1879, was concurred in by a large majority of both Houses, and by
many who opposed the bill as too slow in its operation. This act
of honor and public faith was applauded by the civilized world and
concurred in by our constituents, the doubts only being as to the
machinery to carry it into effect. The time was fixed by those
who most feared resumption, and no one proposed a longer time. My
honorable friend from Indiana [Mr. Morton] truly said (in the recent
campaign in Ohio) that he participated in framing it; and he and
those who agreed with him fixed the time so remote as to excite
the unfounded charge that the bill was a sham, a mere contrivance
to bridge an election.
"And now, sir, to recapitulate this branch of the question, it is
shown that the holder of these notes has a promise of the United
States, made in February, 1862, to pay him one dollar in gold coin;
that the legal purport of this promise has been declared by the
Supreme Court; that we have taken away from this note one of the
legal attributes given it, which would long since have secured its
payment in coin--that when the note was authorized and issued, it
was understood as redeemable in coin when the war was over; that
our promise to pay it was renewed in 1869--'at as early a day as
practicable;' that by reason of our failure to provide for its
payment, it is still depreciated below par more than one-tenth of
its nominal value; that we renewed this promise, and made it definite
as to time, by act of 1875; that it is a debt due from the United
States, and in law and honor due now in coin. Yet it is proposed
to recall our promise to redeem this note in coin three years hence.
I say, sir, this would be national dishonor. It would destroy the
confidence with which the public creditor rests upon the promises
contained in your bonds. It would greatly tend to arrest the
process by which the interest on your bonds is reduced. It would
accustom our people to the substitution of a temporary wave of
popular opinion for its written contract or promise. It would
weaken in the public mind that keen sense of honor and pride which
has always distinguished the English-speaking nations in dealing
with public obligations.
"An old writer thus describes 'public credit:'
'Credit is a consequence, not a cause; the effect of a substance,
not a substance; it is the sunshine, not the sun; the quickening
_something_, call it what you will, that gives life to trade, gives
being to the branches and moisture to the root; it is the oil of
the wheel, the marrow in the bones, the blood in the veins, and
the spirits in the heart of all the negoce, trade, cash, and commerce
in the world.'
'It is produced, and grows insensibly from fair and upright dealing,
punctual compliance, honorable performance of contracts and covenants;
in short, it is the offspring of universal probity.
'It is apparent even by its nature; it is no way dependent upon
persons, parliament, or any particular men or set of men, as such,
in the world, but upon their conduct and just behavior. Credit
never was chained to men's names, but to their actions; not to
families, clans, or collections of men; no, not to nations. It is
the honor, the justice, the fair dealing, and the equal conduct of
men, bodies of men, nations, and people, that raise the thing called
credit among them. Wheresoever this is found, credit will live
and thrive, grow and increase; where this is wanting, let all the
power and wit of man join together, they can neither give her being
nor preserve her life.
'Arts have been tried on various occasions in the world to raise
credit; art has been found able with more ease to destroy credit
than to raise it. The force of art, assisted by the punctual,
fair, and just dealing abovesaid, may have done much to form a
credit upon the face of things, but we find still the honor would
have done it without the art, but never the art without the honor.
Nor will money itself, which, Solomon says, answers all things,
purchase this thing called credit or restore it when lost. . . .
'Our credit in this case is a public thing. It is rightly called
by some of our writers _national credit_. The word denominates
its original. It is produced by the nation's probity, the honor
and exact performing national engagements.'
"And, sir, passing from considerations of public honor, there are
many reasons of _public policy_ which forbid the repeal of the act
of 1875. That act was generally regarded as the settlement of a
financial policy by which at least the party in power is bound,
and upon the faith of which business men have conducted their
affairs and made their contracts. Debts have been contracted and
paid with the expectation that at the time fixed the gold standard
would measure all obligations, and a repeal of the act would now
reopen all the wild and dangerous speculation schemes that feed
and fatter upon depreciated paper money. The influence that secures
this repeal will not stop here. If we can recall our promise to
pay our notes outstanding why should we not issue more? If we can
disregard our promise to pay them, why shall we regard our promise
not to issue more than $400,000,000, as stipulated for by the act
of 1864? If we can reopen the question of the payment of our notes,
why may we not reopen the question as to the payment of our bonds?
Is the act of 1869 any more sacred than the act of 1875? And if
we can reopen these questions, why not reopen the laws requiring
the payment of either interest or principal of the public debt?
They rest upon acts of Congress which we have the power to repeal.
If the public honor cannot protect our promise to the note holder,
how shall it protect our promise to the bondholder? Already do we
see advocated in high places, by numerous and formidable organizations,
all forms of repudiation, which, if adopted, would reduce our nation
to the credit of a robber chief--worse than the credit of an Algerine
pirate, who at least would not plunder his own countrymen. And if
the public creditor had no safety, what chance would the national
banks--creations of our own and subject to our will--have in
Congress? It has already been proposed to confiscate their bonds,
premium and all, as a mode of paying their notes with greenbacks.
What expedient so easy if we would make money cheap and abundant?
Or, if so extreme a measure could be arrested, what is to prevent
the permanent dethronement of gold as a measure of value, and the
substitution of an interconvertible currency bond, bearing three
and sixty-five hundredths per cent. interest, as a standard of
value; and when it become too expensive to print the notes to pay
the interest, reduce the rate. Why not? Why pay three and sixty-
five hundredths per cent., when it is easier to print three? It is
but an act of Congress. And when the process of repudiation goes
so far that your notes will not buy bread, why then declare against
all interest, and then, after passing through the valley of
humiliation, return again to barter, and honor, and gold again.
"Sir, if you once commence this downward course of repudiation then
there is but one ending. You may, like Mirabeau and the Girondists,
seek to stem the torrent, but you will be swept away by the spirit
you have evoked and the instrument you have created. You complain
now of a want of confidence which makes men hoard their money.
Will you, then, destroy all confidence? No, sir, no; the way to
_restore_ confidence is to _inspire_ it by fulfilling your obligations.
You cannot make men lend you; you cannot make men sell you anything
--either bread, or meat, or wool, or iron, or anything that is or
that can be created--except for that which they choose to take.
You may depreciate the money which you offer, but it will only take
more of it to buy what you want. It is true that the creditor may,
by your laws, be compelled to take your money however much you
depreciate it, but he cannot buy back that which he sold, or its
equivalent in other necessaries of life, and thus he is cheated of
part of what he sold. During the war, when money was depreciating,
many a simple man gladly counted his gains as he sold his goods or
crops at advancing prices, but he found out his mistake when, with
his swollen pile, he tried to replace his stock in trade or laid
in his supplies. Sir, this policy exhausts itself in cheating the
man who buys or sells or loans on credit, who produces something
to sell on credit; whether that something be food or clothing;
whether it be a necessity or a luxury of life. Productive labor,
honest toil, whether of the farmer or the artisan, is deeply
interested in credit. It is credit that gives life and competition
to trade; and credit is destroyed by every scheme that impairs,
delays, or even clouds an obligation.
"Again, sir, an irredeemable and fluctuating currency always raises
the rate of interest on money, while a stable currency or an
improving currency always reduces the rate of interest. This is
easily shown by statistics, but the reason is so obvious that proof
is not needed. If a man lends his money he wants it back again
with its increase; but if the money, when it is to be paid back,
is like to be worth less than when he thinks of loaning it, he will
not loan it except at such rates as will cover the risk of
depreciation. He will prefer to buy land or something of stable
value. If money is at the gold standard, or is advancing toward
that standard, he will loan it readily at a moderate interest, for
he knows he will receive back money of at least equal value to that
he loaned. Again, sir, with a depreciated currency great domestic
productions are cut off from the foreign market; for it is impossible
that with such a currency we can compete on equal terms with rival
nations, whose industry rests upon a specie standard. As we approach
such a standard, we are now able, as to a few articles, to compete
with foreign industry; but it is only as to articles in the
manufacture of which we have peculiar advantages. Let us rest our
industries on that standard, and soon we could compete in the
markets of the world in all the articles produced from iron, wood,
leather, and cotton, the raw basis of which are our national
productions. And it must be remembered that all the countries with
which we compete are specie-paying countries.
"A country that does not rest her industry upon specie is necessarily
excluded from the great manufacturing industries of modern
civilization, and is self-condemned to produce only the raw basis
for advanced industry. Cheap food, climate, soil, or natural
advantages, such as cheap land, vast plains for pasture, or rich
mines, may give to a country wealth and prosperity in spite of the
evils of depreciated paper money; but when we come in competition
with the world in the advanced grades of production which give
employment to the skilled mechanic, we must rest such industry upon
the gold basis, or we enter the lists like a knight with his armor
unbound.
"Again, sir, a depreciated and fluctuating currency is a premium
and bounty to the broker and money changer. Under his manipulation
our paper standard of value goes up and down, and he gambles and
speculates, with all the advantages in his favor. Good people look
on and think that it is gold that is going up and down; that their
money is a dollar still, and trade and traffic in that belief.
But the shrewd speculator calculates daily the depreciation of our
note, the shortening of the yard stick, the shrinkage of the acre,
the lessening of the ton, and thus it is that he daily adds to his
gains from the indifference or delusion of our people.
"Sir, it is an old story, often repeated in our day, and most
eloquently epitomized by Daniel Webster in the often-quoted passage
of his speech, in which he said:
'A disordered currency is one of the greatest of political evils.
It undermines the virtues necessary for the support of the social
system and encourages propensities destructive of its happiness.
It wars against industry, frugality, and economy; and it fosters
the evil spirit of extravagance and speculation. Of all contrivances
for cheating the laboring classes of mankind, none has been more
effectual than that which deluded them with paper money. Ordinary
tyranny, oppression, excessive taxation, these bear lightly upon
the happiness of the mass of the community, compared with the
fraudulent currencies and the robberies committed by depreciated
paper. Our own history has recorded for our instruction enough,
and more than enough, of the demoralizing tendency, the injustice,
and the intolerable oppression of the virtuous and well-disposed,
of a degraded paper currency authorized by law or in any way
countenanced by government.'
"Sir, we must meet this question of specie payments, not only
because the public honor is pledged to do so, but also for the
lesser reason that it is our interest to do so. The only questions
we should permit ourselves to discuss are the means and measures
of doing so.
"And now, sir, let us examine the reasons that have been given for
the repeal of the resumption act by those who, though favoring
resumption, yet think the act should be repealed for one or other
of the following reasons:
"First. That it is not advisable to fix a day for resumption.
"Second. Or at least until the balance of trade is in our favor.
"Third. That it produces a contraction of the currency.
"Fourth. That it injuriously adds to the burden of existing
debts.
"Let us glance at these objections.
"First. As to fixing a day for resumption.
"If it was possible to agree upon measures that would secure
resumption without fixing a time, I agree it would not be indispensable,
though not unadvisable, to fix a time; but such agreement is utterly
impossible. Of the multitude of schemes that have been presented
to me by intelligent men trying to solve this problem, many could
have been selected that in my opinion would be practicable; but of
all of them not one ever has or is likely to secure the assent of
a majority of a body so numerous as Congress. One difficulty we
have encountered is that the Democratic party, though in the
minority, has never presented in any form, through any leading
member, a plan for resumption, but with widely differing opinions
has joined in opposing any and every measure from the other side.
I understand from the papers that our Democratic friends, through
a caucus, and through a caucus committee of which my colleague is
chairman, have been laboring to agree upon a plan for specie
payments. After his frequent speeches to us about secret conclaves,
about shams and deceptions, and such like polite and friendly
comments upon the work of the Republican party, I might greet my
colleague with such happy phrases about _his_ caucus; but I will
not, but, on the contrary, I commend his labors, and sincerely hope
that he and his political friends may agree upon some plan to reach
a specie standard, and not one to avoid to, to prevent it, to defer
it. Under color of intending to prepare for it, I hope they will
not make their measure the pretext for repealing the law as it
stands, which fixes a day for resumption and will secure the end
we both aim at.
"I frankly state for the Republican party that, while we could
agree to fixing the time for specie payments and upon conferring
the ample and sufficient powers upon the Secretary of the Treasury
contained in the law, we could not agree in prescribing the precise
mode in which the process should be executed. Nor, in my opinion,
was it at all essential that we should. Much must be left to the
discretion of the officer charged with the execution of such a law.
The powers conferred, as I shall show hereafter, are ample; and
the discretion given will be executed under the eye of Congress.
"And, sir, there is a strong force in the fact that in every example
we have of the successful resumption of specie payments, in this
and other countries, a fixed day has been named by legislative
authority, and the details and power of execution have been left
to executive authority. Thus, in Great Britain, the act of parliament
of July 2, 1819, fixed the time for full resumption at the 1st day
of May, 1823, and for a graduated resumption in gold at intermediate
dates; and for fractional sums under forty shillings to be paid in
silver coin; and the governor and directors of the Bank of England
were charged with its execution, and authorized at their discretion
to resume payment in full on the 1st day of May, 1822. France is
now successfully passing through the same process of resumption,
the time being fixed (two years ago) for January 1, 1878, and now
practically attained.
"In our own country many of the states have presented similar laws
in case of suspended bank payments, and in some cases the suspended
banks have, by associated action, fixed a time for general resumption,
and each bank adopted its own expedient for it. Sir, the light of
experience is the lamp of wisdom. I can recall no case of successful
resumption where a fixed future time has not been presented
beforehand, either by law or agreement; while the historical examples
of repudiation of currency have come by the drifting process, by
a gradual decline of value, by increased issues, and a refusal to
provide measures of redemption, until the whole mass disappeared,
dishonored and repudiated.
"This concurrence in the mode of resumption by so many governments
was the strongest possible instruction to Congress when fixing a
plan of resumption for the United States, and should satisfy
reasonable men of its wisdom.
"Besides, it would seem to be but fair that everyone should have
plain notice of so important a fact. If the measures only were
presented and no time fixed it would be a matter of speculation,
and the discretionary powers of the Secretary of the Treasury could
be exercised with a view to hasten or postpone the time to the
injury of individuals.
"As to the date selected, I can only repeat it was placed as remote
as any one suggested; far more so than is necessary to secure the
object, and so that the fluctuations of value will scarcely exceed
in four years what they have frequently been in a single year. It
allows ample time to arrange all the relations of debtor and
creditor, and to enable Congress to provide any additional measure
in aid of redemption, or, if events make it expedient, to postpone
the time."
CHAPTER XXVII.
MY CONFIDENCE IN THE SUCCESS OF RESUMPTION.
Tendency of Democratic Members of Both Houses to Exaggerate the
Evil Times--Debate Over the Bill to Provide for Issuing Silver Coin
in Place of Fractional Currency--The Coinage Laws of the United
States and Other Countries--Joint Resolution for the Issue of Silver
Coins--The "Trade Dollar" Declared Not to Be a Legal Tender--My
Views on the Free Coinage of Silver--Bill to Provide for the
Completion of the Washington Monument--Resolution Written by Me on
the 100th Anniversary of the Declaration of Independence--Unanimously
Passed in a Day by Both Houses--Completion of the Structure Under
the Act.
It seemed to be the policy of a majority of the Democratic Members
of both the Senate and the House to exaggerate the evils and
discouragements of the times, while in fact the people were rapidly
recovering from the results of the panic of 1873, and all branches
of industry were, to a greater or less extent, starting into life
anew, and to prevent the resumption of specie payments, and, if
possible, to repeal the act providing for such resumption. This
policy undoubtedly checked the process of refunding the public
debt, which progressed slowly, and was confined to an exchange of
bonds bearing five per cent. interest for those bearing six per
cent.
I took a much more hopeful view of the situation, and in the many
speeches I made in that Congress, I stated my confidence, not only
in the process of resumption and refunding, but in the rapid
improvement of all branches of industry as we progressed towards
specie payments. In a speech I made in the Senate on the 6th of
January, 1876, on a bill "to further provide for the redemption of
legal tender United States notes in accordance with existing law,"
I said:
"Sir, we ought to take a hopeful view of things in this centennial
year of our country. Look at the aggregate results. A century
ago we were three million people; now forty million; then we had
a little border on the Atlantic; we are now extended to the Pacific.
See what has been accomplished in a hundred years. During that
time there have been periods of darkness and doubt. Every seven
or ten or twelve years, periodically, there have been times of
financial distress. We have lived through them all. I believe,
and I trust in God, that this very year is the beginning of another
period of prosperity, and that all these dark clouds, which gentlemen
are trying to raise up from the memory of the past two or three
years and from their own clouded imaginations, will entirely
disappear. I believe that even now we are in the sunshine of
increasing prosperity, and that every day and every hour will add
to our wealth and relieve us from our distress.
"Sir, things are not so unhopeful as Senators seem to think. We
have made a promise to be executed three years hence, and every
step of our legislation, if any is had, should look in that direction.
We may not adopt any measure or may not deem that any is necessary;
but, if any be adopted, it ought to look to the execution of that
promise, and we ought to enter on the performance of this duty with
hopeful trust in the continued prosperity of our country. All this
gloom and doubt, all this arraignment of official statements, this
doubt of our sufficient revenues, this doubt of our ability to meet
and advance our destiny, always falls upon my ear with painful
surprise. Senators, the task we have before us may be a difficult
one, as it has always proved to be difficult to resume the specie
standard whenever, for any reason, a nation has fallen from it,
but it is a duty that must be executed, and it ought to be executed
without the spirit of party warfare, without these appeals, directly
or indirectly, to party tactics. The pledges made one year ago,
although not voted for by the Democratic party, are pledges binding
upon their honor and their faith as they are upon mine, and I trust
in God that we shall join together in all the proper steps to carry
out those pledges."
This bill was referred to the committee on finance, but no action
was taken upon it, as the committee preferred to await the action
of the House.
The resumption act provided for the payment and destruction of the
fractional currency then in circulation, to the amount of $40,000,000,
and the substitution of silver coins in all respects, such as were
defined by the coinage act of 1853. This was to be the first step
in preparation for the general resumption of coin payments in
January, 1879. It became necessary to provide for the coinage of
fractional silver coins, and a bill for this purpose, entitled "A
bill to provide for a deficiency in the Printing and Engraving
Bureau, and for the issue of the silver coin of the United States,
in place of the fractional currency," was reported by Mr. Randall,
on the 2nd of March, 1876, from the committee on appropriations of
the House. It was subsequently considered, amended and passed by
the House, after a long debate, participated in by many of the
leading Members. Much to my surprise, Mr. Hewitt and Mr. Ward,
prominent Members from New York, opposed the measure, denounced
the resumption act, and prophesied its failure. Mr. Hewitt, in
support of his position, quoted passages from the reports of Mr.
Bristow, then Secretary of the Treasury, and predicted the utter
failure of resumption, unless the United States notes were entirely
withdrawn. He insisted that if silver coin was issued to replace
fractional currency, the coin would disappear from circulation,
leaving the people without any currency for the smaller necessities
of life. In the progress of the debate, it became manifest that
the larger portion of the Democratic Members would vote against
every measure proposed to aid in the execution of the resumption
act.
The bill passed the House on the 31st of March by the vote of 123
yeas and 100 nays. In the Senate it was referred to the committee
on finance, and reported back with amendments. The third section
of the bill, as it came from the House, provided for the coinage
of the silver dollar, of the weight of 412.8 grains troy, standard
silver, and made that dollar a legal tender at its nominal value,
to an amount not exceeding twenty dollars in any one payment, except
for customs duties and interest on the public debt, and that the
"trade dollar" should not, thereafter, be a legal coin. This
section was stricken out.
In the remarks made by me, upon this bill, on the 10th day of April,
1876 , I gave, in detail, the history of each of the coinage laws
of Great Britain, France, Belgium, Germany, Switzerland and Italy.
I had taken great pains to collect this information and to procure
translations of the laws of the several countries named. The then
recent changes, made by Germany, and their effect upon the coinage
of other nations, were carefully stated. The general conclusion
which I drew from a reference to these statutes of various countries,
were:
"First. It is impossible, in the nature of things, to fix the
precise value of silver and gold. We have tried it three times
and failed.
"Second. Whenever either coin is worth more in the market than
the rate fixed by the law, it flees from the country. That we have
twice proved. That is the admitted economic law. It is the Gresham
law; a law of currency named from the name of its discoverer. He
wrote a book to show that always the poorer currency would drive
out of circulation a superior currency; and his book gave name to
the theory that is called the law of Gresham. It is the universal
law of political economy that, whenever two metals or two moneys
are in circulation, the least valuable will drive out the most
valuable; the latter will be exported.
"The third proposition is that the example of several great European
nations, as well as of the United States, proves that to prevent
the depreciation of silver the tendency of modern nations is to
issue it as a token coinage somewhat less in intrinsic value than
gold, and maintain its value by issuing it only as needed, at par
with the prevailing currency, and to make it a limited legal tender.
I may say that has been acted upon by every great Christian nation.
Russia and Austria have not yet gold coinage at all, but still they
have their values based upon gold.
"Fourth. That the demonetization of silver tends to add to the
value of gold, and that though the relative value ebbs and flows
it is more stable compared to gold than any other metal, grain, or
production. Its limit of variation for a century is between fifteen
to seventeen for one in gold.
"Fifth. That both coins are indispensable, one for small and the
other for large transactions.
"Sixth. That the causes of the decline of silver are temporary.
It is still used by a great majority of mankind as the standard of
value. Its use in France and the United States will, on resumption,
more than counteract its decline in Germany.
"Seventh. The general monetizing of silver now, when it is
unnaturally depreciated, would be to invite to our country, in
exchange for gold or bonds, all the silver of Europe, and at last
it would leave us with a depreciated currency.
"Eighth. The decline of silver enables us now to exchange silver
coin of the old standard for fractional currency, leaving the
exchange optional with the holder, until we have the courage, as
we now have the ability, to redeem it in gold.
"Ninth. More silver can be maintained at par than we have now of
fractional currency.
"Tenth. The redemption of a part of our currency would advance
its purchasing power, while the silver in circulation will counteract
the contraction of the currency."
This bill became a law on the 17th of April, 1876. The second
section provided:
"That the Secretary of the Treasury is hereby directed to issue
silver coins of the United States of the denomination of ten,
twenty, twenty-five and fifty cents of standard value, in redemption
of an equal amount of fractional currency, whether the same be now
in the treasury awaiting redemption, or whenever it may be presented
for redemption; and the Secretary of the Treasury may, under
regulations of the treasury department, provide for such redemption
and issue by substitution, at the regular sub-treasuries and public
depositaries of the United States, until the whole amount of
fractional currency outstanding shall be redeemed. And the fractional
currency redeemed under this act shall be held to be a part of the
sinking fund provided for by existing law, the interest to be
computed thereon as in the case of bonds redeemed under the act
relating to the sinking fund."
A joint resolution for the issue of silver coin was introduced in
the House by Mr. Frost, of Massachusetts, on the 1st of May, 1876.
The object of this resolution was to expedite the issue of minor
coin and the retirement of fractional currency. It was referred
to the committee on finance, reported favorably and passed with
amendments June 21. The House disagreed to the amendments of the
Senate, and a committee of conference was appointed composed of
John Sherman, George S. Boutwell, and Louis V. Bogy, managers on
the part of the Senate, and H. B. Payne, and Samuel J. Randall,
managers on the part of the House. The report of the conferees
was agreed to, and the bill having passed both Houses it was approved
by the President on the 22nd of July. It provided:
"That the Secretary of the Treasury, under such limits and regulations
as will best secure a just and fair distribution of the same through
the country, may issue the silver coin at any time in the treasury
to an amount not exceeding ten million dollars, in exchange for an
equal amount of legal tender notes; and the notes so received in
exchange shall be kept as a special fund, separate and apart from
all other money in the treasury, and be reissued only upon the
retirement and destruction of a like sum of fractional currency
received at the treasury in payment of dues to the United States;
and said fractional currency, when so substituted, shall be destroyed
and held as part of the sinking fund, as provided in the act approved
April seventeen, eighteen hundred and seventy-six."
It also provided: "That the trade dollar shall not hereafter be
a legal tender, and the Secretary of the Treasury is hereby authorized
to limit, from time to time, the coinage thereof to such an amount
as he may deem sufficient to meet the export demand for the same."
It also provided that the amount of subsidiary silver coin authorized
should not exceed $50,000,000. The silver bullion was to be
purchased from time to time at market price by the Secretary of
the Treasury from any money in the treasury not otherwise appropriated,
and any gain or seigniorage arising from the coinage was to be paid
into the treasury.
These provisions in respect to subsidiary coin were in a large
measure executed prior to the 4th of March, 1877, and tended, in
my opinion, to facilitate the progress of the resumption of specie
payments on the 1st of January, 1879. The debate on these measures
occupied a large portion of the time of both Houses of Congress,
and presented in every possible aspect all the financial questions
involved in coinage, resumption and refunding. Anyone desiring a
full knowledge of the view then taken of the act revising the laws
in respect to coins and coinage, approved February 12, 1873, will
find in the debate a full history of that act, given at a time when
it was fresh in the memory of the great body of Senators and
Members.
I supported the coinage of the old silver dollar in a speech in
the Senate made on the 8th of June, 1876, two years before the
appearance of the "Bland bill," or the "Allison bill." Silver
bullion was then declining in market value. The resumption act
provided for the gradual replacement of fractional currency by
silver coins of the character and form provided for by the coinage
act of 1853. When that act passed the old silver dollar was not
coined or in circulation. It was more valuable in the market than
a dollar in gold, and, if coined, would have been exported as
bullion. In the revision of the coinage laws of 1873, it was
dropped from the list of coins, and its further coinage was prohibited
by a clause providing that no coins should be made at the mint
except those provided for in that act. The history of this act
and the reasons for prohibiting the coinage of the old dollar have
been fully stated in a previous chapter of this work. In place of
the old dollar the trade dollar, containing 420 grains of silver,
was provided for. This trade dollar, coined for, and at the expense
of, the owner of the bullion deposited at the mint, was, in the
revision of the laws of the United States, unintentionally made a
legal tender for five dollars, the same as the minor coins issued
by the mint on government account. As silver declined in value,
the trade dollar became less valuable than a dollar in gold, and
the owners of bullion deposited it in the mint, and received in
exchange trade dollars costing less than a dollar in gold, but,
being a legal tender for five dollars, it could be forced upon the
people of California, then upon the gold standard, at a profit to
the owner of the bullion. Mr. Sargent, a Senator from California,
early in the session introduced a bill enlarging the limit of legal
tender of minor coins, and repealing the legal tender quality of
the trade dollar. This bill was referred to the committee on
finance, and was reported with an amendment to strike out all after
the enacting clause, and insert:
"That section 3586 of the Revised Statutes of the United States
be, and hereby is, amended to read as follows:
"The silver coins of the United States, except the trade dollar,
shall be a legal tender at their nominal value for any amount not
exceeding five dollars in any one payment."
This simple bill was made the text of a long debate in the Senate
that continued during the greater part of that session. The
provision that "the trade dollar shall not hereafter be a legal
tender" was transferred to the joint resolution already mentioned
which became a law on the 22nd of July.
In my speech on Mr. Sargent's bill I said:
"This bill proposes to restore the old silver dollar, and with it
and the subsidiary coins of the United States to redeem the United
States notes and fractional currency. The dollar to be restored
is the same dollar that had existed from 1792 to 1873; and the
subsidiary coins to be issued are the same in form and value as
have been issued since 1853. I have already stated in my remarks,
made on the 11th of April last, the history of these silver coins
and the relation of silver and gold to each other, not only in the
United States, but in the countries with which we have the most
extensive commercial relations.
"The two main questions are:
* * * * *
"First. Shall silver coin be exchanged for United States notes as
well as for fractional currency? And,
"Second. Is it wise to recoin the old silver dollar with a view
to exchange it for United States notes?"
In this speech I favored the restoration of the silver dollar of
the precise character and description of the dollar that existed
from 1792 to 1873, but, as the market value of the silver in this
dollar had greatly fallen, I insisted that the dollar should be
coined from bullion purchased by the government at market price,
so that the people of the United States would receive the difference
between the cost of the bullion and the face value of the coin,
the same principle that was adopted in what is known as the Bland-
Allison act of 1878. I did not, however, propose the full legal
tender quality that was given to the dollar by the act when adopted,
but that it should be placed among the other silver coins, and be
a legal tender only for twenty dollars.
The plan proposed by me was to set aside a portion of the surplus
revenue or sinking fund of each year applicable to the payment of
the public debt, for the purchase of silver bullion to be coined
into silver dollars of the old standard. I said:
"The bill reported by the committee on finance thus provides for
an immediate resumption of specie payments in silver coin, and thus
completes the first and most difficult step of the problem. It
neither disturbs nor deranges business, nor stirs up the phantom
of contraction. It is in exact accordance with existing law, and
leaves the silver coin, as now, a subsidiary coin, a legal tender
only for limited amounts.
"The next question presented by this bill is, shall we return to
our silver coinage the old silver dollar. And here I am met by
the objections of the Senator from Vermont, but his objections are
rather to the amendments proposed by the Senator from Missouri,
than to the report of the committee. The committee propose the
silver dollar, not as a legal tender for gold contracts, but only
as a tender for currency contracts not exceeding twenty dollars in
any one payment. I would prefer to leave the silver dollar and
stand upon its intrinsic value as a legal tender the same as the
smaller coin; but there is no injustice in enlarging the limit to
twenty dollars, and but for the reasons I will state hereafter
there is no injustice in making it a legal tender for all currency
contracts. The silver dollar has that intrinsic value which in
all periods of our history has made it a favorite coin, not only
for domestic uses but for exportation. It furnishes silver bullion
in a shape and form more convenient for handling than any other
form of coin.
* * * * *
"When the old silver dollars are issued at par with the United
States notes, a large amount of them will be taken as a reserve by
the people to meet future needs, with or without a legal tender
quality. As their issue is not peremptory, and the aggregate cannot
exceed the surplus revenue or sinking fund, there is no danger of
an overissue, while their existence among the people will be the
best reserve when gold alone becomes the full standard of value.
"Every argument already mentioned in favor of subsidiary silver
coins is equally potent in favor of the silver dollar. It will be
eagerly taken in payment of United States notes. It is purely a
voluntary exchange. It is the cheapest mode in which we can redeem
United States notes. It is specie resumption in the old time-
honored standard of silver dollars of full weight and fineness.
It will accustom our people to distinguish between the real dollar
that pays where it goes and a paper dollar which only promises to
pay. It will prepare the way for full resumption in gold. To the
extent proposed by the committee, and to be used as a purely
voluntary approach to a full specie standard, it is open to no
objection or criticism, and should be assented to by gentlemen who
have differed with each other on the present resumption law or on
the merits and dangers of contraction and expansion."
The vital difference between the free coinage of silver, and the
limited coinage of that metal on government account, is that with
free coinage the standard of value would be the cheaper money.
With silver at its present price in the market the dollar would be
worth but a little over fifty cents. The coinage being free to
the holders of silver bullion no other coins would be made except
the cheaper coins of least purchasing power. On the other hand,
the coinage of silver on government account enables us to maintain
the silver coins at par with gold, without respect to the market
value of the silver bullion. Any nominal profit from this coinage
inures to the benefit of the whole people of the United States and
not merely to the producers of silver bullion. This distinction
has always appeared to me so marked and clear, and the argument so
strong in favor of limiting the coinage of silver to the amount
demanded as a convenience of the people for the smaller transactions
of life, that I cannot sympathize with a policy that aims merely
to secure the cheapest money for the discharge of obligations
contracted upon more valuable money.
Among the measures that became a law at this session was a concurrent
resolution, introduced by me in the Senate on the 5th of July,
1876, to provide for the completion of the Washington monument.
On the morning of the 4th of July, 1876, the 100th anniversary of
American independence, I was making some preparation for the
celebration of that day in the vicinity of Washington. Animated
by the patriotic feeling inspired by the day, and sitting in view
of the unfinished monument of George Washington, I felt that the
time had come when this monument should no longer continue a standing
reproach to a patriotic people. Shortly after the death of
Washington, a resolution providing for the erection of a monument
to his memory, was agreed to by both Houses of Congress. Subsequently,
on January 1, 1801, a bill was passed by the House of Representatives
appropriating $200,000 for this purpose, but, in the political
excitements of that day, the Senate failed to concur. In the
absorbing public questions that ensued, resulting in the War of
1812, the subject was dropped in Congress for the time.
In 1833 the "Washington Monument Society" was formed, with Chief
Justice Marshall as its president. This society proposed to raise
the necessary sum to erect such a monument by voluntary subscriptions
of individuals, and in 1854 it had, by such means, constructed
about one-third of the height of the monument and then suspended
work. Thus it had remained for years for want of means to complete
it, a glaring evidence of failure. The portion of the monument
already reared to the height of 156 feet stood in rude outline, an
abandoned failure in the midst of a reservation partly covered with
water and broken stone. The society was incorporated by Congress
in 1859, but no further progress was made. It was manifest that
the work could not be completed by the existing organization, and
doubts were expressed whether the foundation was sufficient to bear
the superstructure. Under these conditions, on the 100th anniversary
of the declaration of American independence, it occurred to me the
time had arrived when a great country like ours should complete
this unfinished monument to George Washington. Under the inspiration
of this thought I wrote this resolution on the morning of the 4th
of July, and on the next morning offered it for adoption in the
Senate:
"Whereas, It has pleased Almighty God to guide the United States
of America safely through one hundred years of national life, and
to crown our nation with the highest blessing of civil and religious
liberty, Therefore,
"The Senate and House of Representatives in Congress assembled, in
the name of the people of the United States, in reverent thankfulness
acknowledge the fountain and source, the author and giver of all
these blessings, and our dependence upon His providence and will;
and,
"Whereas, We recognize, as our fathers did, that George Washington,
'first in peace, first in war, and first in the hearts of his
countrymen,' was one of the chief instruments of Divine Providence
in securing American independence and in laying broad and deep the
foundations of our liberties in the constitution of the United
States:
"Therefore, as a mark of our sense of the honor due to his name
and to his compatriots and associates, our revolutionary fathers,
"We, the Senate and House of Representatives in Congress assembled,
in the name of the people of the United States at this, the beginning
of the second century of national existence, do assume and direct
the completion of the Washington monument in the city of Washington,
and instruct the committees on appropriations of the respective
Houses to propose suitable provisions of law to carry this resolution
into effect."
In submitting this resolution I said:
"I desire to offer at this time a concurrent resolution I wish to
say before it is read that I believe if it were passed to-day it
would be a matter of profound satisfaction to the great body of
the people of the United States. I ask that it be read."
After the resolution was read, there was a pause, when Mr. Edmunds
said: "Let us consider this resolution. It will be agreed to
unanimously, I am sure."
The resolution was therefore considered and agreed to unanimously.
It was sent to the House of Representatives the next morning, when
Mr. Hopkins, of Pennsylvania, pending a motion to adjourn, asked
unanimous consent to take from the speaker's table the concurrent
resolution in reference to the Washington monument. Upon the
resolution being read, the House seemed to be impressed, as was
the Senate, with the fitness of the time, and the propriety of the
measure proposed, and it was unanimously adopted without debate.
Thus Congress undertook to execute the unfinished work of the
Washington Monument Society. The requisite appropriations were
subsequently made, and the monument, as completed, is now the most
impressive token of the appreciation, by the American people, of
the name and fame of George Washington. It is visited daily by
nearly every American or stranger who enters the city of Washington.
Its dedication will be hereafter mentioned.
CHAPTER XXVIII.
THE HAYES-TILDEN PRESIDENTIAL CONTEST.
Nomination of R. B. Hayes for President--His Fitness for the
Responsible Office--Political Shrewdness of Samuel J. Tilden, His
Opponent--I Enter Actively Into the Canvass in Ohio and Other States
--Frauds in the South--Requested by General Grant to Go to New
Orleans and Witness the Canvassing of the Vote of Louisiana--
Departure for the South--Personnel of the Republican and Democratic
"Visitors"--Report of the Returning Board--My Letter to Governor
Hayes from New Orleans--President Grant's Last Message to Congress
--Letter from President Hayes--Request to Become his Secretary of
the Treasury.
The Republican national convention of 1876 met at Cincinnati on
the 14th of June of that year. After the usual organization the
following eight nominations for President were made: Blaine,
Morton, Conkling, Bristow, Hayes, Hartranft, Wheeler and Jewell.
The total number of delegates was 754. Blaine was greatly in the
lead, receiving on the first ballot 285 votes, some from nearly
every state. Morton received 124, Bristow 113, Conkling 99, Hayes
61, Hartranft 58, Jewell 11, and Wheeler 3. There were 7 ballots,
in which Blaine steadily held his vote and slightly gained, receiving
on the final ballot 351 votes. The vote for Hayes increased at
each ballot until on the seventh ballot he received 384 votes, a
majority over all.
Undoubtedly Blaine was the favorite of the convention, but the
antagonisms that existed between him and Conkling probably defeated
his nomination. I still believe that the nomination of Hayes was
not only the safest, but the strongest, that could be made. The
long possession of power by the Republicans naturally produced
rivalries that greatly affected the election of anyone who had been
constantly prominent in public life, like Blaine, Conkling and
Morton. Hayes had growing qualities, and in every respect was
worthy of the high position of President. He had been a soldier,
a Member of Congress, thrice elected as Governor of Ohio, an
admirable executive officer, and his public and private record was
beyond question. He was not an aggressive man, although firm in
his opinions and faithful in his friendships. Among all the public
men with whom I have been brought in contact, I have known none
who was freer from personal objection, whose character was more
stainless, who was better adapted for a high executive office, than
Rutherford B. Hayes.
Governor Hayes wrote me the following letter in recognition of my
aid in his nomination.
"Columbus, O., June 19, 1876.
"My Dear Sir:--I trust you will never regret the important action
you took in the inauguration and carrying out of the movement which
resulted in my nomination. I write these few words to assure you
that I appreciate, and am gratified for, what you did.
"My kindest regards to Mrs. Sherman.
"Sincerely,
"R. B. Hayes.
"Hon. John Sherman."
His opponent, Samuel J. Tilden, was a man of singular political
sagacity, of great shrewdness, a money-making man, who professed
to represent, and perhaps did represent, as fairly as anyone, the
ideas of the New York politicians of the school of Van Buren and
Marcy. I knew Mr. Tilden personally and very favorably, as we were
members of a board of railroad directors which frequently met. He
seemed to take pleasure in talking with me about political events,
and especially of the famous New York politicians, of whom Silas
Wright and Mr. Van Buren were his favorites. He had acquired great
wealth as the attorney of corporations, and was undoubtedly a man
of marked ability and sagacity. He had taken an active part in
defeating the corruption of Tweed in New York politics. He had
been elected governor of the State of New York, as the candidate
of reform and honesty in politics.
The long and important session of Congress adjourned on the 15th
of August. It had been the arena for long debates, mostly on
political topics growing out of reconstruction, and financial
measures heretofore referred to. The pending presidential contest
also excited much debate in both Houses. The administration of
General Grant had not been entirely satisfactory, and the long
continuance of the Republican party in power was an element of
weakness. The complaints, unavoidable in the most honest
administration, and the disappointments of office-seekers, placed
that party on the defensive. The south had, by reconstruction,
been practically restored to political power, and the body of the
negroes had been substantially disfranchised, though legally entitled
to the suffrage. Riots and crimes of every degree were committed
in the south, notably in Louisiana, South Carolina and Florida.
Organized mobs and violence had deterred many from voting, and in
some cases had prevented even the semblance of a free election.
I entered actively into this canvass, more so than in any previous
one. Three days before the adjournment, I made my opening speech
at Marietta, Ohio, in which I discussed fully the dangers of the
restoration of the Democratic party to power, the probability of
their failure to enforce the constitutional amendments, and the
protection of the rights of the freedmen. I claimed that the
election of Mr. Tilden would result in the virtual nullification
of the constitutional amendments, and amount to a practical
restoration to power of the old Democratic party. The revival of
the rebel claims, the refunding of the cotton tax, and the damages
done to rebels, were fully commented upon, as were the outrages
committed upon freedmen during the second administration of General
Grant, the organization of Ku-Klux Klans, and the White League,
and the boldness with which the laws were disregarded in the south.
It is difficult now to realize the condition of public affairs in
all the states then lately in rebellion. The people of the south
are certainly entitled to the highest credit for the great change
that has recently been made in the government of their states, but
it cannot be denied that during the ten years after the war their
condition bordered on the despotism of mob rule and violence.
Financial questions, no doubt, entered into the canvass, but in
this respect Governor Tilden and Governor Hayes did not materially
differ, while public opinion in the southern states was almost a
unit in favor of the larger use of paper money. Their bankrupt
condition made this policy almost universal there.
I continued until the day of election to make speeches, not only
in Ohio, but in several of the states. I engaged in a joint debate
with Senator Voorhees, of Indiana, at Columbia City, in that state,
in September, which probably had more fun and humor in it than
argument. It so happened that appointments were made for each of
us at Columbia City, on the same day, and the managers of the two
parties concluded that they would have a joint debate, and arranged
for it, to which we both assented. There was a great crowd, and
besides Mr. Voorhees and myself, "Blue Jeans" Williams, the candidate
for governor, was to open the meeting in his peculiar way, to which,
as it would not at all interfere with our debate, I did not object.
The debate was fully reported in the Chicago "Inter-Ocean," and is
a very graphic specimen of popular debates in which each side claims
to be the victor. I think it would be safe to say that from the
close of Congress until the day of election I spoke on nearly every
week day in some one of the five or six states which I visited.
The result of the presidential election in November, 1876, was
extremely doubtful. It was soon asserted that the majority either
way would be very small, and that the probabilities were that Mr.
Tilden was elected. Zachariah Chandler, chairman of the national
Republican committee, however, confidently telegraphed, on the
morning after the election, that Hayes was elected by a majority
of one in the electoral college. Further reports developed that
on account of intimidation, frauds and violence, committed in the
election in Louisiana, South Carolina, and Florida, the vote of
each of those states was doubtful, and could only be ascertained
by the reports of the returning boards. All of their electoral
votes were needed to give Hayes the majority of one. Both parties
claimed in each of the states a majority of the popular vote. In
the heated state of political feeling in those states, it was a
matter of grave doubt whether the count of the vote might not result
in violence, tumult or war. On the evening of November 11, I
received from President Grant the following telegram:
"Philadelphia, Pa., November 11, 1876.
"Received at Mansfield, O., 8:35 p. m.
"Senator John Sherman.
"I would be much pleased if you would join other parties, who have
already accepted same invitation, to go to New Orleans to witness
the canvassing of the vote of Louisiana.
"U. S. Grant."
I replied that I would go as soon as practicable, and received the
following answer:
"Washington, D. C., November 12, 1876.
"Received at Mansfield, O., 4 p. m.
"Hon. John Sherman.
"Unless you can reach there by Friday morning it will be too late.
"U. S. Grant."
I at once started for New Orleans, stopping on the way at Columbus
to confer with Governor Hayes, who said he wished I would go to
New Orleans, and witness the count, but expressed, in the strongest
possible language, his opposition to any movement on the part of
anyone to influence the action of the returning board in his favor.
He said that if Mr. Tilden was elected he desired him by all means
to have the office. I proceeded to Cincinnati, where I met some
of the gentlemen whom General Grant had requested to witness the
count. When we arrived in New Orleans I found far less excitement
in respect to the count than in Ohio. I there met the other
gentlemen who had been, like myself, invited by General Grant.
They were Messrs. Stanley Matthews, Ohio; J. A. Garfield, Ohio; E.
W. Stoughton, New York; J. H. Van Alen, New York; Wm. D. Kelley,
Pennsylvania; Job E. Stevenson, Ohio; Eugene Hale, Maine; J. M.
Tuttle, Iowa; J. W. Chapman, Iowa; W. R. Smith, Iowa; W. A. McGrew,
Iowa; Sidney Clarke, Kansas; C. B. Farwell, Illinois; Abner Taylor,
Illinois; S. R. Haven, Illinois; J. M. Beardsley, Illinois; John
Coburn, Indiana; Will Cumback, Indiana; C. Irving Ditty, Maryland.
At New Orleans I was for the first time introduced to the members
of the returning board, who, under the laws of Louisiana, were
required to verify the count and whose return was final. We met
also a large number of gentlemen who were there at the request of
the national Democratic committee to perform the same duty that
had been imposed upon us by General Grant. These gentlemen were
John M. Palmer, Illinois; Lyman Trumbull, Illinois; William R.
Morrison, Illinois; Samuel J. Randall, Pennsylvania; A. G. Curtin,
Pennsylvania; William Bigler, Pennsylvania; J. R. Doolittle,
Wisconsin; George R. Smith, Wisconsin; J. E. McDonald, Indiana;
George W. Julian, Indiana; M. D. Manson, Indiana; John Love, Indiana;
Henry Watterson, Kentucky; J. W. Stevenson, Kentucky; Henry D.
McHenry, Kentucky; Oswald Ottendorfer, New York; J. B. Stallo,
Ohio; Lewis V. Bogy, Missouri; James O. Brodhead, Missouri; C.
Gibson, Missouri; John Lee Carroll, Maryland; William T. Hamilton,
Maryland; W. G. Sumner, Connecticut; P. H. Watson, Ohio; F. R.
Coudert, New York.
Before my arrival a correspondence had occurred between what was
called the Democratic visitors and the Republican visitors in regard
to our respective duties. This correspondence, all of which was
reported to President Grant, resulted in the attendance of a certain
number of each of the bodies of visitors at each session of the
returning board, and thus a constant surveillance of the proceedings
of the board was had. At the same time we received from the
returning board the following letter:
"State of Louisiana, Office Board of Returning-Officers,}
"New Orleans, November 18, 1876. }
"Sir:--At a meeting of the board of returning-officers, held this
day, the following preamble and resolution, introduced by General
Thomas C. Anderson, was unanimously adopted, viz:
"Whereas, This board has learned with satisfaction that distinguished
gentlemen of national reputation from other States, some at the
request of the President of the United States, and some at the
request of the national executive committee of the Democratic party
are present in this city with a view to witness the proceedings of
this board in canvassing and compiling the returns of the recent
election in this state for presidential electors, in order that
the public opinion of the country may be satisfied as to the truth
of the result and the fairness of the means by which it may have
been attained; and whereas, this board recognizes the importance
which may attach to the result of their proceedings, and that the
public mind should be convinced of its justice by a knowledge of
the facts on which it may be based, therefore, be it
_Resolved_, That this board does hereby cordially invite and request
five gentlemen from each of the two bodies named, to be selected
by themselves respectively, to attend and be present at the meetings
of the board while engaged in the discharge of its duties, under
the law, in canvassing and compiling the returns, and ascertaining
and declaring the result of said election for presidential electors,
in their capacity as private citizens of eminent reputation and
high character, and as spectators and witnesses of the proceedings
in that behalf of this board.
"J. Madison Wells,
"Chairman Board of Returning-Officers.
"Hon. John Sherman, St. Charles Hotel, New Orleans."
On the same day I answered in behalf of my associates as follows:
"St. Charles Hotel, }
"New Orleans, November 18, 1876.}
"Sir:--I have received your note of to-day, with a copy of the
resolution of the board of returning-officers of the State of
Louisiana, and have communicated the invitation contained in it to
the gentlemen who are here at the request of the President of the
United States to witness the canvassing of the vote at the recent
election in this state for presidential electors, and am instructed
by them to inform you of their acceptance of the invitation, and
that they will designate a committee of five of their number to
attend the meetings of the board. And I take this occasion to
express my thanks for the courteous terms of this invitation, my
deep sense of the importance of your proceedings, and my confident
hope that they will be so conducted as to convince the public mind
of the justice of your finding.
"John Sherman.
"Hon. J. Madison Wells."
A similar invitation was extended to the Democratic visitors, and
substantially the same reply made. The returning board then
proceeded to perform its duty under the law. At each session the
Republican and Democratic visitors were present, and I neither know
of nor have ever heard of any act being done or testimony taken by
the board except in the presence of committees of the two bodies
of visitors. The proceedings of the returning board were reported
for each body of visitors and for the returning board, and all the
evidence taken was not only delivered in the presence of the two
visiting bodies, but was reported to the President and was published
by Congress. Whatever opinions may be expressed as to the correctness
of the findings of the returning board, there can be no doubt that
its proceedings were open, fair and impartial. The board arrived
at the conclusion that the Republican electors received a majority
of the votes cast in Louisiana at that election, and were entitled
to cast the vote of the state for President of the United States.
During the great excitement over this controversy, and also over
that in South Carolina and Florida, exaggerated statements, without
the slightest foundation, of frauds and improper conduct on the
part of the returning officers were made and published. As to the
action of the returning board of Louisiana, I feel bound now, after
a long lapse of time, to repeat what was reported to General Grant
by the Republican visitors, that it made a fair, honest and impartial
return of the result of the election. In concluding our report we
said:
"The proof of violence and intimidation and armed disturbance in
many other parishes, is of the same general character, although
more general and decisive, as to the five parishes particularly
referred to. In the others, these causes prevailed at particular
polling places, at many of which the Republican vote was, to a
considerable extent, prevented.
"We hope to be able to furnish full copies of all testimony taken
by the board, that the justice of its conclusions may be appreciated.
It is a tribunal, from which there can be no appeal, and, in view
of the possible consequences of its adjudication, we have closely
observed its proceedings and have carefully weighed the force of
a large mass of the testimony upon which that adjudication has been
reached.
"The members of the board, acting under oath, were bound by law,
if convinced by the testimony that riot, tumult, acts of violence,
or armed disturbance did materially interfere with the purity and
freedom of election at any poll or voting place, or did materially
change the result of the election thereat, to reject the votes thus
cast, and exclude them from their final return. Of the effect of
such testimony, the board was sole and final judge, and if, in
reaching a conclusion, it exercised good faith and was guided by
an honest desire to do justice, its determination should be respected,
even if, upon like proof, a different conclusion might have been
reached by other tribunals or persons.
"To guard the purity of the ballot; to protect the citizen in the
free and peaceful exercise of his right to vote; to secure him
against violence, intimidation, outrage, and especially murder,
when he attempts to perform his duty, should be the desire of all
men, and the aim of every representative government. If political
success shall be attained by such violent and terrible means as
were resorted to in many parishes in Louisiana, complaint should
not be made if the votes thus obtained are denounced by judicial
tribunals and all honest men as illegal and void."
Pending the action of the board I wrote to Governor Hayes the
following letter, giving a general view of the testimony:
"State of Louisiana, Executive Department,}
"New Orleans, November 23, 1876. }
"My Dear Sir:--I have not written you sooner, for the progress of
our visitation will be known to you through the papers sooner than
from my letters, and the telegraph office here is more public than
a sheriff's sale. We sometimes hear of private telegrams before
they are delivered. The action of the returning board has thus
far been open and fair and only confirms the general result known
before. We are now approaching the contested parishes. To five
of them, viz: Baton Rouge, East and West Feliciana, Morehouse and
Ouachita, the evidence of intimidation is so well made out on paper
that no man can doubt as to the just exclusion of their vote. In
these parishes alone we ought to have a majority of 7,000, but
under the law the entire return must be excluded of all election
districts where intimidation has affected or changed the result.
If this is done the result will give the Hayes electors majorities
aggregating 24,111, and the Tilden electors 22,633, but in almost
every parish the official return varies somewhat from the stated
majorities, and thus far slightly reduces the Republican majority.
"The vote of each disputed parish has thus far been laid aside,
and among them two parishes where a most foolish blunder, or
something worse, was made in omitting from the Republican tickets
the names of all the electors but the two Senatorial and one district
elector. The Democrats claim this will lose over 2,000 votes, but
our friends, whose information we have generally found confirmed,
say it will lose us at most 1,193 votes. The law seems conclusive
that the defective ballots cannot be counted for any electors but
those named on the ticket; though it is conclusively shown that
the remaining electors were omitted by reason of the mistaken idea
that the district could only vote for one elector. The whole
trouble has grown out of the fact that in these two parishes a
candidate for district judge was not named on the ticket printed
by the state committee. We undertook to correct this by printing
new tickets, which were voted in those parishes. The result of
this blunder will leave the poll so close as to render it probable
that one or more of the Tilden electors would have a majority.
"There are other parishes where the organized intimidation was not
so general as in the parishes named, though in single election
precincts it was effective. These parishes, where formal protests
have been filed, are Bienville, Bossier, Caldwell, Franklin, Grant,
Iberia, Lincoln, Richland and Sabine. How far the proof in these
parishes will sustain the protests we cannot judge till the evidence
is heard before the returning board.
"We are now collecting the testimony as to the bulldozed parishes.
It seems more like the history of hell than of civilized and
Christian communities. The means adopted are almost incredible,
but were fearfully effective upon an ignorant and superstitious
people. That you would have received at a fair election a large
majority in Louisiana, no honest man can question; that you did
not receive a majority is equally clear. But that intimidation of
the very kind and nature provided against by the Louisiana law did
enter into and control the election, in more election polls than
would change the result and give you the vote, I believe as firmly
as that I write this. The difficulty of gathering this testimony
and putting it in the legal form has been very great, but I believe
has been fully met.
"The whole case rests upon the action of the returning board. I
have carefully observed them, and have formed a high opinion of
Governor Wells and Colonel Anderson. They are firm, judicious,
and, as far as I can judge, thoroughly honest and conscientious.
They are personally familiar with the nature and degree of intimidation
in Louisiana. They can see that the intimidation, as organized,
was with a view of throwing out Republican parishes rather than
endangering Democratic parishes. Our little party is now dividing
out the disputed parishes, with the view of a careful examination
of every paper and detail. Many are impatient of the delay, and
some have gone home. We will probably be able to keep about ten
here. We have incurred some liabilities for reporting, printing,
etc., but hope the Republican national committee will make this
good. If not, we must provide for it ourselves. We are in good
hope and spirit. Not wishing the return in your favor, unless it
is clear that it ought to be so, and not willing to be cheated out
of it, or to be 'bulldozed' or intimidated, the truth is palpable
that you ought to have the vote of Louisiana, and we believe that
you will have ti, by an honest and fair return, according to the
letter and spirit of the law of Louisiana.
"Very truly yours,
"John Sherman."
To this General Hayes responded as follows:
"Columbus, O., November 27, 1876.
"My Dear Sir:--I am greatly obliged to you for your letter of the
23rd. You feel, I am sure, as I do about this whole business. A
fair election would have given us about forty electoral votes at
the south--at least that many. But we are not to allow our friends
to defeat one outrage and fraud by another. There must be nothing
crooked on our part. Let Mr. Tilden have the place by violence,
intimidation and fraud, rather than undertake to prevent it by
means that will not bear the severest scrutiny.
"I appreciate the work doing by the Republicans who have gone south,
and am especially proud of the acknowledged honorable conduct of
those from Ohio. The Democrats make a mistake in sending so many
ex-Republicans. New converts are proverbially bitter and unfair
towards those they have recently left.
"I trust you will soon reach the end of the work, and be able to
return in health and safety.
"Sincerely,
"R. B. Hayes."
I met Governor Hayes on my return and his conversation was to the
same effect, that he wished no doubtful votes and would greatly
prefer to have Mr. Tilden serve as President if there was any doubt
about his (Hayes') election. The Republican visitors did not return
until after the meeting of Congress at its regular session on the
4th of December, 1876.
President Grant, in the beginning of his annual message of that
date, said:
"In submitting my eighth and last message to Congress, it seems
proper that I should refer to, and in some degree recapitulate,
the events and official acts of the past eight years.
"It was my fortune, or misfortune, to be called to the office of
Chief Executive without any previous political training. From the
age of seventeen I had never even witnessed the excitement attending
a presidential campaign but twice antecedent to my own candidacy,
and at but one of them was I eligible as a voter. Under such
circumstances it is but reasonable to suppose that errors of judgment
must have occurred. Even had they not, differences of opinion
between the Executive, bound by an oath to the strict performance
of his duties, and writers and debaters must have arisen. It is
not necessarily evidence of blunder on the part of the Executive
because there are these differences of views. Mistakes have been
made, as all can see and I admit, but, it seems to me, oftener in
the selections made of the assistants appointed to aid in carrying
out the various duties of administering the government, in nearly
every case selected without a personal acquaintance with the
appointee, but upon recommendations of the representatives chosen
directly by the people. It is impossible, where so many trusts
are to be allotted, that the right parties should be chosen in
every instance. History shows that no administration, from the
time of Washington to the present, has been free from these mistakes.
But I leave comparison to history, claiming only that I have acted
in every instance from a conscientious desire to do what was right,
constitutional within the law, and for the very best interests of
the whole people. Failures have been errors of judgment, not of
intent."
This modest statement by General Grant was appreciated by Congress
and by the country. No one doubted the sincerity and patriotism
of the President. His modest confession of errors did not in the
slightest degree impair the universal confidence in him.
On the 18th of January, 1877, Mr. Edmunds, of the select committee
of the Senate on the counting of electoral votes, submitted a report
in writing with an accompanying bill. It was, with one exception,
signed by the members of the committees of the two Houses without
distinction of party. The bill provided in full detail a prescribed
manner for counting the electoral vote. It was adopted by both
Houses and voted for by a great majority, but, believing that it
was extra constitutional, I, with other Republicans, did not vote
for it. The history of the electoral commission provided for in
this bill is part of the history of the country, and it is not
necessary to here enter into it in detail. It is sufficient to
say that it resulted in the counting of the votes of Louisiana,
South Carolina and Florida for Mr. Hayes, electing him President
by a majority of one vote. I took an active part in the debates
on the questions involved and gave in detail my view of the action
of the returning board of Louisiana.
During this period I received a number of personal letters from
Governor Hayes, some of which may be of interest:
"Columbus, O., December 25, 1876.
"My Dear Sir:--I have your esteemed favor, and have also met Judge
Taft and Governor Dennison. There will not be the slightest
difficulty growing out of the matter you refer to. You know my
general course of conduct. It has always seemed to me wisest, in
case of decided antagonisms among friends, not to take sides--to
heal by compromise, not to aggravate, etc., etc. I wish _you_ to
feel authorized to speak in pretty decided terms for me whenever
it seems advisable--to do this not by reason of specific authority
to do it, but from your knowledge of my general methods of action.
"Sincerely,
"R. B. Hayes.
"Hon. John Sherman, etc., etc."
"Columbus, O., January 5, 1877.
"My Dear Sir:--I have your note of the 3rd. I do not wish to
influence the action of our friends, and do not volunteer opinions.
But _you_ have a right to my opinion. I believe the Vice President
alone has the constitutional power to count the votes and declare
the result. Everything in the nature of a contest as to electoral
votes is an affair of the states. The rest is a mere ministerial
duty. Therefore it is not right, in my judgment, for Congress to
interfere.
"Sincerely,
"R. B. Hayes.
"Hon. John Sherman, U. S. S."
"Columbus, O., February 15, 1877.
"My Dear Sir:--I have two letters from you since I last wrote. It
if becomes my duty to make a cabinet I want your views fully and
specifically. If possible a personal interview would be extremely
desirable. Boynton writes to Smith that an assurance of my views
on the southern question, which are truly set forth in my letter,
with such additions as I could properly make, would be useful. I
prefer to make no new declarations. But you may say if you deem
it advisable that you _know_ that I will stand by the friendly and
encouraging words of that letter and by all that they imply. You
cannot express that too strongly.
"Sincerely,
"R. B. Hayes.
"Hon. John Sherman."
"Columbus, O., February 16, 1877.
"My Dear Sir:--If the issue of the contest is in our favor I shall
want to see you at once if it is at all practicable. Don't you
want to visit Mansfield? I can meet you there or here--or possibly
at a point east of there.
"Sincerely,
"R. B. Hayes.
"Hon. John Sherman."
"Columbus, O., February 19, 1877.
"My Dear Sir:--The more I think of it the more difficult it seems
for me to get ready to come to Washington before Wednesday or
Thursday of next week. I must fix affairs at Fremont, and cannot
begin it until I know the result. Why can't friends be sent or
come here?
"It seems to me proper now to say that I am extremely desirous that
you should take the treasury department. Aside from my own personal
preference, there are many and controlling reasons why I should
ask you to do this. It will satisfy friends here in Ohio. I
understand Governor Morton and our friends in Washington like it.
The country will approve it. You are by all odds the best fitted
for it of any man in the nation. Your resignation from the Senate
will be a great loss to that body, but it will cause no serious
dissensions or difficulty in Ohio. Do not say no until I have had
a full conference with you. There is no reason why you should not
visit Ohio as soon as you can be spared from Washington. Of course
the public will know of our meeting. But they will be gratified
to know it. No possible harm can come of it. I should have said
all this before, but I did not want to embarrass you in your action
on the presidential question.
"Sincerely,
"R. B. Hayes.
"Hon. John Sherman."
(Telegram.)
"Columbus, O., February 20, 1877.
"Hon. John Sherman.
"I will be greatly obliged if you can come to Columbus, but will
meet you at Zanesville if you think it important.
"R. B. Hayes."
"Columbus, O., February 28, 1877.
"Hon. John Sherman, Washington, D. C.
"Dear Sir:--Governor Hayes will be obliged to you if you will be
kind enough to speak to Mr. Evarts with respect to his acceptance
of the place in the cabinet referred to in the interview with you
last week. It was the governor's intention to make this request
at that time, and he may have done so, but not being quite sure of
the fact, desires me to write you with reference to it.
"Yours very respectfully,
"W. K. Rogers, Secretary."
President Hayes frequently, in personal conversation and in writing,
had expressed a strong desire that I should become the Secretary
of the Treasury. I was disinclined to accept this position, as I
was content to serve my constituents in the Senate. It was not
until after his urgent request in his letter of February 19, 1877,
that I seriously considered his desire that I should accept that
office. I went to Columbus to ascertain the views of the legislature,
and whether there would be any difficulty in selecting a Republican
to my place in the Senate. Having found that there would not be,
I, with reluctance, accepted his offer. Stanley Matthews was
elected on the 21st of March to serve out my unexpired term, which
ended on the 3rd of March, 1879.
President Hayes arrived at Washington a few days before the 4th of
March and was my guest until he was inaugurated as President. The
4th day of March was on Sunday, and to avoid any questions about
an interregnum, he was sworn into office on that day, but took the
formal oath on the next day, the 5th of March, and made his inaugural
address. He nominated the members of his cabinet to the Senate
and they were promptly confirmed.
I received many letters of congratulation and encouragement in
assuming the duties of Secretary of the Treasury, two of which I
insert:
"New York, March 6, 1877.
"My Dear Mr. Secretary:--Allow me to congratulate you on having
been selected by President Hayes to administer the financial affairs
of the nation.
"I deem it a happy augury that the President's choice of members
of his cabinet has fallen upon men who have made their mark as
statesmen, and whose advent to power will, I feel convinced,
inaugurate an era of prosperity for our country.
"With yourself at the head of the treasury department, there is no
fear of public credit being shaken and commercial interests imperiled
by crude and experimental legislation.
"With great respect, I remain, my dear Mr. Sherman,
"Very truly your friend,
"Cyrus W. Field.
"Hon. John Sherman, Washington."
"Consulate General of the United States for Great Britain and
Ireland,}
"London, E. C., March 12, 1877.}
"The Hon. John Sherman, Secretary of the Treasury.
"My Dear Sir:--When I begin to write to you, I am reminded of what
General Sherman said, in my hearing, to General Grant, after the
latter was made General in Chief: 'I cannot congratulate you; the
responsibility is too great.' You have certainly succeeded to the
most difficult post in the government, one in whose successful
administration Americans abroad feel an especial interest, for no
department is more important to foreigners or more discussed by
them.
"It may not be unsatisfactory to you to know that Americans--both
those long domiciled here and those in transit--applaud the
appointment of the new Chief of the Treasury.
"I beg to offer my best wishes and belief that the reputation he
has already achieved in the Senate will be increased in the cabinet;
and to say how glad I was that the unanimity of his late compeers
showed that they were of the same mind.
"With great respect, I am, my dear sir,
"Very faithfully yours,
"Adam Badeau."
CHAPTER XXIX.
I BEGIN MY DUTIES AS SECRETARY OF THE TREASURY.
Legislative Training of Great Advantage to Me in My New Position--
Loan Contract in Force When I Took the Portfolio--Appointment of
Charles F. Conant as Funding Agent of the Treasury Department in
London--Redeeming Called Bonds--Sale of Four Per Cent. Bonds Instead
of Four and a Half Per Cents.--Popularity of the New Loan--Great
Saving in Interest--On a Tour of Inspection Along the Northern
Atlantic Coast--Value of Information Received on This Trip--Effect
of the Baltimore and Pittsburg Railroad Strikes in 1877 Upon Our
Public Credit.
When I assumed the office of Secretary of the Treasury I had the
advantage of some of my predecessors in that I was acquainted with
the organization and duties of the treasury department. Ever since
1859 my connection with the committee of ways and means in the
House and with the committee on Finance in the Senate had brought
me into official relations with the head of that department. This
legislative training gave me a full knowledge of the several laws
that were to be executed in relation to public revenue, to all
forms of taxation, to coinage and currency, and to the public debt.
The entire system of national finance then existing grew out of
the Civil War, and I had participated in the passage of all the
laws relating to this subject. My intimate association with
Secretaries Chase, Fessenden and McCulloch, and my friendly relations
with Secretaries Boutwell and Richardson, led me, as chairman of
the Senate committee on finance, to have free and confidential
intercourse with them as to legislation affecting the treasury.
Secretary Bristow had not had the benefit of experience either in
Congress or the department. He was a good lawyer and an able man.
He doubted whether resumption would be effective without a gradual
retirement of United States notes, a measure that Congress would
not agree to. Congress repealed even the limited retirement of
such notes provided for by the resumption act. Secretary Morrill,
of Maine, my immediate predecessor, was in hearty sympathy with
the policy of Congress, of which he had been a useful Senator, and
but for his failing health would have been an efficient secretary.
Upon my assuming the duties of secretary, and for some time before,
he had been confined by illness to his lodgings in Washington.
The treasury department was then well organized. Most of the
principal officers had been long in the service. But few changes
were made by President Hayes or by myself, and only as vacancies
occurred or as incompetency was demonstrated. The following loan
contract was in force at the beginning of my administration of the
treasury department:
"This agreement, entered into this 24th day of August, in the year
of our Lord, 1876, between the Secretary of the Treasury of the
United States of America, of the first part, and Messrs. August
Belmont & Co., of New York, in behalf of Messrs. N. M. Rothschild
& Sons, of London, England, and associates, and Messrs. J. & W.
Seligman & Co., of New York, for themselves and associates, and
Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan &
Co., of London, England, and Messrs. Morton, Bliss & Co., of New
York, representing the First National Bank of the city of New York,
the American Exchange National Bank of New York, the Merchants'
National Bank of New York, the Third National Bank of New York,
Messrs. Kuhn, Loeb & Co., of New York, the Bank of New York National
Banking Association, and Messrs. Morton, Rose & Co., of London,
and themselves, of the second part:
"Witnesseth, That the said Messrs. August Belmont & Co. of New
York, on behalf of Messrs. N. M. Rothschild & Sons and associates,
hereby agrees to purchase from the Secretary of the Treasury sixteen
million five hundred thousand dollars ($16,500,000) of the United
States bonds known as the four and a half per cent. funded loan of
1891, issued under the acts of July 14, 1870, and January 20, 1871;
and that Messrs. J. & W. Seligman & Co., for themselves and their
associates, hereby agree to purchase from the Secretary of the
Treasury six million seven hundred and fifty thousand dollars
($6,750,000) of the bonds hereinbefore described; and that Messrs.
Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., of
London, England, hereby agree to purchase from the Secretary of
the Treasury six million seven hundred and fifty thousand dollars
($6,750,000) of the bonds hereinbefore described; and that Messrs.
Morton, Bliss & Co., of New York, representing the First National
Bank of the city of New York, to the extent of four million dollars
($4,000,000); the American Exchange National Bank of New York, to
the extent of one million and fifty thousand dollars ($1,050,000);
the Merchants' National Bank of New York, to the extent of six
hundred thousand dollars ($600,000); the Third National Bank of
the city of New York, to the extent of seven hundred and fifty
thousand dollars ($750,000); Messrs. Kuhn, Loeb & Co., of New York,
to the extent of one million and fifty thousand dollars ($1,050,000);
the Bank of New York National Banking Association, to the extent
of three hundred thousand dollars ($300,000); Messrs. Morton, Rose
& Co., of London, to the extent of one million one hundred and
twenty-five thousand dollars ($1,125,000), and Messrs. Morton,
Bliss & Co., of New York, to the extent of one million one hundred
and twenty-five thousand dollars ($1,125,000), hereby agree, to
the extent severally for each as above stated, to purchase from
the Secretary of the Treasury ten million dollars ($10,000,000) in
the aggregate of the bonds hereinbefore described, making a total
aggregate of forty million dollars ($40,000,000), upon the terms
and conditions following, to-wit:
"First. Of the said aggregate amount, not less than ten million
dollars ($10,000,000) are hereby subscribed for, the subscription
to take effect on the 1st day of September, 1876, and the remaining
amount, namely, thirty million dollars ($30,000,000), may be divided
at the pleasure of the parties of the second part into several
successive subscriptions of not less than five million dollars
($5,000,000) each, to be made prior to the 4th day of March, 1877.
"Second. The parties of the second part shall have the exclusive
right to subscribe, in the same proportion to each of the subscribers,
for the remainder, namely, two hundred and sixty million dollars
($260,000,000), or any portion of said loan authorized to be issued
by the acts of Congress aforesaid, by giving notice thereof to the
Secretary of the Treasury on or before the 30th day of June, 1877;
but the party of the first part reserves the right to terminate
this contract at any time after March 4, 1877, by giving ten days'
notice thereof to the parties of the second part.
"Third. That the Secretary of the Treasury shall, when subscriptions
are made by the said parties of the second part, issue calls with
even date with said subscriptions for the redemption of an equivalent
amount of six per cent. 5-20 bonds of the United States, as provided
by said act of July 14, 1870.
"Fourth. The parties of the second part agree to pay for said four
and a half per cent. bonds par and interest accrued to the date of
application for delivery of said bonds, in gold coin, matured United
States gold coin coupons, or any of the six per cent. 5-20 bonds
called for redemption, or in United States gold certificates of
deposit issued under the act of March 3, 1863, with the understanding
that payment to the extent of the amount of any call shall be made
within the time during which such call shall mature: _Provided_,
That, if the parties of the second part shall elect so to do, they
may have the privilege of making any of said subscriptions payable
specifically in uncalled six per cent 5-20 bonds of the United
States, in which case the Secretary of the Treasury may, to the
extent of such payments, omit the calls mentioned in condition No. 3.
"Fifth. The parties of the second part shall receive in coin a
commission of one-half of one per cent. on all bonds taken by them,
as allowed by the act of July 14, 1870, and shall assume and defray
all expenses which may be incurred in sending bonds to London upon
their request, or by transmitting bonds, coupons, or coin from
there to the treasury department at Washington, including all cost
of making exchange of bonds, and shall also be charged with the
preparation and issuing of the bonds.
"Sixth. No bonds shall be delivered to the parties of the second
part, or either of them, until payment shall have been made in full
therefor in accordance with the terms of this contract.
"Seventh. During the continuance of this contract any sales of
bonds ordered by the Secretary of the Treasury, by authority of
law, except those that it may become necessary to sell to pay
judgments of the Court of Commissioners of Alabama Claims, shall
be made through the parties of the second part, who shall be allowed
thereon a commission of one per cent. in gold coin. And it is
provided that the amount of bonds so ordered shall not exceed in
the aggregate $25,000,000, unless by mutual agreement of the
parties.
"Lot M. Morrill, Secretary of the Treasury.
"Aug. Belmont & Co., On behalf of N. M. Rothschild & Sons, London.
"J. & W. Seligman & Co., On behalf of Seligman Brothers.
"Drexel, Morgan & Co., On behalf of J. S. Morgan & Co., of London.
"Morton, Bliss & Co., For themselves and associates, as named
above."
By its terms the contract provided for the sale of $40,000,000,
four and a half per cent. bonds of the United States at par in gold
coin. The contractors had the exclusive right to subscribe for
all or any portion of the remainder of the four and a half per
cent. bonds, amounting to $260,000,000. The right to terminate
this contract at any time after March 4, 1877, after ten days'
notice, was reserved by the United States. The proceeds of the
bonds sold were to be applied solely to the payment of the six per
cent. 5-20 bonds of the United States. No provision was made in
this contract for the accumulation of coin for the redemption of
United States notes. The process of refunding under it progressed
slowly.
I felt it to be important that I should have some personal
representative in London, to protect the interests of the United
States in the execution of this contract, and, therefore, on the
31st of March, 1877, I appointed Charles F. Conant, as the funding
agent of the treasury department, and directed him to assume the
general management and supervision of all business in London,
arising from the funding of bonds. A letter of instructions
prescribing his duties was given him. He was directed to pursue
the same general plan under which former negotiations had been
conducted, except as modified by these instructions, which were
based upon the contract before mentioned. All bonds, money, or
coupons received by him were to be securely kept in safes, furnished
by the department for that purpose, to be deposited in the vaults
of the Messrs. Rothschild. Combination locks were provided for
each safe, and no safe could be unlocked except by three persons
on distinct combinations, each person using a combination unknown
to the others. He was to keep me fully advised as to the course
of the market, of the price not only of American securities, but
of foreign securities, and was to receive the new bonds and deliver
them to the Rothschilds in exchange for the bonds redeemed. He
proved to be a very competent and faithful agent, and furnished me
important financial information, which aided me greatly in refunding
operations. His compensation and allowances, as well as those of
all persons sent to London in connection with the refunding of the
public debt, were paid by the syndicate, so that no expense whatever
was incurred by the treasury on this account.
I gave the following notice to the parties to this contract that
I would, on the part of the United States, terminate it.
"Treasury Department, }
"Washington, D. C., April 6, 1877.}
"Gentlemen:--I received your friendly cable message of the 10th
ultimo, and return my thanks and hearty good wishes.
"I am very solicitous to promote the funding of our six per cent.
bonds as rapidly as practicable, and feel indebted to you for the
aid you have given in placing the four and a half per cent. bonds.
"I propose no change at present; but it is my desire, if practicable,
to withdraw the four and a half per cent. bonds from the market
and substitute in their place the four per cent. bonds authorized
by the funding act.
"These bonds, as you know, are a very desirable investment, running
thirty years from the date of issue, with every guard and security
that has been given to any bond of the United States, and we think
as safe and desirable as the securities of any other nation. It
is probably the bond into which all the debt of the United States
will in time be converted. I hope you and your associates will be
able to engage with me to place this bond on the market when
$200,000,000 of the four and a half per cent. bonds have been sold.
"The public policy of the United States to resume specie payments
on or before the 1st of January, 1879, is fully established by the
law and by public opinion. It may be that the surplus revenue will
be sufficient to enable me to carry out this policy without the
sale of bonds. I am authorized by the resumption act to sell five,
four and a half, or four per cent. bonds to prepare for resumption,
and it may be desirable to sell through the syndicate, under that
act, a limited amount of bonds, not exceeding, I hope, $30,000,000
a year. I do not wish in the execution of this duty to disturb
the exchanges between Europe and this country. For this purpose
I desire to sell only the four per cent. bonds and must sell at
par in coin, but could receive in payment coin coupons maturing
within a limited time. I invite from you and your associates such
suggestions and offers as you may think proper to make for the
purchase of such bonds.
"The operations of the syndicate have become so important that I
have deemed it proper to ask Mr. Charles F. Conant, late Assistant
Secretary of the Treasury, to take charge of the business in London
in connection with the gentlemen already there. He is well informed
as to our laws, and I trust his services may be of advantage to
the government and agreeable to you.
"I will give my personal attention to this business, and will
receive with pleasure any suggestions from you that will promote
our common object.
"Very truly,
"John Sherman, Secretary.
"Messrs. N. M. Rothschild & Sons, London, England."
I received the following letter:
"New York, April 12, 1877.
"Hon. John Sherman, Secretary of the Treasury, Washington.
"My Dear Sir:--I had an interview with Messrs. Drexel, Morgan &
Co., and conveyed to them your wishes respecting limiting the sale
of the four and a half and taking the four per cent. bond in hand
with the co-operation of the Messrs. Rothschild.
"I told Mr. Drexel that you would be happy to see him and Mr. L.
P. Morton in Washington, whenever convenient for them to go, and
that on receipt by you of favorable advices from Mr. Conant after
his arrival in London, you desired that Drexel, Morton and I should
repair to Washington, in company with other leading members of the
syndicate, with a view of entering into a contract with the
government, in conformity with your views as expressed to me, or
perhaps with some slight modifications, which, if suggested by the
London people, through Mr. Conant, you may deem proper to adopt.
"I shall see Mr. Morton in the course of this day, and have no
doubt but that he, as well as Drexel and myself, will be happy to
aid you in raising the credit of our common country, and assist
the President and you in this patriotic work. I remain, dear Mr.
secretary, yours, very faithfully.
"Jos. Seligman."
A month later I wrote to Mr. Conant as follows:
"Treasury Department, }
"Washington, May 14, 1877.}
"Dear Mr. Conant:-- . . . On Friday last I concluded a modification
of the present syndicate contract, which provides for the sale of
five million four and a half per cent. bonds at par in coin for
resumption purposes. A further negotiation is pending as to the
renewal and modification of the contract, of which I will give you
due notice when completed. In the meantime I wish to keep steadily
in view the sale of the balance of two hundred million four and a
half per cent. bonds, and, if possible, I wish to make the necessary
calls during this month and next.
"You can assure Messrs. Rothschild of every disposition on the part
of the government to meet their views, and to extend the contract
with the necessary modifications. Their efforts in maintaining
the credit of the bonds and securing this result will be highly
appreciated.
"I would like to have you write me at least twice a week as fully
as practicable.
"Very truly,
"John Sherman.
"Mr. C. F. Conant, London."
As the process of redeeming called bonds required a notice of ninety
days, I postponed the termination of the existing contract until
after that period. My purpose in terminating the contract was to
substitute for sale the four per cent. bonds of the United States
instead of the four and a half per cent. bonds. I believed that
the advancing credit of the United States would justify this
reduction of the rate of interest. Another reason for this step
was that, in addition to refunding at a lower rate of interest, I
wished to commence preparation for the resumption of specie payments
on January 1, 1879, according to law. This could only be done by
the sale of bonds for gold coin. I reserved the remainder of the
four and a half bonds, amounting to $100,000,000, authorized by
the refunding act, for resumption purposes in case the four per
cent. bonds could not be sold at par in coin.
Another reason for a change in the existing contract was that it
gave to the syndicate a monopoly in the sale of bonds while I wished
to sell the bonds directly to the people. The new contract was as
follows:
"This agreement, entered into this 9th day of June, 1877, between
the Secretary of the Treasury of the United States, of the first
part, and Messrs. August Belmont & Co., of New York, on behalf of
Messrs. N. M. Rothschild & Sons, of London, England, and associates
and themselves; Messrs. Drexel, Morgan & Co., of New York, on behalf
of Messrs. J. S. Morgan & Co., of London, and themselves; Messrs.
J. & W. Seligman & Co., of New York, on behalf of Messrs. Seligman
Brothers, of London, and themselves; Messrs. Morton, Bliss & Co.,
of New York, on behalf of Messrs. Morton, Rose & Co., of London,
and themselves; and the First National Bank of the city of New York--
"Witnesseth: That the said Messrs. August Belmont & Co., on behalf
of Messrs. N. M. Rothschild & Sons, and associates and themselves,
hereby agree to purchase from the Secretary of the Treasury
$10,312,500 of the bonds known as the four per cent. consols of
the United States, issued under the acts of July 14, 1870, January
20, 1871, and January 14, 1875, and that Messrs. Drexel, Morgan &
Co., on behalf of Messrs. J. S. Morgan & Co., and themselves, agree
to purchase $4,062,500 of said bonds, and that Messrs. J. & W.
Seligman & Co., on behalf of Messrs. Seligman Brothers, and
themselves, agree to purchase $4,062,500 of said bonds, and that
the First National Bank of the city of New York agree to purchase
$2,500,000 of said bonds, making a total aggregate of $25,000,000
of said bonds, on the terms and conditions following:
"First. Of the said aggregate amount not more than $5,000,000
shall be sold for resumption purposes, the remaining $20,000,000
to be sold for funding purposes, and subscribed for by the parties
of the second part during the months of July and August, 1877.
"Second. The parties of the second part shall have the exclusive
right to subscribe in the same proportion to each of the subscribers,
for the remainder of the four per cent. consols of the United
States, or any portion of said consols authorized to be issued by
the acts of Congress aforesaid, by giving notice thereof to the
Secretary of the Treasury on or before the 30th day of June, 1878;
but the party of the first part reserves the right to terminate
this contract at any time after the 31st day of December, 1877, by
giving ten days' notice thereof to the parties of the second part.
"Third. That the Secretary of the Treasury shall not sell for
resumption purposes exceeding five millions per month during the
continuance of this contract, except by mutual agreement of the
parties hereto. When subscriptions are made for other than resumption
purposes by the parties of the second part, the party of the first
part shall issue calls of even date with said subscriptions for
the redemption of an equal amount of six per cent. 5-20 bonds of
the United States, as provided for in said act of July 13, 1870.
"Fourth. The parties of the second part agree to pay for said four
per cent. bonds par and interest accrued to the date of application
for delivery of said bonds in gold coin, matured United States gold
coin coupons, or any of the six per cent. 5-20 bonds called for
redemption, or in United States gold certificates of deposit issued
under the act of March 3, 1863, with the understanding that payment
to the extent of the amount of any call shall be made within the
time during which call shall mature: _Provided_, That if the
parties of the second part shall elect so to do, they may have the
privilege of making any of said subscriptions payable specifically
in uncalled six per cent. 5-20 bonds of the United States, in which
case the Secretary of the Treasury may, to the extent of such
payments, omit the calls mentioned in condition No. 3.
"Fifth. The parties of the second part shall receive in coin a
commission of one-half of one per cent. on all bonds taken by them,
as allowed by the act of July 14, 1870, and shall assume and defray
all expenses which may be incurred in sending bonds to London or
elsewhere upon their request, or by transmitting bonds, coupons,
or coin to the treasury department at Washington, including all
cost of making the exchange of bonds, and shall also be charged
with the cost of the preparation and issuing of the bonds.
"Sixth. No bonds shall be delivered to the parties of the second
part, or either of them, until payment shall have been made in full
therefor in accordance with the terms of this contract.
"Seventh. During the continuance of this contract any sales of
bonds ordered by the Secretary of the Treasury, by authority of
law, shall be made through the parties of the second part, who
shall be allowed thereon a commission similar in amount and subject
to the same deductions as prescribed in the fifth clause of this
contract.
"Eighth. It is also agreed that the parties of the second part
shall offer to the people of the United States, at par and accrued
interest in coin, the four per cent. registered consols and four
per cent. coupon consols of the denominations of fifty dollars and
one hundred dollars, embraced in this contract, for a period of
thirty days from the public notice of such subscriptions, and in
such cities and upon such notice as the Secretary of the Treasury
may prescribe prior to the opening of the lists, and further, to
offer to the subscribers the option of paying in installments,
extending through three months.
"John Sherman, Secretary of the Treasury.
"August Belmont & Co., On behalf of N. M. Rothschild & Sons, of
London, And associates and themselves.
"Drexel, Morgan & Co., On behalf of J. S. Morgan & Co., of London,
And themselves.
"J. & W. Seligman & Co., On behalf of Seligman Brothers and
themselves.
"Morton, Bliss & Co., On behalf of Morton, Rose & Co., of London,
And themselves.
"The First National Bank of the city of New York, by H. C.
Fahnestock.
"Witnesses as to all:
"R. C. McCormick.
"E. J. Babcock."
By this contract the syndicate was to take $25,000,000 of the four
per cent. bonds at par, or in exchange of six per cent 5-20 bonds.
Of this sum $5,000,000 in gold coin was to be paid to the treasury
for resumption purposes. The eighth section was a new provision,
and required the syndicate to offer to the people of the United
States, at par and accrued interest in coin, the four per cent.
bonds, for a period of thirty days, in such cities and upon such
notice as the Secretary of the Treasury might prescribe.
The result of this contract was not only to save one-half of one
per cent. on the annual interest of the bonds redeemed, but to so
popularize the loan that within a brief period I was able to
terminate the contract according to its terms, and to sell the four
per cent. bonds directly to the people at par, without a commission,
or the aid of a syndicate.
I wrote to Mr. Conant as follows:
"Treasury Department, }
"Washington, May 31, 1877.}
"Dear Mr. Conant:--Your letter of the 19th is received. Since its
date matters here have changed greatly for the better, and I have
made two calls for ten millions each.
"There is a strong, steady demand for our bonds, and I have now no
fear but the two hundred millions four and a halfs will be exhausted
before the 1st of July, when they will be withdrawn. The prospect
of placing the four per cent. bonds, commencing July 1, is very
good. I have submitted to the syndicate a proposition in substance
requiring them to take twenty-five millions four per cents., during
July and August, of which five millions will be for resumption
purposes, with a stipulation that if they take fifty millions
additional in September and October the contract will be extended
to January 1, 1878, five millions a month to be applied for resumption
purposes. I do not propose to vary essentially from the proposition.
I have another offer almost as good from other parties, but I hope
to combine these two offers into a modified syndicate, and, if
possible, reserve the right to sell bonds at par, in coin or 5-20
bonds, to persons who apply directly to me for exchange, giving,
however, the syndicate the half per cent. commission. We will
considerably reduce the cost of the bonds, I think, to one-tenth
of one per cent., so that the contracting parties will have a
reasonably fair commission. I am already assured of many sales of
the bonds whenever offered, without the aid of the syndicate, so
that I consider myself strong enough to undertake the placing the
bonds even without their aid, if they will not agree to reasonable
terms. If I can secure the active, hearty co-operation of all the
parties who wish to engage in selling the bonds, and they will be
content with a reasonable profit, the operation of funding can go
on so rapidly that they ought to be satisfied with the profit they
will make.
"I have not overlooked the possibility that some movement of coin
will be made to meet called bonds in Europe in excess of bonds sold
there, but hope to perfect arrangements by which I will secure
American bullion to meet this demand, without stopping accumulations
of coin in the treasury.
"The prospects here are favorable for a good crop in all the states
of the Mississippi valley, but there will probably be a bad crop
in California.
"What we must do is push the loan so that it will be an established
success before the meeting of Congress. If you can succeed in
inspiring the Rothschilds to aid this purpose I am sure of success.
My proposition has been sent to them, and I was advised would be
answered by telegram about this time; but by the 15th I hope to
have the arrangements completed.
"If upon receipt of this letter there is anything of striking
interest affecting the loan you may cable me.
"All well in the department. Matters are going along quietly and
steadily.
"Very truly yours,
"John Sherman.
"Hon. Chas. F. Conant, London."
This letter he received about the time the new contract was executed.
I subsequently sent him the following cable telegram:
"Washington, June 9, 1877.
"Conant, London:
"Contract of August 24, 1876, closed new four and a half per cent.
bonds of $200,000,000. New contract twenty-five millions four per
cent. bonds taken firm. Particulars by mail.
"Sherman."
Two days later I received a reply, as follows:
"London, June 11, 1877.
"Sherman, Washington:
"Congratulations. Rothschilds request me to say that it is important
for this market that the public subscriptions in America for four
per cents. should be a success, and this will make the market for
London. N. M. Rothschild & Sons hope Secretary of the Treasury
will advise that banks subscribe immediately. J. S. Morgan & Co.,
N. M. Rothschild & Sons, think subscription should be opened soon,
in view of preparing London market.
"Conant."
This new agreement gave at once a great impetus to the new loan in
all parts of the United States, as well as in London. The following
letters received indicate this:
"Merchants' National Bank, }
"Cleveland, O., June 11, 1877.}
"Hon. John Sherman, Secretary Treasury United States.
"Dear Sir:--We learn that you propose to offer the public a certain
portion of the new four per cent. loan for a limited time, the
amount subscribed to be paid in gold at the par value of the bonds.
"This bank, being a public depositary of the government of the
United States, shall be glad to further your plans, and act as
agent for the sale of such portion of the loan as you may suggest,
and endeavor to give it such publicity as would secure the sale of
a portion of these bonds in this part of Ohio.
"Wishing you success in the effort, I remain, very respectfully
and truly,
"T. P. Handy, President.
"Treasury Department, June 12, 1877.
"John P. Hunt, Esq., Philadelphia, Pa.
"Sir:--Your note is received. The department will be happy to
receive your subscription in a short time. The bonds are not
prepared, and the treasury regulations for the popular subscription
cannot be issued for a few days, when a copy will be sent you.
"It is the purpose to give you, and all other citizens of the United
States, an opportunity to subscribe at some convenient place in
the city of your residence, to be designated in due time, requiring
only a small deposit at the time of subscription, and allowing the
privilege of paying at any time within ninety days thereafter.
"The bonds will bear date the 1st of July, and will be sold at par
in coin and accruing interest to date of payment.
"Very respectfully,
"John Sherman, Secretary."
Contemporaneous with this contract for selling the four per cent.
bonds for gold coin, there appeared in the New York "Times" a
suggestion that these bonds could be paid in silver. Henry F.
French, Assistant Secretary of the Treasury, in a published letter
of the date of June 11, asserted his opinion that the bonds issued
under the act of July 14, 1870, for refunding, were redeemable in
coin of the standard value at that date, and that "as it cannot be
known what bonds have been transferred since the act of 1873, all
bonds under the act of 1870 must be paid in gold coin of the standard
value named in the act of 1873."
I received a letter from Messrs. Seligman & Co., inclosing an
extract from the New York "Times," as follows:
"New York, June 12, 1877.
"Hon. John Sherman, Secretary of the Treasury, Washington.
"Dear Mr. Secretary:--We beg to inclose a short editorial article
which appeared in to-day's New York 'Times,' which, coming from a
Republican paper, may frighten investors in our country and abroad.
Intelligent people know that you, sir, as well as President Hayes,
are sound on the silver question, and yet it may appear to you
proper, and highly advantageous to the prompt marketing of the four
per cent. bonds, to disabuse those who have been led to believe
that the President and you favor the remonetizing of silver, with
a view of paying our national debt in a metal so fluctuating as
silver has become since the principal nations of Europe have
demonetized it. We remain, dear Mr. secretary, your obedient
servants,
"J. & W. Seligman & Co."
The article in the New York "Times," of June 12, 1877, said:
"In a dispatch received by the Secretary of the Treasury yesterday
from Mr. Conant, the syndicate agent in London, it was stated that
the contract touching the four per cent. bonds is well received in
London, and the new bond bids fair to be the most popular of American
securities. There is no doubt that the bond has many advantages
both for home and foreign investors. It has only one point of
weakness, and that is, if the silver ring should succeed in getting
an unlimited issue of legal tender silver dollars, this bond would
be payable, principal and interest, in that coin. Shrewd men, who
know what silver has done and is liable to do in the way of ups
and downs, will take this fact into consideration, and the government
will ultimately be compelled to do the same. At present the strength
of the silver movement is estimated to be small, but if this estimate
should prove to be mistaken, the new four per cents. would suffer."
Mr. August Belmont wrote me a letter upon this subject of the date
of June 14th, in which he said:
"Permit me to add a few words to the letter of my house of this
day, in order to urge upon you the _vital_ importance of an official
expression of yours _over you own signature_, in the sense of the
letter of Assistant Secretary French, published in this morning's
papers.
* * * * *
"You are placed at this moment, by a large portion of your political
friends, in a somewhat similar position as the late Mr. Chase was
by the attempt of Thad. Stevens to have Congress pass a law to
declare the principal of the 5-20 bonds payable in currency.
"Mr. Chase took the bull by the horns by declaring, over his own
signature, that the principal as well as the interest of the 5-20
bonds were payable in gold, the faith of the United States being
pledged to this by the tacit understanding of the government and
its creditors.
"Nothing has reflected more credit and renown upon that great
statesman--then as prominent and favored a son of the noble State
of Ohio as you are to-day--and nothing more effectually paved the
way to the great work of reducing the burden of our people by
lowering our interest one-third than that expression, sanctioned
and confirmed by subsequent enactment of Congress in 1869.
* * * * *
"You will, in my opinion, insure the success of your financial
measures, and add greatly to your high and prominent political
position, if you will unequivocally declare that the funded debt
of the government can only be redeemed, principal and interest, in
gold coin, and that until otherwise agreed upon by the mutual
consent of the great commercial nations of the United States,
England, France, and Germany, the silver dollar can only be accepted
as an auxiliary standard for the payment of fractional indebtedness."
To this I replied as follows:
"Treasury Department, }
"Washington, June 16, 1877.}
"Dear Sir:--Your private note, the letter of your firm, and one
from Messrs. Seligman & Co., asking me to make a public statement
over my own signature, similar to that of Mr. French, are received.
I have given to this important suggestion the most serious
consideration, and have come to the firm conclusion that such an
act on my part would be inexpedient, and defeat the very object
you have in view. As a purely executive officer, I have no power
to pass upon the question mooted. My attempt to do so would at
once unite all those who are seized with this mania, and those who
oppose executive encroachment upon legislative power. It would
create excitement, personal and political animosities would mingle
with it, and it would tend more than anything else to defeat the
success of the law. I am quite sure this would be the result.
"As to whether Congress or the people would ever undertake to pay
either principal or interest of the bonded debt, and especially
the bonds sold since 1873, in silver, I have a firm conviction that
the question will never seriously be raised. These bonds will be
paid, principal and interest, in gold coin. The people of the
United States have always been extremely sensitive as to the public
credit. They never have, for the sake of an apparent profit,
yielded any question involving the public honor.
"The great satisfaction that will arise from the funding of the
loan at a low rate of interest, together with their strong sense
of public honor and public faith, will always secure the payment
of these bonds, principal and interest, in coin.
"Parties or factions may, for a time, raise and contest questions,
but they are but bubbles, and will pass away, and, like all other
questions involving the public credit, will be rightfully settled,
in due time, by Congress and the people.
"Nothing would so tend to disturb this result as unauthorized
'theses,' or dogmas, by an executive officer, upon a question purely
legislative or judicial. Indeed, it may be that too much has
already been said about this matter by both the President and
myself, and I assure you that you will have no occasion to be
disturbed by anything truthfully reported of either of us hereafter.
The better way is to move right along, making your own statements,
and if, at any time, I see a proper occasion for a strong expression
of my opinion, I will give it.
"Please show this to Mr. Seligman, and such of your associates as
you deem proper, as an answer to all.
"Very truly yours,
"John Sherman.
"Hon. August Belmont, New York."
The new loan was promptly placed on the market on the 14th of June
by the following circular letter signed by the members of the
syndicate:
"Under the authority of a contract with the Secretary of the
Treasury, the undersigned hereby give notice that from this date
until July 16, at 3 p. m., they will receive subscriptions for the
four per cent. funded loan of the United States in denominations
as stated below, at par and accrued interest in gold coin.
"The bonds are redeemable after thirty years from July 1, 1877,
and carry interest from that date, payable quarterly, and are exempt
from the payment of taxes or duties to the United States, as well
as from taxation in any form, by or under state, municipal, or
local authority.
"The interest on the registered stock will be paid by check, issued
by the treasurer of the United States to the order of the holder,
and mailed to his address. The check is payable on presentation,
properly indorsed, at the offices of the treasurer and assistant
treasurers of the United States.
"The subscriptions will be for coupon bonds of $50 and $100, and
registered stock in denominations of $50, $100, $500, $1,000,
$5,000, and $10,000.
"The bonds, both coupon and registered, will be ready for delivery
July 2, 1877.
"Forms of application will be furnished by the treasurer at
Washington, the assistant treasurers at Baltimore, Boston, Chicago,
Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and
San Francisco, and by the national banks and bankers generally.
The applications must specify the amount and denominations required,
and for registered stock the full name and post office address of
the person to whom the bonds shall be made payable.
"Two per cent. of the purchase money must accompany the subscription.
The remainder may be paid, at the pleasure of the purchaser, either
at the time of the subscription or at any time prior to October
16, 1877, with interest added at four per cent. to date of payment.
"The payments may be made in gold coin to the treasurer of the
United States at Washington, or assistant treasurers at Baltimore,
Boston, Chicago, Cincinnati, New Orleans, and St. Louis, and to
the assistant treasurer at San Francisco, with exchange on New
York, or to either of the undersigned.
"To promote the convenience of subscribers, the undersigned will
also receive, in lieu of coin, United States notes or drafts on
New York, at their coin value on the day of receipt in the city of
New York.
"August Belmont & Co., New York.
"Drexel, Morgan & Co., New York.
"J. & W. Seligman & Co., New York.
"Morton, Bliss & Co., New York.
"First National Bank, New York.
"Drexel & Co., Philadelphia.
"June 16, 1877."
A few days later I wrote the following letter:
"Treasury Department, }
"Washington, D. C., June 19, 1877.}
"Sir:--Your letter of the 18th instant, in which you inquire whether
the four per cent. bonds now being sold by the government are
payable, principal and interest, in gold coin, is received. The
subject, from its great importance, has demanded and received
careful consideration.
"Under laws now in force, there is no coin issued or issuable in
which the principal of the four per cent. bonds is redeemable, or
the interest payable, except the gold coins of the United States
of the standard value fixed by laws in force on the 14th of July,
1870, when the bonds were authorized.
"The government exacts, in exchange for these bonds, payment at
par in such gold coin, and it is not to be anticipated that any
future legislation of Congress, or any action of any department of
the government, would sanction or tolerate the redemption of the
principal of these bonds, or the payment of the interest thereon,
in coin, of less value than the coin authorized by law at the time
of the issue of the bonds, being the coin exacted by the government
in exchange for the same.
"The essential element of _good faith_, in preserving the equality
in value between the coinage in which the government receives and
that in which it pays these bonds, will be sacredly observed by
the government and the people of the United States, whatever may
be the system of coinage which the general policy of the nation
may at any time adopt.
"This principle is impressed upon the text of the law of July 14,
1870, under which the four per cent. bonds are issued, and requires,
in the opinion of the executive department of the government, the
redemption of these bonds and the payment of their interest in coin
of equal value with that which the government receives from its
issue.
"Very respectfully,
"John Sherman, Secretary.
"Francis O. French, Esq., 94 Broadway, New York."
The subscriptions were taken in every part of the United States,
and within thirty days $67,600,000 were taken in this country and
$10,200,000 in Europe, making $77,800,000 sold. This sum, when
applied to the payment of the six per cent. bonds, made an annual
saving to the people of the United States of $1,556,000. Since
the 1st of March, 1877, there had been sold under the refunding
act $135,000,000 four and a half per cent. bonds and that amount
of six per cent. bonds was paid off and canceled, thus saving to
the people of the United States $2,025,000 in coin each year. The
aggregate reduction of interest by both classes of bonds from the
1st of March to the close of the popular loan, was $3,581,000 a
year in coin. This was regarded as a great success.
Early in July I set out on the revenue cutter "U. S. Grant" on a
visit of inspection along the north Atlantic coast, accompanied by
the chief of the coast survey, the secretary of the lighthouse
board, the superintendent of the life-saving service, and the chief
of the revenue marine service, and also by Webb Hayes, the son of
the President. We visited the life-saving stations along the New
Jersey coast. I was deeply interested in this service, which I
regard as the most deserving humanitarian branch of the public
service. We also visited some of the leading lighthouses along
the coast and the principal customhouses between the Chesapeake
Bay and Eastport, Maine. We were everywhere received with great
kindness and many social courtesies were extended to us, especially
in New York, Boston and Portland. This outing was a great relief
from the close confinement I had undergone since the 4th of March.
The information I gathered as to these branches of the service,
with which I had not previously had much acquaintance, was of great
value to me. Such trips are sometimes treated by the press as
"junketing" at the public expense. This is a great error. Each
of us paid his share of the expenses and the vessel only pursued
its usual course of duty. I was brought into close association
with these subordinate officers of the department and became informed
of their duties, and their fitness for them, and was enabled to
act with intelligence on their recommendations.
The only unpleasant incident that occurred on the trip was the
running of the cutter upon a rock upon the coast of Maine. This
happened in the afternoon of a beautiful day. All the gentlemen
with me and the officers of the vessel were on deck. The various
buoys were being pointed out and a map of the channel was lying
before us. Some mention was made of a buoy that ought to be near
the place where we were to mark the location of a rock, but none
was found, and suddenly we heard the scraping of the vessel upon
the rock. The cutter trembled and careened over. The captain was
somewhat alarmed and turned the vessel toward the beach, where it
was speedily examined and found to be somewhat injured. We
ascertained afterwards that the buoy had been displaced by a storm
and that a vessel was then on its way to replace it. The sinking
of the revenue cutter "U. S. Grant" was reported in the morning
dispatches and created some excitement; but the vessel did not
sustain any substantial injury. We thought it best to leave it
for a time to be thoroughly examined and repaired and took another
vessel to complete our journey to Eastport, the northeastern port
of the United States. From thence Webb Hayes and myself returned
to Portland and crossed over the Burlington, Vermont, on Lake
Champlain, and from thence went to Saratoga, where we remained a
few days, and then returned to Washington on the 22nd of July. We
passed through Baltimore on the day the riots occurred in that
city, and soon after heard of the much more dangerous outbreak in
Pittsburg.
On the 6th of August I wrote to Mr. Conant as follows:
"Your letter of the 26th ultimo is received. You can safely say
to the Messrs. Rothschild that the strikes have been totally
disconnected with the government, but grow purely out of a contract
between the managers of the leading lines of railway and their
employees as to rates of pay.
"The railroad companies have, for several years, competed with each
other in a very improvident and reckless way, and are now, and have
been for some time, carrying freight for less than cost. This has
caused a large reduction of the net income of roads, has led to
the loss of dividends, and now to the reduction of wages of employees
to rates scarcely sufficient to support life. Hence the strikes.
"The government has been appealed to by both railroads and strikers,
by states and by cities, for relief, and has promptly extended it
in every proper case, and, without shedding blood, has, in every
case, suppressed the riot, and maintained the peace, so that the
government is really stronger by reason of these unfortunate events
than before. I do not observe that any change has been made by
them, either in the price of bonds or in the price of gold, nor in
the payment of subscriptions to four per cent. bonds.
"No effort is made to sell the bonds now, nor do I care to press
the home market, until enough bonds are sold abroad to provide for
called bonds abroad.
"The month of August must necessarily be a languid one, and I do
not advise any unusual efforts to force sales.
"Your supplemental cipher was received after your telegram, but
was soon found and dispatch made out."
I no doubt was mistaken in the effect of the strikes upon our public
credit. From that time forward for many months there was scarcely
any sale of government bonds at any price. The contracting parties
informed me that no bonds were then selling in the market and that
in New York they were a trifle below par. Practically, for the
remainder of the year, government securities were greatly affected
in price and value.
CHAPTER XXX.
POLICY OF THE HAYES ADMINISTRATION.
Reception at my Home in Mansfield--Given by Friends Irrespective
of Party--Introduced by My Old Friend and Partner, Henry C. Hedges
--I Reply by Giving a Résumé of the Contests in South Carolina and
Louisiana to Decide Who Was Governor--Positions Taken by Presidents
Grant and Hayes in These Contests--My Plans to Secure the Resumption
of Specie Payments--Effects of a Depreciated Currency--Duties of
the Secretary of the Treasury--Two Modes of Resuming--My Mansfield
Speech Printed Throughout the Country and in England--Letters to
Stanley Matthews and General Robinson--Our Defeat in Ohio--An Extra
Session of Congress--Bills Introduced to Repeal the Act Providing
for the Resumption of Specie Payments--They All Fail of Passage--
Popular Subscription of Bonds All Paid For.
About the 10th of August I made my usual visit to my home at
Mansfield. Soon after my arrival I received the following invitation,
signed by a great number of my neighbors and friends, without
respect to party, expressing a desire to tender me a reception:
"Hon. John Sherman.
"Dear Sir:--The undersigned, your townsmen, and fellow-citizens of
Richland county, desire to give you some manifestation of the very
high regard in which we hold your public services. We are glad to
know that you are permitted to again be at your own home, and for
a week or two mingle with us in all the unrestrained freedom of
friends and townsmen.
"Financial and other public questions are, however, of importance
to us always, and especially now. We recognize your great ability
and long experience, and cannot but think that an expression of
your views on these questions will be very highly prized by the
people of Ohio, irrespective of party. We therefore desire, with
your sanction, on some day during the next week, to give you a
hearty welcome to your old home, and shall be glad to have you, on
the occasion, give your views on the public questions, now of such
vast importance to all. With our kindest regards, we are,
"Your friends, etc., etc."
I replied as follows:
"Mansfield, O., August 13, 1877.
"Gentlemen:--I received with much pleasure your kindly letter of
the 10th inst., signed by so many of my old friends and neighbors
of Mansfield, and assure you of my high appreciation of your generous
words of courtesy and regard.
"I always return with satisfaction to my home on the western slope
of our little city, and always enjoy the fresh air and picturesque
country around us, but, more than all, the cordial greetings of
old friends, with whom I have been acquainted since boyhood. It
will give me much pleasure, at any time or place, to meet you, and
to speak to you on current public questions, and I venture to name
next Friday evening.
"Very truly yours,
"John Sherman."
The gathering was one of the largest that had come together in
Mansfield for years. The evening was delightful, cool and balmy,
a bright moonlight adding attraction to the scene. A stand decorated
with flags had been erected near the center of the park, with seats
in front, and lights gleamed on either hand. I was introduced to
the audience by my old friend and partner, Henry C. Hedges, whose
remarks were too flattering for me to insert. In closing he said:
"Regarding you as our friend, our neighbor, our townsman, we are
glad and rejoice. We welcome you home, though your stay may be
only a few days, and we sincerely trust that, rested by your stay,
you may go back to your work reinvigorated, and that frequently we
may have the pleasure of your temporary visits, and in the future,
when your labors are finished, among us you may spend your old age,
honored and happy."
As my speech expressed my views upon important questions of that
time, I think it well to embody extracts from it as part of the
history of the then recent events, and my anticipations for the
future:
"The kindly words of welcome uttered by my friend and associate of
many years move me beyond expression. They recall to me the scene
of the early time when I came to Mansfield, then a scattered hamlet
of about 1,100 inhabitants, without pavements and without any of
the modern conveniences of cities and towns. As Mr. Hedges has
told you, very many of those I then met here are dead and gone.
I was a boy then. A generation has passed away, and the sons of
those I met then as citizens of Richland county now fill places of
trust and responsibility. I have every reason in the world for
being strongly attached to this town of Mansfield. You have always
been kind to me. Here I studied law, here I practiced my profession
for several years, here I married my wife, a native of your town,
here I have lived ever since, and when this mortal coil shall be
shuffled off, here, probably, will my body rest with your fathers.
But pardon me, fellow-citizens, if, under the kinds words of welcome
of your spokesman, my old and honored friends, Mr. Hedges, I had
forgotten that we are not here merely to exchange courtesies, but
to discuss grave matters of far more importance than the life or
memories of an individual.
"In doing so I wish it distinctly understood that I speak for myself
alone, as a citizen of Ohio, to you my fellow-citizens and my
neighbors, to whom I am under the highest obligations of gratitude
and duty.
"The President authorized me to say one thing, and one thing only,
for him, and in his name, and that is that all reports that impute
to him any participation whatever in the nomination of candidates
on your state ticket, or any desire or purpose to influence in any
way the senatorial contest in Ohio, are utterly groundless.
"These are your matters, and I can assure you for him, that he does
not and will not, interpose in any such contest between political
friends.
"You all know that I am now, and have been, warmly attached to the
Republican party. I believe in its principles and honor its work.
With my strong convictions I could not conceal my partisan bias,
or my earnest hope for the success of the Republican party, but
the subjects of which I intend to speak to you to-night will not
lead me to say much of former political struggles, or to fight our
old battles over again, but chiefly to discuss the actual administrative
questions of the day as they have arisen since the 4th of March
last, and in all of which you are alike interested, whether you
may call yourselves Republicans or Democrats. As to those questions
I wish fairly to appeal to the candor and good judgment of honest
men of both parties, only asking for the administration of President
Hayes that considerate charity of judgment which must be extended
to all human agents.
"When Mr. Hayes was inaugurated as President he found thirty-six
states in the full and uncontested exercise of all the powers of
states in the Union. In two states only there were contests as to
who was governor. Both contests had existed from January to March,
1877, while General Grant was President.
"In South Carolina Governor Chamberlain claimed to have been elected
on the Republican ticket, and General Hampton on the Democratic
ticket. The President is not made the judge of who is elected
governor of a state, and an attempt to exercise such a power would
be a plain act of usurpation. The constitution of South Carolina
is much like that of Ohio. The count of the vote was to be made
by the general assembly of the state. Unfortunately for Chamberlain
a controlling question in the contest had been decided against him
by a Republican court, and he was only kept in possession of the
state house by the actual presence of United States troops in the
building. He had appealed again and again to President Grant to
recognize him as governor and give him the aid of Federal troops
in the enforcement of his claim, which General Grant had refused,
seeking only to preserve the public peace.
"When President Hayes was inaugurated both contestants were called
to Washington and both were patiently heard and the questions
presented were patiently and carefully examined. The President
held that a case was not presented in which, under the constitution
and the laws, he was justified in using the army of the United
States in deciding a purely local election contest. The soldiers
and bayonets of the United States were then withdrawn from the
state house--not from the state, nor the capital of the state--but
from the building in which the legislature, that alone could lawfully
decide this contest, must meet. This was all that was done by the
President, and Governor Chamberlain, without further contesting
his claim, abandoned it and left the state.
"I say to you now that, strongly as I desired the success of Governor
Chamberlain and the Republican party in South Carolina, the President
had not a shadow of right to interpose the power of the army in
this contest, and his attempt to do so would have been rash and
abortive as well as without legal right.
"The case of Louisiana was far more difficult. The local returning
officers of that state had, after a full examination, certified to
the election of the legislature, showing a Republican majority in
both houses. This had been done by excluding from their return
the votes of certain parishes and counties wherein intimidation,
violence and fraud had prevailed to an extent sufficient to change
the result of the election. I was present, at the request of
General Grant, to witness the count, and I assure you, as I have
said officially, that the proof of this intimidation, violence and
fraud, extending to murder, cruelty, and outrage in every form,
was absolutely conclusive, showing a degree of violence in some of
those parishes that was more revolting and barbarous than anything
I could conceive of. It was plain that the returning officers had
the legal right to pass upon and certify, in the first instance,
who were elected members of the legislature, and that they were
justified by the evidence in excluding bulldozed parishes, but it
was equally clear that their return was not conclusive upon the
members elected, and that each house had the constitutional right
to pass upon the returns and elections of its members, and to set
aside the action of the returning board. The two houses, when
organized, had also the power to pass upon the returns of the
election of governor, and they alone and no one else. Neither the
President of the United States nor the returning board has any
power or right to pass upon the election of governor. And here
the difficulty in the Louisiana case commences.
"Governor Packard contends that a majority of the two houses, as
duly returned, did pass upon the election of the governor, and did
return that he was duly elected, but this was stoutly denied by
Governor Nichols. This vital point was strongly asserted and denied
by the adverse parties, and the legislature of Louisiana divided
into two hostile bodies, holding separate session, each asserting
its legal power, and denouncing the other as rebels and traitors.
Governor Packard and his legislature called upon President Grant
for the aid of the army to put down insurrection and domestic
violence; and here I confess that if I had been President, instead
of General Grant, I would have recognized Packard and sustained
him with the full power of the general government. My intense
feeling, caused by the atrocities in Louisiana, may have unduly
influenced me. But General Grant did not think this was his duty.
I do not criticise his action, but only state the facts, He would
only maintain the peace. He would not recognize Packard as governor,
but I know, what is now an open secret, the strong bent of his
mind, and at one time his decision was to withdraw the troops, to
recognize Nichols and thus end this dangerous contest. He did not
do this, but kept the peace.
"But during these two months the whole condition of affairs had
slowly changed in Louisiana. The government of Packard had dwindled
away until it had scarcely a shadow of strength or authority, except
at the state house, where it was upheld by federal bayonets. The
government of Nichols had extended its authority over the state
and was in full existence as the _de facto_ government of Louisiana,
supported by the great body of the white men and nearly all the
wealth and intelligence of the state, and by the tired acquiescence
of a large portion of the colored people, some of whom deserted
Packard's legislature and entered that of Governor Nichols. The
delay and hesitation of General Grant had been fatal to Packard,
and when Hayes became President the practical question was greatly
changed. One thing was clear, that a legislature had been duly
elected in November previous, and was then in existence, though
separated into two parts. If the members lawfully elected could
be convened, they alone could decide the question of who was
governor, without the intervention of troops, and their decision
could be supported, if necessary, by the general government.
"The most anxious consideration was given to this question. Days
and weeks of anxious deliberation were given to it by the President
and his cabinet. But one way seemed open for a peaceful solution,
and that was to gather, if possible, a single legislature that
could be recognized as the depositary of the representative will
of the people of Louisiana. If this could be done it had the
unquestioned right to decide who had been elected governor, and
all other questions would settle themselves. To aid in this object,
a commission of the most eminent men, high in position, from
different states, and distinguished for judicial impartiality, was
selected and the result is known to all. They went to Louisiana,
and, with great difficulty, brought together these hostile legislatures
which met, organized, promptly settled the question in dispute in
favor of the government of Nichols, and thus ended this most
dangerous controversy. No other change was made, no other act done
except, when the solution was almost accomplished, the few troops
which had then occupied that state house were withdrawn a few
squares away, to their barracks. Thus, in this peaceful appeal to
the legislature of Louisiana, this controversy, which not only
endangered the peace and safety of this state, but the peace and
safety of the whole people of the United States, was settled. This
is the sum and substance of all that was done in the southern
policy, as it is called, of the President.
"Perhaps I ought to state that his policy has a broader motive than
a mere settlement of a local election contest. It seeks to bring
the north and south again into conditions of harmony and fraternity,
and, by a frank appeal to the generous impulses and patriotic
feeling of all classes of people in the south, to secure, not only
peace among themselves, but the equal protection of the laws to
all, and security in the enjoyment of political and civil rights.
"No doubt the result in Louisiana caused some disappointment to
many Republicans throughout the United States, who deeply sympathized
with their Republican brethren in that state. In that feeling I
did, and do, share, and yet I feel and know that every step taken
by President Hayes was right, in strict accordance with his
constitutional duty, and from the highest motives of patriotism.
Some are foolish enough to talk of his abandoning the colored people
and their constitutional rights. President Hayes, from his early
manhood, has been an anti-slavery man; his life was imperiled on
many battlefields in the great cause of liberty, he sympathizes
more and will do more for the equal rights of the colored people
than those who falsely accuse him, and I believe this day, that
the policy he has adopted will do more to secure the full practical
enforcement of those rights than the employment of an army tenfold
greater than the army of the United States."
In this speech I stated the action I proposed to take to secure
the resumption of specie payments. The plan was executed in all
its parts by me, and my remarks may, in one sense, be said to be
a history of resumption. Continuing I said:
"And now, fellow-citizens, this brings me to the question upon
which there is so much diversity of opinion, so many strange
delusions, and that is the question of specie payments. What do
we mean by this phrase? Is it, that we are to have no paper money
in circulation? If so, I am as much opposed to it as any of you.
Is it that we are to retire our greenback circulation? If so, I
am opposed to it and have often so said. What I mean by specie
payments is simply that paper money ought to be made equal to coin,
so that when you receive it, it will buy as much beef, corn or
clothing as coin.
"Now the importance of this cannot be overestimated. A depreciated
paper money cheats and robs every man who receives it, of a portion
of the reward of his labor or production, and, in all times, it
has been treated by statesmen as one of the greatest evils that
can befall a people. There are times when such money is unavoidable,
as during war or great public calamity, but it has always been the
anxious care of statesmen to return again to the solid standard of
coin. Therefore it is that specie payments, or a specie standard,
is pressed by the great body of intelligent men who study these
questions, as an indispensable prerequisite for steady business
and good times.
"Now, most of you will agree to all this, and will only differ as
to the mode, or time, and manner; but there is a large class of
people who believe that paper can be, and ought to be, made into
money without any promise or hope of redemption; that a note should
be printed: 'This is a dollar,' and be made a legal tender.
"I regard this as a mild form of lunacy, and have no disposition
to debate with men who indulge in such delusions, which have
prevailed to some extent, at different times, in all countries,
but whose life has been brief, and which have ever shared the fate
of other popular delusions. Congress will never entertain such a
proposition, and, if it should, we know that the scheme would not
stand a moment before the Supreme Court. That court only maintained
the constitutionality of the legal tender promise to pay a dollar
by a divided court, and on the ground that it was issued during
the war, as in the nature of a forced loan, to be redeemed upon
the payment of a real dollar; that is, so many grains of silver or
gold.
"I therefore dismiss such wild theories, and speak only to those
who are willing to assume, as an axiom, that gold and silver, or
coined money, have been proven by all human experience to be the
best possible standards of value, and that paper money is simply
a promise to pay such coined money, and should be made and kept
equal to coined money, by being convertible on demand.
"Now, the question is as to the time and mode by which this may be
brought about, and on this subject no man should be dogmatic, or
stand, without yielding, upon a plan of his own, but should be
willing to give and take, securing the best expedient that public
opinion will allow to be adopted. The purpose and obligation to
bring our paper money to the standard of coin have been over and
over again announced by acts of Congress, and by the platforms of
the great political parties of the country. If resolutions and
promises would bring about specie payments, we would have been
there long ago; but the diversity of opinion as to the mode now--
twelve years after the close of the war--still leaves our paper
money at a discount of five per cent. Until this is removed, there
will be no new enterprises involving great sums, no active industries,
but money will lie idle, and watch and wait the changes that may
be made before we reach the specie standard.
"In 1869, Congress pledged the public faith that the United States
would pay coin for United States notes. Again, in January, 1875,
after more than a year's debate, Congress declared that on and
after the 1st of January, 1879, the United States would pay its
notes in coin.
"The Secretary of the Treasury is expressly required to prepare
for, and maintain, the redemption of all United States notes
presented at the treasury on and after that date, and for that
purpose he is authorized to use all the surplus revenues, and to
sell bonds of the United States bearing four, four and a half, and
five per cent. interest, at par in coin. It is this law, called
the resumption act, now so much discussed in the papers, that
imposes upon the office I hold most difficult and important duties,
and without replying to any attacks made upon me, I am anxious to
convey to you personally, what I have done, and what I must do, in
obedience to the provisions of this act. It is said that the law
is defective, but, if the great object and policy of the law is
right, the machinery of the law could easily be changed by Congress.
That resumption can be secured, and ought to be secured, under this
law, it will be my purpose to show you, and I shall not hesitate
to point out such defects in the law as have occurred to me in its
execution.
"There are two modes of resumption; one is to diminish the amount
of notes to be redeemed, which mode is commonly called a contraction
of the currency; the other is to accumulate coin in the treasury,
to enable the secretary to maintain the notes at par."
Objection had been made that under the first mode resumption would
be a process of converting a non-interest bearing note into an
interest bearing note, and that was true, but what right had we,
as a nation, or had any bank, or individual, to force in to
circulation, as money, its note upon which it paid no interest?
Why ought not anyone who issued a promise to pay on demand be made
to pay it when demanded, or pay interest thereafter? What right
had he, in law or justice, to insist upon maintaining in circulation
his note, which he refused to pay according to his promise, and
which he refused to receive in payment of a note bearing interest?
A certain amount of United States notes could be, and ought to be,
maintained at par in coin, with the aid of a moderate coin reserve
held in the treasury, and to the extent that this could be done
they formed the best possible paper money, a debt of the people
without interest, of equal value with coin, and more convenient to
carry and handle. Beyond this the issue of paper money, either by
the government or by banks, was a dangerous exercise of power,
injurious to all citizens, and should not continue a single day
beyond the necessities that gave it birth. I added:
"The one practical defect in the law is, that the secretary is not
a liberty to sell bonds of the United States for United States
notes, but must sell them for coin. As coin is not in circulation
among the people, he is practically prohibited from selling bonds
to the people, except by an evasion of the law, or through private
parties. Bonds are in demand and can readily be sold at par in
coin, and still easier at par, or at a premium, in United States
notes. The process of selling for United States notes need not go
far before the mere fact that they are receivable for bonds would
bring them up to par in coin, and that is specie payments.
"But the reason of the refusal of Congress to grant this authority,
often asked of it, was that it would contract the currency, and
this fear of contraction has thus far prevented Congress from
granting the easiest, plainest, and surest mode of resumption. To
avoid contraction, it provided that national bank notes may be
issued without limit as to amount and that, when issued, United
States notes might be retired to the extent of four-fifths of the
bank notes issued. This was the only provision for redeeming United
States notes that Congress made or would make, and this, it was
supposed, would reduce the United States notes to $300,000,000
before January 1, 1879. The actual experiment only proves the
folly of the cry we had for more money, more money."
The second mode of resuming was by accumulating coin gradually, so
that when the time fixed for resumption should arrive, the treasury
might be able to redeem such notes as should be presented. In this
respect the resumption act was as full and liberal as human language
could frame it. The secretary was authorized to prepare for
resumption, and for that purpose to use the surplus revenue and
sell either of the three classes of bonds, all of which in 1877
were at or above par in coin. I said: "The power can be, ought
to be, and will be, executed if not repealed."
This speech was printed in the leading papers in the United States
and in England, and was regarded by the public at large as a
declaration of the policy of the administration, to enforce the
resumption law, whatever might be the current of opinion developed
at the approaching elections, which, as they occurred, were generally
against the Republican party. The Democratic party had taken
position against the resumption act, in favor of the enlarged issue
of United States notes and the free coinage of silver. The strikes
led to the organization of labor unions, which, though independent
of political parties, chiefly affected the Republican party then
in power.
Among many letters received by me, after this speech, I insert one
from Mr. Evarts:
"Windsor, Vt., Aug. 30, 1877.
"The Hon. John Sherman, Secretary of the Treasury.
"Dear Mr. Sherman:--I congratulate you upon the excellence and
success of your speech in Ohio. The difficulty of the undertaking
justly enhances the credit of its prosperous treatment.
"I inclose a remonstrance from an 'Injustice' on the subject of a
new arrangement in the _weighing_ at the customhouse. It was sent
to me at Washington and forwarded from there here. I know nothing
of its source and have no opinion on the subject of the supposed
project.
"The President's visit has pleased the people in New England
amazingly. I hope to see you all in Washington early next week.
"I am very truly yours,
"Wm. M. Evarts."
On the 14th of September, 1877, I sent to Hon. Stanley Matthews
the following letter, giving my view of the position taken by
General Ewing and Mr. Pendleton:
"At the request of General Robinson I have directed to you, in the
care of Bickham, a number of documents for reference in your debate
with Ewing, and as Robinson says you wish me to make suggestions,
I venture to do so, but without any confidence that they can be of
assistance, though they can do no harm.
"The most beneficial financial act of the administration is the
reduction of the interest on the public debt. The amount already
accomplished is stated in my printed speech. The rapidity of this
process depends entirely upon the credit of the government. Ewing's
policy would destroy our credit and stop the process. The very
doubts created by him and Pendleton have already damaged the
government very largely. Confidence is so sensitive that when
prominent men like Ewing and Pendleton talk as they do, the injury
is immediate.
"The whole difference between the amount of silver and gold at this
moment is eight per cent., so that the payment of the debt in silver
would lessen the burden of the debt eight per cent., but under the
funding operations, which would be entirely destroyed by anything
that alarmed the market, we are enabled to save thirty-three per
cent. Whatever may be our right to pay our bonds, either in
greenbacks or in silver, this question of expediency, as you very
properly said in one of your speeches, is to be considered apart
from the question of legal power.
"Refunding would go on with greatly accelerated speed if we could
sell bonds for greenbacks. We make discrimination against the
greenbacks by refusing to take them in payment of bonds. If I had
the power to sell bonds for greenbacks I could make greenbacks
equal to coin with scarcely a perceptible change. That is the
advice of the most sagacious men in the country. I know it. There
is talk about the bondholder being a privileged person. He ought
to be so no longer, and the moment that a bond could be bought with
currency at par in gold, all discrimination in favor of the bondholder
would disappear.
"The differences among Republicans about silver will be settled by
the use of the silver dollar to the extent that it can be kept in
circulation at par with greenbacks, and is a pure question of
detail. The difference in the Democratic party about interconvertible
currency is vital, and Ewing's doctrine overthrows the whole
Democratic theory of finance before the war.
"The existence of the national banks is a question simply of policy
and not a question of principle. The right conferred upon banks
to issue circulation is not conferred for their profit, but for
the public convenience, and all Republicans can agree that that
right should never be permitted to exist except when it is for the
public convenience. The office of bank notes is simply to supply
the ebb and flow of currency made necessary by the wants of business.
The United States cannot lend United States notes, and therefore
cannot meet this want. Ewing proposes to destroy the whole national
bank system, interwoven with all the business of the country. I
send you the last statement of the national banks. You can very
easily show the effect upon the reviving industry of the country
of the withdrawal of these loans and disturbing all this business.
As at present organized the circulation is the vital thing, and if
the bonds held by the banks to secure circulation were thrown upon
the market, it would stop funding and compel also the withdrawal
of loans, and create distress compared with which our present
troubles are mere moonshine.
"I am afraid you will think I am going on to make a speech for you,
so I will stop abruptly, with the promise that if I can furnish
you any documents or information that may be of service to you I
will do so with pleasure.
* * * * *
"I inclose the last statement of the national banks containing many
points that may be of use.
"Upon the question of resumption I believe we are all agreed that
it must come, and that the only standard of value is gold or silver
coin. The time and manner are the points of disagreement. Ewing
is opposed to all resumption, but believes in printing a dollar
and saying it is a dollar, while all the world would know that the
declaration is a lie. The fact that we have advanced the greenbacks
six per cent. in one year, by the movements made under the resumption
act, shows that it is working pretty well. I send you a statement
showing the changed condition in a year of our finances.
"While the people differ about the resumption act there is time to
change it if it needs change, but Ewing would go back and commence
the process over again. I am disposed to be tolerant about
differences on the resumption act, for I think it will demonstrate
its success or failure before Congress is likely to tamper with it."
On the 21st of September I wrote to General J. S. Robinson the
following letter, evincing my anxiety as to the result of the
canvass in Ohio, as it was then conducted:
"I am so deeply impressed with the importance of the campaign in
Ohio that it makes me uneasy and restless that I cannot participate
in it.
"What a magnificent chance the Republican party in Ohio now has,
not only to place itself in the vanguard in the United States, but
to do this country a service as great as any victory won by the
Union army during the war. Here it is demonstrated by the cordial
reception of the President in the south, by his hearty indorsement
in Massachusetts, and by a public sentiment now growing and spreading
with amazing rapidity, that in his southern policy he has opened
the means of order, safety, peace and security in all the southern
states.
"Now, when it is demonstrated that the difficulties in the way of
resumption were myths conjured up by the fantasies of demagogues,
when our notes are worth within three per cent. of gold, when
Providence has favored us with boundless crops, and prosperity is
again coming upon us after a dreary time of distress and trial
caused by inflated paper money, why is it that we cannot see all
these things and avail ourselves of the advantage they give us in
our political contest? It seems to me that we ought to carry the
state by an overwhelming majority, and if we do so we will establish
the beneficial principles of our party beyond danger of overthrow
by reaction, and we will secure the peaceful and orderly development
of industry without a parallel in our previous history.
"I wish it were in my power to impress every Republican in Ohio
with my earnest conviction about this matter, but here, constantly
occupied by official duties, I can only remain watching and waiting
in anxious suspense lest the great advantages we possess shall be
frittered away or lost by inaction or mistakes.
"I know you will do your utmost for success, and only write you
this to show you how earnestly I sympathize with you in your
efforts."
The election in Ohio, in October, resulted in the defeat of William
H. West, Republican, for governor, mainly on account of his position
as to labor unions, but no doubt also because of a feeling of
opposition against the resumption of specie payments. Richard M.
Bishop, Democrat, was elected governor, with a Democratic legislature
in both branches, which subsequently elected George H. Pendleton
as United States Senator.
The following letter expresses my view of the election, and the
causes which led to our defeat:
"Washington, October 17, 1877.
"Dear Sir:--Your letter of the 13th inst. is received.
"Your statement of the causes of our defeat in Ohio seems to me
reasonable, though probably I would not agree with you in many
points stated.
"It is not worth while now to bother ourselves about what we cannot
help. All we can do is to inquire how far we have been right, and
to that extent pursue the right, whether victory or defeat is the
result. No party can administer a government, that will not take
the risk of temporary defeat when it is pursuing what, in the
opinion of the great masses of it, is a beneficial policy for the
country.
"So far as the southern question is concerned, I feel that the
President did right. The wisdom of his executive order as to office
holders depends upon the construction given to it, and he is not
responsible for a perverted construction not authorized by its
words or terms. As to the resumption policy, the law is plain and
mandatory, and, more than all, the law is right, and the Republican
party might as well understand first as last, that the question of
resumption is one higher than any party obligations and will be
pursued by our adversaries if we do not. We can gain the credit
of success, but we can gain no credit by retreating on this vital
question. While the law stands nothing is left but to execute it,
and for one I never would aid to alter the law, except to make it
more effective, and would be very willing to retire on this question
rather than to surrender.
"The only way is for us to go steadily forward, with a certainty
that public opinion in the end will sustain us if we do what is
substantially right. The Republican party has been in this position
many times and has never won success by retreat and cannot do so
now.
"Very truly yours,
"John Sherman.
"A. P. Miller, Esq., Toledo, Ohio."
It became necessary for the President to call an extra session of
Congress, on account of the failure of the passage of the army bill
at the previous session. Though the proclamation was issued on
the 5th of May, 1877, Congress was not convened until the 15th of
October following. Both Houses met on the day appointed. The
Senate was organized by the election of Thomas W. Ferry, of Michigan,
as president _pro tempore_, and Samuel J. Randall, a Democratic
Member from Pennsylvania, was elected speaker of the House by a
majority of seventeen over James A. Garfield, the Republican
candidate.
The message of the President was confined mainly to the circumstances
connected with the failure of the previous Congress to provide for
the support of the army, and to certain deficiencies in appropriations
required for the government, the President stating that as certain
acts of Congress, providing for reports of the government officials,
required their submission at the regular annual session, he deferred
until that time any further reference to subjects of popular
interest.
Congress, however, not being confined in its powers, and having
full jurisdiction of all legislative questions, proceeded at once
to discuss financial questions and especially the measures taken
for the resumption of specie payments. No less than four bills
were introduced in the Senate and fourteen in the House, providing
for the repeal, in whole or in part, of the act for the resumption
of specie payments. One of these bills was reported from the
committee on banking and currency, by Mr. Ewing, on the 31st of
October. It was the subject of debate during the remaining period
of the session, and finally passed the House on the 23rd of November,
by the vote of 133 yeas and 120 nays. It repealed all that part
of the resumption act which authorized the Secretary of the Treasury
to dispose of United States bonds, and to redeem and cancel the
greenback currency, or practically all the resumption act except
the clauses for the substitution of silver coin for fractional
currency. It was sent to the Senate on the 26th of November, and
referred to the committee on finance. No action was taken upon it
during that session, which adjourned on the 3rd of December. The
regular session convened on the same day, with this bill still
pending in the committee on finance. On the 17th of April, 1878,
Mr. Ferry, from that committee, reported back the bill with an
amendment to strike out all after the enacting clause, and insert
new matter. After a long debate ending on the 13th of June, the
following amendment was adopted as a substitute for Mr. Ferry's
amendment, by a vote of yeas 30, nays 29:
"That from and after the passage of this act United States notes
shall be receivable the same as coin in payment for the four per
cent. bonds now authorized by law to be issued; and on and after
October 1, 1878, said notes shall be receivable for duties on
imports."
The bill, as amended, passed the Senate by a large majority. In
this form it had no proper relevancy to the bill as it passed the
House, and the action of the Senate was regarded as a practical
defeat of the bill. It was taken up in the House on the 14th of
June, and the question being taken on concurring in the amendment
of the Senate, the vote was yeas 112, nays 122, so the motion was
disagreed to. On the 17th of June, a motion was made to suspend
the rules and proceed to the consideration of the bill, but as two-
thirds did not vote in favor of the motion it was not adopted, and
the bill was not called up for action until the next session of
Congress, when Mr. Ewing, on February 22, 1879, reported it from
the committee on banking and currency, and moved to concur in the
Senate amendments, with amendments changing the date on which the
act should take effect, and also adding, "that the money hereafter
received from any sale of bonds of the United States shall be
applied only to the redemption of other bonds bearing a higher rate
of interest, and subject to call."
This motion came too late, as the whole subject-matter had been
disposed of by the resumption of specie payments on the 1st of
January previous. It led, however, to a considerable debate in
which Mr. Garfield participated. He made a humorous allusion to
the revival of controversies that were past and gone since the 1st
of January, and moved to lay the bill and the amendments upon the
table. That was adopted by a vote of yeas 141, nays 118.
I have given the official history of the efforts to repeal the
resumption act, but it would be beyond the limits of this book to
quote, or even state, the copious speeches for and against resumption.
I felt secure, for if such a bill should pass, the executive veto
would prevent any action by Congress that would interfere with the
execution of the law. My principal effort was to convince Congress
that it ought not to interfere with what the House called a
destructive experiment, but what I regarded as an easy and beneficial
execution of existing law. A large part of the opposition was
purely political. The resumption act was a Republican measure,
voted for only by Republicans. The Democratic party had, by the
elections just previous to its taking effect, secured a majority
in the House, and, with the aid of a few Republican Senators, with
strong "greenback" proclivities, had the control of the Senate on
the financial question.
This political condition in the fall of 1877 tended to prevent the
sale of four per cent. bonds after the close of the popular loan.
My official correspondence with members of the syndicate, and with
Mr. Conant, published by order of the House of Representatives in
the volume "Specie Resumption and Refunding of the National Debt,"
shows fully the earnest effort made by me to sell the four per
cent. bonds. This was successful to a slight degree in August and
September, but sales were substantially suspended after that date,
until it became manifest that the two Houses could not agree upon
the repeal of the resumption act, or the remonetization of silver.
The threatened measure for the free coinage of silver, and the fear
that the bonds would be paid in silver coin less valuable than the
gold coin paid for them, tended, more than the efforts to repeal
the resumption, to prevent the sale of bonds.
"Mansfield, Ohio, August 18, 1877.
"Dear Mr. Conant:--Your letter of the 4th was forwarded to me here.
I notice what you say about the calls, but you must remember that
out of the sales of four per cent. bonds we must provide five
millions gold for each of the months of September and October, so
that for ten millions of bonds there must be no calls. I should
have informed you of this sooner, but neglected to do so before
leaving. The parties in New York, and no doubt the Rothschilds,
have been advised of it and agree to it. Until the popular
subscription is paid for it will be difficult to press the sale of
the four per cents., but I hope in September the sales will commence
and be pushed rapidly. The movement of the crop has already
commenced. The strike seems to be ended, with a better feeling
among laborers, and some advance in freight. The necessity of the
trunk lines combining on freight is so clear that it is likely to
result in some agreement that will stand.
"I made a speech here yesterday, which no doubt will be received
by you in the New York papers in due time, and which contains some
matters affecting your operations. It is substantially in conformity
with the general wish of the administration as to financial affairs,
and it might be well for you to call the attention of the Rothschilds
to that part of it relating to our loans and the basis of our
credit.
"I return next week to Washington, where I will again be happy to
hear from you.
"Very truly,
"John Sherman, Secretary."
Mr. Conant answered as follows:
"New Court, St. Swithin's Lane, }
"London, E. C., England, August 23, 1877.}
"Dear Mr. Secretary:--I was very glad indeed to receive your letter
of the 6th instant. I at once informed the contracting parties of
what you had written in reference to the strikes and riots at home.
The sale of our bonds has not been directly interfered with on
account of the riots. In fact, the occurrence of the riots has
almost been forgotten. The London 'Times,' of this morning, has,
however, revived the subject by printing a letter from its Philadelphia
correspondent, in which he says that the strikers, it is evident,
are to get into politics through the organization of a party, to
be called the 'Workingmen's party;' and he predicts that mischief
will come out of it through the control of state governments which
the mob element may gain; and the consequent enactment of bad laws,
etc., especially against capital. Another letter is also printed
(written by a Mr. Connolly), by which it is made to appear that
American is in a terrible financial condition. These two letters
are made the subject of an editorial which, on the whole, is not
very complimentary to us, nor calculated to improve our credit.
The 'Times' of last Monday's date had an editorial on the speech
which you made in Ohio on Friday last. I send you a copy, and
think, if you can find time, you will rather enjoy reading the
article. Nearly all of the English people, as you are aware,
believe in the principle of 'free trade,' and it is but natural
that they should, for the reason that England depends upon her
great commerce and her markets in every part of the globe for the
employment and maintenance of her people. People here think that
our protectionist tariffs are not only detrimental to the commercial
interest of our own country, but that they are of a suicidal
character so far as our fiscal policy is concerned. They think,
in other words, that it would be vastly better for the real interest
of the people of the United States if they would trade more
extensively with the people of England. What the 'Times' editor
has to say about the balance of trade will amuse you, and yet people
talk about the advantages of a balance of trade as being an exploded
idea. English interests are laboring to effect a new treaty with
France, under which large reductions in duties are proposed.
"I note what you are pleased to say in regard to sales of bonds
during the present month. With the price of bonds at the present
moment they cannot of course be sold. The parties will find it
necessary to use great caution as well as care in managing the
market, so as to get control of it. Any attempt to force the sale
of the bonds during this, and, I think, next month will only operate
to keep the price so low that they cannot be sold at all. I am
firm in the belief that the premium on gold will go gradually lower,
and that the balance of trade in our favor will keep forcing it
down.
"I remain your obedient servant,
"Chas. F. Conant.
"Hon. John Sherman."
He again wrote on the 30th of August:
"On Tuesday last a further amount of gold (£130,000) was withdrawn
from the Bank of England for shipment to the United States, and
for the purpose of protecting its stock of bullion the bank
immediately advanced its rate to three per cent., and also increased
the price of American eagles.
"Great Britain must obtain from us this season a large supply of
breadstuffs and grain, larger than has been required in any one
year during several years past, and at higher prices than those
heretofore paid, and, in the present condition of trade between
the two countries, gold, to quite an extent, will have to be sent
over in payment for these articles. Therefore, advancing the rate
of interest may check for a time, but will not stop altogether,
the shipment of bullion, but it may attract here some of the gold
held by the Bank of France. The bank rate does not govern the
street rate, and a further advance by the bank, which it is very
likely may be made, is not to be considered as indicating that we
are to have a dearer money market. I inquired to-day of Mr. Morgan
and the Messrs. Rothschild what they thought of the prospects of
making any sales during next month, and their answer was: 'Wait
patiently for the market to recuperate.' I am satisfied that good
investment securities are scarce here; that they have been cleared
from the market, and that as soon as the question of cheap or dear
money is settled, sales of the four per cent. consols will be
resumed. The amount of the sales will of course depend upon which
way the question is settled. There were times during the placing
of the five per cent. and four and a half per cent. bonds when, as
you are aware, operations were suspended for quite a time, the
condition of the market being such as to prevent anything being
done. From semi-official accounts it appears that the famine in
India is a very serious affair, and it is quite possible that large
sums of money will be required from here with which to purchase
supplies."
My experience thus far convinced me that it was bad public policy
to continue the sale of bonds for refunding purposes through a
syndicate of bankers, the chief of whom resided in London. I could
see no reason why this function could not be performed by national
banks, better than by bankers at home or abroad. A question arose
whether the Secretary of the Treasury had the power to designate
national banks as public depositaries of the proceeds of bonds sold
under the resumption and refunding acts. The object to be gained
by this designation was to prevent the withdrawal of coin from
circulation, and the undue accumulation of coin in the treasury of
the United States. If the exchange of one bond by another could
be directly effected through the banks without the payment of coin,
it would facilitate the process of refunding. I submitted this
inquiry to Attorney General Devens, and on the 30th of August he
stated his opinion and closed as follows:
"In answer to your inquiry, I have, therefore, the honor to say
that the Secretary of the Treasury, if he deems it expedient as a
matter of administrative policy, may sell bonds under the act known
as the 'refunding' and 'resumption' acts, depositing the amounts
received therefrom with such public depositaries as he may select
under the national bank act, taking such security as is required
by the statutes."
The last of the popular subscriptions for the four per cent. bonds
became due on the 16th of October, and all were paid for but three
subscriptions aggregating $1,600, and these were assumed by the
syndicate. The bonds had been paid for by the syndicate either by
called six per cent. bonds, which were canceled, or in gold coin
deposited in the treasury, without the loss of a dollar. The called
session of Congress, which met on the 15th of October, and the
agitation of the repeal of the resumption act and the remonetization
of silver, prevented for the time any further sales of the four
per cent. bonds by the government.
JOHN SHERMAN'S
RECOLLECTIONS
OF
FORTY YEARS
IN
THE HOUSE, SENATE AND CABINET
AN AUTOBIOGRAPHY.
VOLUME II.
ILLUSTRATED
WITH PORTRAITS, FAC-SIMILE LETTERS, SCENES, ETC.
GREENWOOD PRESS, PUBLISHERS
NEW YORK 1968
Copyright, 1895, By John Sherman
First Greenwood reprinting, 1968
LIBRARY OF CONGRESS catalogue card number: 68-28647
Printed in the United States of America
ILLUSTRATIONS
VOLUME II.
Mr. Sherman in His Library at Washington, D. C., 1895. _Frontispiece_
Rutherford B. Hayes
President Hayes and Cabinet
John Sherman (Chamber of Commerce Portrait.)
Inauguration of President Garfield
Thurman, Sumner, Wade, Chase (Group.)
James A. Garfield
Chester A. Arthur
Invitation to Blaine's Eulogy of Garfield
United States Senate Chamber
Invitation to Washington Monument Dedication
Meeting of the Surviving Members of the Sherman Family
John A. Logan
James G. Blaine
Surviving Members of the 34th Congress (Taken in 1888.)
Representative Ohio Men--Schenck, Cox, Pendleton
Court House at Mansfield, Ohio. 1895
Mr. Sherman's Washington Residence, "K" Street
Hallway in Mr. Sherman's Washington Residence
Dining Room in Mr. Sherman's Washington Residence
AUTOGRAPH LETTERS
VOLUME II.
J. M. Rusk, April 14, 1878
Jay Gould, October 17, 1878
Whitelaw Reid, March 29, 1878
John Jay, February 3, 1879
John W. Foster, December 15, 1878
James G. Blaine, July 3, 1879
George Bancroft, February 22, 1881
John G. Whittier, February 8, 1885
U. S. Grant, January 27, 1885
S. S. Cox, January 23, 1886
W. T. Sherman, February 3, 1891
TABLE OF CONTENTS.
VOLUME II.
CHAPTER XXXI.
EFFECT OF THE BLAND BILL ON THE COUNTRY.
An Act Passed by the House Providing for the Free Coinage of the
Silver Dollar--Mr. Ewing Makes an Attack on Resumption--Fear of
Capitalists Regarding Our National Credit--Four Per Cents. Sell
Below Par--Suspense and Anxiety Continued Throughout the Year--My
First Report as Secretary of the Treasury--Recommendations of a
Policy to be Pursued "To Strengthen the Public Credit"--Substitution
of $50,000,000 in Silver Coin for Fractional Currency--Silver as
a Medium of Circulation--Its Fluctuation in Value--Importance of
Gold as a Standard of Value--Changes in the Market Value of Silver
Since 1873.
CHAPTER XXXII.
ENACTMENT OF THE BLAND-ALLISON SILVER LAW.
Amendments to the Act Reported by the Committee on Finance--Revival
of a Letter Written by Me in 1868--Explained in Letter to Justin
S. Morrill Ten Years Later--Text of the Bland Silver Bill as Amended
by the Senate and Agreed to by the House--Vetoed by President Hayes
--Becomes a Law Notwithstanding His Objections--I Decide to Terminate
the Existing Contract with the Syndicate--Subscriptions Invited
for Four per Cent. Bonds--Preparations for Resumption--Interviews
with Committees of Both Houses--Condition of the Bank of England
as Compared with the United States Treasury--Mr. Buckner Changes
His Views Somewhat.
CHAPTER XXXIII.
SALE OF BONDS FOR RESUMPTION PURPOSES.
Arrangements Begun for the Disposal of $50,000,000 for Gold or
Bullion--Interviews with Prominent Bankers in New York--Proposition
in Behalf of the National Banks--Terms of the Contract Made with
the Syndicate--Public Comment at the Close of the Negotiations--
"Gath's" Interview with Me at the Completion of the Sale--Eastern
Press Approves the Contract, While the West Was Either Indifferent
or Opposed to it--Senate Still Discussing the Expediency of Repealing
the Resumption Act--Letter to Senator Ferry--Violent and Bitter
Animosity Aroused Against Me--I Am Charged with Corruption--Interview
with and Reply to Letter of Peter Cooper--Clarkson N. Potter's
Charges.
CHAPTER XXXIV.
A SHORT RESPITE FROM OFFICIAL DUTIES.
Visit to Mansfield and Other Points in Ohio--Difficulty of Making
a Speech at Toledo--An Attempt to Break up a Meeting that Did Not
Succeed--Various Reports of the Gathering--Good Work of the Cincinnati
"Enquirer"--Toledo People Wanted "More Money"--Remarks Addressed
to the Cincinnati Chamber of Commerce--Visit to Lancaster, the
Place of My Birth--My Return to Washington--I Begin to Exchange
Silver Dollars for United States Notes--My Authority to Do So Before
January 1 Questioned--The Order is Withdrawn and Some Criticism
Follows--Instructions to the United States Treasurer and Others--
Arrangements with New York Clearing House.
CHAPTER XXXV.
INVESTIGATION OF THE NEW YORK CUSTOMHOUSE.
A General Examination of Several Ports Ordered--No Difficulty Except
at New York--First Report of the Commission--President Hayes'
Recommendations--Letter of Instructions to Collector C. A. Arthur
--Second Report of the Commission--Losses to the Government by
Reason of Inefficiency of Employees--Various Measures of Reform
Recommended--Four Other Reports Made--The President Decides on the
Removal of Arthur, Cornell and Sharpe--Two Letters to R. C. McCormick
on the Subject--Arthur et al. Refuse to Resign--The Senate Twice
Refuses to Confirm the Men Appointed by the President to Succeed
Them--Conkling's Contest Against Civil Service Reform--My Letter
to Senator Allison--Final Victory of the President.
CHAPTER XXXVI.
PREPARATIONS FOR RESUMPTION OF SPECIE PAYMENTS.
Annual Report to Congress on Dec. 2, 1878--Preparations for Resumption
Accompanied with Increased Business and Confidence--Full Explanation
of the Powers of the Treasurer Under the Act--How Resumption Was
to Be Accomplished--Laws Effecting the Coinage of Gold and Silver
--Recommendation to Congress That the Coinage of the Silver Dollar
Be Discontinued When the Amount Outstanding Should Exceed $50,000,000
--Funding the Public Debt--United States Notes at Par with Gold--
Instructions to the Assistant Treasurer at New York--Political
Situation in Ohio.
CHAPTER XXXVII.
REFUNDING THE NATIONAL DEBT.
Over $140,000,000 of Gold Coin and Bullion in the Treasury January
1, 1879--Diversity of Opinion as to the Meaning of Resumption--
Effect of the Act to Advance Public Credit--Funding Redeemable
Bonds Into Four per Cents.--Letters to Levi P. Morton and Others--
Six per Cent. Bonds Aggregating $120,000,000 Called During January,
1879--The Sale in London--Charges of Favoritism--Further Enactments
to Facilitate the Funding--Difficulty of Making Sales of Four per
Cent. Bonds to English Bankers--Large Amounts Taken in the United
States--One Subscription of $190,000,000--Rothschild's Odd Claim--
Complimentary Resolution of the New York Chamber of Commerce.
CHAPTER XXXVIII.
GENERAL DESIRE TO NOMINATE ME FOR GOVERNOR OF OHIO.
Death of My Brother Charles--The 46th Congress Convened in Special
Session--"Mending Fences" at My Home in Mansfield--Efforts to Put
Me Forward as a Candidate for the Governorship of Ohio--Letter to
Murat Halstead on the Question of the Presidency, etc.--Result of
My Letter to John B. Haskin--Reasons of My Refusal of the Nomination
for Governor--Invitation from James G. Blaine to Speak in Maine--
My Speech at Portland--Victory of the Republican Party--My Speech
at Steubenville, Ohio--Evidences of Prosperity on Every Hand--Visit
to Cincinnati and Return to Washington--Results in Ohio.
CHAPTER XXXIX.
LAST DAYS OF THE HAYES ADMINISTRATION.
Invitation From General Arthur to Speak in New York--Letter to Hon.
John Jay on the Subject--Mr. Evarts' Refined Specimen of Egotism--
An Anecdote of the Hayes Cabinet--Duty of the Government to Protect
the Election of All Federal Officers--My Speech in Cooper Institute
--Offers of Support to Elect Me as a Successor of Senator Thurman
--My Replies--Republican Victory in New York--President Hayes'
Message to Congress--My Report as Secretary of the Treasury--
Modification of My Financial Views Since that Time--Bank Notes as
Currency--Necessity for Paper Money--Mr. Bayard's Resolution
Concerning the Legal Tender Quality of United States Notes--Questions
Asked Me by the Finance Committee of the Senate.
CHAPTER XL.
THE PRESIDENTIAL NOMINATION IN 1880.
Talk of Grant for President for a Third Term--His Triumphal Return
from a Trip Around the World--The Candidacy of Mr. Blaine and Myself
--Many of My Opponents Those Who Disagreed with Me on Financial
Questions--Accused of Being a Catholic and of Using Patronage to
Aid in My Nomination--My Replies--Delay in Holding the Ohio State
Convention--My Interview with Garfield--Resolution of the State
Convention in My Favor--National Convention at Chicago, on June 2,
1880--Fatal Move of Nine Ohio Delegates for Blaine--Final Nomination
of Garfield--Congratulations--Letter to Governor Foster and to
Garfield--Wade Hampton and the "Ku-Klux Klan."
CHAPTER XLI.
MY LAST YEAR IN THE TREASURY DEPARTMENT.
Opening of the 1880 Campaign in Cincinnati--My First Speech Arraigned
as "Bitterly Partisan"--Letter from Garfield Regarding the Maine
Election--Ohio Thought to Be in Doubt--Many Requests for Speeches
--Republican Ticket Elected in Ohio and Indiana--A Strange Warning
from Detroit Threatening Garfield with Assassination--The Latter's
Reply--My Doubts About Remaining in the Treasury Department or
Making an Effort for the Senate--Letter to Dalzell--Last Annual
Report to Congress in December, 1880--Recommendations Regarding
Surplus Revenue, Compulsory Coinage of the Silver Dollar, the
Tariff, etc.--Bills Acted Upon by Congress.
CHAPTER XLII.
ELECTED TO THE SENATE FOR THE FOURTH TIME.
Blaine Appointed Secretary of State--Withdrawal of Governor Foster
as a Senatorial Candidate--I Am Again Elected to My Old Position
to Succeed Allen G. Thurman--My Visit to Columbus to Return Thanks
to the Legislature--Address to Boston Merchants on Finances--Windom
Recommended to Succeed Me as Secretary of the Treasury--Personal
Characteristics of Garfield--How He Differed from President Hayes
--The Latter's Successful Administration--My One Day out of Office
in Over Forty Years--Long Animosity of Don Piatt and His Change of
Opinion in 1881--Mahone's Power in the Senate--Windom's Success in
the Treasury--The Conkling-Platt Controversy with the President
Over New York Appointments.
CHAPTER XLIII.
ASSASSINATION OF GARFIELD AND EVENTS FOLLOWING.
I Return to Mansfield for a Brief Period of Rest--Selected as
Presiding Officer of the Ohio State Convention--My Address to the
Delegates Indorsing Garfield and Governor Foster--Kenyon College
Confers on Me the Degree of Doctor of Laws--News of the Assassination
of the President--How He Differed from Blaine--Visit of General
Sherman--Reception by Old Soldiers--My Trip to Yellowstone Park--
Speechmaking at Salt Lake City--Visit to Virginia City--Placer
Mining in Montana--The Western Hunter Who Was Lost in a "St. Louis
Cañon"--Sunday in Yellowstone Park--Geysers in the Upper Basin--
Rolling Stones Down the Valley--Return Home--Opening of the Ohio
Campaign--Death of Garfield.
CHAPTER XLIV.
BEGINNING OF ARTHUR'S ADMINISTRATION.
Special Session of the Senate Convened by the President--Abuse of
Me by Newspapers and Discharged Employees--Charges Concerning
Disbursement of the Contingent Fund--My Resolution in the Senate--
Secretary Windom's Letter Accompanying the Meline Report--Investigation
and Complete Exoneration--Arthur's Message to Congress in December
--Joint Resolutions on the Death of Garfield--Blaine's Tribute to
His Former Chief--Credit of the United States at "High Water Mark"
--Bill Introduced Providing for the Issuing of Three per Cent.
Bonds--Corporate Existence of National Banks Extended--Bill to
Reduce Internal Revenue Taxes--Tax on Playing Cards--Democratic
Victory in Ohio.
CHAPTER XLV.
STEPS TOWARDS MUCH NEEDED TARIFF LEGISLATION.
Necessity of Relief from Unnecessary Taxation--Views of the President
as Presented to Congress in December, 1882--Views of the Tariff
Commission Appointed by the President--Great Changes Made by the
Senate--Regret That I Did Not Defeat the Bill--Wherein Many Sections
Were Defective or Unjust--Bill to Regulate and Improve the Civil
Service--A Mandatory Provision That Should be Added to the Existing
Law--Further Talk of Nominating Me for Governor of Ohio--Reasons
Why I Could Not Accept--Selected as Chairman of the State Convention
--Refusal to Be Nominated--J. B. Foraker Nominated by Acclamation
--His Career--Issues of the Campaign--My Trip to Montana--Resuming
the Canvass--Hoadley Elected Governor--Retirement of Gen. Sherman.
CHAPTER XLVI.
EFFECT OF THE MARINE NATIONAL BANK AND OTHER FAILURES.
Continued Prosperity of the Nation--Arthur's Report to Congress--
Resolution to Inquire into Election Outrages in Virginia and
Mississippi--Reports of the Investigating Committee--Financial
Questions Discussed During the Session--Duties and Privileges of
Senators--Failure of the Marine National Bank and of Grant and Ward
in New York--Followed By a Panic in Which Other Institutions Are
Wrecked--Timely Assistance from the New York Clearing House--Debate
in the Senate on the National Bank System--Dedication of the John
Marshall Statue at Washington--Defeat of Ingalls' Arrears of Pensions
Amendment to Bill to Grant Pensions to Soldiers and Sailors of the
Mexican War--The Senate Listens to the Reading of the Declaration
of Independence on July 4.
CHAPTER XLVII.
MY PARTICIPATION IN THE CAMPAIGN OF 1884.
Again Talked of as a Republican Candidate for the Presidency--I
Have No Desire for the Nomination--Blaine the Natural Candidate of
the Party--My Belief that Arthur Would be Defeated if Nominated--
Speech at Washington, D. C., for Blaine and Logan--Opening of the
Ohio Campaign at Ashland--Success of the Republican State Ticket
in October--Speeches in Boston, Springfield, Mass., New York and
Brooklyn--Address to Business Men in Faneuil Hall--Success of the
National Democratic Ticket--Arthur's Annual Message to Congress--
Secretary McCulloch's Recommendations Concerning the Further Coinage
of Silver Dollars--Statement of My Views at This Time--Statue to
the Memory of General Lafayette--Controversy Between General Sherman
and Jefferson Davis.
CHAPTER XLVIII.
DEDICATION OF THE WASHINGTON MONUMENT.
Resolution of Senator Morrill Providing for Appropriate Dedicatory
Ceremonies--I Am Made Chairman of the Commission--Robert C. Winthrop's
Letter Stating His Inability to Attend the Exercises--Letters of
Regret from General Grant and John G. Whittier--Unfavorable Weather
for the Dedication--My Address as Presiding Officer--The President's
Acceptance of the Monument for the Nation--Mr. Winthrop's Address
Read in the House by John D. Long--Inauguration of the First
Democratic President Since Buchanan's Time--Visit to Cincinnati
and Address on the Election Frauds--Respects to the Ohio Legislature
--A Trip to the West and Southwest--Address on American Independence.
CHAPTER XLIX.
REUNION OF THE "SHERMAN BRIGADE."
Patriotic Address Delivered at Woodstock, Conn., On My Return from
the Pacific Coast--Meeting of the Surviving Members of the Sherman
Family at Mansfield--We Attend the Reunion of the "Sherman Brigade"
at Odell's Lake--Addresses of General Sherman and Myself to the
Old Soldiers and Others Present--Apathy of the Republican Party
During the Summer of 1885--Contest Between Foraker and Hoadley for
the Governorship--My Speech at Mt. Gilead Denounced as "Bitterly
Partisan"--Governor Hoadley Accuses Me of "Waving the Bloody Shirt"
--My Reply at Lebanon--Election of Foraker--Frauds in Cincinnati
and Columbus--Speeches Made in Virginia.
CHAPTER L.
ELECTED PRESIDENT PRO TEMPORE OF THE SENATE.
Death of Vice President Hendricks--I Am Chosen to Preside Over the
United States Senate--Letter of Congratulation from S. S. Cox--
Cleveland's First Annual Message to Congress--His Views on the
Tariff and Condition of Our Currency--Secretary Manning's Report--
Garfield's Statue Presented to the Nation by the State of Ohio--I
Am Elected a Senator from Ohio for the Fifth Time--I Go to Columbus
to Return Thanks to the Legislature for the Honor--Business of this
Session of Congress--Attempt to Inquire Into the Methods of Electing
Mr. Payne to the Senate from Ohio--My Address on "Grant and the
New South"--Address Before the Ohio Society of New York.
CHAPTER LI.
A PERIOD OF POLITICAL SPEECH MAKING.
Organization of the "Sherman Club" at Mansfield, Ohio--My Experiences
with Newspaper Reporters--Address at the State Fair in Columbus on
Agricultural Implements--Other Speeches Made in the Campaign of
that Year--Address at Louisville, Ky.--Courteous Treatment by Henry
Watterson, of the "Courier Journal"--Hon. John Q. Smith's Change
of Heart--Answering Questions Propounded by Him at a Gathering in
Wilmington, Ohio--Success of the Republican Party--Second Session
of the 49th Congress--But Little Legislation Accomplished--Death
of Senator John A. Logan--Tributes to His Memory--His Strong
Characteristics--My Reason for Resigning the Presidency of the
Senate--Succeeded by John J. Ingalls.
CHAPTER LII.
VISIT TO CUBA AND THE SOUTHERN STATES.
Departure for Florida and Havana--A Walk Through Jacksonville--
Impressions of the Country--Visit to Cigar Factories and Other
Places of Interest--Impressions of Cuba--Experience with Colored
Men at a Birmingham Hotel--The Proprietor Refuses to Allow a
Delegation to Visit Me in My Rooms--Sudden Change of Quarters--
Journey to Nashville and the Hearty Reception Which Followed--Visit
to the Widow of President Polk--My Address to Nashville Citizens--
Comment from the Press That Followed It--An Audience of Workingmen
at Cincinnati--Return Home--Trip to Woodbury, Conn., the Home of
My Ancestors--Invitation to Speak in the Hall of the House of
Representatives at Springfield, Ill.--Again Charged with "Waving
the Bloody Shirt."
CHAPTER LIII.
INDORSED FOR PRESIDENT BY THE OHIO STATE CONVENTION.
I Am Talked of as a Presidential Possibility--Public Statement of
My Position--Unanimous Resolution Adopted by the State Convention
at Toledo on July 28, 1887--Text of the Indorsement--Trip Across
the Country with a Party of Friends--Visit to the Copper and Nickel
Mining Regions--Stop at Winnipeg--A Day at Banff--Vast Snowsheds
Along the Canadian Pacific Railroad--Meeting with Carter H. Harrison
on Puget Sound--Rivalry Between Seattle and Tacoma--Trying to Locate
"Mount Tacoma"--Return Home After a Month's Absence--Letter to
General Sherman--Visit to the State Fair--I Attend a Soldiers'
Meeting at Bellville--Opening Campaign Speech at Wilmington--Talk
to Farmers in New York State--Success of the Republican Ticket in
Ohio--Blaine Declines to Be a Candidate.
CHAPTER LIV.
CLEVELAND'S EXTRAORDINARY MESSAGE TO CONGRESS.
First Session of the 50th Congress--The President's "Cry of Alarm"
--Troubled by the Excess of Revenues over Expenditures--My Answer
to His Doctrines--His Refusal to Apply the Surplus to the Reduction
of the Public Debt--The Object in Doing So--My Views Concerning
Protection and the Tariff--In Favor of a Tariff Commission--"Mills
Bill" the Outcome of the President's Message--Failure of the Bill
During the Second Session--My Debates with Senator Beck on the
Coinage Act of 1873, etc.--Omission of the Old Silver Dollar--Death
of Chief Justice Waite--Immigration of Chinese Laborers--Controversy
with Senator Vest--Speech on the Fisheries Question--Difficulties
of Annexation with Canada.
CHAPTER LV.
REPUBLICAN NATIONAL CONVENTION OF 1888.
Majority of the Ohio Delegates Agree to Support Me for President--
Cleveland and Thurman Nominated by the Democrats--I Am Indorsed by
the State Convention Held at Dayton, April 18-19--My Response to
a Toast at the Americus Club, Pittsburg, on Grant--Meeting with
Prominent Men in New York--Foraker's Reply to Judge West's Declaration
Concerning Blaine--Blaine's Florence Letter to Chairman Jones--His
Opinion of My Qualifications for the Honorable Position--Meeting
of the Convention in Chicago in June--I Am Nominated by General D.
H. Hastings and Seconded by Governor Foraker--Jealousy Between the
Ohio Delegates--Predictions of My Nomination on Monday, June 25--
Defeated by a Corrupt New York Bargain--General Harrison is Nominated
--Letters from the President Elect--My Replies--First Speeches of
the Campaign--Harrison's Victory--Second Session of the 50th Congress
--The President's Cabinet.
CHAPTER LVI.
FOUR AND A HALF MONTHS IN EUROPE.
Our Party Takes Its Departure on the "City of New York" on May 1--
Personnel of the Party--Short Stop in London--Various Cities in
Italy Visited--Sight-Seeing in Rome--Journey to Pompeii and Naples
--Impressions of the Inhabitants of Southern Italy--An Amusing
Incident Growing Out of the Ignorance of Our Courier--Meeting with
Mr. Porter, Minister to Rome--Four Days in Florence--Venice Wholly
Unlike Any Other City in the World--Favorable Impression of Vienna
--Arrival at Paris--Reception by the President of the Republic of
France--Return Home--My Opinion Concerning England and Englishmen
--Reception at Washington--Campaigning Again for Foraker--Ohio Ballot
Box Forgery and Its Outcome--Address at Cleveland on "The Congress
of American States"--Defeat of Foraker for Governor.
CHAPTER LVII.
HISTORY OF THE "SHERMAN SILVER LAW."
President Harrison's First Annual Message--His Recommendations
Regarding the Coinage of Silver and Tariff Revisions--Bill Authorizing
the Purchase of $4,500,000 Worth of Silver Bullion Each Month--
Senator Plumb's "Free Silver" Amendment to the House Bill--Substitute
Finally Agreed Upon in Conference--Since Known as the "Sherman
Silver Law"--How It Came to Be so Called--Chief Merit of the Law--
Steady Decline of Silver After the Passage of the Act--Bill Against
Trusts and Combinations--Amendments in Committee--The Bill as Passed
--Evils of Unlawful Combinations--Death of Representative Wm. D.
Kelley and Ex-Member S. S. Cox--Sketch of the Latter--My Views
Regarding Immigration and Alien Contract Labor--McKinley Tariff
Law--What a Tariff Is--Death of George H. Pendleton--Republican
Success in Ohio--Second Session of the 51st Congress--Failure of
Senator Stewart's "Free Coinage Bill."
CHAPTER LVIII.
EFFORTS TO CONSTRUCT THE NICARAGUAN CANAL.
Early Recognition of the Need of a Canal Across the Isthmus
Connecting North and South America--M. de Lesseps Attempts to Build
a Water Way at Panama--Feasability of a Route by Lake Nicaragua--
First Attempts in 1825 to Secure Aid from Congress--The Clayton-
Bulwer Convention of 1850--Hindrance to the Work Caused by This
Treaty--Report of the Committee on Foreign Relations in 1891--
Failure to Secure a Treaty Between the United States and Nicaragua
in 1884--Cleveland's Reasons for Withdrawing This Treaty--Incorporation
of the Maritime Canal Company of Nicaragua--Inevitable Failure of
Their Attempts Unless Aided by the Government--Why We Should Purchase
Outright the Concessions of the Maritime Company--Brief Description
of the Proposed Canal--My Last Letter from General Sherman--His
Death from Pneumonia After a Few Days' Illness--Messages of President
Harrison--Resolution--My Commemorative Address Delivered Before
the Loyal Legion.
CHAPTER LIX.
THE CAMPAIGN OF 1890-91 IN OHIO.
Public Discussion of My Probable Re-election to the Senate--My
Visit to the Ohio Legislature in April, 1891--Reception at the
Lincoln League Club--Address to the Members--Appointed by the
Republicans as a Delegate to the State Convention at Columbus--Why
My Prepared Speech Was Not Delivered--Attack on Me by the Cincinnati
"Enquirer"--Text of the Address Printed in the "State Journal"--
Beginning of a Canvass with Governor Foraker as a Competitor for
the Senatorship--Attitude of George Cox, a Cincinnati Politician,
Towards Me--Attempt to Form a "Farmers' Alliance" or People's Party
in Ohio--"Seven Financial Conspiracies"--Mrs. Emery's Pamphlet and
My Reply to It.
CHAPTER LX.
FREE SILVER AND PROTECTION TO AMERICAN INDUSTRIES.
My Views in 1891 on the Free Coinage of Silver--Letter to an Ohio
Newspaper on the Subject--A Problem for the Next Congress to Solve
--Views Regarding Protection to American Industries by Tariff Laws
--My Deep Interest in This Campaign--Its Importance to the Country
at Large--Ohio the Battle Ground of These Financial Questions--
Opening the Campaign in Paulding Late in August--Extracts from My
Speech There--Appeal to the Conservative Men of Ohio of Both Parties
--Address at the State Fair at Columbus--Review of the History of
Tariff Legislation in the United States--Five Republican Principles
Pertaining to the Reduction of Taxes--Speeches at Cleveland, Toledo,
Cincinnati and Elsewhere--McKinley's Election by Over 21,000
Plurality.
CHAPTER LXI.
ELECTED TO THE UNITED STATES SENATE FOR THE SIXTH TIME.
I Secure the Caucus Nomination for Senator on the First Ballot--
Foraker and Myself Introduced to the Legislature--My Address of
Thanks to the Members--Speech of Governor Foraker--My Colleague
Given His Seat in the Senate Without Opposition--Message of President
Harrison to the 52nd Congress--Morgan's Resolutions and Speech for
the Free Coinage of Silver--Opening of the Silver Debate by Mr.
Teller--My Speech on the Question--Defeat of the Bill in the House
--Discussion of the Chinese Question--My Opposition to the Conference
Report on Mr. Geary's Amended Bill--Adopted by the Senate After a
Lengthy Debate--Effect of the Tariff Laws Upon Wages and Prices--
Senator Hale's Resolution--Carlisle's Speech in Opposition to High
Prices--My Reply--Résumé of My Opinions on the Policy of Protection
--Reception by the Ohio Republican Association--Refutation of a
Newspaper Slander Upon H. M. Daugherty--Newspaper Writers and
Correspondents--"Bossism" in Hamilton County.
CHAPTER LXII.
SECOND ELECTION OF GROVER CLEVELAND.
Opposition to General Harrison for the Presidential Nomination--My
Belief That He Could Not Be Elected--Preference for McKinley--
Meeting of the National Republican Convention at Minneapolis--
Meeting of Republicans at Washington to Ratify the Ticket--Newspaper
Comment on My Two Days' Speech in the Senate on the Silver Question
--A Claim That I Was Not in Harmony with My Party on the Tariff--
My Reply--Opening Speeches for Harrison and Reid--Publication of
My "History of the Republican Party"--First Encounter with a "Kodak"
--Political Addresses in Philadelphia, New York, Cincinnati, Chicago
and Milwaukee--Return to Ohio--Defeat of Harrison.
CHAPTER LXIII.
ATTEMPTS TO STOP THE PURCHASE OF SILVER BULLION.
My Determination to Press the Repeal of the Silver Purchasing Clause
of the "Sherman Act"--Reply to Criticisms of the Philadelphia
"Ledger"--Announcement of the Death of Ex-President Hayes--Tribute
to His Memory--Efforts to Secure Authority to the Secretary of the
Treasury to Sell Bonds to Maintain the Resumption of United States
Notes--The Senate Finally Recedes from the Amendment in Order to
Save the Appropriation Bill--Loss of Millions of Dollars to the
Government--Cleveland Again Inducted Into Office--His Inaugural
Address--Efforts to Secure an Appropriation for the "World's Fair"
--Chicago Raises $1,000,000--Congress Finally Decides to Pay the
Exposition $2,500,000 in Silver Coin--I Attend the Dedication of
the Ohio Building at the Fair--Address to the Officers and Crew of
the Spanish Caravels.
CHAPTER LXIV.
REPEAL OF PART OF THE "SHERMAN ACT" OF 1890.
Congress Convened in Extraordinary Session on August 7, 1893--The
President's Apprehension Concerning the Financial Situation--Message
from the Executive Shows an Alarming Condition of the National
Finances--Attributed to the Purchase and Coinage of Silver--Letter
to Joseph H. Walker, a Member of the Conference Committee on the
"Sherman Act"--A Bill I Have Never Regretted--Brief History of the
Passage of the Law of 1893--My Speech in the Senate Well Received
--Attacked by the "Silver Senators"--General Debate on the Financial
Legislation of the United States--Views of the "Washington Post"
on My Speech of October 17--Repeal Accomplished by the Republicans
Supporting a Democratic Administration--The Law as Enacted--Those
Who Uphold the Free Coinage of Silver--Awkward Position of the
Democratic Members--My Efforts in Behalf of McKinley in Ohio--His
Election by 81,000 Plurality--Causes of Republican Victories
Throughout the Country.
CHAPTER LXV.
PASSAGE OF THE WILSON TARIFF BILL.
Second Session of the 53rd Congress--Recommendations of the President
Concerning a Revision of the Tariff Laws--Bill Reported to the
House by the Committee of Ways and Means--Supported by Chairman
Wilson and Passed--Received in the Senate--Report of the Senate
Committee on Finance--Passes the Senate with Radical Amendments--
These are Finally Agreed to by the House--The President Refuses to
Approve the Bill--Becomes a Law After Ten Days--Defects in the Bill
--Not Satisfactory to Either House, the President or the People--
Mistakes of the Secretary of the Treasury--No Power to Sell Bonds
or to Borrow Money to Meet Current Deficiencies--Insufficient
Revenue to Support the Government--A Remedy That Was Not Adopted--
Gross Injustice of Putting Wool on the Free List--McKinley Law
Compared with the Wilson Bill--Sufficient Revenue Furnished by the
Former--I Am Criticized for Supporting the President and Secretary.
CHAPTER LXVI.
SENIORITY OF SERVICE IN THE SENATE.
Notified That My Years of Service Exceed Those of Thomas Benton--
Celebration of the Sons of the American Revolution at the Washington
Monument--My Address to Those Present--Departure for the West with
General Miles--Our Arrival at Woodlake, Nebraska--Neither "Wood"
nor "Lake"--Enjoying the Pleasures of Camp Life--Bound for Big
Spring, South Dakota--Return via Sioux City, St. Paul and Minneapolis
--Marvelous Growth of the "Twin Cities"--Publication of the "Sherman
Letters" by General Sherman's Daughter Rachel--First Political
Speech of the Campaign at Akron--Republican Victory in the State
of Ohio--Return to Washington for the Winter of 1894-95--Marriage
of Our Adopted Daughter Mary with James Iver McCallum--A Short
Session of Congress Devoted Mainly to Appropriations--Conclusion.
CHAPTER XXXI.
EFFECT OF THE BLAND BILL ON THE COUNTRY.
An Act Passed by the House Providing for the Free Coinage of the
Silver Dollar--Mr. Ewing Makes an Attack on Resumption--Fear of
Capitalists Regarding Our National Credit--Four Per Cents. Sell
Below Par--Suspense and Anxiety Continued Throughout the Year--My
First Report as Secretary of the Treasury--Recommendations of a
Policy to be Pursued "To Strengthen the Public Credit"--Substitution
of $50,000,000 in Silver Coin for Fractional Currency--Silver as
a Medium of Circulation--Its Fluctuation in Value--Importance of
Gold as a Standard of Value--Changes in the Market Value of Silver
Since 1873.
The silver question was suddenly thrust upon the House of
Representatives on the 5th of November, 1877, by a motion, submitted
by Mr. Bland, of Missouri, that the rules be suspended so as to
enable him to introduce, and the House to pass, a bill to authorize
the free coinage of the standard silver dollar of 412½ grains, and
to restore its legal tender character. The motion to suspend the
rules cut off all amendments and all debate. Several members
demanded a hearing. Efforts were made to adjourn, but this was
refused. The previous question being ordered and the rules suspended,
a single vote would introduce the bill without a reference to a
committee, and would pass it without any power of amendment, without
the usual reading at three separate times. The motion was agreed
to by a vote of yeas 163, nays 34. So, two-thirds voting in favor
thereof, the rules were suspended and the bill was passed.
The first section of this bill provided that there shall be coined,
at the several mints of the United States, the silver dollar of
the weight of 412½ grains, troy, of standard silver, as provided
in the act of January 18, 1837, on which shall be the devices and
superscriptions provided by said act; which coins, together with
all silver dollars heretofore coined by the United States, of like
weight and fineness, shall be a legal tender at their nominal value
for all debts and dues, public and private, except where otherwise
provided by contract; and any owner of silver bullion may deposit
the same in any United States coinage mint or assay office, to be
coined into such dollars for his benefit, upon the same terms and
conditions as gold bullion is deposited for coinage under existing
law. Section 2 provided for repealing all acts and parts of acts
inconsistent with provisions of the act.
Thus this bill, of wide-reaching importance, was introduced and
passed by the House under the previous question, and a suspension
of the rules without debate on the same day of its introduction by
a vote of yeas 163, nays 34. It was sent to the Senate and referred
to the committee on finance.
On the same day Mr. Ewing moved in the House of Representatives to
suspend the rules and adopt the following resolution:
"_Resolved_, That the bill to repeal the third section of the
resumption law be made the special order, not to interfere with
any appropriation bills, for to-morrow at the expiration of the
morning hour, and from day to day thereafter until the following
Tuesday at three o'clock, when the previous question shall be
ordered on it and on any amendments then pending, all amendments
meanwhile to be in order, provided the time shall be extended, if
necessary, so as to allow five days after the morning hour for the
consideration of said bill and amendments."
This resolution passed by a vote of yeas 143, nays 47.
In consequence of this action of the House, the syndicate declined
to offer the bonds, and no further calls for six per cent. bonds
were therefore made.
On the 7th of November August Belmont wrote me from New York as
follows;
"I fear that the threatening position of the silver question will
check completely any demand for the four per cent. bonds here and
in Europe. The damage which the passage of this measure will do
to our public credit abroad _cannot be over estimated_. To remonetize
silver upon the old standard, and make it a legal tender for all
private and public debts, will be considered by the whole civilized
world as an act of repudiation on the part of the federal government,
and cast a stain upon our national credit, which has hitherto stood
as high and bright as that of any government in the world.
"It is just as much repudiation for the federal government to compel
its bondholders to accept the payment of their interest in silver,
which is at a discount of ten per cent., against the gold which
the government received for the bonds, as it would be if Congress
decreed that all the bonds of the United States should not bear a
higher interest than two per cent. per annum. To do such a thing
now as is contemplated by the Bland silver bill, when the federal
finances are in a flourishing condition, when the premium of gold
has been reduced two and a half to three per cent., and when our
funded debt sells equal to that of any other public security in
the world, is actually as if a man of wealth and position, who had
by a life-long course of strict honesty acquired the well-earned
confidence and respect of his fellow-citizens and of the outer
world, should in the midst of his affluence, and without the
palliating excuse of any temptation of want or necessity, commit
open theft.
"I am sure I do not over estimate the damaging effect which the
passage of the bill must have upon American credit. All my letters
from abroad, and conversations with people familiar with the English
and continental money markets, confirm my convictions on that point.
When you look back and find in the archives of your department the
proud records of a nation's faith kept inviolate with a most
punctilious and chivalrous spirit during a century, amidst all the
trials of foreign and civil war which strained the resources of
our country to the very verge of ruin, the task before you is
certainly a difficult and harassing one; but while the path of duty
is often narrow and difficult, it is always straight and so well
defined that it can never be mistaken.
"Sound financial policy and love of our country's fair name alike
demand from those to whom the administration of its affairs have
been intrusted the most uncompromising hostility to the _blind_
and _dishonest_ frenzy which has taken hold of Congress, and I
sincerely hope that you will be seconded in the task before you by
the hearty support of the President and your colleagues."
On the 9th of November I was advised that the four per cent. bonds
were selling at 99 and interest, in a small way only. The syndicate
had bought in the market about $750,000 of these bonds at less than
par in order to prevent a further depreciation. On the same day
I was informed by August Belmont & Co., as follows:
"After conference and careful consideration of the whole subject,
it is the conclusion of all the associates, in Europe and here,
that it is injudicious to undertake further negotiations of the
fours, during the pendency of the legislation proposing to make
silver a full legal tender, as the discussion has checked dealings
in the bonds by the public. To make a call in the face of a market
quotation (to-day 98¾ and interest) below the price fixed by law
would not convince the public that new business had been undertaken
at a loss, but that the call was connected with business previously
done.
* * * * *
"Further than this, we are satisfied that, holding the views
expressed in your letters mentioned, the President and all his
cabinet will agree with us that it would be wrong for us to ask
for another call at this juncture, as such action would be held by
those advocating the legislation in favor of silver as proving that
such legislation in our opinion was not prejudicial to the national
credit and the refunding of our national debt."
On the 10th of November Mr. Conant wrote me that our bonds had been
depressed by the rumors which had been circulated respecting probable
legislation which would depreciate their value, and that four and
a half per cent. bonds had fallen off three-fourths per cent. He
said: "If, in any legislation which may be enacted regarding
silver, provision could be made not only exempting the debt and
interest thereon from payment in silver, but declaring that payment
of the same shall be made in gold coin, it would aid us immeasurably
in placing our bonds."
Two days later I received a letter from F. O. French, of New York,
as follows:
"Our business people are very much alarmed at the rumored strength
of the silver people, and, as they apprehend the gravest disasters
from the success of the Bland bill, a committee of gentlemen
connected with insurance and trust companies, as well as with the
banks, go to Washington to-morrow to present their views to the
finance committee.
"Once dispatch this silver business--and I have faith that it cannot
live in the light of full discussion by the Senate--and we shall
renew funding, and by attaining resumption put an end to financial
discussions as we did to slavery."
And on the following day I wrote to August Belmont & Co.:
"Your letter of the 9th instant was received, and also a personal
letter from Mr. Belmont.
"I am watchful of the course of legislation in Congress and of the
current of public sentiment, both in our own and foreign countries,
on the silver question. I am not prepared at present to give any
assurance as to what will be done in Congress, nor of the action
of the executive department. It is better to let the matter stand
as it is, awaiting events without any committals whatever. I have
faith to believe that all will come our right so far as the public
credit is affected, and will write you again when anything definite
can be said."
On the 29th of November Belmont wrote me a long letter containing
the following statements:
"I need hardly assure you, at this late day, of my earnest solicitude
for the success of the funding and resumption operations, and of
my personal deep regret, apart from all pecuniary considerations,
as a member of the syndicate, to see this unfortunate situation of
the silver question put a complete stop to all further sales of
the four per cent. bonds at present, here and in England. The
capitalists and banks on both sides of the Atlantic will not buy
a bond at par _in gold_, when it is almost certain, from the
overwhelming vote in the House, and the known attitude of the
Senate, that a silver bill, making the old silver dollar a legal
tender for all private and public obligations, will pass both Houses
this winter. . . .
"The bonds are selling at ninety-nine and one-fourth in gold in open
market, and it seems to me very doubtful policy to offer bonds, by
us, to the public at this moment, and thus assist the advocates of
the old silver dollar by our apparent indifference to the injustice
and dishonesty of the Bland bill."
This condition of suspense and anxiety continued during the remainder
of the year.
My first annual report, as Secretary of the Treasury, was made to
Congress on the 3rd of December, 1877. The statement made of our
financial condition was a very favorable one, showing a surplus
revenue of $30,340,577.69. The receipts from different sources of
revenue were largely diminished, but the expenditures for the year
were reduced by an equal amount. The surplus revenue was applied
to the redemption of United States notes and of fractional currency,
and to the payment of six per cent. bonds for the sinking fund.
The report dealt with the usual topics of such reports, embracing
a great variety of subjects. What attracted the most attention
was, naturally, what was said about refunding the public debt and
the resumption of specie payments. The results of refunding during
the previous year have already been sufficiently stated. The plans
for the resumption of specie payments were fully explained. The
mode and manner of bringing this about was not specified in the
law, but the time for resumption was fixed and the means provided
for accumulating coin for that purpose were ample.
By the resumption act the Secretary of the Treasury was required
to redeem legal tender notes to the amount of eighty per centum of
the sum of national bank notes issued, and to continue such
redemption, as circulating notes were issued, until there was
outstanding the sum of $300,000,000 of such legal tender United
States notes, and no more.
By the same act it was provided that, on and after the 1st day of
January, 1879, the Secretary of the Treasury should redeem, in
coin, the United States legal tender notes then outstanding, on
their presentation for redemption at the office of the assistant
treasurer of the United States, in the city of New York, in sums
of not less than fifty dollars. "And," it continued, "to enable
the Secretary of the Treasury to prepare and provide for the
redemption in this act authorized or required, he is authorized to
use any surplus revenues, from time to time, in the treasury, not
otherwise appropriated, and to issue, sell, and dispose of, at not
less than par, in coin, either of the descriptions of bonds, of
the United States, described in the act of Congress approved July
14, 1870, entitled 'An act to authorize the refunding of the national
debt,' with like qualities, privileges, and exemptions, to the
extent necessary to carry this act into full effect, and to use
the proceeds thereof for the purposes aforesaid."
In obedience to this provision I had sold at par, for coin,
$15,000,000 four and a half per cent. bonds, or $5,000,000 during
each of the months of May, June and July, and $25,000,000 at par,
in coin, of four per cent. bonds, or $5,000,000 for each of the
months of August, September, October, November and December. Of
the coin thus received $4,000,000 had been sold for the redemption
of United States notes, and the residue was in the treasury. The
surplus revenue had also, under the same authority, been applied
to the redemption of the residue of United States notes, not redeemed
by the sale of coin, and the balance was held in the treasury in
preparation for resumption.
These operations, aided greatly, no doubt, by the favorable condition
of our foreign commerce, had advanced the market value of United
States notes to ninety-seven and three-eighths per cent., or within
nearly two and a half per cent. of coin. They had also conclusively
demonstrated the practicability of restoring United States notes
to par, in coin, by the time fixed by law, and that without disturbing
either domestic or foreign trade or commerce. Every step had been
accompanied with growing business, with the advance of public
credit, and the steady appreciation of United States notes. The
export of bullion had been arrested, and our domestic supply had
accumulated in the treasury. The exportation of other domestic
products had been largely increased, with great advantage to all
industries. I said the course adopted under the resumption act,
if pursued, would probably be followed with like favorable results,
and a sufficient fund for the maintenance of resumption would
doubtless accumulate in the treasury at or before the date fixed
by law.
I strongly urged the firm maintenance of a policy that would make
good the promise contained in the United States note when issued--
a promise repeated in the act "To strengthen the public credit,"
approved March 18, 1869, and made definite and effective by the
resumption act, and asserted that dishonored notes, less valuable
than the coin they promise, though justified by the necessity which
led to their issue, should be made good as soon as practicable;
that the public credit was injured by failure to redeem them; that
every holder who was compelled by law to receive them was deprived
of a part of his just due; that our national resources being ample,
the process of appreciation being almost complete, and the wisdom
of the law having been demonstrated, it was the dictate of good
policy and good faith to continue the process of preparation, so
that, at or before the time fixed by law, every United States note
would have equal purchasing power with coin; that to reverse this
policy in the face of assured success would greatly impair the
public credit, arrest the process of reducing the interest on the
public debt, and cause anew the financial distress our country had
recently suffered.
The first section of the resumption act plainly provided for the
permanent substitution of silver coin for the whole amount of
fractional currency outstanding. Section 3 directed the permanent
reduction of United States notes to an amount not exceeding
$300,000,000. No distinct legislative declaration was made in the
resumption act that notes redeemed after that limit was reached
should not be reissued; but section 3579 of the Revised Statutes
of the United States provided that "when any United States notes
are returned to the treasury they may be reissued, from time to
time, as the exigencies of the public interest may require."
I expressed in my report the opinion that, under this section,
notes, when redeemed after the 1st of January, 1879, if the amount
outstanding was not in excess of $300,000,000, might be reissued
as the exigencies of the public service required. A note redeemed
with coin was in the treasury and subject to the same law as if
received for taxes, or as a bank note, when redeemed by the
corporation issuing it. The authority to reissue it did not depend
upon the mode in which it was returned to the treasury. But this
construction was controverted, and I thought should be settled by
distinct provisions of law. It should not be open to doubt or
dispute. The decision of this question by Congress would involve
not merely the construction of existing law, but the public policy
of maintaining in circulation United States notes, either with or
without the legal tender clause. These notes were of great public
convenience--they circulated readily; were of universal credit;
were a debt of the people without interest; were protected by every
possible safeguard against counterfeiting; and, when redeemable in
coin at the demand of the holder, formed a paper currency as good
as had yet been devised.
It was conceded, I said, that a certain amount could, with the aid
of an ample reserve in coin, be always maintained in circulation.
Should not the benefit of this circulation inure to the people,
rather than to corporations, either state or national? The government
had ample facility for the collection, custody, and care of the
coin reserves of the country. It was a safer custodian of such
reserves than a multitude of scattered banks would be. The authority
to issue circulating notes by banks was not given to the banks for
their benefit, but for the public convenience, and to enable them
to meet the ebb and flow of currency caused by varying crops,
productions, and seasons. It was indispensable that a power should
exist somewhere to issue and loan credit money at certain times,
and to redeem it at others. This function could be performed better
by corporations than by the government. The government could not
loan money, deal in bills of exchange, or make advances on property.
I expressed the opinion, that the best currency for the people of
the United States would be a carefully-limited amount of United
States notes, promptly redeemable on presentation in coin, supported
by ample reserves of coin, and supplemented by a system of national
banks, organized under general laws, free and open to all, with
power to issue circulating notes secured by United States bonds,
deposited with the government and redeemable on demand in United
States notes or coin. Such a system would secure to the people a
safe currency of equal value in all parts of the country, receivable
for all dues, and easily convertible into coin. Interest could
thus be saved on so much of the public debt as could be conveniently
maintained in permanent circulation, leaving to national banks the
proper business of such corporations, of providing currency for
the varying changes, the ebb and flow of trade.
I said that the legal tender quality given to United States notes
was intended to maintain them in forced circulation at a time when
their depreciation was inevitable. When they were redeemable in
coin this quality might either be withdrawn or retained, without
affecting their use as currency in ordinary times. But all experience
had shown that there were periods when, under any system of paper
money, however carefully guarded, it was impracticable to maintain
actual coin redemption. Usually contracts would be based upon
current paper money, and it was just that, during a sudden panic,
or an unreasonable demand for coin, the creditor should not be
allowed to demand payment in other than the currency upon which
the debt was contracted. To meet this contingency, it would seem
to be right to maintain the legal tender quality of the United
States notes. If they were not at par with coin it was the fault
of the government and not of the debtor, or, rather, it was the
result of unforseen stringency not contemplated by the contracting
parties.
In establishing a system of paper money, designed to be permanent,
I said it should be remembered that theretofore no expedient had
been devised, either in this or other countries, that in times of
panic or adverse trade had prevented the drain and exhaustion of
coin reserves, however large or carefully guarded. Every such
system must provide for a suspension of specie payment. Laws might
forbid or ignore such a contingency, but it would come; and when
it came it could not be resisted, but had to be acknowledged and
declared, to prevent unnecessary sacrifice and ruin. In our free
government the power to make this declaration would not be willingly
intrusted to individuals, but should be determined by events and
conditions known to all. It would be far better to fix the maximum
of legal tender notes at $300,000,000, supported by a minimum
reserve of $100,000,000, of coin, only to be used for the redemption
of notes, not to be reissued until the reserve was restored. A
demand of coin to exhaust such a reserve might not occur, but, if
events should force it, the fact would be known and could be
declared, and would justify a temporary suspension of specie
payments. Some such expedient could, no doubt, be provided by
Congress for an exceptional emergency. In other times the general
confidence in these notes would maintain them at par in coin, and
justify their use as reserves of banks and for the redemption of
bank notes.
As to the fractional currency I said the resumption act provided
for the exchange and substitution of silver coins for such currency.
To facilitate this exchange, the joint resolution, approved July
22, 1876, provided that such coin should be issued to an amount
not exceeding $10,000,000, for an equal amount of legal tender
notes. It also provided that the aggregate amount of such coin
and fractional currency outstanding should not exceed, at any time,
$50,000,000. That limit would have been reached if the whole amount
of fractional currency issued and not redeemed, had been held to
be "outstanding." It was well known, however, that a very large
amount of fractional currency issued had been destroyed, and could
not be presented for redemption, and could hardly be held to be
"outstanding." The Treasurer of the United States, the Comptroller
of the Currency, and the Director of the Mint concurred in estimating
the amount, so lost and destroyed, to be not less than $8,083,513.
As it was evident that Congress intended to provide an aggregate
issue of $50,000,000 of such coin and currency in circulation, I
directed the further issue of silver coin, equal in amount to the
currency estimated to have been lost and destroyed.
I recommended that the limitation upon the amount of such fractional
coin, to be issued in exchange for United States notes, be repealed.
The coin was readily taken, was in great favor with the people,
its issue was profitable to the government, and experience had
shown that there was no difficulty in maintaining it at par with
United States notes. The estimated amount of such coin in circulation
in the United States in 1860, at par with gold, was $43,000,000.
Great Britain, with a population of 32,000,000, maintained an
inferior fractional coin to the amount of $92,463,500, at par with
gold, and other nations maintained a much larger _per capita_
amount. The true limit of such coin was the demand that might be
made for its issue, and if only issued in exchange for United
States notes there was no danger of an excess being issued.
By the coinage act of 1873, any person might deposit silver bullion
at the mint to be coined into trade dollars of the weight of 420
grains, troy, upon the payment of the cost of coinage. This
provision had been made at a time when such a dollar, worth in the
market $1.02-13/100 in gold, was designed for the use of trade in
China, where silver was the only standard. By the joint resolution
of July 22, 1876, passed when the trade dollar in market value,
had fallen greatly below one dollar in gold, it was provided that
it should not be thereafter a legal tender, and the Secretary of
the Treasury was authorized "to limit the coinage thereof to such
an amount as he may deem sufficient to meet the export demand for
the same." Under these laws the amount of trade dollars issued,
mainly for exportation, was $30,710,400.
In October, 1877, it became apparent that there was no further
export demand for trade dollars, but deposits of silver bullion
were made, and such dollars were demanded of the mint for circulation
in the United States, that the owner might secure the difference
between the value of such bullion in the market and United States
notes. At the time the mints were fully occupied by the issue of
fractional, and other coins, on account of the government. Therefore,
under the authority of the law of 1876 referred to, I directed that
no further issues of trade dollars be made until necessary again
to meet an export demand. In case another silver dollar was
authorized, I recommended that the trade dollar be discontinued.
The question of the issue of a silver dollar for circulation as
money had, previous to my report, been discussed and carefully
examined by a commission organized by Congress, which had recommended
the coinage of the old silver dollar. With such legislative
provisions as would maintain its current value at par with gold,
its issue was recommended by me. I thought a gold coin of the
denomination of one dollar was too small for convenient circulation,
while such a coin in silver would be convenient for a multitude of
daily transactions, and in a form to satisfy the natural instinct
of hoarding.
I discussed the silver question to some length and said that of
the metals, silver was of the most general use for coinage. It
was a part of every system of coinage, even in countries where gold
was the sole legal standard. It best measured the common wants of
life, but, from its weight and bulk, was not a convenient medium
in the larger exchanges of commerce. Its production was reasonably
steady in amount. The relative market value of silver and gold
was far more stable than that of any other two commodities--still,
it did vary. It was not in the power of human law to prevent the
variation. This inherent difficulty had compelled all nations to
adopt one or the other as the sole standard of value, or to authorize
an alternative standard of the cheaper coin, or to coin both metals
at an arbitrary standard, and to maintain one a par with the other
by limiting the amount and legal tender quality of the cheaper
coin, and receiving or redeeming it at par with the other.
It had been the careful study of statesmen for many years to secure
a bimetallic currency not subject to the changes of market value,
and so adjusted that both kinds could be kept in circulation
together, not alternating with each other. The growing tendency
had been to adopt, for coins, the principle of "redeemability"
applied to different forms of paper money. By limiting tokens,
silver, and paper money, to the amount needed for business, and
promptly receiving or redeeming all that might at any time be in
excess, all these forms of money could be kept in circulation, in
large amounts, at par with gold. In this way, tokens of inferior
intrinsic value were readily circulated, and did not depreciate
below the paper money into which they were convertible. The
fractional coin then in circulation, though the silver of which it
was composed was of less market value than the paper money, passed
readily among all classes of people and answered all the purposes
for which it was designed. And so the silver dollar, if restored
to our coinage, would greatly add to the convenience of the people.
But this coin should be subject to the same rule, as to issue and
convertibility, as other forms of money. If the market value of
the silver in it was less than that of gold coin of the same
denomination, and it was issued in unlimited qualities, and made
a legal tender for all debts, it would demonetize gold and depreciate
our paper money.
The importance of gold as the standard of value was conceded by
all. Since 1834, it had been practically the sole coin standard
of the United States, and, since 1815, been the sole standard of
Great Britain. Germany had recently adopted the same standard.
France, and other Latin nations, had suspended the coinage of
silver, and, it was supposed, would gradually either adopt the sole
standard of gold, or provide for the convertibility of silver coin,
on the demand of the holder, into gold coin.
In the United States, several experiments had been made with the
view of retaining both gold and silver in circulation. The 2nd
Congress undertook to establish the ratio of fifteen of silver to
one of gold, with free coinage of both metals. By this ratio gold
was under-valued, as one ounce of gold was worth more in the markets
of the world than fifteen ounces of silver, and gold, therefore,
was exported. To correct this, in 1837, the ratio was fixed at
sixteen to one, but sixteen ounces of silver were worth, in the
market, more than one ounce of gold, so that silver was demonetized.
These difficulties in the adjustment of gold and silver coinage
had been fully considered by Congress, prior to the passage of the
act approved February 21, 1853. By that act a new, and it was
believed a permanent, policy was adopted to secure the simultaneous
circulation of both silver and gold coins in the United States.
Silver fractional coins were provided for at a ratio of 14.88 in
silver to one in gold, and were only issued in exchange for gold
coin. The right of private parties to deposit silver bullion for
such coinage was repealed, and these coins were issued from bullion
purchased by the Treasurer of the Mint, and only upon the account,
and for the profit, of the United States. The coin was a legal
tender only in payment of debts for all sums not exceeding five
dollars. Though the silver in this coin was then worth in the
market 3.13 cents on the dollar less than gold coin, yet its
convenience for use in change, its issue by the government only in
exchange for, and its practical convertibility into, gold coin,
maintained it in circulation at par with gold coin. If the slight
error in the ratio of 1792 prevented gold from entering into
circulation for forty-five years, and the slight error in 1837
brought gold into circulation and banished silver until 1853, how
much more certainly would an error then of nine per cent. cause
gold to be exported and silver to become the sole standard of value?
Was it worth while to travel again the round of errors, when
experience had demonstrated that both metals could only be maintained
in circulation together by adhering to the policy of 1853?
The silver dollar was not mentioned in the act of 1853, but from
1792 until 1874 it was worth more in the market than the gold dollar
provided for in the act of 1837. It was not a current coin
contemplated as being in circulation at the passage of the act of
February 12, 1873. The whole amount of such dollars, issued prior
to 1853, was $2,553,000. Subsequent to 1853, and until it was
dropped from our coinage in 1873, the total amount issued was
$5,492,838, and this was almost exclusively for exportation.
By the coinage act approved February 12, 1873, fractional silver
coins were authorized, similar in general character to the coins
of 1853, but with a slight increase in silver in them, to make them
conform exactly to the French coinage, and the old dollar was
replaced by the trade dollar of 420 grains of standard silver.
Much complaint had been made that this was done with the design of
depriving the people of the privilege of paying their debts in a
cheaper money than gold, but it was manifest that this was an error.
No one then did or could foresee the subsequent fall in the market
value of silver. The silver dollar was an unknown coin to the
people, and was not in circulation even on the Pacific slope, where
coin was in common use. The trade dollar of 420 grains was
substituted for the silver dollar of 412½ grains because it was
believed that it was better adapted to supersede the Mexican dollar
in the Chinese trade, and experiment proved this to be true. Since
the trade dollar was authorized $30,710,400 had been issued, or
nearly four times the entire issue of old silver dollars since the
foundation of the government. Had not the coinage act of 1873
passed, the United States would have been compelled to suspend the
free coinage of silver dollars, as the Latin nations were, or to
accept silver as the sole coin standard of value.
Since February, 1873, great changes had occurred in the market
value of silver. Prior to that time the silver in the old dollar
was worth more than a gold dollar, while it was worth then, in
1877, about 92 cents. If by law any holder of silver bullion might
deposit in the mint and demand a full legal tender dollar for every
412½ grains of standard silver deposited, the result would be
inevitable that as soon as the mints could supply the demand the
silver dollar would, by a financial law as fixed and invariable as
the law of gravitation, become the only standard of value. All
forms of paper money would fall to that standard or below it, and
gold would be demonetized and quoted at a premium equal to its
value in the markets of the world. For a time the run to deposit
bullion at the mint would give to silver an artificial value, of
which the holders and producers of silver bullion would have the
sole benefit. The utmost capacity of the mints would be employed
for years to supply this demand at the cost of, and without profit
to, the people. The silver dollar would take the place of gold as
rapidly as coined, and be used in the payment of customs duties,
causing an accumulation of such coins in the treasury. If used in
paying the interest on the public debt, the grave questions then
presented would arise with public creditors, seriously affecting
the public credit.
It had been urged that the free coinage of silver in the United
States would restore its market value to that of gold. Market
value was fixed by the world, and not by the United States alone,
and was affected by the whole mass of silver in the world. As the
enormous and continuous demand for silver in Asia had not prevented
the fall of silver, it was not likely that the limited demand for
silver coin in this country, where paper money then was, and would
be, the chief medium of exchange, would cause any considerable
advance in its value. This advance, if any, would be secured by
the demand for silver bullion for coin, to be issued by and for
the United States, as well as if it were issued for the benefit of
the holder of the bullion. If the financial condition of our
country was so grievous that we must at every hazard have a cheaper
dollar, in order to lessen the burden of debts already contracted,
it would be far better, rather than to adopt the single standard
of silver, to boldly reduce the number of grains in the gold dollar,
or to abandon and retrace all efforts to make United States notes
equal to coin. Either expedient would do greater harm to the public
at large than any possible benefit to debtors.
The free coinage of silver would also impair the pledge made of
the customs duties, by the act of February, 1862, for payment of
the interest of the public debt. The policy adhered to of collecting
these duties in gold coin, had been the chief cause of upholding
and advancing the public credit, and making it possible to lessen
the burden of interest by the process of refunding.
In view of these considerations, I felt it to be my duty to earnestly
urge upon Congress the serious objections to the free coinage of
silver on such conditions as would demonetize gold, greatly disturb
all the financial operations of the government, suddenly revolutionize
the basis of our currency, throw upon the government the increased
cost of coinage, arrest the refunding of the public debt, and impair
the public credit, with no apparent advantage to the people at
large.
I believed that all the beneficial results hoped for from a liberal
issue of silver coin could be secured by issuing this coin, in
pursuance of the general policy of the act of 1853, in exchange
for United States notes, coined from bullion purchased in the open
market, by the United States, and by maintaining it by redemption,
or otherwise, at par with gold coin. It could be made a legal
tender for such sums and on such contracts as would secure to it
the most general circulation. It could be easily redeemed in United
States notes and gold coin, and only reissued when demanded for
public convenience. If the essential quality of redeemability
given to the United States notes, bank bills, tokens, fractional
coins and currency, maintained them at par, how much easier it
would be to maintain the silver dollar, of intrinsic market value
nearly equal to gold, at par with gold coin, by giving to it the
like quality of redeemability. To still further secure a fixed
relative value of silver and gold, the United States might invite
an international convention of commercial nations. Even such a
convention, while it might check the fall of silver, could not
prevent the operation of that higher law which places the market
value of silver above human control. Issued upon the conditions
stated, I was of opinion that the silver dollar would be a great
public advantage, but that if issued without limit, upon the demand
of the owners of silver bullion, it would be a great public injury.
CHAPTER XXXII.
ENACTMENT OF THE BLAND-ALLISON SILVER LAW.
Amendments to the Act Reported by the Committee on Finance--Revival
of a Letter Written by Me in 1868--Explained in Letter to Justin
S. Morrill Ten Years Later--Text of the Bland Silver Bill as Amended
by the Senate and Agreed to by the House--Vetoed by President Hayes
--Becomes a Law Notwithstanding His Objections--I Decide to Terminate
the Existing Contract with the Syndicate--Subscriptions Invited
for Four per Cent. Bonds--Preparations for Resumption--Interviews
with Committees of Both Houses--Condition of the Bank of England
as Compared with the United States Treasury--Mr. Buckner Changes
His Views Somewhat.
The President's message supported and strengthened the position
taken by me both in favor of the policy of resumption and against
the free coinage of silver provided for in the Bland bill. The
comments in the public press, both in the United States and in
Europe, generally sustained the position taken by the President
and myself. I soon had assurances that the Bland bill would not
pass the Senate without radical changes. Even the House of
Representatives, so recently eager to repeal the resumption act,
and so hasty and united for the free coinage of silver, had become
more conservative and would not have favored either measure without
material changes. I conversed with Mr. Allison and wrote him the
following letter:
"Washington, D. C., December 10, 1877.
"Hon. W. B. Allison, U. S. Senate.
"Dear Sir:--Permit me to make an earnest appeal to you to so amend
the silver bill that it will not arrest the refunding of our debt
or prevent the sale of our four per cent. bonds. I know that upon
you must mainly rest the responsibility of this measure, and I
believe that you would not do anything that you did not think would
advance the public service, whatever pressure might be brought to
bear upon you.
"It is now perfectly certain that unless the customs duties and
the public debt--as least so much of it as was issued since February,
1873--are excepted, we cannot sell the bonds. The shock to our
credit will bring back from abroad United States bonds, and our
people will then have a chance to buy the existing bonds and we
cannot sell the four per cent. bonds. This will be a grievous loss
and damage to the administration and to our party, for which we
must be held responsible. You know I have been as much in favor
of the silver dollar as anyone, but if it is to be used to raise
these difficult questions with public creditors, it will be an
unmixed evil.
"I wish I could impress you as I feel about this matter, and I know
you would then share in the responsibility, if there is any, in so
amending this bill that we can have all that is good out of it
without the sure evil that may come from it if it arrests our
funding and resumption operations.
"With much respect, yours, etc.
"John Sherman.
The amendments to the Bland bill proposed by Mr. Allison from the
committee on finance, completely revolutionized the measure. The
Senate committee proposed to strike out these words in the House
bill:
"And any owner of silver bullion may deposit the same at any coinage
mint or assay office, to be coined into such dollars, for his
benefit, upon the same terms and conditions as gold bullion is
deposited for coinage under existing laws."
And to insert the following:
"And the Secretary of the Treasury is authorized and directed, out
of any money in the treasury not otherwise appropriated, to purchase,
from time to time, at the market price thereof, not less than
$2,000,000 per month, nor more than $4,000,000 per month, and cause
the same to be coined into such dollars. And any gain or seigniorage
arising from this coinage shall be accounted for and paid into the
treasury, as provided under existing laws relative to the subsidiary
coinage: _Provided_, that the amount of money at any one time
invested in such silver bullion, exclusive of such resulting coin,
shall not exceed $5,000,000."
These amendments were agreed to.
Sections two and three of the bill were added by the Senate. The
bill, as amended, was sent to the House of Representatives, and
the Senate amendments were agreed to. The bill as amended was as
follows;
"AN ACT TO AUTHORIZE THE COINAGE OF THE STANDARD SILVER DOLLAR,
AND TO RESTORE ITS LEGAL TENDER CHARACTER.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That there shall
be coined, at the several mints of the United States, silver dollars
of the weight of four hundred and twelve and a half grains troy of
standard silver, as provided in the act of January eighteenth,
eighteen hundred thirty-seven, on which shall be the devices and
superscriptions provided by said act; which coins, together with
all silver dollars heretofore coined by the United States, of like
weight and fineness, shall be a legal tender, at their nominal
value, for all debts and dues, public and private, except where
otherwise expressly stipulated in the contract. And the Secretary
of the Treasury is authorized and directed to purchase, from time
to time, silver bullion, at the market price thereof, not less than
two million dollars worth per month, nor more than four million
dollars worth per month, and cause the same to be coined monthly,
as fast as so purchased, into such dollars; and a sum sufficient
to carry out the foregoing provision of this act is hereby appropriated
out of any money in the treasury not otherwise appropriated. And
any gain or seigniorage arising from this coinage shall be accounted
for and paid into the treasury, as provided under existing laws
relative to the subsidiary coinage: _Provided_, That the amount
of money at any one time invested in such silver bullion, exclusive
of such resulting coin, shall not exceed five million dollars:
_And provided further_, That nothing in this act shall be construed
to authorize the payment in silver of certificates of deposit issued
under the provisions of section two hundred and fifty-four of the
Revised Statutes.
"Sec. 2. That immediately after the passage of this act, the
President shall invite the governments of the countries composing
the Latin union, so-called, and of such other European nations as
he may deem advisable, to join the United States in a conference
to adopt a common ratio between gold and silver, for the purpose
of establishing, internationally, the use of bimetallic money, and
securing fixity of relative value between those metals; such
conference to be held at such place, in Europe or in the United
States, at such time within six months, as may be mutually agreed
upon by the executives of the governments joining in the same,
whenever the governments so invited, or any three of them, shall
have signified their willingness to unite in the same.
"The President shall, by and with the advice and consent of the
Senate, appoint three commissioners, who shall attend such conference
on behalf of the United States, and shall report the doings thereof
to the President, who shall transmit the same to Congress.
"Said commissioners shall each receive the sum of two thousand five
hundred dollars and their reasonable expenses, to be approved by
the Secretary of State; and the amount necessary to pay such
compensation and expenses is hereby appropriated out of any money
in the treasury not otherwise appropriated.
"Sec. 3. That any holder of the coin authorized by this act may
deposit the same with the treasurer or any assistant treasurer of
the United States in sums not less than ten dollars, and receive
therefor certificates of not less than ten dollars each, corresponding
with the denominations of the United States notes. The coin
deposited for or representing the certificates shall be retained
in the treasury for the payment of same upon demand. Said certificates
shall be receivable for customs, taxes, and all public dues, and,
when so received, may be reissued.
"Sec. 4. All acts and parts of acts inconsistent with the provisions
of this act are hereby repealed."
It was sent to the President, and was disapproved by him. His veto
message was read in the House on the 28th of February, and upon
the question whether the bill should pass, the objections of the
President notwithstanding, it was adopted by a vote of yeas 196,
nays 73. It passed the Senate on the same day, by a vote of yeas
46, nays 19, and thus became a law.
I did not agree with the President in his veto of the bill, for
the radical changes made in its terms in the Senate had greatly
changed its effect and tenor. The provisions authorizing the
Secretary of the Treasury to purchase not less than $2,000,000
worth of silver bullion per month, at market price, and to coin it
into dollars, placed the silver dollars upon the same basis as the
subsidiary coins, except that the dollar contained a greater number
of grains of silver than a dollar of subsidiary coins, and was a
legal tender for all debts without limit as to amount. The provision
that the gain or seigniorage arising from the coinage should be
accounted for and paid into the treasury, as under the existing
laws relative to subsidiary coinage, seemed to remove all serious
objections to the measure. In view of the strong public sentiment
in favor of the free coinage of the silver dollar, I thought it
better to make no objections to the passage of the bill, but I did
not care to antagonize the wishes of the President. He honestly
believed that it would greatly disturb the public credit to make
a legal tender for all amounts, of a dollar, the bullion of which
was not of equal commercial value to the gold dollar.
The provision made directing the President to invite the governments
of the countries composing the Latin Union, and of such other
European countries as he deemed advisable, to unite with the United
States in adopting a common ratio between gold and silver, has been
made the basis of several conferences which have ended without any
practical result, and the question of a single or double standard
still stands open as the great disturbing question of public policy,
affecting alike all commercial countries.
While this measure was pending in the Senate, a casual letter
written by me ten years previously was frequently quoted, as evidence
that I was then in favor of paying the bonds of the United States
with United States notes, at that date at a large discount in coin.
The letter is as follows:
"United States Senate Chamber,}
"Washington, March 20, 1868. }
"Dear Sir:--I was pleased to receive your letter. My personal
interests are the same as yours, but, like you, I do not intend to
be influenced by them. My construction of the law is the result
of a careful examination, and I feel quite sure an impartial court
would confirm it, if the case could be tried before a court. I
send you my views, as fully stated in a speech. Your idea is that
we propose to repudiate or violate a promise when we offer to redeem
the 'principal' in 'legal tender.' I think the bondholder violates
his promise when he refuses to take the same kind of money he paid
for the bonds. If the coin is to be tested by the law, I am right;
if it is to be tested by Jay Cooke's advertisements, I am wrong.
I hate repudiation, or anything like it, but we ought not to be
deterred from doing what is right by fear of undeserved epithets.
If, under the law as it now stands, the holder of the 5-20's can
only be paid in gold, then we are repudiators if we propose to pay
otherwise. If, on the other hand, the bondholder can legally demand
only the kind of money he paid, he is a repudiator and an extortioner
to demand money more valuable than he gave.
"Your truly,
"John Sherman.
"Hon. A. Mann, Jr., Brooklyn Heights."
On the 26th of March, 1878, I wrote the following letter to Senator
Justin S. Morrill, which was read by him in the debate, and, I
think, was a conclusive answer to the erroneous construction put
upon my letter to Mann:
"My Dear Sir:--Your letter of the 24th inst. is received. I have
noticed that my casual letter to Dr. Mann, of the date of March
20, 1868, inclosing a speech made by me, has been frequently used
to prove that I have changed my opinion since that time as to the
right of the United States to pay the principal of the 5-20 bonds
in legal tenders. This would not be very important, if true, but
it is not true, as I never have changed my opinion as to the
technical legal right to redeem the principal of the 5-20 bonds in
legal tenders, but, as you know and correctly state, have always
insisted that we could not avail ourselves of this legal right
until we complied, in all respects, with the legal and moral
obligations imposed by the legal tender note, to redeem it in coin
on demand or to restore the right to convert it into an interest-
bearing government bond. The grounds of this opinion are very
fully stated in the speech made February 27, 1868, referred to in
the letter to Dr. Mann, and in a report on the funding bill made
by me from the committee on finance, December 7, 1867.
"If my letter is taken in connection with the speech which it
inclosed and to which it expressly referred, it will be perceived
that my position there is entirely consistent with what it is now,
and time has proven that, if the report of the committee on finance
had been adopted, we would long since have reached the coin standard,
with an enormous saving of interest, and without impairing the
public credit. My position was, that while the legal tender act
made United States notes a legal tender for all debts, private and
public, except for customs duties and interest of the public debt,
yet we could not honestly compel the public creditors to receive
United States notes in the payment of bonds until we made good the
pledge of the public faith to pay the notes in coin. That promise
was printed on the face of the notes when issued, was repeated in
several acts of Congress, and was declared valid and obligatory by
the Supreme Court.
"From the first issue of the legal tender note, which I heartily
supported and voted for, I have sought to make it good, to support,
maintain and advance its value. It was in the earnest effort to
restore to the greenback the right to be converted, on the demand
of the holder, into a five per cent. bond and, as soon as practicable,
into coin, that I made the speech referred to, resisting alike the
demand of those who wished to exclude United States notes from the
operation of funding and the large class of persons who wished to
cheapen, degrade and ultimately repudiate them. In all my official
connection with legislation as to legal tender notes, I have but
one act to regret and to apologize for, and that is my acquiescence
in the act of March 3, 1863, which, under the pressure of war and
to promote the sale of bonds, took away from the holders of these
notes the right to convert them into interest-bearing securities.
This right might properly have been suspended during the war, but
its repeal was a fatal act, the source and cause of all the financial
evils we have suffered and from which we cannot recover until we
restore that right or redeem on demand our notes in coin.
"The speech referred to, and which I have recently read by reasons
of the reference to it in the letter to Dr. Mann, will clearly show
that I have not been guilty of inconsistency or a change of opinion
--the most pardonable of all offenses--but then insisted, as I now
insist, that no discrimination should be made against the note
holder, but that until we are ready to pay him in coin he should
be allowed, at his option, to convert his money into a bond at par.
Until then our notes are depreciated by our wrongful act, and we
have no right to take advantage of our own wrong by forcing upon
the bondholders the notes we refuse to receive. This is the precise
principle involved in the act to strengthen the public credit,
approved March 18, 1869. That act did not in any respect change
the legal and moral obligations of the United States, but expressly
provides that none of the interest-bearing obligations not already
due shall be redeemed or paid before maturity, unless at such time
as the United States notes shall be convertible into coin, at the
option of the holder. And the act further 'solemnly pledges the
public faith to make provisions, at the earliest practicable period,
for the redemption of United States notes in coin.'
"This is in exact harmony with the position I held when I wrote
the letter to Dr. Mann and that I now maintain, the primary principle
being that the United States notes shall first be brought to par
in coin before they shall be forced upon the public creditor in
payment of his bonds. This act is the settled law, and whatever
any man's opinions were before it passed, he would assume a grave
responsibility who would seek to evade its terms, weaken its
authority or change its provisions. It has entered into every
contract made since that time. It has passed the ordeal of four
Congresses and two elections for Presidents. It cannot be revoked
without public dishonor. So far as the bondholder is concerned,
it is an executed law. Over $700,000,000 of bonds have been redeemed
in coin under it, and the civilized world regards all the remainder
as covered by its sanction, and in their faith in it our securities
have become the second only in the markets of the world. This law
is not yet quite executed so far as the note holder is concerned.
His note is not yet quite as good as coin. Congress has debated
ever since its passage the best mode to make it good. The Senate
in 1870 provided, in the third section of the refunding act, as it
passed that body, that these notes might be converted into four
per cent. bonds, but the House would not concur. Everybody can
now see that if this had been done these notes would now be at par
in coin. Other expedients were proposed, and finally the resumption
act was passed, and, if undisturbed, is now on the eve of execution.
"The promise made in 1862, and so often repeated, is about to be
fulfilled. Agitation on collateral questions may delay it, but
the obligation of public faith, written on the face of every United
States note and sacredly pledged by the act to strengthen the public
credit, will give us neither peace nor assured prosperity until it
is fulfilled. Public opinion may vibrate, and men and parties may
array themselves against the fulfillment of these public promises,
but in time they will be fulfilled, and I think the sooner the
better. Pardon me for this long answer to your note, but I have
no time to condense it.
"Very respectfully,
"John Sherman."
Relief from the fear of the enactment of the Bland bill, and the
limitation of the amount of silver dollars to be coined, removed
the great impediment to the sale of four per cent. bonds, for
refunding purposes, and the progress toward specie payments.
As already indicated, I had concluded to terminate the existing
contract with the syndicate, and to make the sales directly through
national bank depositaries, and the treasury and sub-treasuries of
the United States. I therefore gave August Belmont & Co. the
following notice:
"Treasury Department, January 14, 1878.
"Messrs. August Belmont & Co., New York.
"Gentlemen:--In compliance with the second clause of the contract
between the Secretary of the Treasury and yourselves and associates,
of the date of June 9, 1877, for the sale of four per cent. bonds,
I give you notice that from and after the 26th day of January
instant that contract is terminated. It is the desire of the
President, in which I concur, to open subscriptions in the United
States to the four per cent. bonds in a different way from that
provided in our contract, and therefore this notice is given. I
sincerely hope to have your active co-operation in the new plan,
and am disposed, if you are willing, to continue in substance, by
a new contract with you, the sale of these bonds in European markets,
and invite your suggestions to that end.
"Very respectfully,
"John Sherman, Secretary."
I received from them the following answer:
"New York, January 15, 1878.
"Hon. John Sherman, Secretary of the Treasury, Washington.
"Dear Sir:--We beg to acknowledge receipt of your favor of the 14th
instant, notifying us of the termination of the contract of June
9, 1877, for the sale of four per cent. bonds, on the 29th of this
month, which we have communicated to the associates here and in
London.
"We have also communicated to our friends in London your willingness
to continue the contract for the sale of the four per cent. bonds
in Europe, with such modifications as may become necessary, and as
soon as we have received their views we shall take pleasure in
writing to you again for the purpose of appointing a conference on
the subject.
"In the meantime, we remain, very respectfully,
"Aug. Belmont & Co."
Notice was given to Mr. Conant of the termination of the contract,
but he was advised by me that we would probably agree to the
continuance of the syndicate in the European markets. He had
expressed to me a fear that a panic would occur about our bonds in
Europe, on account of the anticipated passage of the Bland bill,
but I was able to assure him that it would not become a law in the
form originally proposed.
Being thus free from all existing contracts, I published the
following notice inviting subscriptions to the four per cent. bonds:
"Treasury Department, }
"Washington, D. C., January 16, 1878.}
"The Secretary of the Treasury hereby gives notice that, from the
26th instant, and until further notice, he will receive subscriptions
for the four per cent. funded loan of the United States, in
denominations as stated below, at par and accrued interest, in coin.
"The bonds are redeemable July, 1907, and bear interest, payable
quarterly, on the first day of January, April, July, and October,
of each year, and are exempt from the payment of taxes or duties
to the United States, as well as from taxation in any form by or
under state, municipal, or local authority.
"The subscriptions may be made for coupon bonds of $50, $100, $500,
and $1,000, and for registered bonds of $50, $100, $500, $1,000,
$5,000, and $10,000.
"Two per cent. of the purchase money must accompany the subscription;
the remainder may be paid at the pleasure of the purchaser, either
at the time of subscription or within thirty days thereafter, with
interest on the amount of the subscription, at the rate of four
per cent. per annum, to date of payment.
"Upon the receipt of full payment, the bonds will be transmitted,
free of charge, to the subscribers, and a commission of one-fourth
of one per cent. will be allowed upon the amount of subscriptions,
but no commission will be paid upon any single subscription less
than $1,000.
"Forms of application will be furnished by the treasurer at
Washington, the assistant treasurers at Baltimore, Boston, Chicago,
Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and
San Francisco, and by the national banks and bankers generally.
The applications must specify the amount and denominations required,
and, for registered bonds, the full name and post office address
of the person to whom the bonds shall be made payable.
"The interest on the registered bonds will be paid by check, issued
by the treasurer of the United States, to the order of the holder,
and mailed to his address. The check is payable on presentation,
properly indorsed, at the offices of the treasurer and assistant
treasurers of the United States.
"Payments for the bonds may be made in coin to the treasurer of
the United States at Washington, or the assistant treasurers at
Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York,
Philadelphia, St. Louis, and San Francisco.
"To promote the convenience of subscribers, the department will
also receive, in lieu of coin, called bonds of the United States,
coupons past due or maturing within thirty days, or gold certificates
issued under the act of March 3, 1863, and national banks will be
designated as depositaries under the provisions of section 5153,
Revised Statutes of the United States, to receive deposits on
account of this loan, under regulations to be hereafter prescribed.
"John Sherman, Secretary of the Treasury."
After the publication of this notice inviting subscriptions to the
four per cent. bonds, I found that the chief impediment in my way
was the apparent disposition of both Houses of Congress to require
the called bonds to be paid in United States notes. This was not
confined to any party, for, while the majority of the Democrats of
each House were in favor of such payment, many of the prominent
Republicans were fully committed to the same policy. I was requested
by committees of the two Houses, from time to time, to appear before
them, which, in compliance with the law, I cheerfully did, and
found that a free and unrestricted statement of what I proposed to
do was not only beneficial to the public service, but soon induced
Congress not to interfere with my plans for resumption. My first
interview was on the 11th of March, 1878, with the committee on
coinage of the House, of which Alexander H. Stephens, of Georgia,
was chairman. I was accompanied by H. R. Linderman, Director of
the Mint. The notes of the conference were ordered by the House
of Representatives to be printed, and the committee was convinced
of the correctness of the statements in regard to the amount of
actual coin and bullion on hand, and where it was situated, which
had been previously doubted.
On the 19th of March, I had an interview with the Senate committee
on finance, of which Mr. Morrill, of Vermont, was chairman. I was
examined at great length and detail as to the preparations for
resumption, and the actual state of the treasury at that time.
The principal topic discussed was whether the four per cent. bonds
could be sold, Mr. Bayard being evidently in favor of the substitution
of the four and a half per cents. for the four per cent. bonds I
had placed on the market. The question of how to obtain gold coin
and bullion was fully considered in this interview, and here I was
able to convince the committee that a purchase of domestic gold
coin and bullion would meet all the requirements of the treasury,
and that no necessity existed for the purchase of gold abroad.
This interview, which covers over twenty printed pages, I believe
entirely satisfied the committee of the expediency of the steps
taken by me and their probable success. After this interview I
had the assistance of the committee of finance, without regard to
party, in the measures adopted by me. Mr. Bayard and Mr. Kernan
gave me their hearty support, and Mr. Voorhees made no unfriendly
opposition. The report of this interview was subsequently published,
and had a good effect upon the popular mind.
By far the most important interview was one with the committee on
banking and currency, of the House of Representatives, of which A.
H. Buckner, of Missouri, was chairman. A large majority of this
committee had reported a bill to repeal the resumption act, and
the members of the committee of each party were among the most
pronounced greenbackers in the House of Representatives. Perhaps
the most aggressive was Thomas Ewing, a friend, and by marriage a
relative of mine, a Member of ability and influence, and thoroughly
sincere in his convictions against the policy of resumption. I
was summoned before this committee to answer a series of interrogatories
furnished me a few days previously, calling for statements as to
the actual amount of gold and silver belonging to, and in the
custody of, the treasury department on the 28th of March, where
located and what deductions were to be made from it, on account of
actual existing demands against it. This interview, extending
through several days, and covering seventy-three printed pages,
embraced every phase of the financial condition of the United
States, and the policy of the treasury department in the past and
in the future. At the end of the first day the principal question
seemed to be whether it was possible that the United States could
resume specie payments and maintain them. This led to a careful
scrutiny of the amount of gold in the treasury, Mr. Ewing assuming
that a portion of the amount stated was "phantom" gold, and was
really not available for the purposes of resumption. I said that
the United States would be, on the 1st of January, in a better
condition to resume specie payments than the Bank of England was
to maintain them, and gave my reasons for that opinion. I saw that
Mr. Ewing regarded this statement as an exaggeration.
After the adjournment I understood that Mr. Ewing said that I was
grossly in error, and that he would be able to show it by authentic
documents as to the condition of the Bank of England. He said that
I was laboring under delusions, which he would be able to expose
at the next meeting. When we again met with the full committee
present, Mr. Ewing said:
"I ask your attention to a comparison of the condition of the
treasury for resumption with the condition of the Bank of England
in 1819 and now, with the Bank of France this year, and with the
banks of the United States in 1857 and 1861."
To this I replied:
"When I said the other day that I thought the condition of the
treasury, on the 1st of January next, would be as good as the Bank
of England, I had not then before the actual figures or tables,
but only spoke from a general knowledge of the facts. Since then
I have given the matter a good deal of attention, and now have some
carefully prepared tables, founded upon late information, giving
the exact comparison of the condition of the Bank of England, the
Bank of France, the Bank of Germany, the Bank of Belgium, the
national banks, and the treasury. These tables will show that
pretty accurately."
I handed the tables to the committee, and they are printed with
the report. I then proceeded to show in detail that while the Bank
of England had notes outstanding to the amount of £38,698,020, it
had on hand as assets: Government debt, £11,015,100; other
securities, £3,984,900; gold coin and bullion, £23,698,020; that
upon this it was apparent that in the issue department the Bank of
England was stronger than the United States; but in the banking
department, the bank was liable for deposits, the most dangerous
form of liability, and various other forms of liability, to the
amount of £46,277,277. To pay these it had government securities,
notes and other securities and £1,032,773 gold and silver coin, in
all amounting to £46,277,277. Combining these accounts it was
shown that the demand liabilities on the bank were £54,639,171,
while the gold and bullion on hand was only £24,730,793. Then I
said:
"Now, in regard to the United States, I have a statement here
showing the apparent and probable condition of the United States
treasury on April 1, 1878, and on the 1st of January next. The
only difference in these statements is that I add to the present
condition of the treasury the proposed accumulation of fifty millions
of coin and a substantial payment before that of the fractional
currency. I think it will be practically redeemed before that
time. The actual results show the amount of demand liabilities on
April 1, 1878, against the United States, as $460,527,374, and they
show the demand resources, including coin and currency, at
$174,324,459, making the percentage of resources to liabilities
thirty-seven. To show the probable condition of the treasury on
the 1st of January, 1879, I add the fifty millions of coin and I
take off the fractional currency, and deducted estimated United
States notes lost and destroyed, leaving the other items about the
same. That would show an aggregate of probable liabilities of
$35,098,400 and probable cash resources of $224,324,459, making
fifty-one per cent. of the demand liabilities. The ratio of the
Bank of England, at this time, is forty-five per cent.; the ratio
of the Bank of France, is sixty-five per cent.; the ratio of the
Bank of Germany, is fifty-eight per cent.; and the ratio of the
Bank of Belgium, is twenty-five per cent., all based upon the same
figures."
I gave the statistics as to the condition of the national banks,
showing their assets and liabilities, that they were not bound to
redeem their notes in gold or silver, but could redeem them in
United States notes, of which they had on hand $97,083,248, and
besides they had deposited in the treasury, as security for their
notes, an amount of United States bonds ten per cent. greater than
the entire amount of their circulating notes, and that these bonds
were worth in the market a large premium in currency. In addition
to the legal tenders on hand, they had five per cent. of their
circulation in legal tender notes deposited in the treasury as a
redemption fund, amounting to $15,028,340. They had also on hand
gold and silver coin and gold certificates amounting to $32,907,750,
making a total cash reserve of $145,019,338. The ratio of their
legal tender funds to circulation was 48.4; ratio of legal tenders
to circulation and deposits, 15.1.
In this interview I explicitly stated to the committee my purpose
to sell bonds, under the resumption act, at the rate of $5,000,000
a month, to the aggregate amount of $50,000,000; that I was satisfied
I could make this sale upon favorable terms, and could add to the
coin then in the treasury the sum of $50,000,000 gold coin, which
I thought sufficient to secure and maintain the parity of our notes
with coin. Mr. Ewing inquired:
"Where do you expect to get the additional fifty millions of gold
by January 1, 1879?"
My answer was as follows:
"You must see that for me to state too closely what I propose to
do might prevent me from doing what I expect to do, and therefore
I will answer your question just as far as I think you will say I
ought to go. I answer, mainly from the sale of bonds. Indeed, in
the present condition of the revenue, we cannot expect much help
from surplus revenue, except so far as that surplus revenue may be
applied to the payment of greenbacks and to the redemption of
fractional currency in aid of the sinking fund. To that extent I
think we can rely upon revenue enough to retire the United States
notes redeemed under the resumption act; so that I would say that
we can get the $50,000,000 of gold additional by the sale of bonds.
As to the kind of bonds that I would sell, and as to how I would
sell them, etc., I ought not to say anything on that subject at
present, because you ought to allow me, as an executive officer,
in the exercise of a very delicate discretion, free power to act
as I think right at the moment, holding me responsible for my action
afterward. As to what bonds I will sell, or where I will sell
them, or how I will sell them, as that is a discretionary power
left with the secretary, I ought not to decide that now, but to
decide it as the case arises."
Some question was made by Mr. Ewing as to the ability to sell bonds,
and he asked:
"I understood you to say in your interview with the Senate committee
that you would have to rely upon the natural currents of trade to
bring gold from aborad; that is, that there cannot be a large sale
of bonds for coin abroad. Is it on a foreign sale that you are
relying?"
I replied:
"Not at all, but on a sale at home. Perhaps I might as well say
that if I can get two-thirds of this year's supply of gold and
silver from our own mines, it will amount to a good deal more that
$50,000,000, so that I do not have to go abroad for gold. If we
can keep our own gold and silver from going abroad, it is more than
I want."
Mr. Buckner inquired:
"For this $50,000,000 additional I suppose you rely, to some extent,
on the coinage of silver?"
I said:
"To some extent; silver and gold we consider the same under the
law."
Mr. Ewing asked:
"Do you expect to pay out the silver dollar coined by you for
current expenses, or only for coin liabilities, or to hoard it for
resumption?"
I said:
"I expect to pay it out now only in exchange for gold coin or for
silver bullion. I am perfectly free and answer the question fully,
because on that point, after consulting with many Members of both
Houses, I have made up my mind what the law requires me to do. I
propose to issue all the silver dollars that are demanded in exchange
for gold coin. That has been going on to some extent; how far I
cannot tell. Then I propose to use the silver in payment for silver
bullion, which I can do at par in gold. I then propose to buy all
the rest of the silver bullion which I need, under the law, with
silver coin. As a matter of course, in the current course of
business, some of that silver coin will go into circulation; how
much, I do not know. The more, the better for us. But most of
it, I take it, will be transferred to the treasury for silver
certificates (that seems to be the idea of the bill), and those
silver certificates will come into the treasury in payment of
duties, and in that way, practically, the silver will belong to
the government again."
Some question arose as to the reissue of treasury notes under the
resumption act. I expressed my opinion that all notes not in excess
of $300,000,000 could be reissued under existing laws, but as to
whether notes in excess of $300,000,000 could be reissued was a
question which I hoped Congress would settle, that I considered
the law as doubtful. Congress did subsequently suspend the retirement
of United States notes at $346,000,000.
The sinking fund and many other subjects were embraced in this
interview, the importance of which would justify a fuller statement
than I have given, but, as the interview has been published as a
public document, I do not give further details. I stated frankly
and explicitly what I intended to do if not interrupted by Congress.
I felt assured, not only from the Senate, but from what I could
learn from Members of the House, that no material change of existing
law would be made to prevent the proposed operations of the treasury
department. From that time forward I had not the least doubt of
success in preparing for and maintaining resumption, and refunding,
at a lower rate of interest, all the public debt then subject to
redemption.
I think I entirely satisfied the committee that the government was
not dealing with shadows, but had undertaken a task which it could
easily accomplish, if not prevented by our common masters, the
Congress of the United States. It was said of Mr. Buckner that
before I appeared before the committee, he regarded me as a visionary
enthusiast, who had undertaken to do what was impossible to be
done, that after the first day of the examination he came to the
conclusion that I was honest in my belief that resumption was
possible, but he did not believe in my ability to do what was
proposed; at the end of the second day he expressed some doubts of
the ability to resume, but said that the object aimed at was a good
one, and he was not disposed to interfere with the experiment; and
on the third day he said he believed I had faith in the success of
resumption, and would not interfere with it, but if I failed I
would be the "deadest man politically" that ever lived.
CHAPTER XXXIII.
SALE OF BONDS FOR RESUMPTION PURPOSES.
Arrangements Begun for the Disposal of $50,000,000 for Gold or
Bullion--Interviews with Prominent Bankers in New York--Proposition
in Behalf of the National Banks--Terms of the Contract Made with
the Syndicate--Public Comment at the Close of the Negotiations--
"Gath's" Interview with Me at the Completion of the Sale--Eastern
Press Approves the Contract, While the West Was Either Indifferent
or Opposed to it--Senate Still Discussing the Expediency of Repealing
the Resumption Act--Letter to Senator Ferry--Violent and Bitter
Animosity Aroused Against Me--I Am Charged with Corruption--Interview
with and Reply to Letter of Peter Cooper--Clarkson N. Potter's
Charges.
The general results of these interviews, which had a wide circulation
at the time, I believe were beneficial, and at least assured the
public that a hopeful and determined effort was being made to
advance United States notes and national bank notes to par with
coin.
Before I had these interviews I had determined to sell $50,000,000
bonds at the rate of $5,000,000 a month for gold coin or bullion
for resumption purposes, and also to press the refunding operations
as rapidly as possible. I had at my disposal an unlimited amount
of five, four and a half and four per cent. bonds, with authority
to sell either kind to accumulate coin for the maintenance of
resumption, or for the payment of bonds that were at the time
redeemable, bearing a higher rate of interest. My printed
correspondence with banks and bankers shows the advancing value of
the four and four and a half per cent. bonds. The most active
agent for the sale of these bonds was the First National Bank of
New York, which had been the agent of the syndicate, and, though
having no privilege or facility that was not extended to all banks
and bankers alike, it evinced the utmost activity, intelligence
and success, and took the lead in the sale of bonds. The advancing
quotations furnished by it and other banks and bankers satisfied
me that the policy of an open loan, such as was provided for by
the notice of January 18, 1878, would be successful, if only we
could have the certainty of coin payments by the 1st of January,
1879. I knew of the sensitive jealousy between the banks and
bankers and between the old syndicate and prominent and wealthy
firms who wished to participate in any new syndicate, and were
jealous and suspicious of each other.
Offers were made to me by banks and bankers for special arrangements
for the purchase of bonds, but I put them all aside until after I
had written to all the parties a notice substantially similar to
the following, sent to Belmont & Co.:
"Treasury Department, April 5, 1878.
"Gentlemen:--It is my purpose to be in New York at four o'clock on
Monday afternoon, and I would like, if practicable, to meet the
members of the old syndicate at the Fifth Avenue Hotel that evening
at any hour convenient to them, to confer as to the best mode of
obtaining $50,000,000 gold coin or bullion prior to January 1,
1879, for resumption purposes, and to receive from the associates,
or any of them, or from new parties, offers for any of the description
of bonds I am authorized to sell for that purpose.
"I propose to accumulate this coin in either the treasury, the
assay offices, or the public depositaries throughout the United
States that will comply with the conditions of section 5153 Revised
Statutes.
"I will send a similar letter to this to the First National Bank,
and have to request that you will give notice to the other members
of the old syndicate, and, with their consent, to any others you
desire to participate in the interview.
"Very respectfully,
"John Sherman, Secretary.
"Messrs. August Belmont & Co., New York."
I sent General Hillhouse the following notice:
"Treasury Department, April 5, 1878.
"Sir:--You will please inform Messrs. H. F. Vail, president National
Bank of Commerce; J. D. Vermilye, president Merchants' National
Bank; George S. Coe, president American Exchange National Bank; B.
B. Sherman, Mechanics' National Bank, and James Buell, president
Importers and Traders' National Bank, that I desire an interview
with them at any hour on Tuesday next, at your office, or at such
other places as they may prefer, in respect to the purchase for
the Treasury for resumption of, say, $50,000,000 gold coin or
bullion, to be delivered monthly and before the 1st of January
next, either at your office or at the designated depositaries of
the United States, under section 5153 Revised Statutes, and also,
if practicable, to secure from them a bid for either of three
classes of bonds described in the refunding act to an amount
sufficient to purchase the coin stated. These gentlemen are
respectfully requested to select such others connected with national
banks as they may agree upon to join in the interview.
"Very respectfully,
"John Sherman, Secretary.
"General Thomas Hillhouse,
"Assistant Treasurer United States, New York."
Regarding the negotiation as one of great importance, I was
accompanied to New York by Hon. Charles Devens, Attorney General;
John Jay Knox, Comptroller of the Currency; Charles F. Conant,
Assistant Secretary; Daniel Baker, Chief of the Loan Division, and
E. J. Babcock, my Secretary.
On the 8th of April I, with the gentlemen named, had an interview
with the members of the old syndicate, Messrs. Belmont, Seligman,
Bliss, Fabri and Fahnestock.
I stated that the object of my visit to New York, and of my request
for an interview with the associates, was to obtain $50,000,000
coin for resumption purposes, and I would like to sell four per
cent. bonds to that amount.
Mr. Belmont did not think the four per cent. bonds could be sold
then, and the associates all concurred in the opinion that they
would prefer making a proposition for the four and a halfs, although
they were not prepared to make any definite offer. I said I would
like to get 103 for the four and a halfs, but the associates said
they would not consider that at all; they would communicate with
the Rothschilds and others, and might possibly be able to offer
101; they would come to some conclusion by next day.
On the following day, at the National Bank of Commerce, I met the
presidents of the national banks: Mr. Vail, Commerce; Mr. Vermilye,
Merchants'; Mr. Coe, Merchants' Exchange; Mr. Sherman, Mechanics';
Mr. Buell, Importers and Traders'; Mr. Moses Taylor, City; Mr. F.
D. Tappan, Gallatin; Mr. G. G. Williams, Chemical; Mr. F. A. Palmer,
Broadway; Mr. George I. Seney, Metropolitan; Mr. P. C. Calhoun,
Fourth National.
Mr. Vail said that this meeting was called at my request, that the
gentlemen present had no information as to the object of the meeting,
and had had no opportunity for consultation; that I would explain
more fully what I desired.
I said that I proposed to resume specie payments on the 1st of
January, in accordance with law, and that for this purpose I wished
to get $50,000,000 of gold, and, to accumulate this amount, would
if possible, sell four per cent. bonds.
Mr. Vermilye and Mr. Coe spoke at some length to the effect that
they were in full accord with me on the subject of resuming specie
payments, and they were willing to co-operate in any way to bring
it about. They said that although they had not consulted with the
other gentlemen present, they had no doubt they were all agreed
upon this subject. They thought, however, it would be utterly
useless to attempt to sell four per cent. bonds, and that as far
as such bonds were concerned there need be no more said.
I said this being so, I would like to have some propositions for
four and a halfs.
Mr. Coe said that no definite proposition could be made without
further consultation among themselves; that they were willing to
assist to the extent of their power to obtain resumption; that they
would place themselves at my service in any way I might wish without
compensation. He said that he thought an arrangement could be made
by which the national banks could be made my agents in the sale of
bonds. He thought the banks might take the $50,000,000 of four
and a half per cent. bonds, to be paid for by the 1st of January,
the government to receive whatever the banks could get for the
bonds.
I invited the gentlemen to confer among themselves, and, if
practicable, make me some definite proposition in the morning.
In the afternoon of the same day we met the members of the old
syndicate. Mr. Belmont read a cable from the Rothschilds offering
101 for $100,000,000 four and a half per cent. bonds, $50,000,000
for resumption and $50,000,000 for refunding purposes.
I said I was not prepared to accept, but would give a definite
answer next day.
On the following morning I met Mr. Vail, of the National Bank of
Commerce, and Mr. Vermilye, of the Merchants' National Bank, at
the sub-treasury.
Mr. Vail and Mr. Vermilye submitted a memorandum that if I would
indicate my willingness to receive a proposition for the negotiation
of $50,000,000 four and a half per cent. bonds at par in gold they
would recommend the national banks to unite in making it.
I then asked Mr. Vail and Mr. Vermilye whether, if a proposition
was made to me by bankers of acknowledged credit and responsibility
of 101 for four and a half per cent. bonds, payable in installments
and with the usual option, in their opinion, it was my duty to
accept it.
They both said decidedly, yes; that such an arrangement would be
far more advantageous than the acceptance of their proposition,
and besides, if they took the bonds, it might impair to some extent
their power to render the usual facilities to their commercial
customers.
The proposition submitted by Messrs. Vail and Vermilye, in behalf
of the national banks, was as follows:
"If the secretary will intimate his willingness to receive a
proposition from the national banks in New York, Boston, Philadelphia
and Baltimore for the negotiation of fifty millions four and a half
per cent. bonds at par in gold, for resumption purposes, we will
recommend our associates to unite in making it, with the belief on
our part that it can be accomplished as suggested. This special
loan to be the only bonds of this character offered, unless the
same parties have the option on any further sums required."
Afterwards, on the same day, I again met the members of the syndicate
at the sub-treasury, and said that I would sell only $50,000,000
four and a half per cent. bonds; that these must be paid for in
gold coin, for resumption purposes; that I would sell them for
101½, allowing one-half of one per cent. commission, the syndicate
to pay all expenses; but before signing the contract wished to
communicate with the President.
These terms were accepted by the syndicate upon condition that
their associates in London would consent, they reserving the right
to cable to London for such consent; and the meeting adjourned
until 1:30 o'clock, when, I having received a telegram from the
President, the details of the contract were then discussed, and
signature was delayed for an answer to the cable of the syndicate.
On the following day we again met at the sub-treasury, and Mr.
Lucke, of Belmont & Co., informed me that the English parties had
authorized them to close the contract, and it was therefore signed.
It was as follows:
"This agreement, entered into the 11th day of April, 1878, between
the Secretary of the Treasury of the United States, of the first
part, and August Belmont & Co., of New York, on behalf of N. M.
Rothschild & Sons, of London, England, and their associates and
themselves; Drexel, Morgan & Co., of New York, on behalf of J. S.
Morgan & Co., of London, and themselves; J. & W. Seligman & Co.,
of New York, on behalf of Seligman Bros. of London, and themselves;
Morton, Bliss & Co., of New York, on behalf of Morton, Rose & Co.
of London, and themselves; and the First National Bank of the city
of New York, witnesseth: That said August Belmont & Co., on behalf
of N. M. Rothschild & Sons, and their associates and themselves,
hereby agree to purchase from the Secretary of the Treasury $4,125,000
of the four and one half per cent. bonds of the United States,
issued under the acts of July 14, 1870, January 20, 1871, and
January 14, 1875, and that Drexel, Morgan & Co., on behalf of J.
S. Morgan & Co., and themselves, agree to purchase $1,625,000 of
said bonds, and that J. & W. Seligman & Co., on behalf of Seligman
Bros., and themselves, agree to purchase $1,625,000 of said bonds,
and that Morton, Bliss & Co., on behalf of Morton, Rose & Co., and
themselves, agree to purchase $1,625,000 of said bonds, and that
the First National Bank of the city of New York agrees to purchase
$1,000,000 of said bonds; making a total aggregate of $10,000,000
of said bonds on the terms and conditions following:
"First. The bonds covered by this contract shall be sold for
resumption purposes.
"Second. The parties of the second part shall have the exclusive
right to subscribe in the same proportion of each of the subscribers
for the remainder of the $50,000,000 of the four and a half per
cent. bonds of the United States authorized to be issued by the
acts of Congress aforesaid; but the amount to be so subscribed
shall not be less than $5,000,000 for each and every month after
the present month of April.
"Third. That the Secretary of the Treasury shall not sell, during
the continuance of this contract, any bonds other than such as by
act of Congress may be provided to be sold for the payment of the
Halifax or Geneva award, and the four per cent. consols of the
United States, and those only for refunding purposes, except by
mutual agreement of the parties hereto.
"Fourth. The parties of the second part agree to pay for the said
four and a half per cent. bonds par and one and a half per cent.
premium and interest accrued to the date of the application for
the delivery of said bonds, in gold coin or matured United States
gold coin coupons, or any of the six per centum 5-20 bonds heretofore
called for redemption, or in United States gold certificates of
deposit issued under the act of March 3, 1873, or in gold coin
certificates of deposit of authorized designated deposit, and that
have complied with the law.
"Fifth. The parties of the second part shall receive in gold coin
a commission of half of one per centum on all bonds taken by them
under this contract, as allowed by the act of July 14, 1870, and
shall assume and defray all expenses which may be incurred in
sending the bonds to London or elsewhere, upon their request, or
by transmitting the bonds, coupons, or coin to the treasury department
at Washington, including all cost of making the exchange. The
bonds shall also be charged with the cost of preparation and issuing
of the bonds.
"Sixth. No bonds shall be delivered to the parties of the second
part, or either of them, until payment shall have been made in full
therefor, in accordance with the terms of this contract.
"Signed by John Sherman, Secretary of the Treasury, J. & W. Seligman
& Co., Morton, Bliss & Co., August Belmont & Co., the First National
Bank of New York, Drexel, Morgan & Co.; and by Assistant United
States Treasurer Thomas Hillhouse and E. J. Babcock, as witnesses."
The importance of this contract and the open publicity of the
negotiation, created quite a sensation in the newspaper press,
which presented a medley of praise and censure. All varieties of
opinion from extravagant flattery to extreme denunciation were
visited upon me by the editors of papers according to their
preconceived opinions. I made no effort at secrecy, and no answer
to either praise or blame, but freely contributed any information
in respect to the matter to anyone, whether friendly or otherwise,
who applied to me. Perhaps as accurate a statement as any, of my
opinions, was made by George Alfred Townsend, over his _nom de
plume_ of "Gath," in the New York "Graphic" of April 12, 1878. He
said:
"At four o'clock yesterday afternoon John Sherman, the Secretary
of the Treasury, was sitting in Parlor No. 1, the ante-room of the
late Republican national committee, when I followed my card into
his presence. 'Ah!' he said, rising from an easy chair where he
was resting, like one recently wearied but now relieved. 'Come
in; it's all over now, and I don't mind telling you about it.'
'Yes, it's all over Wall street, and I think opinion was more
favorable to the syndicate getting the bonds than the bank
presidents.'
'The representatives of the banks were very polite and well-meaning,'
said the secretary. 'I sent word that I was coming to the city
and asked the national banks, as intimately related to the treasury
department, to select persons to meet me. I also notified the
members of the old syndicate that I had some propositions to suggest
to them.'
'This is your third visit on the general object of resumption? A
very eventful visit, isn't it, in the story of our finances?'
'Well, both my previous visits were important--in May, 1877, when
$200,000,000 of four and a half per cent. bonds were disposed of,
and again last June, when $75,000,000 of the four per cent. bonds
were subscribed for. The present visit is probably the last with
such an object. I feel glad and relieved.'
'You failed to get the bank philosophers to get you the $50,000,000
of gold?'
'I thought I could see that they did not mean to enter into the
subscription. They all said they wanted to see resumption achieved,
and would like to aid it, but spoke of their obligations to their
commercial customers. They said too, that they would have to rely
on brokers to get the gold and pay commissions for it, and were
afraid it might be run up on them. One or two, perhaps, expected
a more advantageous offer as to rates--indeed, wanted me to pay
them a commission for selling our bonds at par. I can excuse them,
because they will have to be looking after the redemption of their
own circulation.'
"I suggested to the secretary that some of the bank presidents had
discouraged resumption or treated it as a figment.
'When the congressional committee was over here,' he answered,
'there was something said about the advantage of getting priority
in the line on resumption day; but that is nothing. They were very
civil, but didn't see the proposition favorably.'
'Is there any disadvantage in negotiating through the syndicate?'
'No, there is an advantage in this respect; they sold the higher
bonds abroad, and taking these will also place a part of them there,
facilitating exchange in commercial settlements and interestedly
maintaining prices. A portion of these low bonds ought to locate
in Europe.'
'Speaking of exchange, Mr. secretary, the idea has been put forward
here, in the fiscal form, I believe, that a large, round balance
of trade in our favor indicates poverty and collapse. Is that good
political economy?'
'There are nations,' said the secretary, 'like England, which have
steady apparent balances of trade against them, yet show a great
prosperity. But that is only the product of English money invested
in foreign places and colonies; it is an apparent purchase, but
really their own harvest. No nation that is greatly in debt, as
we are, can observe real balances of trade overwhelmingly against
us and not feel alarmed.'
'Do you expect any opposition from Congress as the reply to this
negotiation and the near probability of specie payments?'
'No, I do not think Congress will interfere. The conservative
element of the inflation party was appeased by the reissue of
$300,000,000, and the candid way in which their silver legislation
was carried out. I do not anticipate that Congress can affect this
action.'
'May not the surprise of the news that you so readily negotiated
these bonds and secured your gold, enrage those who have cast their
political hopes upon preventing resumption?'
'I do not see why. General Ewing and the finance committee were
clearly apprised by me two weeks ago of the exact plan I have
followed out. They questioned me directly, and I told them. As
no attack has been made upon that programme, I look for no successful
resistance to its performance.'
'Do you consider the price paid by the syndicate for these bonds
as good?'
'It was the best that could at present be had. I wanted them,
first, to take $50,000,00 to $100,000,000 of the four per cent.
bonds at 103--bonds that I think preferable in some respects,
particularly for durable investment. These gentlemen, however,
thought those bonds not convenient for them for ready sale, and
they urged that I ought to let them have the four and a half per
cents. at par, as some had been put to the people at that. I
desired a premium of three per cent. They finally met me half way,
and gave one and a half premium. In short, we get a very little
scant of 103 currency for those bonds, for the syndicate pays over
to us the accrued interest.'
'You do not anticipate that they will take the $10,000,000 and
decline the other $40,000,000?'
'No; I think our economy, industry, exports, production, ready
resources and general physical and political superiority will expand
right onward, and protect everybody who puts faith in our national
securities.'
'How much gold have you absolutely got for resumption to-day?'
'Seventy-two millions clear net of our own. I have nearly $140,000,000
present due, or coming, not counting any liabilities on it. The
$50,000,000 I have secured to-day will give me, clear of everything,
$120,000,000 of gold, and that is plenty.'
'Have you read the views of Mr. Musgrave and other bankers, in "The
Graphic," on the theory that you have enough gold now and would
not have to redeem much with your gold? I heard a merchant say
this afternoon that you might not have $5,000,000 put at you!'
'That is more likely to be the case now,' said Mr. Sherman 'when
I am so well protected. There might be a dash made at my $72,000,000
--not at my $120,000,000.'"
As a flattering background to his interview Mr. Townsend gave the
following description of myself, which I hope it will not be egotism
to publish. There were so many descriptions of me of a different
character that I feel at liberty to quote one that was quite
friendly:
"John Sherman, as he sat before me, young looking, his air and
beard in perfect color, his manners gracious and indicating an easy
spirit not above enjoyment, and manners not abraded by application,
seemed to be a very excellent example to young public men. His
nature had not been worn out in personal contests, nor his courage
abated by the exercise of discretion and civility. He was the
earliest and best champion of the Republican party--its first
candidate for speaker of Congress, its last Secretary of the
Treasury. For twenty years he has been in the national center of
observation. He owes to temperance and study, exercise and natural
sense, his present proud position as the principal exponent of the
Republican party. Not in the Senate is that party seen at its
best, but in the executive, where the President's original
discrimination is approved by time and events; he chose John Sherman
first of the cabinet, and within thirteen months he has concluded
the last great treaty of the war--peace with the public creditor.
In our arising commerce and huge balances of trade, we observe
again 'Sherman's march to the sea.'"
The following statement in regard to the new loan and the national
banks appeared in the "Financial Chronicle" of April 13:
"Mr. Sherman has shown, in his interviews with the committees of
the House and Senate, not only his faith in the possibility of
executing the resumption act, but also his determination to do it;
and the disclosures of the past few days are the signs of the
progress he is making. In fact, the events of the week, culminating
in the successful negotiation with the syndicate bankers of a sale
of four and a half per cent. bonds, practically put at rest all
doubts with regard to the fact that on or before the 1st day of
January, 1879, anyone can, on application to the office of the
assistant treasurer in New York, obtain gold or silver for greenbacks,
in sums of not less than fifty dollars. The terms of the loan are
substantially set out in the following, which was posted, shortly
after one o'clock on Thursday, on the bulletin boards of the sub-
treasury, the parties composing the syndicate being Drexel, Morgan
& Co., and J. S. Morgan & Co., of London; August Belmont & Co.,
and through them the Rothschilds, of London; Morton, Bliss & Co.;
J. & W. Seligman, and Seligman Brothers, of London; and the First
National Bank:
'The Secretary of the Treasury and the members of the last syndicate
have entered into an agreement for the sale, for resumption purposes,
of $50,000,000 United States four and a half per centum 15-year
bonds at par and accrued interest, and one and a half per centum
premium in gold coin, $10,000,000 to be subscribed immediately,
and $5,000,000 per month during the balance of the year. The sale
of four per centum bonds will be continued by the treasury department
as heretofore, upon the terms and conditions of the last circular,
and the proceeds will be applied to the redemption of six per centum
5-20 bonds.'
"This certainly will be considered a very favorable negotiation
for the government."
Among the numerous letters received at this time, I insert the
following:
"Viroqua, Wis.,, April 14, 1878.
"Hon. John Sherman, Secretary of the Treasury.
"Dear Sir:--We have a Honest Money League started in Chicago, of
which you are probably aware. The secretary is the Hon. Thos. M.
Nichol, who aided us so materially in carrying the state last fall.
He is one of the ablest defenders of honest money that we have in
the northwest. Any information you can furnish him will reach the
people of the northwest. I see by the dispatches you have completed
arrangements whereby you will be able to resume by January 1, 1879.
I hope Congress will have the good sense not to throw any obstacles
in your way. I used to, when in the army, tell the boys to trust
in General Sherman and keep their powder dry, and now I feel like
trusting in Secretary Sherman to keep our money honest. I have no
fears of the result if Congress will let you alone.
"Yours truly,
"J. M. Rush."
The eastern press, almost without exception, gave its hearty approval
of the contract made, and the mode and manner of the negotiation.
The leading papers in New York, including the "Herald," "Tribune,"
and "Times," gave full accounts. In the west, however, where the
greenback craze or "heresy," as it was commonly called, prevailed,
the press was either indifferent or opposed to the contract and to
the object sought. It is singular how strong the feeling in favor
of an irredeemable paper currency was in many of the western towns
and among the farming people. United States notes, universally
called greenbacks, were so much better as money than the bank notes
were before the war, that the people were entirely content with
them, even if they were quoted at a discount in coin. They were
good enough for them. Any movement tending to reduce their number
was eagerly denounced.
At the very time when the negotiation was being made, the Senate
finance committee was discussing the expediency of agreeing to the
bill repealing the resumption act which had passed the House. The
indications were that the committee had agreed upon a time when a
final vote should be taken upon this bill and that it would be
favorably reported by a majority of one. It depended upon the vote
of Mr. Ferry, who was strongly in sympathy with the sentiment in
the House. It appeared quite certain that with a favorable report
the bill would pass. If passed it would no doubt have been vetoed,
but the moral effect of its passage would have been to greatly
weaken all measures for redemption. I had frequent conversations
with Mr. Ferry and appealed to him as strongly as I could to stand
by his political friends, and for the success of the negotiation.
He voted against reporting the bill. I wrote him the following
letter while the matter was still pending:
"Washington, D. C., May 1, 1878.
"Dear Sir:--The deep interest I feel in the pending legislation in
Congress, endangering as it does my hope of success in the great
object of resumption, will be my excuse for appealing to you again,
in the strongest manner, against the mandatory provision that,
under all circumstances, United States notes shall be receivable
in payment of customs duties.
"This provision may defeat the whole of our policy for which we
have been struggling so long and to which our party is so firmly
committed. Resumption on United States notes can be easily maintained
with a reasonable reserve and with a certainty that any considerable
run will be stopped by increased demand for United States notes,
but there is one essential prerequisite to our ability to resume,
and that is that we must have coin income enough to pay the interest
of the public debt and other current coin demands. To throw upon
the treasury the possibility of the necessity of buying coin to
pay the interest of the public debt, in addition to buying that
which is necessary to maintain resumption on United States notes,
is simply to overload the wagon and break it down at the very start.
Ordinarily the secretary would receive greenbacks for duties (and,
therefore, I have no objection to the discretionary authority being
conferred upon him), if he can use them also in payment of interest,
but as we must pay the interest in coin, and the slightest difference
in favor of coin making it certain that demand would be made for
it for interest, we cannot undertake to buy sufficient coin to pay
the interest in addition to what we would naturally, under like
circumstances, be required to pay such notes as are presented.
"I have thought so much about this, and am so much troubled about
it, that I would feel almost like giving up the ship rather than
to undertake the additional task which the bill as now reported
would impose upon me. Surely we are so near the end of our long
struggle that we ought not to assume a fresh load, and I assure
you that a mandatory provision requiring the secretary to receive
United States notes in payment of customs duties, without regard
to the time and circumstances, is simply a repeal of the resumption
act, and it had better be done openly and directly. Because we
have been so fortunate this far in the progress towards resumption
is no reason why we should assume an additional burden.
"Please state this to any others who you think would have any
respect for my opinions, as I do not wish to thrust them upon those
who would like to thwart them; and, if overruled in this, I trust
you will make this letter public, for I will not be responsible
for so serious a change in the whole plan of resumption. I said
to the committee on finance that if the discretion was conferred
upon me to receive United States notes for duties, I had no doubt
that I could do so on the 1st of October, but it was not then
supposed by anyone that such a provision would be mandatory.
"Very truly yours,
"John Sherman.
"Hon. T. W. Ferry, U. S. Senate."
While I was congratulating myself upon accomplishing an important
work for the people, I had aroused an animosity more bitter and
violent than any I ever encountered before or since. I was charged,
directly, by a correspondent of the "National Republican," published
in Washington, with corruption, and that I was interested in and
would make money through the syndicate. It was said that I "came
to the United States Senate several years ago a poor and perhaps
a honest man. To-day he pays taxes on a computed property of over
half a million, all made during his senatorial term, on a salary
of $6,000 a year and perquisites." My property at home and in
Washington was discussed by this letter, and the inference was
drawn that in some way, by corrupt methods, I had made what I
possessed. It is true that I found many ready defenders, but I
took no notice of these imputations, knowing that they were entirely
unfounded, for I never, directly or indirectly, derived any advantage
or profit from my public life, except the salary.
At one time it was alleged that a sub-committee, consisting of
Messrs. Ewing, Hartzell and Crittenden, had been in correspondence
with leading bankers, financiers and capitalists, and that information
had been obtained which led to the conclusion that I had derived
profit from the negotiation. It was said that the committee proposed
to interview me upon the subject of my recent syndicate operations,
that the syndicate would get about a $750,000 commission, which
could have been saved had outsiders been permitted to buy the bonds,
that the committee had summoned members of the syndicate and bankers
who were not admitted into the syndicate, but who wanted to be
allowed to buy bonds without any commission, that the allegation
was so well supported that a resolution was prepared authorizing
the committee to investigate, but that this was unnecessary, as
the resolution authorizing the banking and currency committee to
make inquiries concerning resumption conferred authority to inquire
into this matter. The only sign of the alleged investigation was
an inquiry from Mr. Ewing, which was answered by me as follows:
"Treasury Department, April 19, 1878.
"Hon. Thomas Ewing, Acting Chairman Committee on Banking and
Currency, House of Representatives.
"Sir:--In compliance with your request of the 18th instant, I
inclose herewith a copy of the contract recently made with a
syndicate of New York bankers for the sale of four and a half per
cent. bonds. The only previous correspondence on this subject was
a letter sent to said bankers and one to the presidents of certain
national banks, copies of which are inclosed.
"In response to your question as to the amount of accrued interest
that will be allowed to the syndicate at each payment on account
of such sales, I have to reply that no accrued interest is paid to
them, but, as you will see by the fourth paragraph of said contract,
they are to pay the United States the amount of interest accrued
on the bond up to the time of payment for it, in addition to the
premium of one and a half per cent. The interest on the four and
a half per cent. bonds accrued on the 1st of March, and therefore,
the interest is added from that date to the date of payment for
the bonds.
"The amount of commission to be paid is fixed by law at one-half
of one per cent., but out of this the associates are to pay all
expenses incurred by them in the sale, and reimburse the United
States all expenses incurred by it as stated by said contract in
paragraph 5.
"Very respectfully,
"John Sherman, Secretary."
No further action was taken by the committee on banking and currency.
Subsequently I wrote Mr. Ewing the following letter:
"May 21, 1878.
"Dear Sir:--I notice the crazy barkings of Buell in the 'Post'
about the syndicate, and favors granted to it by me.
"I wish to say to you that nothing would please me better than to
have the banking and currency committee examine into this matter,
and I am quite sure you will be gratified that the result will be
to my credit.
"I have no desire to dignify this by asking an investigation, but
only to say to you privately, as a personal friend, that I court,
rather than fear, such an inquiry.
"Very truly yours,
"John Sherman.
"Hon. Thomas Ewing, House of Representatives."
It was at this time that it was alleged that Mr. Tappan, a New York
bank president, said that he would pay $50,000 to stand at the head
of the line when the government began to pay out gold; that he
could put in $29,000,000 United States notes held by the New York
banks and break the government and take out all the gold. It was
said that Mr. Coe, a prominent banker in New York, was asked his
opinion whether I could resume, and that he said: "Well, yes, I
would let the government resume, but it must sell a certain number
of bonds to the banks at such a figure." Sensational reports were
sent out from Washington to discredit the contract lately made with
the syndicate. It was reported that the terms were concealed, that
only ten millions were contracted for, part of which it might be
necessary to take back, and that the banking and currency committee
had summoned me to explain the contract. So far from being true
the contract itself was printed in all the papers and the utmost
publicity was given to every step taken.
I had a very friendly acquaintance with Peter Cooper, for whom I
had the highest respect, but he had fallen into the general ideas
of the greenbackers. When in New York, early in April, I called
upon him and had a pleasant interview. Soon after I received from
him the following letter:
"New York, April 18, 1878.
"Hon. John Sherman, Secretary of the Treasury.
"Dear Sir:--In the brief interview which you did me the honor to
give me at my house a few days ago, I was impressed with your desire
to give all the information that would throw light upon the financial
policy of the government, and on the department of which you are
the executive head.
"But we had not the time to discuss fully some of those practical
questions that involve this financial policy, and I therefore now
take the liberty, in a more deliberate manner, to ask of you an
answer to questions, which might throw light upon the public mind
on these great interests, and allay the anxiety which pervades the
hearts of our people in reference to their future prospects of
business and employment, and show more clearly how the present
policy of the government in enforcing 'specie payments' by law and
carrying out the 'resumption act,' could be attended with any
_wholesome results to the financial interests_ of this country both
in the present and in the future.
"First. Can you resume in the presence of $645,000,000 of legal
tender and bank notes with what gold and silver you may have at
your command, without an actual shrinkage of this currency, either
on the part of the government or of the banks?
"Second. Can 'resumption' be maintained after the law has placed
a premium on coin, and virtually demonetized the paper, by rendering
its convertibility compulsory? In other words, can the present
'par value' of paper and coin be taken as an index that after the
law has thrown its whole weight in favor of coin, by making the
paper 'convertible,' the present equilibrium between the two can
still be maintained?
"Third. In connection with the fact that by purely commercial
laws, we have already arrived at specie payments, or the par between
coin and paper money, what good will it do to thrust the further
power of the law on the side of coin? How can we avoid placing
the paper at the mercy of those who will have control of the coin
--especially the paper of the national banks, whose chief credit
will consist in maintaining 'specie payments?'
"Fourth. After 'resumption,' how much money will the people have
with which to transact business, employ labor, enter into new
enterprises, and use 'cash payments' instead of 'inflating credit'
to a ruinous degree, as in times past, under the system of specie
payments, and convertibility by law?
"Fifth. It being the duty of Congress to make the necessary and
proper laws for carrying into execution a system of money, weights
and measures as the only means to regulate commerce with foreign
nations and among the several states, to provide as far as possible
an 'unfluctuating currency,' a steady measure of prices, how can
you prevent great and disastrous fluctuations in our 'convertible
money' and coin, arising out of the great demands for gold and
silver that may, at any time, be made upon us from the commercial
relations of this country with Europe over which the government
can have no direct control? With great respect I remain,
"Your obedient servant,
"Peter Cooper."
I made the following reply:
"Dear Sir:--Your letter of the 18th inst. is received. The questions
you ask me have been, in the main, answered to the committees of
the two Houses, and I might, perhaps, best reply to your letter by
sending these documents, printed by the order of the respective
Houses; but my sincere respect for you, and desire to allay any
doubts you may entertain of the success of the present plan of
resumption, induce me to answer your letter as fully as my time
will allow.
"As to your first question:
'Can you resume in the presence of $645,000,000 of legal tender
and bank notes, with what gold and silver you may have at your
command, without an actual shrinkage of this currency, either on
the part of the government or of the banks?'
"You must bear in mind that the aggregate amount of legal tender
notes and bank notes stated by you, may be gradually diminished,
so far as the legal tenders are concerned, to $300,000,000, and by
the banks to such sum as they find can be maintained at par with
United States notes. But, assuming that the aggregate should be
about the present amount, and remembering always that the bank
notes can be redeemed in legal tender notes, and are not required
to be redeemed in coin, I do express the opinion that resumption
in a country like ours can be maintained in the presence of the
existing volume of circulation; but if this should prove to be too
great, the reduction will be gradually of the bank notes, or, if
Congress so direct, of the legal tender notes.
"As to your second question:
'Can resumption be maintained after the law has placed a premium
on coin and virtually demonetized the paper, by rendering its
_convertibility compulsory?_ In other words, can the par value of
paper and coin be taken as an index that after the law has thrown
its whole weight in favor of coin, by making paper convertible,
the present equilibrium between the two can still be maintained?'
"I respectfully deny that the law places a premium on coin. One-
half of this circulation is not redeemable in coin at all, but in
legal tenders; nor does the law fix a premium on coin as against
legal tenders, but simply requires an equality. Its convertibility
is not compulsory. It is upon the demand of the holder. The holder
is as likely to deposit the coin, if he has it, as to deposit the
notes for coin. The currency would rest upon the presumption that
all paper money rests upon, that its use and convenience and
convertibility will always keep it at par with coin.
"To your third question:
'In connection with the fact that, by purely commercial laws, we
have already arrived at specie payments, or the par between coin
and paper money, what good will it do the thrust the further power
of the law on the side of coin? How can we avoid placing the paper
at the mercy of those who will have control of the coin--especially
the paper of the national banks, whose chief credit will consist
in maintaining specie payments?'
"I have simply to say that we have only arrived at our present
position approaching specie payments by the accumulation of coin
in the treasury and by the gradual and slow reduction of the volume
of notes; and the very measures which have enabled us to reach so
near the specie standard, are necessary to be continued to enable
us to maintain resumption. If resumption is desirable, it cannot
be maintained by a repeal of the law, which requires resumption
and grants the necessary powers to prepare for it and to maintain
it.
"As to your fourth question:
'After resumption, how much money will the people have with which
to transact business, employ labor, enter into new enterprises,
and use cash payments instead of inflating credit to a ruinous
degree, as in times past under the system of specie payments, and
convertibility by law?'
"It is answered, I think, by what I have said in reply to your
first question. We will have the United States notes, the bank
notes, and coin certificates, both gold and silver, together with
the gold and silver itself, all in circulation. The actual amount
of currency in circulation, I think, will be as large in specie
times as now, and its equality and convertibility will rather
increase than prevent the circulation of either. The depreciation
of paper money is not necessarily caused solely by its excess, but
by the uncertainty of its value and confidence in its redemption.
"In reply to your fifth question:
'It being the duty of Congress to make the necessary and proper
laws for carrying into execution a system of money, weights and
measures, as the only means to regulate commerce with foreign
nations and among the several states, to provide as far as possible
an unfluctuating currency, a steady measure of prices, how can you
prevent great and disastrous fluctuations in our convertible money
and coin, arising out of the great demands for gold and silver that
may at any time be made upon us from the commercial relations of
the country with Europe, over which the government can have no
direct control?'
"I have only to say that it is undoubtedly the duty of Congress to
provide for the possible contingencies that would make it necessary
to suspend specie payments, though, as the circumstances which
would compel suspension are necessarily unforeseen, unknown,
difficult to be defined or to be provided for, I am not sure but
it is better to leave the question of suspension to the necessities
of the case rather than to legislation which must be founded upon
uncertainty. When the treasury is actually unable to redeem its
notes in coin, suspension comes necessarily, but resumption would
come again from the absolute necessity of currency for our daily
wants, and Congress could provide better in view of the actual
facts than anticipated facts.
"I think the real difficulty that has stood in the way of resumption
is the nightmare of things that have existence only in the brain,
and not in fact. We can only deal with the current course of events
based upon probabilities, and cannot provide for unforeseen
contingencies.
"It is my earnest hope that you and gentlemen like you, who I know
are sincere in your convictions, may see your way to trust to the
policy that is now entered upon, which seeks to provide as much
paper currency as can be maintained at par in coin, and to secure
its active circulation in aid of industry and enterprise.
"I am, with great respect,
"John Sherman."
On the 13th of May, 1878, the charges against me assumed a different
form, by the adoption, in the House of Representatives, of a preamble
and resolutions offered by Clarkson N. Potter, of New York. Among
the recitals of this resolution was a charge that James E. Anderson
and D. A. Weber, supervisors of registration of the parishes of
East and West Feliciana, falsely protested that the election in
such precincts had not been fair and free, and that the returning
board thereupon falsely and fraudulently excluded the vote of said
precincts, and the choice of the people was annulled and reversed,
and that such action of said Weber and Anderson was induced or
encouraged by assurances from me. The charge was based upon the
following letter, alleged to have been written by me:
"New Orleans, November 20, 1876.
"Messrs. D. A. Weber and James E. Anderson.
"Gentlemen:--Your note of even date has just been received. Neither
Mr. Hayes, myself, the gentlemen who accompany me, or the country
at large, can ever forget the obligations under which you will have
placed us should you stand firm in the position you have taken.
From a long and intimate acquaintance with Governor Hayes, I am
justified in assuming the responsibility for promises made, and
will guarantee that you will be provided for as soon after the 4th
of March as may be practicable, and in such manner as will enable
you both to leave Louisiana, should you deem it necessary.
"Very truly yours,
"John Sherman."
The charge was without any foundation whatever, and excited my
resentment. On the 20th of May I wrote Mr. Potter the following
letter:
"May 20, 1878.
"Hon. Clarkson N. Potter, House of Representatives.
"Sir:--I observe that the resolution of the House, under which your
committee is organized, singles me out personally by name from
among twenty or more gentlemen who were present, at the request of
President Grant, or the chairman of the Democratic national committee,
to attend and witness the action of the returning board upon the
presidential election returns in the State of Louisiana in 1876,
and, in substance, charges that at that election in East Feliciana
parish the Republican vote was withheld and not cast, in pursuance
and execution of a conspiracy by such voters, that in furtherance
of such conspiracy, James E. Anderson, supervisor of registration
in that parish, and D. A. Weber, supervisor of registration in West
Feliciana parish, falsely protested that such election in such
parishes had not been free and fair, and that, therefore, the
returning board of said state falsely and fraudulently excluded
votes of such precincts, and 'by means thereof, and of other false
and fraudulent action of said returning board, the choice of the
people of the state was annulled and reversed, and that such action
by the said Weber and Anderson was induced or encouraged by the
assurances of Hon. John Sherman, now Secretary of the Treasury.'
"This resolution requires you to investigate these allegations,
and upon the result of these depends the accusations against me.
"First. That there was a conspiracy among the voters to withhold
and not cast the votes, with a view to make a false charge on the
election.
"Second. That in point of fact there was a free and fair election
in East and West Feliciana, which was falsely protested and returned
by said Anderson and Weber, by which the votes of those parishes
were falsely and fraudulently excluded by the returning board.
"Third. That the offense of Anderson and Weber was encouraged by
assurances by me.
"With the view, therefore, to meet this accusation, which, so far
as it affects me, I declare and know to be absolutely destitute of
even the shadow of truth, I respectfully ask, and now make formal
application, for leave to be represented before your committee in
the investigations of all charges affecting me personally. I tender
and offer to prove that, in point of fact, the election in East
and West Feliciana parishes was governed and controlled by force,
violence and intimidation so revolting as to excite the common
indignation of all who became conversant with it, and proof was
submitted to that effect, not only before the returning board in
evidence contained in ex. doc. No. 2, second session 44th Congress,
but also in the testimony taken by the committee of the Senate on
privileges and elections, report No. 701, second session 44th
Congress.
"I will, if allowed, furnish the names of witnesses whom I desire
to examine before you to prove the truth of this statement as to
said parishes, and that the protests referred to were true, supported
by the testimony and properly acted upon and sustained by the
returning board. To my personal conduct during this examination
I invite your fair and candid scrutiny, with entire confidence that
not only myself, but my associates of both political parties, acted
honestly and properly, from a sense of public duty. I have requested
Hon. Samuel Shellabarger to deliver this to you, and I respectfully
designate him as the gentleman I would desire, on my part, to be
present to cross-examine witnesses testifying in relation to charges
against me, and who will, as my counsel, tender evidence in proof
of this statement. The favor of an early answer is requested.
"Very respectfully,
"John Sherman."
It is not necessary to detail the history of this investigation,
of which so much was said or printed at the time. It was a partisan
committee organized to stir up the controversy that had been settled
by the decision of the electoral commission. The committee conducted
a long and expensive investigation. The result was that the
pretended letter was proven to be a forgery, and that my conduct
during the sittings of the returning board was shown to have been
that of a spectator, precisely like that of a score of other so-
called visitors, of both political parties. The investigation
proved to be a radical failure. The report was not made until
March 3, 1879, the last day of the 45th Congress. No action was
taken upon it.
During the investigation I specifically denied, under oath, that
I had ever written or signed such a letter. There was not the
slightest proof, direct or indirect, that I did so. The majority,
with great unfairness, instead of frankly stating that they were
deceived by a forgery, treated it as a matter in doubt. In their
report they do not allege or pretend that I wrote or signed such
a letter. The evidence of their own witnesses was conclusive that
it was written by a Mrs. Jenks.
The report of the minority of the committee commented with severity
upon the unfairness of the majority, in the following language:
"The majority seem to us to have come short of what we had a right
to expect from their candor, when they fail to report explicitly
whether the testimony on this subject sustains the charge that such
a letter as Anderson and Weber testified to was ever written by
the Hon. John Sherman. For our part, we report distinctly and
emphatically that it does not, and that the palpable perjuries of
both the witnesses named justify a feeling of deep disgust that
they should be treated as capable of creating a serious attack upon
the character of a man who has borne a high character in the most
responsible service of the country for five-and-twenty years.
"The charge, if it meant anything, was that of corruptly bribing
Anderson and D. A. Weber to perpetrate a fraud in the election
returns of the Feliciana parishes.
"We find nothing in the testimony to show that Mr. Sherman either
knew or believed that any such fraud was committed. We find abundant
evidence that he believed that the protests against the fairness
of the election were honestly and rightly made.
"We cannot follow the majority in their yielding to what we must
believe to be a prejudice of party spirit, which has carried then
even to the extent of intimating that the Secretary of the Treasury
was party to the pranks of an eccentric woman who dropped a parcel
of letters to set the local politicians of New Orleans agog--a
woman who was called before the committee a long time as a witness,
but who was neither called, examined, nor cross-examined by the
minority, who, however they might share the public amusement at
the performance, entirely declined to take part in it.
"A considerable number of gentlemen who visited New Orleans, either
at the request of President Grant or of the national or local
campaign committee, were called, and testified as to the purpose
of their visit and their procedure during it.
"Adhering to our purpose of leaving the majority to frame issues
on which they were willing to proceed in investigating, we did not
seek to examine into the particulars of the conduct of the Democratic
visitors in Louisiana. To let the testimony show the original
resolutions of inquiry to be both useless and mischievous, serving
no purpose but the spread of unjust scandal, seemed to us, in view
of all former inquiries in the same direction, the proper course
to pursue.
"Messrs. Sherman, Garfield, Hale, Kelley, and others were examined,
and their testimony was compared with that by which it was attempted
to impeach their motives and their conduct. Their account of their
action is consistent and frank. They believed that their party
had rightfully a good claim to the fruits of the election in that
state. They also believed that the notorious violence and intimidation
which had in former years disgraced that state had been again
practiced in the campaign of 1876. They approved the action of
the returning board in deciding, under the powers given them by
law, to declare null the pretended elections at precincts and polls
where evidence of such interference with the freedom of election
had occurred. We do not find that they attempted to control the
board or to dictate their action. We do not find that they attempted
to dictate to witnesses or to procure false testimony to place
before the board. We do not find that they were in any way more
partisan or less scrupulous than the similar party of gentlemen
who then represented the Democratic party. The attempt to single
out Mr. Sherman for special attack seems to us to have had no
original foundation but the testimony of James E. Anderson, and
the terms in which the majority, in their report, have characterized
that person, warrant us in declaring our opinion that when the
character of that witness and his testimony were discovered, it
was the duty of the majority of the committee frankly to abandon
their effort to discriminate between Mr. Sherman and the other
gentlemen who were associated with him."
Shortly afterward I wrote the following letter to E. F. Noyes, then
United States minister at Paris, whose name was mentioned in the
resolution of investigation:
"Washington, D. C., April 1, 1879.
"My Dear Sir:--Your letter of the 18th ult. is received.
"The report of the Potter committee, which you correctly pronounce
to be infamous, was received in silence and was scarcely printed
or noticed in the newspapers of the United States two days after
its presentation to the House. It was then severely handled by
the Republican press and treated with silence by the Democratic
press, and now it is not mentioned. I think that neither of us
should complain of any injurious result from the Potter investigation;
although it was annoying, it was fair and creditable both to the
committee and many of the witnesses. But for the expense and
trouble of the investigation, I am rather gratified that it occurred,
for the feeling of the Democratic party, over what they supposed
was a fraudulent return, would have deepened into conviction, while
the investigation tended on the while to repel this suspicion.
* * * * *
"Very truly yours,
"John Sherman.
"Hon. E. F. Noyes."
Another investigation into the conduct of the department was
inaugurated by J. M. Glover, of Missouri, who, on November 6, 1877,
introduced into the House of Representatives a resolution directing
the several committees of the House to inquire into the conduct of
the different branches of the public service coming under their
charge, and the committees on expenditures in the several departments
to examine into the state of the accounts and expenditures of the
respective departments submitted to them. This resolution in
substance was adopted January 11, 1878, and Mr. Glover was chairman
of the sub-committee to examine into the conduct of the treasury
department. He came to the department and every facility was given
him for examination. He was allowed experts to aid him in the
work, and continued the investigation for two years until the close
of the Congress. His committee incurred much expense, but was
unable to find that any of the public money had been wasted or
lost. His report, submitted in the closing days of Congress, was
not ordered to be printed. Subsequently, on the 15th of April,
1879, after Mr. Glover had ceased to be a Member of the House, a
petition from him was presented asking that his report be printed,
which was referred to a committee, but they did not seem to think
the report of much consequence, as they did not recommend it be
printed.
The only financial bill that became a law during that session was
the following, approved May 31, 1878:
"AN ACT TO FORBID THE FURTHER RETIREMENT OF UNITED STATES LEGAL
TENDER NOTES.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That from and
after the passage of this act it shall not be lawful for the
Secretary of the Treasury, or other officer under him, to cancel
or retire any more of the United States legal tender notes. And
when any of said notes may be redeemed or be received into the
treasury under any law, from any source whatever, and shall belong
to the United States, they shall not be retired, canceled, or
destroyed, but they shall be reissued and paid out again and kept
in circulation: _Provided_, That nothing herein shall prohibit
the cancellation and destruction of mutilated notes and the issue
of other notes of like denomination in their stead, as now provided
by law.
"All acts and parts of acts in conflict herewith are hereby
repealed."
I recommended the passage of this law, as I believed that the
retirement of the greenbacks pending the preparation for resumption,
by reducing the volume of the currency, really increased the
difficulties of resumption.
The session of Congress closed on the 26th of June, 1878. During
the recess the business of the department proceeded in the ordinary
way, without any event to attract attention, but all that happened
tended in the right direction. The crops were good, confidence
became assurance, and all business was substantially based upon
coin.
In consequence of the sale of four and a half per cent. bonds for
resumption purposes the return of Mr. Conant to London became
necessary. His numerous letters advised the department of the
current of financial operations in Europe. There was some fluctuation
in the relative price of United States notes and coin, chiefly
caused by our demand for gold and the appearance in the market of
bonds of other countries. At one period the sale of four and a
half per cent. bonds became more rapid than the contract provided
for, and this rapid accumulation of coin tended to advance its
price, which I desired to avoid, and, therefore, strictly limited
the sale of the four and a half per cent. bonds to $5,000,000 a
month, thus preventing an unusual demand for coin. During this
period there was a constant effort of banks and bankers, chiefly
in New York, to have some exceptional privilege in the purchase of
four per cent. bonds. This was in every case denied. The published
offer of the sale of these bonds was repeated during every month,
and the terms prescribed were enforced in every instance without
favor or partiality.
On the 12th of July W. S. Groesbeck, one of the members of the
monetary commission about to assemble in Europe, applied to the
department for information that would enable the American conferees
to assure the conference that the United States would resume by
the time fixed, and should therefore be regarded by the conference
as not in a state of suspicion. I responded to his letter as
follows:
"Treasury Department, }
"Washington, D. C., July 15, 1878.}
"William S. Groesbeck, Esq., Cincinnati, Ohio.
"Dear Sir:--Your letter of the 12th instant was received during my
temporary absence, and I comply with your request with pleasure.
"Accompanying this I send you sundry documents, duly scheduled,
which contain in detail the law and my views on the resumption
question.
"Among these papers is a letter from the treasurer of the United
States, of date July 6, showing the exact coin on hand for all
purposes, a careful examination of which will prove to you our
ability to resume at the time fixed by law.
"It will be perceived that we have on hand in the treasury coin
enough to cover all our coin liabilities of every name and nature,
and also thirty five per cent. of the aggregate amount of United
States notes outstanding, with an excess of $2,474,822. We have
also $7,139,529 of fractional silver coin, which will be used for
current expenses.
"Of the United States notes outstanding, at least sixty millions
are held in the treasury, either as the property of the United
States or as special funds for purposes prescribed by law, which
cannot readily be diminished.
"In addition, the secretary is authorized to sell bonds for the
purchase of coin or bullion, and he may use United States notes
for the same purpose. Our revenue, both in coin and currency, is
more than sufficient to pay all current expenses covered by the
appropriations of Congress.
"Considering that the United States notes are scattered over a vast
country, are in great favor and demand, and extremely popular, I
feel entire confidence in the ability of the treasury to resume on
the 1st of January next, and the leading bankers and brokers of
New York are of the same opinion.
"I know of nothing that can prevent the United States from taking
its place among the specie-paying nations at this time, except the
possible repeal by Congress of the resumption act, and this I do
not anticipate.
"Very respectfully,
"John Sherman, Secretary."
CHAPTER XXXIV.
A SHORT RESPITE FROM OFFICIAL DUTIES.
Visit to Mansfield and Other Points in Ohio--Difficulty of Making
a Speech at Toledo--An Attempt to Break up a Meeting that Did Not
Succeed--Various Reports of the Gathering--Good Work of the Cincinnati
"Enquirer"--Toledo People Wanted "More Money"--Remarks Addressed
to the Cincinnati Chamber of Commerce--Visit to Lancaster, the
Place of My Birth--My Return to Washington--I Begin to Exchange
Silver Dollars for United States Notes--My Authority to Do So Before
January 1 Questioned--The Order is Withdrawn and Some Criticism
Follows--Instructions to the United States Treasurer and Others--
Arrangements with New York Clearing House.
In the latter part of August, 1878, I made a visit to Ohio, first
going to Mansfield where I was cordially received. In the evening
I was serenaded, and after the band had played several times I went
to the steps of the hotel and made a few impromptu remarks, reported
as follows by the local paper:
"Fellow Citizens:--I thank you heartily for the courtesy of this
serenade, and especially the members of the band who have favored
us with their excellent music. I will be here with you but for a
few days, and welcome with joy the sight of home, and the familiar
faces and scenes around me. I do not desire to say anything of
politics, or of matters upon which we do not agree, but prefer to
meet you all as old acquaintances and townsmen, having common
interests and sympathies as to many things as to which we do agree.
And I especially congratulate you upon the bountiful harvests,
fruitful orchards and reviving prosperity with which you are blessed.
I will be glad to shake hands with any of you, and to talk with
you free from all artificial restraints."
I went from Mansfield to Toledo, where I had agreed with the state
central committee to make a speech, and where the opposition to
resumption was stronger than in any other city in the state. Here
the so-called National party had its origin. I knew a great many
of the citizens of Toledo and the prevailing feeling on financial
topics. I, therefore, carefully prepared a speech, covering all
the leading questions involved in the campaign, especially all that
related to our currency. The meeting was held August 26, in a
large opera house, which would seat 2,500 people. I found it full
to overflowing. Every particle of space in the aisles was occupied
and it was estimated that 3,000 people were gathered within its
walls. I will give the narrative of a correspondent of the St.
Paul "Pioneer Press," who was an eyewitness of the scenes that
followed:
"Secretary Sherman was not received with that hearty greeting common
to a man of such prominence at first, while the organization that
had been picketed in different parts of the hall at once commenced
hissing at the first sight of the tall, slender form of the speaker.
Until his introduction the emotion was the same, and as soon as he
commenced to speak he was interrupted with jeers and insults from
what Nasby, in his paper, called the 'hoodlums of the city,' who
came organized and determined to break up the meeting without giving
the speaker a chance to be heard, by shouting at the top of their
voices such insults as 'You are responsible for all the failures
in the country;' 'You work to the interest of the capitalist;'
'Capitalists own you, John Sherman, and you rob the poor widows
and orphans to make them rich;' 'How about stealing a President;'
'Why don't you redeem the trade dollar?'
"These, with many other like flaunting sneers, were constantly
indulged in by the disorderly element, which had been distributed
with care throughout the hall. So boisterous and moblike was their
behavior that it was apparent several times that it would be
impossible to maintain order, and notwithstanding the speaker stated
that if any gentlemen wished to ask any question, upon any point
that he might discuss, in their order, he would be glad to answer
them, and invited criticisms, but one such question was asked by
Mr. F. J. Scott, one of the leading lights of the Nationals, who
wished to know the difference between 'fiat' money and greenbacks;
the speaker replied: 'Fiat money is redeemable nowhere, payable
nowhere, for no amount without security, at no time, and without
a fixed value; while greenbacks are redeemable in specie at par,
at a fixed time, and secured by the pledge of the government.'
"By this ready, pointed and satisfactory answer the speaker turned
the tide, and the applause was hearty in his favor. When answering
Judge Thurman the speaker alluded to the charge made by him that
the 'Republican party was the enemy of the country.' Then, after
calling attention to the war record of the Democratic party, the
speaker said: 'Who is the enemy of the country?' [A voice from
a 'hoodlum,' 'John Sherman.'] 'Why,' says the speaker; 'because
he has brought greenbacks up to par value, and is in favor of honest
money?' This was another cause for an outburst of applause and
approval to the speaker, although it was very doubtful, in the
beginning of the speech, whether he could carry enough of the vast
audience, with the large disturbing element opposing intermingled
among them, with him. But long before the closing of his discourse
it became apparent that John Sherman is able to defend his position,
even in the camp of the enemy, while the ungentlemanly acts of the
disorganizing element were disgusting to the better element of
their party. It also effectively revived the lukewarm Republicans
in this community, and it may be well said that John Sherman did
what no other man could have done, that is, to go to a place like
Toledo, stand before an organized party which was determined to
prevent his speaking, while his own party was lukewarm toward him
--it was frequently asserted here 'John Sherman had not a single
friend in the city'--and during his speech of two hours turn the
popular tide in his favor, as was evident he did from the hearty
applause he received as he proceeded in his remarks; and it is safe
to say that no man in these United States could have done the
Republican cause, in this place, the good that Secretary Sherman
did by his speech, and the 'Toledo National hoodlums,' in their
efforts to break up the meeting, 'gave the old man a reception,'
as was remarked on the streets; but throughout his speech he kept
his temper, kept cool and considerate, made remarks of cheer by
saying, 'This is only a love feast,' and 'We will feel better
natured after a while, as we become better acquainted,' etc., etc."
The narrative given by the correspondent is perhaps a little
exaggerated, but the general outlines are correct, as I very
distinctly remember. The result was that my carefully prepared
speech was knocked into "pi," and I had to depend upon the resources
of the moment to make a speech suitable to the occasion and the
crowd. The Cincinnati "Enquirer," to which, as to other papers,
a copy of the prepared address had been sent, had two stenographers
in Toledo to report the speech as made and telegraph it to the
paper. They did so and the speech as reported and published in
the "Enquirer" was so much more sensational and better than the
prepared speech that it was selected by the Republican state
committee for publication as a campaign document. This enterprise
of an unfriendly newspaper resulted to my advantage rather than my
detriment, for on account of the interruptions the speech reported
was much more readable than the other.
No doubt the feeling in Toledo grew out of the long depression that
followed the panic of 1873, that for a time arrested the growth
and progress of that thriving and prosperous city. The people
wanted more money, and I was doing all I could, not only to increase
the volume of money by adding coin to our circulation, but to give
it value and stability. I have spoken in Toledo nearly every year
since, and have always been treated with courtesy and kindness,
and many of my best friends now in Toledo are among those who joined
in interrupting me, and especially their leader, Mr. Scott.
From Toledo I went to Cincinnati. I have been for many years an
honorary member of the Chamber of Commerce of Cincinnati, a body
of business men as intelligent and enterprising as can be found
anywhere. It has been my habit to meet them once a year and to
make a short speech. This I did on August 28. The "Gazette"
reported my visit as follows:
"Secretary Sherman was on 'change yesterday, and, at the close of
the business hour, he was introduced by President Hartwell, and
was greeted with applause, after which he spoke as follows:
'Gentlemen:--It gives me pleasure to meet so many of the active
business men of Cincinnati, even for a brief period. In the office
which I hold I have a great deal to do with merchants, like these
engaged in the exchange of the products of our industries, and I
congratulate you, first of all, that this fall, by the bounty of
Divine Providence, you will have to market the largest crop we have
ever gathered in this country since the world was born.
'In every part of our country, with but few exceptions, and only
as to certain crops, are crops greater than ever before, and you
will have to buy and sell them.
'The only point of an unpleasant nature, that occurs to me, affecting
the industrial interests which you so largely represent, is the
misfortune which has befallen large portions of the south, where
yellow fever, one of the worst enemies of human life, now has spread
a pall of distress among our southern brethren. I am glad, fellow-
citizens, that you are doing something to contribute to the relief
of their sufferings, because business men, above all others, are
to be humane and generous to those who are in distress.
'That this will, to some extent, affect the business of gathering
cotton, I have no doubt will occur to you all, but you can only
hope that it will be but a brief season until the frost will
dissipate the distress of the south and the cotton crop may be
safely gathered.
'There is another thing I can congratulate you upon as business
men, that is--our currency is soon to be based upon the solid money
of the world. I do not want to talk politics to you, and I do not
intend to do so, but I suppose it is the common desire of all men
engaged in business to have a stable, certain standard of value,
and although you and I may differ as to the best means of obtaining
it, and as to whether the means that have been adopted have been
the proper means, yet I believe the merchants of Cincinnati desire
that their money shall be as good as the money of any country with
which we trade. And that, I think, will soon be accomplished.
'Now, gentlemen, I do not know that there is any other topic on
which you desire to hear from me. I take a hopeful view of our
business affairs. I think all the signs of the times are hopeful.
I think it a hopeful fact that, after this week, there will be an
end of bankruptcies, that all men who believe that they are not in
a condition to pay their debts will have taken the benefit of the
law provided for their relief, and, after Saturday next, we will
all stand upon a better basis--on the basis of our property and
our deserved credit.
'It has been the habit, you know, of one of your able and influential
journals to charge me with all the bankruptcies of the country.
If a grocer could not sell goods enough to pay expenses, and a
saloon keeper could not sell beer enough to get rich, and took the
short way of paying his debts, this paper would announce the fact
that he had "Shermanized." [Laughter.] And if a bank was robbed,
or the cashier gobbled the money in the safe and left for parts
unknown, this able editor announced that the bank had "Shermanized."
And thus this paper contributed largely to the very result it
denounced. You understand how this thing works.
'But we have passed through this severe crisis. It has been common
in all countries and all states that carry on extensive commercial
transactions with each other. I believe that we are through with
this one; a ray of hope has dawned on us, and we are certainly
entering upon a career of prosperity. Every sign of business is
hopeful. We have paid off immense amount of our debts. We do not
owe Europe anything of consequence. We have gone through the debt
paying process. A few years ago we were running in debt at the
rate of $100,000,000 a year, but lately we have been paying off
our debt at the rate of $100,000,000 a year. From this time on we
will be more prosperous. Take heart, you men of Cincinnati; you
men who represent the great interests in this great city; you who
live in the heart of the great west, take heart in the transaction
of your business, because I believe you have reached a solid basis
upon which to conduct your business profitably, the basis of solid
coin.'"
From Cincinnati I went to Lancaster, the place of my birth, and
where my eldest sister, Mrs. Reese, resides. I need not say that
the visit was a pleasant one, for it was necessarily so. A great
many among those whom I saw had been my associates in boyhood, and,
as a matter of course, the topics of conversation were mainly of
the past. A dispatch to the Cincinnati "Gazette" of the date of
August 30, briefly describes my visit and gives the substance of
a few remarks I was called upon to make by an impromptu gathering
in the evening at the residence of my sister:
"The Lancaster band serenaded Secretary John Sherman this evening,
at the residence of his sister, Mrs. General Reese. A very large
crowd assembled on the occasion, and, in response, Senator Sherman
made one of the neatest, pleasantest, and most satisfactory little
talks heard here for many a day. Of course he began by touching
upon his early boyhood, and some of the incidents of the same spent
here in old Lancaster, the place of his nativity; told of his
incipient struggles in life with the rod and chain on an engineer
corps in the Muskingum valley; how he was ushered into the sterner
vicissitudes of life, and how he drifted into politics; and then,
without using the occasion for party purposes, without making a
political speech, he explained in well selected language his position
as an officer of the government; what was the course prescribed
for him to do, how he was doing it, and concluding with a most
clear and intelligible exegesis of the resumption act; what it was,
its intent, purpose and meaning; and with convincing nicety and
clearness, and evident satisfactoriness, was his explanation given,
that he was frequently interrupted by spontaneous applause from
the crowd. He told how the credit of the country was advancing as
we near the solid foundation of hard money; how the American people
were the most favored, the greatest blest, the freest and most
prosperous people on the earth; how the signs of the times in busy
shops and abounding field told of the disappearing hard times, and
the dawning of an era of greater peace and prosperity."
I returned to Washington, and at once proceeded to arrange with
the treasurer and assistant treasurers of the United States to make
the change from currency to coin easy. I conferred with General
Hillhouse, assistant treasurer at New York, upon the subject and
had his opinions verbally and in writing. I conferred freely with
James Gilfillan, treasurer of the United States, and, as a result
of these conferences, on the 3rd of September, I directed the
treasurer of the United States, upon the receipt by him, from any
person, of a certificate, issued by any assistant treasurer, designed
depositary, or national bank designated as a public depositary of
the United States, stating that a deposit of currency had been made
to his credit in general account of the sum of one thousand dollars,
and any multiple thereof, not exceeding ten thousand dollars, to
cause a shipment to be made, from some mint of the United States
to the person in whose name the certificate was issued, of a like
amount of standard silver dollars, the expense of transportation
to be paid by the mint.
The sole purpose of this order was to facilitate the circulation
of standard silver dollars for all purposes as currency, but not
to issue them so as to be used directly in making those payments
to the government which were required to be made in coin. I wished
to avoid their deposit for silver certificates. Officers receiving
deposits of currency were expected, as far as practicable, to see
that the silver dollars were put in circulation. Shipments, however,
were to be made only to points in the United States reached through
the established express lines by continuous railway or steamboat
communication.
I regarded this as practically the resumption of specie payments
in silver dollars, but the chief object aimed at was to secure a
general distribution of these dollars throughout the United States,
to the extent of the demand for them, without forcing them into
circulation.
General Hillhouse recommended the payment of silver for all purposes,
not only for circulation, but for the payment of bonds and customs
duties. This I fully considered, but thought it best for the
present to get into ordinary circulation among the people, in points
remote from the ports of entry, as much silver coin as practicable,
before offering it freely in cities where it would be immediately
used for customs duties. I said: "If, within a month or so, we
are able to reduce our stock of silver to five or six millions, I
should not hesitate a moment to offer it then freely in New York
and elsewhere, and run the risk of doing without gold revenue for
awhile."
On September 7 I issued the following order:
"Treasury Department, September 7, 1878.
"Hon. James Gilfillan, Treasurer of the United States.
"Sir:--On and after the 16th day of this month you are authorized,
at the treasury in Washington, and at the several sub-treasuries
in the United States, to exchange standard silver dollars for United
States notes.
"Very respectfully,
"John Sherman, Secretary."
The question was raised in the public prints, and in the department,
whether I had legal authority, under the existing laws, to pay
silver dollars in exchange for United States notes before the 1st
of January. It was plausibly urged that the payment of this coin
in advance of the time fixed for resumption was the exercise of
authority not authorized by law. I, therefore, on the 13th day of
September, three days before the previous order would take effect,
directed the treasurer of the United States as follows:
"Treasury Department, September 13, 1878.
"Hon. James Gilfillan, Treasurer United States.
"Sir:--Some question has been made whether the issue of silver
dollars in exchange for United States notes, before January 1,
next, is in entire accordance with the legislation of Congress
bearing on the subject, and, therefore, you will please postpone
the execution of department order of the 3rd instant until further
instructions, and withhold from transmission to assistant treasurers
the order of the 7th.
"Silver dollars will be issued as heretofore, in the purchase of
silver bullion, in payment of coin liabilities, and in the mode
pointed out in your order of July 19, as modified.
"With a view to their payment on current liabilities, you will
request that each disbursing officer estimate the amount he can
conveniently disburse.
"Very respectfully,
"John Sherman, Secretary."
This change of my opinion was the subject of much criticism in the
public prints. Some complained that I was unfriendly to the silver
dollar and sought to prevent its use, and others complained that
its use before the 1st of January as a substitute for gold coin
was a violation of the law. My only purpose was to accustom the
people to the use of the silver dollar in the interior of the
country at places where it could not be used in the payment of
customs duties. These could only be paid in coin, and, in view of
resumption, I desired to strengthen the treasury as much as possible
by the receipt of gold coin. The charge that I was guilty of
changing my mind did not disturb me when I was convinced that I
had exceeded my authority in the issue of the first order.
At that time there was an evident reluctance to pay coin into the
treasury for four per cent. bonds sold, when, within a brief period,
United States notes could be paid for such bonds. I therefore
directed the treasurer of the United States: "Where deposits with
national banks on account of subscriptions to the four per cent.
loan have not been paid into the treasury within ninety days after
the deposit was made, you will at once draw for the amount of such
deposits, to be forthwith paid into the treasury, and as such
deposits accrue under this rule, you will make such withdrawals
until the whole is paid."
I also directed the chief of the loan division as follows:
"No doubt most of the depositaries will place coin to their credit
within the period of the call outstanding after subscriptions are
made, according to the circular of the 1st ultimo, but if this is
not done, the deposit must be withdrawn at the expiration of ninety
days from the date of subscription."
I also advised August Belmont & Co., that the department expected
that by the 1st of October the remainder of the coin then due upon
the four and a half per cent. bonds, both from the American sales
and those made in London, would be paid into the treasury; that it
was deemed best that this should be done, so that the account of
this loan might be closed as soon thereafter as the books could be
made up. This request was promptly complied with.
Early in October there were many rumors in circulation charging
that prominent capitalists and speculators were combining to defeat
resumption. Among them Jay Gould was mentioned as being actively
engaged in "bearing" the market. About this period I received from
him the following letter:
"578 Fifth Avenue, Oct. 17, 1878.
"Hon. John Sherman.
"Dear Sir:--Referring to recent newspaper statements that I have
been interested in movements either to tighten money or create a
scarcity of gold and thus interfere with natural and early resumption,
I beg to say that they are without the slightest foundation. On
the contrary I feel a very deep interest in your efforts, so far
eminently successful in carrying the country to a successful
resumption.
"_If resumption is made a real success it will be accompanied with
substantial business prosperity and do more to strengthen and retain
the ascendency of the Republican party than any and all other
reasons_.
"The real causes of the recent disturbances in the money market
are the following:
"First. Government bonds have come back from Europe faster than
investment orders would absorb them--the surplus are carried on
call loans and have absorbed several millions of dollars.
"Second. The financial troubles in England are retarding the rapid
movement of western produce. The elevators at Chicago and Milwaukee
are full of grain; at Chicago alone about 7,000,000 bushels. The
currency sent west to pay for this grain will not be released until
the grain is marketed.
"Third. A large amount of foreign capital usually lent on call in
Wall street has been transferred to London and Liverpool as money
commands (or has until recently) better rates there than in New
York.
"I remain, yours very truly,
"Jay Gould."
The purchase of four per cent. bonds sensibly increased in October.
As the six per cent. bonds could not be paid within ninety days
after the call, the purchasers of the four per cent. bonds claimed
the right to pay for such bonds in United States notes, which on
the 1st of January would be redeemable in coin. To this I replied
that as the sale of four per cent. bonds was solely for the purpose
of refunding the six per cent. bonds, the proceeds of the sale must
be such as could be lawfully paid for called bonds. "Under existing
law the treasury is required to and will redeem in coin, on and
after January 1, 1879, United States legal tender notes, on
presentation at the sub-treasury in New York, and will then receive
such notes in payment for four per cent. bonds. The department
does not anticipate any change in the law that would operate to
prevent this, but cannot stipulate against any act which Congress
in its judgment may pass."
Every facility which the law allowed to promote the easy change in
the basis of our currency was carefully considered and adopted.
The chief measure adopted was to promote exchanges in the clearing
house in New York, so that only the balance of debits or credits
would actually be paid. I requested Assistant Secretary French to
examine whether, under existing law, such an arrangement was in
the power of the department, and called his attention to previous
correspondence in 1875 in the department on this subject. He came
to the conclusion that the existing law would not justify such an
arrangement. John Jay Knox, comptroller of the currency, however,
favored the admission of the assistant treasurer of the United
States at New York as a member of the clearing house. He said:
"The proposition is favored by the banks generally, and it is
believed that the representation of the treasury department in the
clearing house will facilitate the transaction of business between
the department and the banks, and I therefore respectfully suggest
that application be made for the admission of the assistant treasurer
in New York to the Clearing House Association, provided it shall
be found that there is no legal objection thereto."
General Hillhouse also was strongly in favor of the plan proposed.
He said:
"The plan of going into the clearing house was proposed in
correspondence with the department several years ago, as a remedy
for the risk incurred in the collection of checks, and if there
are no legal impediments in the way, it would very much simplify
the business of the office if it could be adopted. The effect in
connection with resumption would also, I think, be good, as it
would place the banks and the treasury on the same footing with
respect to the use of United States notes in settlements, and thus
aid in maintaining them at par with gold in all the vast transactions
connected with our internal trade and commerce. I have not given
the question sufficient thought to speak with confidence, but it
seems to me a very important one, and well worthy of careful
consideration."
A committee of the clearing house called upon me and the subject
was thoroughly considered. Mr. Gilfillan wrote to General Hillhouse
as follows:
"Treasury of the United States.}
"Washington, November 9, 1878. }
"Sir:--By direction of the secretary, I have the honor to request
that you will submit to the Clearing House Association of the banks
of your city the following propositions, and, upon obtaining the
assent of the association to them and communicating that fact to
the department, you are expected to act in conformity with them.
"First. Hereafter, drafts drawn upon any bank represented in the
Clearing House Association in the city of New York, received by
the assistant treasurer in that city, may be presented to such bank
at the clearing house for payment.
"Second. Hereafter, drafts drawn on the assistant treasurer at
New York may be adjusted by him at the clearing house, and the
balances due from the United States may be paid at his office in
United States notes or clearing house certificates.
"Third. After the 1st of January next, payment of checks presented
to the assistant treasurer by any bank connected with the clearing
house may be made by him in United States notes.
"Very respectfully,
"James Gilfillan, Treasurer United States.
"Hon. Thomas Hillhouse, Assistant Treasurer United States, New
York."
General Hillhouse, on the 12th of November, advised me of the
receipt of this letter, and that the propositions of the treasurer
were referred to the Clearing House Association, that a meeting
would be held and there was little doubt but that they would be
accepted.
On the same day the Clearing House Association, fifty out of fifty-
eight banks, members of the associations, being present, unanimously
adopted the following resolutions:
"_Resolved_, That in order to facilitate the payment of drafts and
checks, between the treasurer of the United States and the associated
banks, the manager of the New York clearing house is authorized to
make such an arrangement with the assistant treasurer as will
accomplish that purpose through the medium of the clearing house.
"_Resolved_, That the reported interview between the members of
the clearing house committee and the Secretary of the Treasury,
with the views expressed by them to him in the paper presented to
this meeting upon the subject of the restoration of specie payments,
meets the cordial approbation of this association, and that the
practical measures recommended for the adoption of the banks in
respect to their treatment of coin in their business in the public,
and with each other, be accepted and carried into practical operation;
and, in pursuance thereof, it is hereby further
"_Resolved_, That the associated banks of this city, after the 1st
of January, 1879, will, first, decline receiving gold coins as
'special deposits,' but accept and treat them as lawful money;
second, abolish special exchanges of gold checks at the clearing
house; third, pay and receive balances between banks at the clearing
house, either in gold or United States legal tender notes; fourth,
receive silver dollars upon deposit only, under special contract
to withdraw the same in kind; fifth, prohibit payments of balances
at the clearing house in silver certificates, or in silver dollars,
excepting as subsidiary coin, in small sums (say under $10); sixth,
discontinue gold special accounts, by notice to dealers, on 1st of
January next, to terminate them.
"_Resolved_, That the manager of the clearing house be requested
to send copies of the proceedings of this meeting to clearing houses
in other cities, with an expression of the hope that they will
unite in similar measures for promoting the resumption of coin
payments."
I accepted in the following note:
"Treasury Department, }
"Washington, D. C., November 13, 1878.}
"George S. Cox, President American Exchange National Bank, New York.
"Sir:--Your letter of yesterday, advising me of the adoption by
the Clearing House Association of the result of our recent interview,
is received with much pleasure.
"The end we all aim at, a specie standard and a redeemable currency,
is greatly promoted by the judicious action of the banks, and I
will, with greater confidence, do my part officially in securing
the maintenance of resumption.
"John Sherman, Secretary."
This arrangement, entered into with care, proved to be a measure
of very great advantage to the government as well as to all business
men engaged in the great commercial operations of New York. The
necessary details to carry this agreement into effect were arranged
between General Hillhouse, for the United States, and W. A. Camp,
manager of the New York clearing house.
CHAPTER XXV.
INVESTIGATION OF THE NEW YORK CUSTOMHOUSE.
A General Examination of Several Ports Ordered--No Difficulty Except
at New York--First Report of the Commission--President Hayes'
Recommendations--Letter of Instructions to Collector C. A. Arthur
--Second Report of the Commission--Losses to the Government by
Reason of Inefficiency of Employees--Various Measures of Reform
Recommended--Four Other Reports Made--The President Decides on the
Removal of Arthur, Cornell and Sharpe--Two Letters to R. C. McCormick
on the Subject--Arthur et al. Refuse to Resign--The Senate Twice
Refuses to Confirm the Men Appointed by the President to Succeed
Them--Conkling's Contest Against Civil Service Reform--My Letter
to Senator Allison--Final Victory of the President.
At the beginning of the administration of President Hayes, and for
months previous, there had been complaints as to the conduct of
business in the principal customhouses of the United States. This
was especially called to my attention, and at my suggestion the
President directed an examination into the conduct of the customhouses
at New York, Philadelphia, New Orleans, San Francisco and perhaps
other ports. Examinations were made by intelligent business men
selected in the various ports, and full reports were made by them,
and printed as public documents. Many changes were made, and
reforms adopted, founded upon these reports, and there was no
difficulty except only at the port of New York, where more than
two-thirds of all the customs revenue was collected. Chester A.
Arthur was then collector of the port, A. B. Cornell was naval
officer, and George H. Sharpe was appraiser.
On the 23rd of April, 1877, I designated John Jay, Lawrence Turnure,
of New York, and J. H. Robinson, Assistant Solicitor of the Treasury,
as a commission on the New York customhouse. They were requested
to make a thorough examination into the conduct of business in that
customhouse. Full instructions were given and many specifications
were made in detail of all the points embraced in their examination.
On the 24th of May they made their first report, preferring to
treat the general subject-matter separately. This report related
chiefly to appointments upon political influence without due regard
to efficiency. I promptly referred it to the President, and received
the following letter:
"Executive Mansion, }
"Washington, May 26, 1877.}
"My Dear Sir:--I have read the partial report of the commission
appointed to examine the New York customhouse. I concur with the
commission in their recommendations. It is my wish that the
collection of the revenues should be free from partisan control,
and organized on a strictly business basis, with the same guarantees
for efficiency and fidelity in the selection of the chief and
subordinate officers that would be required by a prudent merchant.
Party leaders should have no more influence in appointments than
any other equally respectable citizens. No assessments for political
purposes, on officers or subordinates, should be allowed. No
useless officer or employee should be retained. No officer should
be required or permitted to take part in the management of political
organizations, caucuses, conventions, or election campaigns. Their
right to vote, and to express their views on public questions,
either orally or through the press, is not denied, provided it does
not interfere with the discharge of their official duties.
"Respectfully,
"R. B. Hayes.
"Hon. John Sherman, etc."
My answer to the commission was as follows:
"Treasury Department, May 26, 1877.
"Gentlemen:--Your first report on the customhouse in New York, of
date the 24th instant, has been received, and the reduction proposed
by you of twenty per cent. of the number of persons employed therein
is approved.
"So far as these offices are created by law, vacancies will be made
and left for the action of Congress. The reduction of the other
employees, the number of whom and whose compensation are not fixed
by law, will be made as soon as practicable.
"I am much gratified that the collector, the naval officer, and
the surveyor of the port, concur with you in the proposed reduction.
"The hours of employment, after the 31st of this month, will be
from 9 o'clock a. m. till 4 o'clock p. m., excepting where a longer
time is prescribed by law. This corresponds to the hours of clerical
service in this department. This rule will be strictly enforced,
and absence will be the cause of reduction of pay or removal.
Strict attention to duty will be required, and other business will
not be allowed to interfere with the full discharge of the duty
attached to the office.
"I notice that you do not suggest a mode of carrying into effect
the reduction of the force recommended, and I cannot, with due
regard to the remaining subjects of your inquiry, ask you to extend
your investigation into the _personnel_ of each employee, his
character, efficiency, and merits. This must be mainly left to
the collector, who, by law, is authorized to employ, with the
approval of the Secretary of the Treasury, proper persons as deputy
collectors, weighers, gaugers, and measurers, in the several ports
within his district. Thus, nearly all the officers of the customhouse
are appointed by the collector, and, with the approval of the
Secretary of the Treasury, may be removed at pleasure. He will be
promptly called upon, under special orders, to perform this delicate
and onerous duty. It is very important that it should be executed
with due regard to the efficiency and merit of the employees, and
so as best to promote the public service.
"In order that a rule might be furnished him, I called upon the
President for instructions to govern alike the collector and myself
in the execution of this duty. A copy of his answer is hereto
annexed. You will see from it that he approves your recommendations,
and that he wishes the customhouse conducted free from partisan
control, on a strictly business basis, with the same guarantees
for efficiency and fidelity in the selection of the chief and
subordinate officers that would be required by a prudent merchant;
that the public business should not be affected injuriously by the
interests or influence of party leaders or party struggles; and
that, while an officer should freely exercise his political rights
as a citizen, he should not use his power as an officer to influence
the conduct of others.
"I believe the opinions expressed by the President will meet with
your hearty approval, and they are in harmony with your report.
"Permit me to add the thanks of this department for your care,
ability and industry in conducting this inquiry.
"Very respectfully,
"John Sherman, Secretary.
"Messrs. John Jay, L. Turnure, and J. H. Robinson,
"Commission on Custom House, New York."
I inclosed a copy of the report of the commission to Collector
Arthur, with the following letter of instruction:
"Treasury Department, May 28, 1877.
"Sir:--Inclosed I send you a copy of the first report of the
commission on the New York customhouse, recommending a large
reduction of the employees in the various offices in your collection
district, and the approval and adoption of that report.
"It only remains now to execute this order, upon the principles
and in the spirit stated by the President. This task, always an
unpleasant one, when it requires the removal of employees, falls
mainly upon you, subject to my approval. It may not be amiss now
for me to state, in advance, somewhat in more detail, my views as
to the mode of reduction. The extent of the reduction is fully
stated in the report, and we are thus relieved from that portion
of the task.
"I notice by the report that you have an exceptionally large
proportion of experienced officers still in the service. You will
have no difficulty in selecting, from these, the more efficient
and trustworthy to fill the more important positions, and when
these are carefully selected, you will have secured for the duties
of greatest trust, active, efficient, and experienced officers.
It must happen that among those longest in service some are disabled
by age and infirmity. It is often the most painful, but necessary,
duty, to dismiss there, or reduce them to positions which they are
still able to fill. The government is fairly entitled to the
services of those who are fully able to discharge personally the
duties of their office, and who are willing to give their entire
attention to their official duty. If they cannot, or do not, do
this, it is no injustice to remove them.
"In the selection of inferior officers, the only rule should be
the one daily acted upon by merchants--to employ only those who
are competent for the special work assigned them, whose industry,
integrity, and good habits give guarantees for faithful services,
honestly rendered. This reduction will enable you to transfer
those now employed on work for which they are not fitted, to other
work for which they are competent, and to reward exceptional merit
and ability by promotion.
"It is impossible, in a force so large as yours, that you should
know the peculiar qualities and merits of each employee, and it is
important, in making selections, that you secure this information
through committees of trusted officers, and in proper cases to test
the intelligence, ability, and qualifications of an officer or
applicant for office by written questions or an oral examination.
In many cases the partiality and influence of relations secure
several persons of the same family in office, thus causing complaints
and favoritism. As a rule, it is best in all cases to have but
one of the same family under your jurisdiction, and no just complaint
can be made if this rule is impartially enforced.
"The President properly lays great stress on excluding from a purely
business office active participation in party politics. Naturally,
in a government like ours, other things being equal, those will be
preferred who sympathize with the party in power; but persons in
office ought not to be expected to serve their party to the neglect
of official duty, or to promote the interests of particular
candidates, or to interfere with the free course of popular opinion,
or to run caucuses or conventions. Such activity of office-holders
is offensive to the great mass of the people who hold no office,
and gives rise to complaints and irritation. If any have been
appointed for purely political reasons, without regard to their
efficiency, now is a good time to get rid of them.
"Where actual misconduct is proven, such as receiving gratuities
or bribes, or oppression or insolence in office, or even the want
of common courtesy, or drunkenness or other bad habits tending to
degrade the officer, or absence from or neglect of duty--in all
such cases I know it will be your pleasure to dismiss the employee.
"The payment of taxes is not pleasant at best, but if rudely enforced
by oppression or discreditable officers, it renders the tax as well
as the tax-collector odious.
"I do not fix any time within which this reduction must be made,
but shall expect it to be completed by the 30th day of June proximo.
So far as the reduction is specifically made by the adoption of
the report, it should be made by the 1st day of June, and it should
be made as to each particular division or department of the
customhouse as early as practicable.
"After all, the success of this movement for reform of old abuses,
which existed for many years before you became collector, will
depend mainly upon your good sense and discretion. I assure you
I will heartily sustain and approve any recommendation you may make
that appears to me to tend to make the New York customhouse--not
only what it now is, the most important, but what it ought to be--
the best managed business agency of the government.
"Very respectfully,
"John Sherman, Secretary.
"C. A. Arthur, Esq., Collector of Customs, New York."
When the inquiry commenced there was no purpose or desire on the
part of the President or anyone to make a change in the officers
of the New York customhouse. This is apparent from my letter to
Collector Arthur. The commission proceeded with their examination,
and on the 2nd of July made their second report. This contained
specific charges, but of a general character, against persons
employed in the customhouse. They found that for many years past,
the view had obtained with some political leaders that the friends
of the administration in power had a right to control the customs
appointments; and this view, which seemed to have been acquiesced
in by successive administrations, had of late been recognized to
what the commission deemed an undue extent by the chief officers
of the service. These gentlemen, on the ground that they were
compelled to surrender to personal and partisan dictation, appeared
to have assumed that they were relieved, in part, at least, from
the responsibilities that belonged to the appointing power.
The collector of the port, in speaking of the "ten thousand
applications," and remarking that the urgency for appointments came
from men all over the country, added, "the persons for whom it is
made bear their proportion of the responsibility for the character
of the whole force."
The surveyor had said:
"I had, within the last two weeks, a letter, from a gentleman
holding a high official position, in regard to the appointment of
an officer whom he knows had been dropped three times from the
service for cause. He has also been to see me about him, and the
last time he came he admitted to me that he had been engaged in
defrauding the revenue; and yet he writes me calling my attention
to the case, and requesting his appointment."
The collector, in his testimony before the commission, said that
"the larger number of complaints probably come from the surveyor
of the port," and, on being asked their character, said:
"Some are for inefficiency, some are for neglect of duty, some for
inebriety, and some for improper conduct in various ways; some for
want of integrity, and some for accepting bribes."
The commission further stated:
"The investigation showed that ignorance and incapacity on the part
of the employees were not confined to the surveyor's department,
but were found in other branches of the service--creating delays
and mistakes, imperiling the safety of the revenues and the interests
of importers, and bringing the service into reproach. It was
intimated by chiefs of departments that men were sent to them
without brains enough to do the work, and that some of those
appointed to perform the delicate duties of the appraiser's office,
requiring the special qualities of an expert, were better fitted
to hoe and to plow. Some employees were incapacitated by age, some
by ignorance, some by carelessness and indifference; and parties
thus unfitted have been appointed, not to perform routine duties
distinctly marked, but to exercise a discretion in questions
demanding intelligence and integrity, and involving a large amount
of revenue.
"The evidence shows a degree and extent of carelessness which we
think should not be permitted to continue. This point was illustrated
to some degree by the testimony of the chiefs of the appraiser's
department, the important duties of which would certainly justify
a reasonable exactness. The invoices, which are recorded in that
office, and which are sent out to the different divisions to be
passed upon and then returned to the chief clerk, are found to
exhibit, on their return, errors on the part of the several divisions
--according to one witness, nearly eight hundred errors a month--
although the number by the appraiser was estimated at a lesser
figure. A part of these errors may be assigned to a difference of
opinion as to the classification of the goods; but fully one-half
are attributed to carelessness. At the naval office it was stated
that the balance in favor of the government, of the many and large
errors which they discover in the customhouse accounts of the
liquidation of vessels and statements of refund, amounts to about
a million and a half of dollars per annum."
The commission entered into a full statement and details as to
irregularities, inefficiency and neglect of duties in different
departments of the customhouse, and recommended various measures
of reform, both in the laws regulating the customs service and its
actual administration. A copy of this report was immediately sent
to Collector Arthur and Naval Officer Cornell, with instructions
to recommend to me the number of each grade for each branch of his
office, with various details designated by me, and to carry into
execution the general recommendations of the commission. I added:
"You will please take your own way, by committee of your officers
or otherwise, to fix the number of each grade requisite to conduct
the business of your office, and make report as early as
practicable."
The third report was made on the 21st of July, and related to the
management of the department of weighers and gaugers.
The fourth report, made on the 31st of August, related to the
appraiser's office. In acknowledging the receipt of this report
on the 12th of September, I stated:
"The recommendations made by you will be fully examined in detail,
and be acted upon cotemporaneously with the proposed change in the
leading officers of that customhouse."
Two other reports were made, dated October 31 and November 1, 1877,
the latter containing suggestions as to the recommendations of
legislative amendments to various existing laws and usages.
After the receipt of the report of August 31 the President, who
had carefully read the several reports, announced his desire to
make a change in the three leading officers of the New York
customhouse. He wished to place it upon the ground that he thought
the public service would be best promoted by a general change, that
new officers would be more likely to make the radical reforms
required that those then in the customhouse. The matter was
submitted to the cabinet, and I was requested to communicate with
these officers, in the hope that they would resign and relive the
President from the unpleasant embarrassment of removing them. On
the 6th of September I wrote to Richard C. McCormick, Assistant
Secretary of the Treasury, who was then at his home near New York
on account of illness, the following letter. I knew that Mr.
McCormick was on friendly terms with Collector Arthur, and that he
might better than I inform him of the wish of the President to
receive the resignations of himself, and Messrs. Cornell and Sharpe:
"Treasury Department, }
"Washington, D. C., September 6, 1877.}
"Dear Governor:--After a very full consideration, and a very kindly
one, the President, with the cordial assent of his cabinet, came
to the conclusion that the public interests demanded a change in
the three leading offices in New York, and a public announcement
of that character was authorized. I am quite sure that this will,
on the whole, be considered to be a wise result. The manner of
making the changes and the persons to be appointed will be a subject
of careful and full consideration, but it is better to know that
it is determined upon and ended. This made it unnecessary to
consider the telegrams in regard to Mr. Cornell. It is probable
that no special point would have been made upon his holding his
position as chairman of the state committee for a limited time,
but even that was not the thing, the real question being that,
whether he resigned or not, it was better that he and Arthur and
Sharpe should all give way to new men, to try definitely a new
policy in the conduct of the New York customhouse.
"I have no doubt, unless these gentlemen should make it impossible
by their conduct hereafter, that they will be treated with the
utmost consideration, and, for one, I have no hesitation in saying
that I hope General Arthur will be recognized in a most complimentary
way.
"Things are going on quietly here, but we miss you very much. Hope
you will have a pleasant time and return to us in fresh health and
vigor.
"Very truly yours,
"John Sherman.
"Hon. R. C. McCormick."
On the next day I wrote him a supplementary letter:
"Treasury Department, }
"Washington, D. C., September 7, 1877.}
"Dear Governor:--Your note of yesterday is received.
"The action of the President on the New York customhouse cases
turned upon the general question of change there, and not upon
Cornell's case. It happened in this way: General Sharpe, in a
very manly letter, withdrew his application for reappointment as
surveyor of the port. In considering the question of successor
the main point, as to whether the changes in the New York customhouse
rendered necessary a general change of the heads of the departments,
was very fully and very kindly considered, and, without any reference
to Cornell's matter, until it was thought, as a matter of public
policy, it was best to make change in these heads, with some details
about it which I will communicate to you when you return. When
that was seen to be the unanimous opinion, it was thought hardly
worth while to single out Mr. Cornell's case, and act upon it on
the question that affected him alone. If he was allowed to resign
from the committee, it would undoubtedly be upon an implied
supposition that he would be continued as naval officer. I think
even yet he ought to do as he proposed to Orton, but we could not
afford to have him do it with any such implied assent, and, therefore,
it was deemed better to make the formal announcement agreed upon.
You know how carefully such things are considered, and, after a
night's reflection, I am satisfied of the wisdom of the conclusion.
"I want to see Arthur, and have requested him to come here. You
can say to him that, with the kindest feelings, and, as he will
understand when he sees me, with a proper appreciation of his
conduct during the examination by the commission, there should be
no feeling about this in New York. At all events, what has been
done is beyond recall.
"Very truly yours,
"John Sherman.
"Hon. R. C. McCormick."
Mr. McCormick complied with my request, and orally reported his
interview on his return to Washington. We were given to understand
that these officers did not wish to be removed pending the
investigation, as it would seem that they were charged with the
acknowledged defects and irregularities which they themselves had
pointed out. The President was quite willing to base his request
for their resignation, not upon the ground that they were guilty
of the offenses charged, but that new officers could probably deal
with the reorganization of the customhouse with more freedom and
success than the incumbents. I also saw General Arthur, and
explained to him the view taken by the President and his desire
not in any way to reflect upon the collector and his associates,
Cornell and Sharpe. I believed that at the close of the investigation
by the commission these gentlemen would resign, and that their
character and merits would be recognized possibly by appointments
to other offices.
Acting on this idea, on the 15th of October, I wrote the following
letter to Arthur:
"Washington, D. C., October 15, 1877.
"Dear Sir:--I regret to hear from Mr. Evarts that you decline the
consulship at Paris which I supposed would be very agreeable to you.
"As the time has arrived when your successor must be appointed, I
submit to you whether, though your resignation might be inferred
from your letters on file, it would not be better for you to tender
it formally before your successor is appointed.
"The President desires to make this change in a way most agreeable
to you, and it would be most convenient to have it announced to-
morrow.
"An early answer is requested.
"Very truly, etc.,
"John Sherman.
"General C. A. Arthur, Collector Customs, New York."
It soon became manifest that these gentlemen had no purpose to
resign, and that Senator Conkling intended to make a political
contest against the policy of civil service reform inaugurated by
President Hayes. On the 24th of October, 1877, the President sent
to the Senate the nominations of Theodore Roosevelt to succeed
Arthur as collector, Edwin A. Merritt to succeed George H. Sharpe
as surveyor, and L. B. Prince to succeed A. B. Cornell as naval
officer. All of them were rejected by the Senate on the 29th of
October. On the 6th day of December, during the following session,
Roosevelt, Prince and Merritt were again nominated, and the two
former were again rejected. Merritt was confirmed as surveyor on
the 16th of December.
This action of the Senate was indefensible. There was not the
slightest objection to Roosevelt or Prince, and none was made.
The reasons for a change were given in the report of the Jay
commission. Even without this report the right of the President
to appoint these officers was given by the constitution. To compel
the President to retain anyone in such an office, charged with the
collection of the great body of the revenue from customs, in the
face of such reasons as were given for removal, was a gross breach
of public duty. No doubt the Democratic majority in the Senate
might defend themselves with political reasons, but the motive of
Mr. Conkling was hostility to President Hayes and his inborn desire
to domineer. The chief embarrassment fell upon me. I wished to
execute the reforms needed in the collector's office, but could
only do it with his consent. The co-operation required was not
given, and the office was held in profound contempt of the President.
If the rejection of these nominations had been placed upon the
ground of unfitness, other names could have been sent to the Senate,
but there was no charge of that kind, while specific and definite
charges were made against the incumbents. Other names were mentioned
to the President, and suggestions were made, among others by Whitelaw
Reid, whose letter I insert:
"New York, March 29, 1878.
"My Dear Mr. Sherman:--Leaving Washington unexpectedly this morning,
I was unable to call again at the treasury department in accordance
with your polite invitation of last night. I have, however, been
thinking over the customhouse problem of which you asked my opinion.
It seems to me, more and more clear, that, if a new appointment is
to be made, it should be controlled by two considerations: First,
the appointee should be a man who can be confirmed; and, second,
he should be a man equal to all the practical duties of the place,
which are necessarily and essentially political as well as
mercantile.
"To nominate another man only to have him rejected would do great
harm, and the confirmation cannot, by any means, be taken for
granted. I believe it is possible to select some well-known man,
who has carefully studied the subject of revenue collection, and
could bring to the task executive skill, experience, and sound
business and political sagacity, and that such a nomination could
be confirmed. I assume, of course, that any movement of this sort
would be based upon the previous removal of the present incumbent,
for good cause--of which I have been hearing rumors for some time.
"Pray let me renew more formally the invitation to dine with me,
on the evening of the 10th of April, at seven o'clock, at the Union
League Club, to meet Mr. Bayard Taylor just before his departure
for Berlin. I sincerely hope you can arrange your movements after
the Chester visit so as to make it possible.
"Very truly yours,
"Whitelaw Reid.
"Hon. John Sherman, Secretary of the Treasury, Washington, D. C."
The President would not make other appointments during the session
of the Senate, as the implication would arise that the rejections
were based upon opposition to the persons named, and he, therefore,
postponed any action until the close of the session.
After the close of the session, on the 11th of July, 1878, the
President gave temporary commissions to Edwin A. Merritt as collector
to succeed C. A. Arthur, and Silas W. Burt to succeed Cornell as
naval officer, and these gentlemen entered upon the duties of their
respective offices.
On the following December it became necessary to send their
nominations to the Senate. I had definitely made up my mind that
if the Senate again rejected them I would resign. I would not hold
an office when my political friends forced me to act through
unfriendly subordinates. I wrote a letter to Senator Allison as
follows:
"Washington, D. C., January 31, 1879.
"My Dear Sir:--I would not bother you with this personal matter,
but that I feel the deepest interest in the confirmation of General
Merritt, which I know will be beneficial to us as a party, and
still more so to the public service. Personally I have the deepest
interest in it because I have been unjustly assailed in regard to
it in the most offensive manner. I feel free to appeal to you and
Windom, representing as you do western states, and being old friends
and acquaintances, to take into consideration this personal aspect
of the case. If the restoration of Arthur is insisted upon, the
whole liberal element will be against us and it will lose us tens
of thousands of votes without doing a particle of good. No man
could be a more earnest Republican than I, and I feel this political
loss as much as anyone can. It will be a personal reproach to me,
and merely to gratify the insane hate of Conkling, who in this
respect disregards the express wishes of the Republican Members
from New York, of the great body of Republicans, and, as I personally
know, runs in antagonism to his nearest and best friends in the
Senate.
"Surely men like you and Windom, who have the courage of your
convictions, should put a stop to this foolish and unnecessary
warfare. Three or four men who will tell Conkling squarely that,
while you are his friends, you will not injure our party and our
cause, would put a stop to this business. Arthur will not go back
into the office. This contest will be continued, and the only
result of all this foolish madness will be to compel a Republican
administration to appeal to a Democratic Senate for confirmation
of a collector at New York. It is a most fatal mistake.
"I intended to call upon some of the Senators this morning, but I
am very much pressed, and will ask you to show this in confidence
to Senator Windom, as I have not time to write him.
"Very truly yours,
"John Sherman.
"Hon. W. B. Allison, U. S. Senate."
I wrote to Senator Justin S. Morrill a much longer letter, giving
reasons in detail in favor of confirmation and containing specific
charges of neglect of duty on the part of Arthur and Cornell, but
I do not care to revive them.
Conkling was confident of defeating the confirmations, and thus
restoring Arthur and Cornell. The matter was decided, after a
struggle of seven hours in the Senate, by the decisive vote in
favor of confirmation of Merritt 33, and against him 24, in favor
of Burt 31, against 19. From this time forward there was but slight
opposition to the confirmation of Hayes' appointments. The reforms
proposed in the customhouse at New York were carried out.
This termination of the controversy with Arthur and Cornell was
supported by public opinion generally throughout the United States.
I insert a letter from John Jay upon the subject.
"N. Y. C. H., 24 Washington Square,}
"New York, February 3, 1879. }
"The Honorable John Sherman.
"My Dear Sir:--Allow me to thank you for the two papers you have
kindly sent me, in reference to the customhouse, the last of which,
the firm message of the President with your second conclusive
letter, reached me to-day.
"Whatever may be the result in the Senate, and I can scarcely
believe that, after so full an exposure, the nomination will be
rejected, the plain-thinking people of this country will appreciate
the attitude taken by the government as the only one consistent
with the duty of the executive and the general welfare.
"It will give new hope and confidence to the great body of Republicans,
and to many who can hardly be called Republicans, who look to the
administration for an unflinching adherence--no matter what the
opposition--to the pledge of reform on which the party was successful
in the last election, and on fidelity to which depends its safety
in the next.
"The country is infinitely indebted to you for redeeming its faith
by a return to honest money. A new debt will be incurred of yet
wider scope if you succeed in liberating the custom service from
the vicious grip of the immoral factions of office holders and
their retainers, who have made it a scandal to the nation with such
gigantic loss to the treasury and immeasurable damage to our
commerce, industry and morals.
"I hope that the President will feel that all good citizens who
are not blinded by prejudice or interest are thoroughly with him
in the policy and resolve of his message that the customhouse shall
no longer be 'a center of partisan political management.'
"With great regard I have the honor to be, dear Mr. Sherman,
"Faithfully yours,
"John Jay."
CHAPTER XXXVI.
PREPARATIONS FOR RESUMPTION OF SPECIE PAYMENTS.
Annual Report to Congress on Dec. 2, 1878--Preparations for Resumption
Accompanied with Increased Business and Confidence--Full Explanation
of the Powers of the Treasurer Under the Act--How Resumption Was
to Be Accomplished--Laws Effecting the Coinage of Gold and Silver
--Recommendation to Congress That the Coinage of the Silver Dollar
Be Discontinued When the Amount Outstanding Should Exceed $50,000,000
--Funding the Public Debt--United States Notes at Par with Gold--
Instructions to the Assistant Treasurer at New York--Political
Situation in Ohio.
The annual report made by me to Congress on the 2nd of December,
1878, contained the usual formal information as to the condition
of the treasury, and the various bureaus and divisions of that
department. It was regarded as a fair statement of public affairs
at a time of unusual prosperity. The revenue in excess of expenditures
during the year amounted to $20,799,551.90.
The statement made by me in this report, in respect to the resumption
of specie payments on the 1st day of January, 1879, is so closely
a narrative of what did happen before and after that date that I
deem it best to quote the language of the report. I then said:
"The important duty imposed on this department by the resumption
act, approved January 14, 1875, has been steadily pursued during
the past year. The plain purpose of the act is to secure to all
interests and all classes the benefits of a sound currency, redeemable
in coin, with the least possible disturbance of existing rights
and contracts. Three of its provisions have been substantially
carried into execution by the gradual substitution of fractional
coin for fractional currency, by the free coinage of gold, and by
free banking. There remains only the completion of preparations
for resumption in coin on the 1st day of January, 1879, and its
maintenance thereafter upon the basis of existing law.
"At the date of my annual report to Congress in December, 1877, it
was deemed necessary, as a preparation for resumption, to accumulate
in the treasury a coin reserve of at least forty per cent. of the
amount of United States notes then outstanding. At that time it
was anticipated that under the provisions of the resumption act
the volume of United States notes would be reduced to $300,000,000
by the 1st day of January, 1879, or soon thereafter, and that a
reserve in coin of $120,000,000 would then be sufficient. Congress,
however, in view of the strong popular feeling against a contraction
of the currency, by the act approved May 31, 1878, forbade the
retirement of any United States notes after that date, leaving the
amount in circulation $346,681,016. Upon the principle of safety
upon which the department was acting, that forty per cent. of coin
was the smallest reserve upon which resumption could prudently be
commenced, it became necessary to increase the coin reserve to
$138,000,000.
"At the close of the year 1877 this coin reserve, in excess of coin
liability, amounted to $63,016,050.96, of which $15,000,000 were
obtained by the sale of four and a half per cent., and $25,000,000
by the sale of four per cent. bonds, the residue being surplus
revenue. Subsequently, on the 11th day of April, 1878, the secretary
entered into a contract with certain bankers in New York and London
--the parties to the previous contract of June 9, 1877, already
communicated to Congress--for the sale of $50,000,000 four and a
half per cent. bonds for resumption purposes. The bonds were sold
at a premium of one and a half per cent. and accrued interest, less
a commission of one-half of one per cent. The contract has been
fulfilled, and the net proceeds, $50,500,000, have been paid into
the treasury in gold coin. The $5,500,000 coin paid on the Halifax
award have been replaced by the sale of that amount of four per
cent. bonds sold for resumption purposes, making the aggregate
amount of bonds sold for these purposes, $95,500,000, of which
$65,000,000 were four and a half per cent. bonds, and $30,500,000
four per cent. bonds. To this has been added the surplus revenue
from time to time. The amount of coin held in the treasury on the
23rd day of November last, in excess of coin sufficient to pay all
accrued coin liabilities, was $141,888,100, and constitutes the
coin reserve prepared for resumption purposes. This sum will be
diminished somewhat on the 1st of January next, by reason of the
large amount of interest accruing on that day in excess of the coin
revenue received meanwhile.
"In anticipation of resumption, and in view of the fact that the
redemption of United States notes is mandatory only at the office
of the assistant treasurer in the city of New York, it was deemed
important to secure the co-operation of the associated banks of
that city in the ready collection of drafts on those banks and in
the payment of treasury drafts held by them. A satisfactory
arrangement has been made by which all drafts on the banks held by
the treasury are to be paid at the clearing house, and all drafts
on the treasury held by them are to be paid to the clearing house
at the office of the assistant treasurer, in United States notes;
and, after the 1st of January, United States notes are to be received
by them as coin. This will greatly lessen the risk and labor of
collections both to the treasury and the banks.
"Every step in these preparations for resumption has been accompanied
with increased business and confidence. The accumulation of coin,
instead of increasing its price, as was feared by many, has steadily
reduced its premium on the market. The depressing and ruinous
losses that followed the panic of 1873 had not diminished in 1875,
when the resumption act passed; but every measure taken in the
execution or enforcement of this act has tended to lighten these
losses and to reduce the premium on coin, so that now it is merely
nominal. The present condition of our trade, industry, and commerce,
hereafter more fully stated, our ample reserves, and the general
confidence inspired in our financial condition, seem to justify
the opinion that we are prepared to commence and maintain resumption
from and after the 1st day of January, A. D. 1879.
"The means and manner of doing this are left largely to the discretion
of the secretary, but, from the nature of the duty imposed, he must
restore coin and bullion, when withdrawn in the process of redemption,
either by the sale of bonds, or the use of the surplus revenue, or
of the notes redeemed from time to time.
"The power to sell any of the bonds described in the refunding act
continues after as well as before resumption. Thought it may not
be often used, it is essential to enable this department to meet
emergencies. By its exercise it is anticipated that the treasury
at any time can readily obtain coin to reinforce the reserve already
accumulated. United States notes must, however, be the chief means
under existing law with which the department must restore coin and
bullion when withdrawn in process of redemption. The notes, when
redeemed, must necessarily accumulate in the treasury until their
superior use and convenience for circulation enables the department
to exchange them at par for coin or bullion.
"The act of May 31, 1878, already referred to, provides that when
United States notes are redeemed or received in the treasury under
any law, from any source whatever, and shall belong to the United
States, they shall not be retired, canceled, or destroyed, but
shall be reissued and paid out again and kept in circulation.
"The power to reissue United States notes was conferred by section
3579, Revised Statutes, and was not limited by the resumption act.
As this, however, was questioned, Congress wisely removed the doubt.
"Notes redeemed are like other notes received into the treasury.
Payments of them can be made only in consequence of appropriations
made by law, or for the purchase of bullion, or for the refunding
of the public debt.
"The current receipts from revenue are sufficient to meet the
current expenditures as well as the accruing interest on the public
debt. Authority is conferred by the refunding act to redeem six
per cent. bonds as they become redeemable, by the proceeds of the
sale of bonds bearing a lower rate of interest. The United States
notes redeemed under the resumption act are, therefore, the principal
means provided for the purchase of bullion or coin with which to
maintain resumption, but should only be paid out when they can be
used to replace an equal amount of coin withdrawn from the resumption
fund. They may, it is true, be used for current purposes like
other money, but when so used their place is filled by money received
from taxes or other sources of income.
"In daily business no distinction need be made between moneys, from
whatever source received, but they may properly be applied to any
of the purposes authorized by law. No doubt coin liabilities, such
as interest or principal of the public debt, will be ordinarily
paid and willingly received in United States notes, but, when
demanded, such payments will be made in coin; and United States
notes and coin will be used in the purchase of bullion. This method
has already been adopted in Colorado and North Carolina, and
arrangements are being perfected to purchase bullion in this way
in all the mining regions of the United States.
"By the act approved June 8, 1878, the Secretary of the Treasury
is authorized to constitute any superintendent of a mint, or assayer
of any assay office, an assistant treasurer of the United States,
to receive gold coin or bullion on deposit. By the legislative
appropriation bill, approved June 19, 1878, the Secretary of the
Treasury is authorized to issue coin certificates in payment to
depositors of bullion at the several mints and assay offices of
the United States. These provisions, intended to secure to the
producers of bullion more speedy payment, will necessarily bring
into the mints and treasury the great body of the precious metals
mined in the United States, and will tend greatly to the easy and
steady supply of bullion for coinage. United States notes, at par
with coin, will be readily received for bullion instead of coin
certificates, and with great advantage and convenience to the
producers.
"Deposits of coin in the treasury will, no doubt, continue to be
made after the 1st of January, as heretofore. Both gold and silver
coin, from its weight and bulk, will naturally seek a safe deposit,
while notes redeemable in coin, from their superior convenience,
will be circulated instead. After resumption the distinction
between coin and United States notes should be, as far as practicable,
abandoned in the current affairs of the government; and therefore
no coin certificates should be issued except where expressly required
by the provisions of law, as in the case of silver certificates.
The gold certificates hitherto issued by virtue of the discretion
conferred upon the secretary will not be issued after the 1st of
January next. The necessity for them during a suspension of specie
payments is obvious, but no longer exists when by law every United
States note is, in effect, a coin certificate. The only purpose
that could be subserved by their issue hereafter would be to enable
persons to convert their notes into coin certificates, and thus
contract the currency and hoard gold in the vaults of the treasury
without the inconvenience or risk of its custody. For convenience,
United States notes of the same denomination as the larger coin
certificates will be issued.
"By existing law, customs duties and the interest of the public
debt are payable in coin, and a portion of the duties was specifically
pledged as a special fund for the payment of the interest, thus
making one provision dependent upon the other. As we cannot, with
due regard to the public honor, repeal the obligation to pay in
coin, we ought not to impair or repeal the means provided to procure
coin. When, happily, our notes are equal to coin, they will be
accepted as coin, both by the public creditor and by the government;
but this acceptance should be left to the option of the respective
parties, and the legal right on both sides to demand coin should
be preserved inviolate.
"The secretary is of the opinion that a change of the law is not
necessary to authorize this department to receive United States
notes for customs duties on and after the 1st day of January, 1879,
while they are redeemable and are redeemed on demand in coin.
After resumption it would seem a useless inconvenience to require
payment of such duties in coin rather than in United States notes.
The resumption act, by clear implication, so far modifies previous
laws as to permit payments in United States notes as well as in
coin. The provision for coin payments was made in the midst of
war, when the notes were depreciated and the public necessities
required an assured revenue in coin to support the public credit.
This alone justified the refusal by the government to take its own
notes for the taxes levied by it. It has now definitely assumed
to pay these notes in coin, and this necessarily implies the receipt
of these notes as coin. To refuse them is only to invite their
presentation for coin. Any other construction would require the
notes to be presented to the assistant treasurer in New York for
coin, and, if used in the purchase of bonds, to be returned to the
same officer, or, if used for the payment of customs duties, to be
carried to the collector of customs, who must daily deposit in the
treasury all money received by him. It is not to be assumed that
the law requires this indirect and inconvenient process after the
notes are redeemable in coin on demand of the holder. They are
then at a parity with coin, and both should be received indiscriminately.
"If United States notes are received for duties at the port of New
York, they should be received for the same purpose in all other
ports of the United States, or an unconstitutional preference would
be given to that port over other ports. If this privilege is denied
to the citizens of other ports, they could make such use of these
notes only by transporting them to New York and transporting the
coin to their homes for payment; and all this not only without
benefit to the government, but with a loss in returning the coin
again to New York, where it is required for redemption purposes.
"The provision in the law for redemption in New York was believed
to be practical redemption in all parts of the United States.
Actual redemption was confined to a single place from the necessity
of maintaining only one coin reserve and where the coin could be
easily accumulated and kept.
"With this view of the resumption act, the secretary will feel it
to be his duty, unless Congress otherwise provides, to direct that
after the 1st day of January next, and while United States notes
are redeemed at the treasury, they be received the same as coin by
the officers of this department, in all payments in all parts of
the United States.
"If any further provision of law is deemed necessary by Congress
to authorize the receipt of United States notes for customs dues
or for bonds, the secretary respectfully submits that this authority
should continue only while the notes are redeemed in coin. However
desirable continuous resumption may be, and however confident we
may feel in its maintenance, yet the experience of many nations
has proven that it may be impossible in periods of great emergency.
In such events the public faith demands that the customs duties
shall be collected in coin and paid to the public creditors, and
this pledge should never be violated or our ability to perform it
endangered.
"Heretofore, the treasury, in the disbursement of currency, has
paid out bills of any denomination desired. In this way the number
of bills of a less denomination than five dollars is determined by
the demand for them. Such would appear to be the true policy after
the 1st of January. It has been urged that, with a view to place
in circulation silver coins, no bills of less than five dollars
should be issued. It would seem to be more just and expedient not
to force any form of money upon a public creditor, but to give him
the option of the kind and denomination. The convenience of the
public, in this respect, should be consulted. The only way by
which moneys of different kinds and intrinsic values can be maintained
in circulation at par with each other is by the ability, when one
kind is in excess, to readily exchange it for the other. This
principle is applicable to coin as well as to paper money. In this
way the largest amount of money of different kinds can be maintained
at par, the different purposes for which each is issued making a
demand for it. The refusal or neglect to maintain this species of
redemption inevitably effects the exclusion from circulation of
the most valuable, which, thereafter, becomes a commodity, bought
and sold at a premium. . . .
"When the resumption act passed, gold was the only coin which by
law was a legal tender in payment of all debts. That act contemplated
resumption in gold coin only. No silver coin of full legal tender
could then be lawfully issued. The only silver coin provided was
fractional coin, which was a legal tender for five dollars only.
The act approved February 28, 1878, made a very important change
in our coinage system. The silver dollar provided for was made a
legal tender for all debts, public and private, except where
otherwise expressly stipulated in the contract.
"The law itself clearly shows that the silver dollar was not to
supersede the gold dollar; nor did Congress propose to adopt the
single standard of silver, but only to create a bimetallic standard
of silver and gold, of equal value and equal purchasing power.
Congress, therefore, limited the amount of silver dollars to be
coined to not less than two millions nor more than four millions
per month, but did not limit the aggregate amount nor the period
of time during which this coinage should continue. The market
value of the silver in the dollar, at the date of the passage of
the act, was 93¼ cents in gold coin. Now it is about 86 cents in
gold coin. If it was intended by Congress to adopt the silver
instead of the gold standard, the amount provided for is totally
inadequate for the purpose. Experience not only in this country,
but in European countries, has established that a certain amount
of silver coin may be maintained in circulation at par with gold,
though of less intrinsic bullion value. It was, no doubt, the
intention of Congress to provide a coin in silver which would answer
a multitude of the purposes of business life, without banishing
from circulation the established gold coin of the country. To
accomplish this it is indispensable either that the silver coin be
limited in amount, or that its bullion value be equal to that of
the gold dollar. If not, it use will be limited to domestic
purposes. It cannot be exported except at its commercial value as
bullion. If issued in excess of demands for domestic purposes, it
will necessarily fall in market value, and, by a well-known principle
of finance, will become the sole coin standard of value. Gold will
be either hoarded or exported. When two currencies, both legal,
are authorized without limit, the cheaper alone will circulate.
If, however, the issue of the silver dollars is limited to an amount
demanded for circulation, there will be no depreciation, and their
convenient use will keep them at par with gold, as fractional silver
coin, issued under the act approved February 21, 1853, was kept at
par with gold.
"The amount of such coin that can thus be maintained at par with
gold cannot be fairly tested until resumption is accomplished. As
yet paper money has been depreciated, and silver dollars, being
receivable for customs dues, have naturally not entered into general
circulation, but have returned to the treasury in payment of such
dues, and thus the only effect of the attempt of the department to
circulate them has been to diminish the gold revenue. After
resumption these coins will circulate in considerable sums for
small payments. To the extent that such demand will give employment
to silver dollars their use will be an aid to resumption rather
than a hindrance, but, if issued in excess of such demand, they
will at once tend to displace gold and become the sole standard,
and gradually, as they increase in number, will fall to their value
as bullion. Even the fear or suspicion of such an excess tends to
banish gold, and, if well established, will cause a continuous
drain of gold until imperative necessity will compel resumption in
silver alone. The serious effect of such a radical change in our
standards of value cannot be exaggerated; and its possibility will
greatly disturb confidence in resumption, and may make necessary
large reserves and further sales of bonds.
"The secretary, therefore, earnestly invokes the attention of
Congress to this subject, with a view that either during the present
or the next session the amount of silver dollars to be issued be
limited, or their ratio to gold for coining purposes be changed.
"Gold and silver have varied in value from time to time in the
history of nations, and laws have been passed to meet this changing
value. In our country, by the act of April 2, 1792, the ratio
between them was fixed at one of gold to fifteen of silver. By
the act of June 28, 1834, the ratio was changed to one of gold to
sixteen of silver. For more than a century the market value of
the two metals had varied between these two ratios, mainly resting
at that fixed by the Latin nations of one to fifteen and a half.
"But we cannot overlook the fact that within a few years, from
causes frequently discussed in Congress, a great change has occurred
in the relative value of the two metals. It would seem to be
expedient to recognize this controlling fact--one that no nation
alone can change--by a careful readjustment of the legal ratio for
coinage of one to sixteen, so as to conform to the relative market
values of the two metals. The ratios heretofore fixed were always
made with that view, and, when made, did conform as near as might
be. Now, that the production and use of the two metals have greatly
changed in relative value, a corresponding change must be made in
the coinage ratio. There is no peculiar force or sanction in the
present ratio that should make us hesitate to adopt another, when,
in the markets of the world, it is proven that such ratio is not
now the true one. The addition of one-tenth or one-eighth to the
thickness of the silver dollar would scarcely be perceived as an
inconvenience by the holder, but would inspire confidence, and add
greatly to its circulation. As prices are now based on United
States notes at par with gold, no disturbance of values would result
from the change.
"It appears, from the recent conference at Paris, invited by us,
that other nations will not join with us in fixing an international
ratio, and that each county must adapt its laws to its own policy.
The tendency of late among commercial nations is to the adoption
of a single standard of gold and the issue of silver for fractional
coin. We may, by ignoring this tendency, give temporarily increased
value to the stores of silver held in Germany and France, until
our market absorbs them, but, by adopting a silver standard as
nearly equal to gold as practicable, we make a market for our large
production of silver, and furnish a full, honest dollar that will
be hoarded, transported, or circulated, without disparagement or
reproach.
"It is respectfully submitted that the United States, already so
largely interested in trade with all parts of the world, and
becoming, by its population, wealth, commerce, and productions, a
leading member of the family of nations, should not adopt a standard
of less intrinsic value than other commercial nations. Alike
interested in silver and gold, as the great producing country of
both, it should coin them at such a ratio and on such conditions
as will secure the largest use and circulation of both metals
without displacing either. Gold must necessarily be the standard
of value in great transactions, from its greater relative value,
but it is not capable of the division required for small transactions;
while silver is indispensable for a multitude of daily wants, and
is too bulky for use in the larger transactions of business, and
the cost of its transportation for long distances would greatly
increase the present rates of exchange. It would, therefore, seem
to be the best policy for the present to limit the aggregate issue
of our silver dollars, based on the ratio of sixteen to one, to
such sums as can clearly be maintained at par with gold, until the
price of silver in the market shall assume a definite ratio to
gold, when that ratio should be adopted, and our coins made to
conform to it; and the secretary respectfully recommends that he
be authorized to discontinue the coinage of the silver dollar when
the amount outstanding shall exceed fifty million dollars.
"The secretary deems it proper to state that in the meantime, in
the execution of the law as it now stands, he will feel it to be
his duty to redeem all United States notes presented on and after
January 1, next, at the office of the assistant treasurer of the
United States, in the city of New York, in sums of not less than
fifty dollars, with either gold or silver coin, as desired by the
holder, but reserving the legal option of the government; and to
pay out United States notes for all other demands on the treasury,
except when coin is demanded on coin liabilities.
"It is his duty, as an executive officer, to frankly state his
opinions, so that if he is in error Congress may prescribe such a
policy as is best for the public interests.
"The amount of four per cent. bonds sold during the present year,
prior to November 23, is $100,270,900, of which $94,770,900 were
sold under the refunding act approved July 14, 1870. Six per cent.
bonds, commonly known as 5-20's, to an equal amount, have been
redeemed, or will be redeemed as calls mature. This beneficial
process was greatly retarded by the requirement of the law that
subscriptions must be paid in coin, the inconvenience of obtaining
which, to the great body of people outside of the large cities,
deterred many sales. This will not affect sales after resumption,
when bonds can be paid for with United States notes. The large
absorption of United States securities in the American market, by
reason of their return from Europe, together with the sale of four
and a half per cent. bonds for resumption purposes, tended to retard
the sale of four per cent. bonds. As, from the best advices, not
more than $200,000,000 of United States bonds are now held out of
the country, it may be fairly anticipated that the sale of four
per cent. bonds, hereafter, will largely increase.
"Prior to May, 1877, United States bonds were mainly sold through
an association of bankers. Experience proves that under the present
plan of selling to all subscribers on terms fixed by public
advertisement, though the aggregate of sales may be less, their
distribution is more satisfactory. Under a popular loan the interest
is paid at home, and the investment is available at all times,
without loss, to meet the needs of the holder. This policy has
been carefully fostered by other nations, and should be specially
so in ours, where every citizen equally participates in the government
of his country. The holding of these bonds at home, in small sums
well distributed, is of great importance in enlisting popular
interest in our national credit and in encouraging habits of thrift,
and such holding in the country is far more stable and less likely
to disturb the market than it would be in cities or by corporations,
where the bonds can be promptly sold in quantities.
"The three months' public notes required by the fourth section of
the refunding act, to be given to holders of the 5-20 bonds to be
redeemed, necessarily involve a loss to the government by the
payment of double interest during that time. The notice should
not be given until subscriptions are made or are reasonably certain
to be made. When they are made and the money is paid into the
treasury, whether it is kept there idle during the three months or
deposited with national banks under existing law, the government
not only pays interest on both classes of bonds during the ninety
days, but, if the sales are large, the hoarding of large sums may
disturb the market. Under existing law this is unavoidable; and,
to mitigate it, the secretary deemed it expedient during the last
summer to make calls in anticipation of subscriptions, but this,
though legal, might, in case of failure of subscriptions, embarrass
the government in paying called bonds. The long notice required
by law is not necessary in the interest of the holder of the bonds,
for, as the calls are made by public notice and the bonds are
indicated and specified by class, date, and number, in the order
of their numbers and issue, he, by ordinary diligence, can know
beforehand when his bonds in due course will probably be called,
and will not be taken by surprise.
"The secretary therefore recommends that the notice to be given
for called bonds be, at his discretion, not less than ten days nor
more than three months. In this way he will be able largely to
avoid the payment of double interest, as well as the temporary
contraction of the currency, and may fix the maturity of the call
at a time when the interest of the called bonds becomes due and
payable."
Soon after the passage of the act authorizing the coinage of the
standard silver dollar, and an attempt being made to procure the
requisite bullion for its coinage to some extent at the mints on
the Pacific coast, it was found that the producers and dealers
there would not sell silver to the government at the equivalent of
the London rate, but demanded in addition thereto an amount equal
to the cost of bringing it from London and laying it down in San
Francisco. These terms, being deemed exorbitant, were rejected,
and arrangements were immediately made to bring the capacity of
the mint at Philadelphia to its maximum, with a view to meet the
provisions of law, which required two millions of silver dollars
to be coined in each month, and the available supplies of silver
from domestic sources being entirely insufficient for the coinage
of this amount, the foreign market was indirectly resorted to and
an amount sufficient to meet the requirements of law secured.
In July, 1878, the principal holders of bullion on the Pacific
coast receded from their position and accepted the equivalent of
the London rate, at which price sufficient bullion was purchased
to employ the mints of San Francisco and Carson on the coinage of
the dollar.
At the date of my report, United States notes were practically at
par with gold. The public mind had settled into a conviction that
the parity of coin and currency was assured, and our people,
accustomed to the convenience of paper money, would not willingly
have received coin to any considerable amount in any business
transactions. The minor coins of silver, were received and paid
out without question at parity with gold coin, because the amount
was limited and they were coined by the government only as demanded
for the public convenience. The silver dollar was too weighty and
cumbersome and when offered in considerable sums was objected to,
though a legal tender for any sum, and coined only in limited
amounts for government account. Every effort was made by the
treasury department to give it the largest circulation, but the
highest amount that could be circulated was from fifty to sixty
millions, and much of this was in the southern states. All sums
in excess of that were returned to the treasury for silver
certificates. These were circulated as money, like United States
notes and bank bills. This was only possible by the guarantee of
the government that all forms of money would be maintained at parity
with each other. If this guarantee had been doubted, or if the
holder of silver bullion could have had it coined at his pleasure
and for his benefit at the ratio of sixteen to one, the silver
dollar would, as the cheaper coin, have excluded all other forms
of money, and the purchasing power of silver coin would have been
reduced to the market value of silver bullion.
On the 3rd of December, 1878, I wrote the following letter:
"Hon. Thomas Hillhouse,
"United States Assistant Treasurer, New York.
"Sir:--I have this day telegraphed you as follows:
'After receipt of this you will please issue no more gold
certificates.'
"In compliance with the above instructions you will not, until
further advised, issue gold certificates either in payment of
interest on the public debt or for gold coin deposited.
"It is desired that you issue currency in payment of coin obligations
to such an amount as will be accepted by public creditors.
"Very respectfully,
"John Sherman, Secretary."
After resumption, United States notes were in fact gold certificates,
being redeemable in coin. On the 4th, I again wrote to General
Hillhouse as follows:
"Your letter of yesterday is received. The necessity of the recent
order about coin certificates became apparent to the department,
and the only doubt was as to the date of issuing it. After full
consideration, it was deemed best to make it immediate, so that no
more certificates could be asked for. By the 21st of this month
the large denominations of greenbacks will be ready for issue to
you, and after the 1st of January they will be received for customs
duties and paid out for gold coin deposited with you. I am led to
suppose that considerable sums of gold coin will be deposited with
you soon after that date. It is important that the business men
of New York should see the propriety of such a course, with a view
to aid in popular opinion the process of resumption.
"I would be pleased to hear from you as to whether any additional
force in your office will be necessary in view of resumption.
Every reasonable facility should be given to persons who apply for
coin, and we should be prepared for a considerable demand during
the first month.
"I will be in New York some time this month, and will confer with
you as to any matters of detail."
I received the following reply:
"Office of United States Assistant Treasurer,}
"New York, December 5, 1878. }
"Sir:--I have received your letter of the 4th instant. The issue
of gold certificates, however convenient to the public, had long
ceased to be of any advantage to the government, and in view of
resumption it had become a positive injury, by enabling speculators
to carry on their operations without the risk and expense of handling
the actual coin. So far as I have discovered, the banks and the
business community generally regard the withdrawal of the certificates
as a wise measure. They may be put to some temporary inconvenience
thereby, but they cannot fail to see that, in the use of this and
all other legitimate means of making the great scheme of resumption
a success, the secretary is really promoting their interests, and
that in the end they will be greatly benefitted by the establishing
of a sound and stable currency, which is the object in view.
* * * * *
"Very respectfully,
"Thomas Hillhouse,
"Assistant Treasurer United States."
On the 5th I wrote him as follows:
"In reply to your letter of the 4th instant, inquiring whether you
are at liberty to pay out the standard silver dollars in exchange
for gold coin, you are authorized to pay out the standard silver
dollars to any amount which may be desired in exchange for gold
coin.
* * * * *
"In reply to your letter of yesterday, I have to advise you that
it was the purpose of the order referred to to prohibit the issue
of gold coin certificates for any purpose, including the redemption
of called bonds. It is believed that the reasons for issuing such
certificates have ceased to exist, and that those outstanding should
be redeemed and not reissued.
"No public end is subserved by receiving coin deposits for private
parties to be held for their benefit, but gold will be received in
exchange for United States notes of any denomination desired, and
such exchange is invited."
On the 18th I wrote him:
"I have concluded to direct the prepayment of the coupons maturing
January 1, in coin or United States notes, _as desired by the
holder_, and interest on registered stock, as soon as you can
receive the schedules, which will be about the 28th. While I wish
no hesitation about paying gold to anyone desiring it, it is better
to get people in the habit of receiving currency rather than coin."
On the 18th General Hillhouse wrote me:
"Since my letter of yesterday gold has sold at par, the prevailing
rate being one sixty-fourth to three sixty-fourth premium. The
indications now are that the combinations which were presumed to
be operating to keep up the premium have failed so far in their
object, and that, unless unlooked for circumstances should intervene,
the premium will be more likely to fall below the present rate than
to advance."
On the 27th I sent the following instructions to the treasurer:
"Treasury Department, December 27, 1878.
"Hon. James Gilfillan, Treasurer United States.
"Sir:--In connection with the department's circular of the 14th
instant concerning the resumption of specie payments, you are
directed, on and after the 1st proximo, to keep no special account
of coin with any public disbursing officer, and to close any account
of that description at that time standing on your books, keeping
thereafter but one money of account in your office.
"Similar instructions have this day been sent to the several
independent treasury officers.
"Very respectfully,
"John Sherman, Secretary."
On the 28th I wrote the First National Bank of New York:
"Your letter of yesterday is received. I do not see my way clear
to issue another call until the one now outstanding is covered by
subscription. There is still a deficit of about $4,000,000 on the
71st call. There is not, however, the slightest objection to your
stating authoritatively, or, if desired, I will do so in response
to a direct inquiry, that every dollar of the proceeds of four per
cent. bonds sold during the present year had been applied on calls
for refunding, and it is my purpose to continue this unless I give
public notice to the contrary.
"I feel the more inclined to refuse to make a call by reason of
the probable requisition that may be made for the Halifax award,
and I do not wish by any chance to impair the resumption fund."
During the latter part of December the air was full of rumors of
a combination in New York for a run upon the sub-treasury on the
opening of the new year. The alarm was so great that the president
of the National Bank of Commerce in that city, who was also chairman
of the clearing house committee, at three o'clock p. m. on the
30th, with the advice of other bankers, sent me, by special messenger,
an urgent request for the transfer to his bank, on the following
day, from the sub-treasury, of $5,000,000 in gold, in exchange for
a like amount in United States notes, to enable the banks, he said,
to meet a "corner" in gold. To this there could be but one reply.
The treasury had no power to make the transfer, even if it desired
to do so. I therefore declined the proposition, and did not believe
in a "corner."
During the exciting events connected with resumption and refunding
I did not overlook the political condition in Ohio, and wrote a
letter in regard to it, which I think proper here to insert, as it
presents my view at its date:
"December 26, 1878.
"My Dear Sir:--Much obliged for your kind letter of the 21st.
"My official duties engross my time so much that I scarcely catch
a glimpse of home affairs by reading the newspapers, and your
intelligent view is therefore the more interesting. It seems to
me that the nomination of General Garfield for governor and Foster
for lieutenant governor would be a very excellent arrangement, but
I understand that it is not agreeable to them. Garfield has no
desire for the position, while Foster feels that he ought to head
the ticket. An understanding that Garfield is to be Senator might
embarrass us in certain doubtful districts, where the chief contest
would be upon that office. Still such a ticket would be universally
conceded to be very strong and would inspire confidence, and would
be entirely satisfactory to me. Indeed, I wish to be in a condition
to support our political friends in anything they may do in the
convention, without taking an active part in it.
"The contingency that you refer to with which my name is connected
is still to remote to talk about. I never supposed that a person
occupying my office, open to attack and compelled to say no to so
many persons, could be sufficiently popular to justify any party
in running him for the presidency, and, therefore, I have always
dismissed such suggestions as the kindly compliments of the hour.
Certainly it has not gained my mental consent, nor is it considered
by me as one of the probabilities of the future. If I should get
the maggot in my brain it would no doubt be more likely to hurt
than help.
"The tendency of public opinion is evidently towards General Grant,
whose absence and good conduct are in his favor, while the involuntary
feeling of Republicans would be in favor of nominating him as a
remonstrance against the violence in the south, and notice that it
must end.
"However, a year hence will be time enough to settle this matter.
"I send my hearty greetings for the holiday season, and remain,
"Very truly yours,
"John Sherman.
"Hon. Richard Smith, Cincinnati, O."
About this time I received the following letter:
"United States Legation, }
"Mexico, December 15, 1878.}
"Hon. John Sherman, Washington, D. C.
"My Dear Sir:--Allow me to send you, as a New Years' greeting, my
hearty congratulations on your successful management of our national
finances and on the resumption of specie payments, which I have no
doubt will be an accomplished fact when this letter reaches you.
"The nation owes you a great debt for your courage, persistence
and wisdom in adhering to your policy for re-establishing and
maintaining our government credit. To your conduct I attribute
the present honorable position of the Republican party, more than
to any other one influence. I believe that neither the country
nor the party will forget your services.
"Very truly,
"John W. Foster."
CHAPTER XXXVII.
REFUNDING THE NATIONAL DEBT.
Over $140,000,000 of Gold Coin and Bullion in the Treasury January
1, 1879--Diversity of Opinion as to the Meaning of Resumption--
Effect of the Act to Advance Public Credit--Funding Redeemable
Bonds Into Four per Cents.--Letters to Levi P. Morton and Others--
Six per Cent. Bonds Aggregating $120,000,000 Called During January,
1879--The Sale in London--Charges of Favoritism--Further Enactments
to Facilitate the Funding--Difficulty of Making Sales of Four per
Cent. Bonds to English Bankers--Large Amounts Taken in the United
States--One Subscription of $190,000,000--Rothschild's Odd Claim--
Complimentary Resolution of the New York Chamber of Commerce.
On the 1st of January, 1879, when the resumption act went into
effect, the aggregate amount of gold coin and bullion in the treasury
exceeded $140,000,000. United States notes, when presented, were
redeemed with gold coin, but instead of the notes being presented
for redemption, gold coin in exchange for them was deposited, thus
increasing the gold in the treasury.
The resumption of specie payments was generally accepted as a
fortunate event by the great body of people of the United States,
but there was a great diversity of opinion as to what was meant by
resumption. The commercial and banking classes generally treated
resumption as if it involved the payment and cancellation of United
States notes and all forms of government money except coin and bank
notes. Another class was opposed to resumption, and favored a
large issue of paper money without any promise or expectation of
redemption in coin. The body of the people, I believe, agreed with
me in opinion that resumption meant, not the cancellation and
withdrawal of greenbacks, but the bringing them up to par and
maintaining them as the equivalent of coin by the payment of them
in coin on demand by the holder. This was my definition of
resumption. I do not believe that any commercial nation can conduct
modern operations of business upon the basis of coin alone. Prior
to our Civil War the United States undertook to collect its taxes
in specie and to pay specie for its obligations; this was the
bullion theory. This narrow view of money compelled the states to
supply paper currency, and this led to a great diversity of money,
depending upon the credit, the habits and the wants of the people
of the different states. The United States notes, commonly called
greenbacks, were the creature of necessity, but proved a great
blessing, and only needed one attribute to make them the best
substitute for coin money that has ever been devised. That quality
was supplied by their redemption in coin, when demanded by the
holder.
The feeling in the treasury department on the day of resumption is
thus described by J. K. Upton, assistant secretary, in an article
written at the close of 1892:
"The year, however, closed with no unpleasant excitement, but with
unpleasant forebodings. The 1st day of January was Sunday and no
business was transacted. On Monday anxiety reigned in the office
of the secretary. Hour after hour passed; no news came from New
York. Inquiry by wire showed all was quiet. At the close of
business came this message: '$135,000 of notes presented for coin
--$400,000 of gold for notes.' That was all. Resumption was
accomplished with no disturbance. By five o'clock the news was
all over the land, and the New York bankers were sipping their tea
in absolute safety.
"Thirteen years have since passed, and the redemption fund still
remains intact in the sub-treasury vaults. The prediction of the
secretary has become history. When gold could with certainty be
obtained for notes, nobody wanted it. The experiment of maintaining
a limited amount of United States notes in circulation, based upon
a reasonable reserve in the treasury pledged for that purpose, and
supported also by the credit of the government, has proved generally
satisfactory, and the exclusive use of these notes for circulation
may become, in time, the fixed financial policy of the government."
The immediate effect of resumption of specie payments was to advance
the public credit, which made it possible to rapidly fund all the
bonds of the United States then redeemable into bonds bearing four
per cent. interest. Early in January, 1879, I issued a circular
offering the four per cent. funded loan of the United States at
par and accrued interest to date of subscription in coin. It was
substantially similar to the one issued on the 16th of January,
1878, but graded the commission, allowing from one-eighth of one
per cent. to one-fourth of one per cent., according to the amount
subscribed.
Several letters written about this date will show my view better
than anything I can say now:
"Washington, D. C., January 6, 1879.
"Dear Sir:--Your note of the 2nd was received upon my return from
the west.
"Much obliged for subscription, and hope that you will soon get
above the ten millions and thus be entitled to the additional one-
tenth. I cannot, however, allow it on the first ten millions
without adopting it as a rule, which would be impossible, by reason
of the limitation of the entire cost to one-half of one per cent.
I may be compelled to allow the one-eighth commission down to
$1,000, but perhaps not, as I have to carefully husband the limited
fund out of which all expenses must be paid. With the energy and
hopefulness now exhibited, we can easily refund the 5-20's within
this year and, perhaps, within six months. The more rapid the
process the less disturbance it will create. I am hopeful and
sanguine of improving business, not that greenbacks will be so
abundant, but that employment will be ready for everyone willing
to work.
"Thanks for your congratulations, which I heartily reciprocate,
for the syndicate are entitled to a large portion of the merit now
given to me. As I got more than my share of the abuse, it is
probably thought that I should get more than my share of the credit.
"Very truly yours,
"John Sherman.
"Hon. L. P. Morton, New York."
"Washington, D. C., January 8, 1879.
"R. C. Stone, Esq., Secretary Bullion Club, New York.
"Dear Sir:--Your letter of the 5th inst., inclosing a card of
invitation from the Bullion Club, to attend a dinner at their club
house on Thursday evening, the 16th inst., is received.
"I regret that my official duties will not permit me, in person,
to respond to the toast you send me, and I cannot do so, by letter,
in words more expressive than the toast itself, 'To Resumption--
may it be forever.'
"Irredeemable money is always the result of war, pestilence, or
some great misfortune. A nation would not, except in dire necessity,
issue its promises to pay money when it is unable to redeem those
promises. I know that when the legal tenders were first issued,
in February, 1862, we were under a dire necessity. The doubt that
prevented several influential Senators, like Fessenden and Collamer,
from voting for the legal tender clause, was that they were not
convinced that our necessities were so extreme as to demand the
issue of irredeemable paper money. Most of those who voted for it
justified their vote upon the ground that the very existence of
the country depended upon its ability to coin into money its promises
to pay. THat was the position taken by me. We were assured by
Secretary Chase that nearly one hundred millions of unpaid requisitions
were lying upon his table, for money due to soldiers in the presence
of the enemy, and for food and clothing to maintain them at the
front. We then provided for the issue of legal tender United States
notes, as an extreme remedy in the nation's peril. It has always
seemed strange that so large and respectable a body of our fellow-
citizens should regard the continuance of irredeemable money as
the permanent policy of a nation so strong and rich as ours, able
to pay every dollar of its debts on demand, after the causes of
its issue had disappeared. To resume is to recover from illness,
to escape danger, to stand sound and healthy in the financial world,
with our currency based upon the intrinsic value of solid coin.
"Therefore I say, may resumption be perpetual. To wish otherwise
is to hope for war, danger, and national peril, calamities to which
our nation, like others, may be subject, but against which the
earnest aspiration of every patriot will be uttered.
"Very respectfully yours,
"John Sherman."
"January 10, 1879.
"H. C. Fahnestock, Esq.,
"Vice President First National Bank, New York.
"Sir:--Your unofficial letter of the 9th inst., suggesting the
danger that may arise from the very large and rapid subscriptions
to the four per cent. bonds, is received.
"The danger is apparent enough to all, and certainly to those who
purchase without ability to pay at the time stipulated, but it is
not one that the government can guard against, except only by taking
care to have ample security for each subscription.
"In the face of the advertisement now outstanding, I could not
withdraw the money from deposit with subscribing banks, until at
or near the time of the maturity of the call, when they must be
prepared to pay. It is not the interest of the government to force
subscriptions beyond the ability of investors, but we cannot check
subscriptions by any violation of the public advertisement or any
public caution against the danger that is open to everyone.
"Very truly yours,
"John Sherman."
"Washington, D. C., January 13, 1879.
"George Kerr, Esq., Janesville, Bremer Co., Iowa.
"Sir:--I have received your letter of the 6th instant inclosing a
slip cut from the Bremer County 'Independent,' a weekly paper
published in Waverly, containing a statement to the effect that
the First National of New York is enjoying, from the department,
special privileges in the matter of holding public money on account
of subscriptions to the four per cent. consols of 1907, and receiving
from the government unusual commissions on subscription.
"It is needless to say to you that the statement is entirely
erroneous from beginning to end.
"In the department's circular of the first instant, a copy of which
is hereby inclosed for your information, _all_ national banks are
invited to become financial agents, and depositaries of public
moneys received on account of the sale of these bonds, and the
commissions allowed on subscriptions are plainly stated therein.
Over one hundred (100) national banks have been thus designated as
depositaries for the purpose mentioned, and all are treated precisely
alike, both as to commissions allowed and balances held.
"The First National Bank of New York enjoys, as a United States
depositary, no special privileges whatever from the department.
It has, however, thus far, subscribed for a larger amount of four
per cent. bonds than any other bank, and has, consequently, received
a larger amount for commissions. But any other bank subscribing
for the same amount of bonds would, of course, receive the same
amount for commissions.
"Very respectfully,
"John Sherman, Secretary."
"Treasury Department, }
"Washington, D. C., January 14, 1879.}
"H. C. Fahnestock, Esq., New York.
"Dear Sir:--Your note of the 13th instant is received.
"In buying the fours thrown upon the market, you are rendering as
much service to the government as if you bought directly. Indeed,
I am glad you are buying from the market rather than from the
department. I do not wish to force this refunding operation too
much, lest it may embarrass resumption. I only fear that some
eager parties may subscribe for more than they can sell and pay
for by called bonds or coin within the running of the call. This
is the only contingency that disturbs me.
"Very respectfully,
"John Sherman."
My published correspondence shows that with all the efforts and
strength of the department it was impossible to keep up with the
subscriptions for bonds pouring in from all parts of the United
States and from Europe. Over sixty millions were subscribed for
in the first two weeks of January. Offers made by me in December,
though not accepted at the time, were made the grounds of demands
in January, when conditions had greatly changed. As the money
received for four per cent. bonds could not be applied to the
payment of six per cent. called bonds until interest on such bonds
ceased, ninety days after the call, I feared that the enormous
deposits would create a serious stringency in the money market,
and perhaps cause a panic after the first of April. The banks and
bankers in New York, as well as in other large cities of the United
States, were actively competing to swell these subscriptions, so
as to get the larger commission offered for the greater amount of
bonds sold. Such a contest occurred between the First National
Bank of New York, and Seligman & Co., and their associates. In
ended in a contract made on the 21st of January, between the
Secretary of the Treasury and the former syndicate, by which the
latter subscribed for $10,000,000 of four per cent. bonds, on the
terms stated in my circular of January 1, and $5,000,000 a month
thereafter, the secretary reserving the power to terminate the
contract.
On the same day a call was made for $20,000,000 of six per cent.
bonds. Another call for a like amount was made on the 28th. The
aggregate call for six per cent. bonds in January was $120,000,000.
Charles F. Conant was again appointed as the funding agent of the
treasury department, and directed to assume the general management
and supervision of all business in London arising from the funding
of bonds. He was instructed to advise me frequently as to the
condition of the business intrusted to him.
The object of this sale of bonds in London was stated in the public
prints, and also in the following letter:
"Treasury Department, January 22, 1879.
"Charles M. Fry, Esq.,
"President Bank of New York, National Banking Association, New
York.
"Sir:--Your telegram was received yesterday.
"The syndicate arrangement was confined to the sale of bonds in
Europe, where it is deemed important to sell bonds partly to cover
called bonds held abroad; and a contract has been made with bankers
having houses in London, on precisely the same terms as were extended
to all in this country. It was thought that this would be best
for the domestic loan. No contract of arrangement will be made to
interfere in any way with the free, open, popular subscriptions in
the United States.
"I am glad to notice your success and will give you every facility
that is extended to anyone else.
"Very respectfully,
"John Sherman, Secretary."
The sale in London was fully justified when the called bonds matured,
and those held abroad were paid for without the exportation of
coin. It was my desire to secure the exchange of four per cent.
bonds directly with the holders of the six per cents. For this
purpose I invited, by a department order widely circulated, such
an exchange, allowing to the holder of any six per cent. bond,
whether called or uncalled, the same commission and allowance for
interest granted to banks and bankers. By these expedients I hoped
for, and succeeded in conducting, the change of bonds without
disturbing the ordinary current of business.
The process of refunding the 5-20 six per cent. bonds, by the sale
of four per cent. bonds, went on with some fluctuations until the
4th of April, 1879, when all the six per cent. bonds then redeemable
were called for payment. This period in the magnitude of business
done was far the most active and important while I was Secretary
of the Treasury. The struggle between banks and bankers, not only
in the United States but in London also, gave rise to many questions
which had to be promptly acted upon, chiefly by cable or telegram.
The amount involved were so large as to induce caution and care.
The principal difficulty in refunding arose out of the provision
in the act of Congress that ninety days' notice should be given,
to the holder of bonds, by the government, when it exercised its
option to pay, after five years, any portion of the bonds known as
the 5-20 bonds, payable in twenty years but redeemable after five
years. Prudence required the actual sale of four per cent. bonds
before a call could be made or notice given to the holders of the
5-20 bonds, designated by description and numbers, of the intention
of the government to pay them. When sales were made the money
received was deposited in the treasury of the United States, or
with national banks acting as public depositaries, which were
required to give security for such deposits.
The necessary effort of the deposit of large amount involved in
refunding operations was to create a stringency in the money market.
I early called the attention of Congress to this difficulty, but
had doubts whether the government would be justified in repealing
the law requiring ninety days' notice. This provision was a part
of the contract between the government and the bondholder, and
could only be changed by the consent of both parties. Congress
failed to act upon my suggestion. The interest accruing for ninety
days at six per cent., or one and a half per cent. on the great
sums involved, was a loss to the government but a gain to the banks
or bankers that sold the bonds. The syndicate of bankers engaged
in the sale of bonds chose the First National Bank of New York as
their depositary. The department was indifferent where the deposits
were made so that they were amply secured. Other banks and bankers
engaged in the sale of bonds chose their own depositaries, and thus
an active competition was created in which the department took no
part or interest.
This struggle led to charges of favoritism on the part of the
department, but they were without the slightest foundation. Every
order, ruling and letter was fully discussed and considered by the
Secretary and other chief officers of the treasury, and also by
General Hillhouse, assistant treasurer at New York, and is in the
printed report of the letters, contracts, circulars and accounts
relating to resumption and refunding made to Congress on the 2nd
of December, 1879.
The charge was especially made that favor was shown the First
National Bank of New York, of which George F. Baker was president
and H. C. Fahnestock was vice president. It was said that I was
a stockholder in that bank, and that I was interested in the
syndicate. It is scarcely necessary for me to say, as I do, that
these charges and imputations were absolutely false. This bank
and the associated bankers sold larger amounts of four per cent.
bonds than any others and received a corresponding commission, but,
instead of being favored, they were constantly complaining of the
severity of the treasury restrictions. Rothschild, the head of
the great banking house in London and the chief of the syndicate,
especially complained of what he called the "stinginess" of the
treasury department. I can say for all the officers of the treasury
that not one of them was interested in transactions growing out of
resumption or refunding, or did or could derive any benefit
therefrom.
The rapid payment of the 5-20 bonds had a more serious effect upon
the English market than upon our own. Here the four per cent.
bonds were received in place of the six per cent. bonds, no doubt
with regret by the holders of the latter for the loss of one-third
of their interest, but accompanied by a sense of national pride
that our credit was so good. In London the process of refunding
was regarded with disfavor and in some cases by denunciation. On
the 4th of March Secretary Evarts wrote me the following letter:
"Department of State, }
"Washington, March 4, 1870.}
"Hon. John Sherman, Secretary of the Treasury.
"Sir:--I have the honor to transmit herewith, for your information,
a copy of a dispatch No. 928, dated February 12, from the consul
general at London, in which the department is advised that there
exists dissatisfaction, among certain holders of the 5-20 bonds of
the issue of 1867, with the rapidity with which the government is
refunding its debt at a lower rate of interest, and that it is the
purpose of such holders to demand payment of their called bonds in
coin. I have to honor to be, sir, your obedient servant.
"Wm. M. Evarts."
This demand was easily met by the sale of four per cent. bonds in
London, and the balance of trade in our favor was increasing. The
anticipated movement of gold did not occur.
Congress, by the act approved January 25, 1879, extended the process
of refunding to the 10-40 bonds bearing interest at the rate of
five per cent., amounting to $195,000,000 as follows:
"AN ACT TO FACILITATE THE REFUNDING THE NATIONAL DEBT.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That the Secretary
of the Treasury is hereby authorized, in the process of refunding
the national debt under existing laws, to exchange directly at par
the bonds of the United States bearing interest at four per centum
per annum, authorized by law, for the bonds of the United States
commonly known as 5-20's, outstanding and uncalled, and, whenever
all such 5-20 bonds shall have been redeemed, the provisions of
this section, and all existing provisions of law authorizing the
refunding of the national debt, shall apply to any bonds of the
United States bearing interest at five per centum per annum or a
higher rate, which may be redeemable. In any exchange made under
the provisions of this section interest may be allowed, on the
bonds redeemed, for a period of three months."
On the 26th of February the following act was passed:
"AN ACT TO AUTHORIZE THE ISSUE OF CERTIFICATES OF DEPOSIT IN AID
OF THE REFUNDING OF THE PUBLIC DEBT.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That the Secretary
of the Treasury is hereby authorized and directed to issue, in
exchange for lawful money of the United States that may be presented
for such exchange, certificates of deposit, of the denominations
of ten dollars, bearing interest at the rate of four per centum
per annum, and convertible at any time, with accrued interest, into
the four per centum bonds described in the refunding act; and the
money so received shall be applied only to the payment of the bonds
bearing interest at a rate of not less than five per centum in the
mode prescribed by said act, and he is authorized to prescribe
suitable rules and regulations in conformity with this act."
On the 4th of March, 1879, the amount of uncalled 5-20 six per
cent. bonds outstanding was $88,079,800. Anticipating that sales
of four per cent. bonds would continue, I gave the following notice:
"Notice is given that when the 5-20 six per cent. bonds of the
United States are covered by subscriptions to the four per cent.
consols, the latter will be withdrawn from sale upon the terms
proposed by department circular of January 1, 1879, and upon the
terms stated in the contract with the Messrs. Rothschild and others,
of the date of January 21, 1879. The amount of 5-20 six per cent.
bonds outstanding and embraced in calls to this date is $88,079,800.
When this sum is covered by subscriptions under the existing circular
and contract, all further sales of four per cent. consols, to
provide for the refunding of the 10-40 five per cent. bonds, will
be made upon terms which will probably be less favorable to the
purchaser, and in accordance with new proposals and contracts.
This notice is given so that all parties wishing to subscribe for
consols upon the terms stated in the circular and contract may have
an opportunity to do so until the 5-20 bonds are called."
In giving this notice I had in view a change in the mode of refunding
which would save to the government the whole or large part of the
three months' interest pending the call. This notice gave an
additional spur to the market for four per cent. bonds. Copies of
it were sent to Mr. Conant and to all parties interested in pending
operations, and due notice was given to all persons and corporations
engaged in the sale of bonds that all existing contracts would
terminate when the 5-20 bonds were covered by subscriptions.
At this time there was a good deal of anxiety as to the effect of
the large sale of four per cent. bonds. If these could be exchanged,
par for par for six per cent. bonds, the operation would be easy,
but many holders of called bonds would not accept the lower rate
of interest and invested the principal of their bonds in other
securities. General Hillhouse, on the 8th of March, expressed the
common feeling as follows:
"There is a good deal of speculation in the papers, as well as in
business circles, as to the probable effect on the money market of
the settlements to be made in April, during which month, if I am
not mistaken, about $150,000,000 of calls will mature. It is now
seen, however, that investment demand for the fours is much larger
than was anticipated by many; and the subscribing banks will be,
therefore, likely to find themselves loaded with large amounts which
they cannot dispose of. It would not be strange, in the closing
of such vast transactions, if there should be some stringency, but
with the favorable indications, that the public are taking the
bonds freely, and with the power of the secretary in various ways
to facilitate the settlements, it can hardly be more than
temporary."
Mr. Conant wrote me, on March 8, from London:
"I have called on all the members of the syndicate several times
within the past few days, and have urged them very strongly to push
the sales of the bonds here. I have persistently tried to persuade
them that they ought to conduct the business with far more energy,
and I have said to them that, at the time the contract was entered
into, representations were made to you that $50,000,000 of the four
per cent. consols could be disposed of on this side of the Atlantic,
and that as they had undertaken the business they should not
disappoint you. I have represented to them the importance of
preventing the shipments of gold from New York, and that you supposed
that the sales of bonds which you expected they would make would
prevent such shipments. . . .
"The feeling which I alluded to in my last letter, that when the
time arrives for the settlement of the large subscriptions made in
New York and elsewhere at home the market will be found overloaded,
and that a fall in price will take place, still exists here, and
has the effect of causing certain classes of investors to delay
making purchases, which they will ultimately make. I have not
hesitated to say to the associates here that when refunding operations
shall have been completed the four per cent. consols will soon
thereafter go to a premium, and good reasons can be given why such
should be the case."
Soon after I commenced receiving prophecies of stringency and
disaster. A long letter from Fisk & Hatch, of New York, said that
general apprehension had been growing up in financial circles, and
was rapidly gaining ground, that the settlements by the national
banks with the treasury department, in April and May, for the large
subscriptions of four per cent. bonds made in January and February,
would occasion serious disturbance and embarrassment in the money
market. They advised me to pursue a course that, whether proper
or not, was not in accordance with law. Mr. L. P. Morton., on the
same date, took a milder view of it, but still suggested a remedy
not within my power.
On the 13th, General Hillhouse, in referring to the apprehensions
of my correspondents in regard to the settlements in connection
with refunding, said that they might be caused in some instances
by the suspicion, if not by the conviction, that their subscriptions
had been carried beyond the point of absolute safety, "and now that
settlement day is approaching they are naturally desirous of
ascertaining how far they can count on the forbearance of the
government."
This was the same view I had taken of the matter. I did not feel
myself officially bound to do anything but to require prompt payment
for the bonds subscribed. The treasury, however, was well prepared
for any probable stringency, and I was convinced that the settlements
would not cause any serious disturbance. The advices from London
continued to be unfavorable. The bonds were offered in the market
in some cases at a less price than the syndicate were to pay for
them.
In the process of selling the four per cent. bonds I had frequently
been written to by persons of limited means, who wished to invest
their savings in government bonds of small denominations bearing
four per cent. interest. I called the attention of the proper
committee of each House to the expediency of issuing notes or
certificates of that description, and the act of February 26, 1879,
already quoted, was passed.
On the 26th of March I issued a circular relative to these
certificates, prescribing the manner in which they should be sold,
and stated the purpose and probable effect of their issue, as
follows:
"The primary purpose of these certificates is to enable persons of
limited means to husband small savings as they accrue, and place
them where they will draw interest and become the nest egg for
future accumulation. The form of certificate seems better adapted
for the purpose than the French _ventes_ or the English savings
bank system. The objection to a national savings bank is that, in
a country so extensive as ours, the agencies would necessarily be
scattered, and the cost and delay of correspondence and transferring
money to Washington would be considerable; but, more than all, the
United States cannot undertake the risk of repaying deposits at
any time when called for. The necessary reserve for that purpose
would make the system burdensome. The certificate, as issued, may,
at the expense of the subscriber, be either to bearer, or, by being
registered, only transferable by assignment on the books of the
treasury. It combines, in the cheapest form, all the benefits of
any system of savings banks that has been devised. No doubt these
certificates, when first issued, will, by voluntary consent of
parties, be used as currency; but, after they shall have run a
short time, the accruing interest on them will induce their sorting
and holding, and thus, like the compound-interest notes, they will
cease to be a currency and become an investment. Their possible
use as currency is certainly no objection to them; for, though I
adhere as strictly as anyone to a specie standard of value, I think
that, it being constantly maintained by ample reserves and prompt
redemption, current money in different forms should be provided
for daily use. Diversity of the currency, if it is always redeemable,
is no objection. These certificates will always be redeemable in
the bonds stipulated for, and can, with profit, be issued, while
the money received for them can be used in redeeming bonds bearing
a higher rate of interest. They are of as low a denomination as
can be conveniently issued and bear interest. The issue of this
certificate is a safe experiment. I have confidence that it will
be beneficial to the holder, in begetting habits of saving, and to
the treasury, in aiding refunding; but its great benefit will be
that the people themselves will in this way have a direct interest
in preserving and maintaining the public faith."
On the same date I wrote a note for publication to the treasurer
of the United States, to facilitate the payment of called bonds,
as follows:
"As it is desirable to make payment of called bonds in the mode
that will least disturb the market, you will draw from the depositary
banks the proceeds of four per cent. bonds only when required to
make payment of called bonds, and in proportion from the several
depositaries to the amounts held by them, as near as may be, in
sums of $1,000. Money in the treasury received from four per cent.
bonds should be applied to the payment of called bonds before such
drafts are made.
"When practicable, drafts upon depositary banks, for transfers of
deposits on account of proceeds of four per cent. bonds, may be so
drawn as to be payable at the option of the bank, through the New
York clearing house.
"Drafts on depositary banks in cities other than New York should
be drawn a sufficient time in advance to meet payments there.
"Payment by called bonds should be treated as payment in money as
of the date when it would, under this order, be required."
On the 27th I received from Conant the following cablegram:
"Would be pleased to know if subscriptions to be settled during
April can be expected without disturbing market in New York."
I answered on the same day as follows:
"Entirely confident subscriptions during next month will be settled
without disturbing market. Order of the treasury department
yesterday will facilitate greatly."
The following correspondence with Conant, the syndicate and myself
then took place:
"London, March 28, 1879.
"Sherman, Washington.
"Rothschild & Sons request me to say they do not consider contract
of January 21, 1879, requires subscription two million to be made
April 1. On account of market price below par at present time they
desire delay subscription few days. Hope you will consent.
"Conant."
"Treasury Department, March 28, 1879.
"Conant, London.
"I think contract of January 21, 1879, very plain, subscription
should be made April 1, but, if they desire, time will be extended
to April 8.
"Sherman."
"Treasury Department, March 28, 1879.
"August Belmont & Co., New York.
"Gentlemen:--In confirmation of my two telegrams of to-day to you,
copies of which are inclosed, I have to inform you that the proper
legal officers of the department, as well as myself, consider it
very clear that, under the contract of January 21, your option to
make the second subscription expires on the 1st of April, but I am
not at all desirous of raising the question, and therefore am
willing to extend the time a week, within which I am quite confident
the anxiety about the April payments will begin to subside. Thus
far this week, over $17,000,000 called bonds have been redeemed by
credit on subscriptions, and $450,000 only paid by draft. Called
bonds are rapidly coming in for credit. The subscriptions in excess
of bonds called now amount to $6,600,000. With an assurance of a
subscription of $2,000,000 from you, by the 1st, or even the 8th,
of April, I would immediately issue a call for $10,000,000, and
may do so without waiting for your subscription.
"I would prefer that the parties to the contract should not avail
themselves of the extension offered, but leave that entirely to
your good judgment.
"Very respectfully,
"John Sherman, Secretary."
(Telegram.)
"Treasury Department, March 28, 1879.
"August Belmont & Co., New York.
"The contract is very plain that the first subscription should be
made by April 1. The stipulation for five million each month would
have made the second subscription in February or March, but, by
the agreement, it need not be made before April 1.
"John Sherman, Secretary."
"New York, March 28, 1879.
"Hon. John Sherman, Secretary of the Treasury, Washington, D. C.
"Dear Sir:--We received this morning a telegram from Messrs.
Rothschild about the next subscription under the contract of the
21st of January, and telegraphed its contents to you, as follows:
'London associates telegraph consider according contract have all
month April to make next subscription. Please telegraph whether
you agree they are right'
"In reply we received your telegrams reading:
'The contract is very plain that the next subscription should be
made by April 1. The stipulation for five million each month would
have made the second subscription in February or March, but by
agreement it need not be made before April 1.'
"and--
'Have cabled Conant to extend option, if desired, to April 8.'
"contents of which we have communicated to our London friends.
"Yours, very respectfully,
"_Pro_ August Belmont & Co.
"W. Suttgen.
"W. Beuter."
The explanation of these cablegrams is given in the following
letter:
"New Court, St. Swithin's Lane, }
"London, E. C., England, March 29, 1879.}
"Dear Mr. Secretary:--On the 27th instant I had the honor to make
an inquiry of you by cable dispatch, as follows: 'Would be pleased
to know if subscriptions to be settled during April can be effected
without disturbing market in New York.' The constant decline in
the price of all descriptions of our bonds in New York, the strenuous
efforts being made by certain parties to sell American bonds here
at low rates on home account, particularly the four and four and
a half per cent. stock, the advancing rates of interest, and the
condition of the exchanges, together with the rumors concerning
scarcity of money in New Orleans and elsewhere, gave rise to
apprehension, in the minds of many, that refunding operations had
been carried to too great an extent; that too many bonds had been
subscribed for on speculative account, and that any forced settlement
of the subscriptions falling due in April would produce a panic.
Private telegrams sent here conveyed information to the effect that
arrangements would be made between yourself and the banks, by which
the deposits in them would not be drawn upon until absolutely
necessary. The answer, however, which I received from you a few
hours later was highly gratifying and reassuring, and I gave it as
much publicity as possible without, of course, publishing it. It
reads as follows: 'Entirely confident subscriptions during the
next month will be settled without disturbing the market. Order
treasury department yesterday will facilitate greatly.'
"The question of obligation to make a subscription on the 1st day
of April to continue the contract has been under consideration by
the syndicate during the past week, and in fact ever since the
beginning of the decline in the price of the four per cent. stock.
The associates claim that they are only required to take five
millions of the bonds during the month of April, and that having
already taken three-fifths of the amount in advance, they should,
in view of the impossibility of disposing of the stock at present
prices, be allowed the balance of the month in which to subscribe
for the remaining two millions. They argue that it cannot be
expected that they can afford to take the bonds and pay the government
one and a half per cent. above the market prices, and they add that
they do not think you would wish to have them do so. They also
say that if they wanted the bonds for _speculative purposes only_
they should give up the contract and purchase in the open market;
but their policy is to keep the price at par and not to buy or sell
when it is below par. Bonds will sell more rapidly when they are
at par than when below it. It is the speculators and not the
investors, as a rule, who deal in stocks when they are cheap. If
the price of the bonds had remained at par, I have no doubt but
that all the bonds I have here would already have been disposed
of, and that the parties would have been ready and willing to make
the subscription for five millions on April 1.
"The Messrs. Rothschild say that, owing to the high price which
they were compelled to pay for called bonds, and the reduced price
at which they were compelled to part with a portion of the four
per cent. bonds, they have made a slight loss on their transactions
so far. They like to have business relations and connections with
governments, and I think that that disposition on their part is
paramount to the question of profits. The matter of the subscription
was discussed again yesterday, and deferred until Monday for further
consideration, and I was asked to send the following cable message
to you:
'Rothschild & Sons request me to say they do not consider contract
of January 21, 1879, requires subscription $2,000,000 to be made
April 1. On account of market price below par at the present time,
they desire delay subscription a few days. Hope you will consent.'
"I hoped you would consent, because I think it quite important,
for many reasons, that we should dispose of bonds on this side of
the water. They take the place of actual gold in settling exchanges,
and thereby prevent the disturbances in the money market which
always result from the moving of bullion. I have no doubt but that
the use of these bonds in this manner has stimulated purchases of
grain and produce from us which would never have left our shores
if payment for the same could only have been made in bullion. I
received this morning your cable message in answer to the one I
sent yesterday, as follows:
'I think contract of January 21, 1879, very plain. Subscriptions
should be made April 1; but, if they desire, time will be extended
to April 8.'
* * * * *
"With great respect, I remain, yours truly,
"Chas. F. Conant.
"Hon. John Sherman."
I have set out in full this correspondence with Rothschild and his
associates and with Conant, to show that on the eve of complete
success they were discouraged and asked for a postponement of, to
them, the small subscription of $1,000,000, and did not even think
of taking the option of $10,000,000 of bonds subsequently claimed.
With the 1st of April all stringency disappeared. Accounts were
settled without difficulty. The amount of four per cent. consols
sold to March 31, inclusive, was $473,443,400.
On the 4th of April, while attending a meeting of the cabinet, I
was handed the following telegram:
"New York, April 4, 1879.
"Hon. John Sherman, Secretary of the Treasury, Washington, D. C.
"National Bank of Commerce in New York subscribes for forty million
dollars four per cent. bonds. Particulars and certificates by mail.
"Henry F. Vail, President."
I thought the amount was a mistake, that four instead of forty was
meant. I replied as follows:
"Henry F. Vail, President National Bank of Commerce, New York.
"Before making call I prefer you repeat your subscription."
A few moments after sending this telegram I received the following
from Mr. Vail:
"I sent you telegram to-day, which from its importance I beg you
will telegraph me acknowledgment of its receipt."
I replied:
"Your telegram is received, and I have asked repetition of it before
making call."
The following telegraphic correspondence then occurred:
"Hon. John Sherman.
"Please enter to-day for us a subscription for ten million dollars
four per cents. making, however, no announcement until we see you
to-morrow.
"G. F. Baker, President First National Bank, New York.
"Hon. John Sherman.
"We have taken two million subscriptions to-day thus far, and more
to follow.
"E. D. Randolph,
"President Continental National Bank, New York."
"New York, April 4, 1879.
"Hon. John Sherman.
"Your two telegrams received. I hereby confirm my telegram of to-
day, subscribing, in name of National Bank of Commerce in New York,
for forty million dollars four per cent. bonds.
"Henry F. Vail, President."
"Henry F. Vail, President National Bank of Commerce, New York.
"Your subscription for forty million four per cent. bonds, having
been repeated by telegram, is accepted. A call will issue to-day
for the balance of the sixty-sevens and to-morrow a call will issue
for the whole of the sixty-eights.
"John Sherman, Secretary."
"E. D. Randolph, President, etc., New York.
"Your two million subscription received and accepted, but can accept
no more. All 5-20's are covered.
"John Sherman, Secretary."
"New York, April 4, 18979.
"Hon. John Sherman.
"We subscribe for three millions more, making five in all.
"F. Taylor, Cashier Continental National Bank."
"Treasury Department, April 4, 1879.
"F. Taylor, Cashier Continental National Bank, New York.
"Your subscription for three millions arrived too late; all the 5-
20's have been covered by previous subscriptions.
"John Sherman, Secretary."
A similar telegram was sent to the Continental National Bank of
New York, which subscribed $25,000,000 additional, the Hanover
National Bank of New York, $25,000,000, and the New York National
Banking Association, $2,000,000.
I then telegraphed to Mr. Conant as follows:
"Subscriptions have been made covering all 5-20 bonds (consols of
1867 and consols of 1868) outstanding, reserving for contracting
parties the one million not subscribed for.
"Inform the contracting parties and accept no new subscriptions."
On the 4th of April, 1879, I had the satisfaction of issuing the
95th and 96th calls for 5-20 bonds, covering all the bonds outstanding
issued under the act of March 3, 1865, and the last of the United
States 5-20 bonds. The early twenty year bonds, issued during the
first two years of the Civil War, were not yet due or redeemable,
and, therefore, could not be called for payment. This was a
practical illustration of the importance, in issuing government
securities, of reserving the right to redeem them before maturity.
The rapid and irregular subscriptions made on the 4th of April
involved the department in serious difficulty in determining who
of the many subscribers were entitled to the bonds. The aggregate
of subscriptions was more than double the amount of 5-20 bonds
outstanding. By adopting a rule of accepting bids made before a
fixed hour of that day, and by voluntary arrangements among the
bidders, a distribution was made.
The only serious controversy in respect to this distribution was
upon the claim of the Rothschilds that they had option extending
to the 30th of June for ten millions of bonds, and for one million
extended from April 1 to April 8. The latter was allowed, but the
department held that the option for ten millions June 30 was
dependent upon whether the bonds were previously sold, and this
occurred on the 4th of April. This gave rise to a controversy
which was settled by the voluntary transfer, by the National Bank
of Commerce, of ten millions of the forty millions bonds subscribed
for by it. Rothschild, the head of the house, would not accept
this offer, but, with some show of resentment, declined to receive
his share of the bonds, but they were eagerly taken by his
associates.
The 5-20 bonds having been paid off or called, the department
proceeded, as soon as practicable, to execute the laws of January
25 "to facilitate the refunding of the national debt," and February
26 "to authorize the issue of certificates of deposit in aid of
the refunding of the public debt."
On the 16th of April I published the offer of $150,000,000 four
per cent. bonds at one-half of one per cent. above par and accrued
interest, and reserved $44,566,300 of these bonds for the conversion
of ten dollar refunding certificates.
The following telegrams, addressed to the Secretary of the Treasury
on the 17th of April, tell the result:
From the Bank of New York National Banking Association, New York:
"Send two millions four per cent. bonds under terms of to-day's
dispatch."
From Chase National Bank, New York:
"We have subscribed for half million dollars four per cent. bonds
on terms just issued. Can we deposit our securities at the treasury
here, as heretofore?"
From First National Bank, New York:
"Please enter subscription this date for ten million dollars, and
reserve further amount of fifteen millions, awaiting our letter.
Please make no announcement of either to-day, for reasons will
explain."
From Bank of New York National Banking Association, New York:
"Send seventy-five certificates ten thousand each, fifty of five
thousand each, four per cents., in name of I. & S. Wormser. Also
four hundred bonds five hundred each, three hundred of one thousand
each; in all, one million five hundred thousand. Certificate
deposit by mail."
From Baltzer and Lichtenstein, New York:
"We subscribe to-day through the National Bank of the state for
one million fours."
From National Bank of the State of New York:
"We confirm dispatch of Baltzer and Lichtenstein order one million
four per cent. consols, and order, in addition to that and our
previous dispatch, one million more, half each coupon and
registered."
Bank of New York National Banking Association, New York:
"We take two million more fours; particulars later."
From National Bank of the State of New York:
"Please forward immediately four million United States four per
cent. consols."
* * * * *
"Please forward three hundred thousand registered and two hundred
thousand coupons four per cent. consols. Particulars by mail."
* * * * *
"Please forward one million four per cent. consols coupons."
* * * * *
"Please forward immediately fifteen hundred thousand United States
four per cent. consols additional to all former subscriptions."
From Bank of New York National Banking Association:
"Send one hundred and twenty certificates, ten thousand each, in
name of I. & S. Wormser; also eight hundred coupon bonds, one
thousand each, in all, two million fours. Certificate by mail."
* * * * *
"We subscribe for four millions fours; this is in addition to all
other telegrams. Certificates by mail."
From Continental National Bank, New York:
"We subscribe to-day two million four per cents., name Hatch &
Foote. Particulars by mail."
From First National Bank, New York:
"Please enter our subscription under this date for one hundred and
fifty million dollars four per cent. bonds and forty million dollars
refunding certificates, in all, one hundred and ninety million
dollars, under terms of your circulars of April 16 and March 7.
These subscriptions are for this bank and its associates. Will
see you to-morrow morning. This is repetition of dispatch sent to
the department."
From National Bank, State of New York:
"Confirming previous dispatches covering subscriptions of seven
million five hundred thousand dollars to four per cent. loan, please
forward additional two millions coupon bonds."
From Bank of New York National Banking Association:
"We subscribe for one million four per cents. Certificates of
deposit by mail to-morrow."
From National Bank, State of New York:
"Please forward immediately one million more United States four
per cent. consols, making a total, together with former subscriptions,
of ten million five hundred thousand."
I sent the following telegram to the First National Bank of New
York:
"Your telegram covering one hundred and ninety million consols
staggers me. Your telegram for twenty-five million received, and
entered at two o'clock. About thirty million from other parties
were received and entered before your last telegram. Will wait
till letters received. What is the matter? Are you all crazy?"
On the 18th the bids were carefully analyzed and accepted in the
order in which they were received. The bid of the First National
Bank was made on the behalf of an association of banks and bankers.
I declined their offer for refunding certificates and accepted
their offer for $111,000,000.
I wrote to Conant, April 18, as follows:
"Since I wrote you the letters yesterday respecting the recent
circular of April 16, I have sold the whole of the $150,000,000 of
bonds offered therein; $39,000,000 were sold to sundry banks in
the city of New York, and the residue, $111,000,000, were sold to
an association of banks and bankers through First National Bank.
This unexpected and agreeable _denouement_ of our refunding operations
will supersede much that I have written you. I received and answered
your telegram of to-day. Arrangements will be made with the new
associates for delivery of four per cent. consols and the receipt
of called bonds in London.
"Although I have given notice that I will feel at liberty to do so
after the 4th of May, I prefer that you will postpone any new
arrangement for delivery to other parties until the 10th; hoping
that before that time Messrs. J. S. Morgan & Co. will be able to
close out the balance of their last subscription."
On the same day I made a call for $160,000,000 10-40 bonds, being
all of such bonds outstanding, except an amount that would be
covered by the proceeds of ten dollar refunding certificates. The
sale of these certificates gave the department a great deal of
trouble. The object and purpose of the law was to secure to persons
of limited means an opportunity to purchase, at par, certificates
of indebtedness bearing four per cent. interest. As they could be
converted at pleasure into 10-40 bonds of small denominations, it
was thought they would be promptly taken by the persons for whom
they were designed. They were sold in limited amounts to individuals
at post offices, but as they were, when converted into bonds, worth
a premium, bankers and others hired men to stand in line and purchase
certificates. This was a practical fraud on the law, and was mainly
conducted in the cities, and where done the sale was discontinued.
The great body of the certificates were taken by the class of
persons for whom they were designed. In a brief period they were
sold, and the proceeds were in the treasury.
On the 21st of April I made the final call for all outstanding 10-
40 bonds. With this call the refunding operations were practically
at an end for the time. A good deal of correspondence was had as
to priority of bids and sales of refunding certificates, but this
was closed, at the end of ninety days, by the full payment of the
called bonds, and the substitution of bonds bearing a lower rate
of interest. This was accomplished without the loss of a dollar,
or, so far as I can recall, without a lawsuit.
The aggregate amount of bonds refunded from March 4, 1877, to July
21, 1879, was $845,345,950.
The annual interest saved by this operation was $14,290,416.50.
The general approval and appreciation of these results was manifested
by the public press, and especially in Europe. Mr. Conant, in a
letter dated April 19, said:
"On yesterday morning, at the stock exchange, just after the opening
hour, a McLean's cable dispatch was posted up, stating that you
had entered into a contract with a syndicate for the sale of
$150,000,000 of four per cent. bonds, against the outstanding 10-
40 five per cent. bonds. People were astounded at the information,
and they were all the more astonished because the operation followed
so closely upon the transaction of the 4th instant. The effect of
this has been to send the price of the bonds up by three-fourths
per cent., and to create a demand for them."
From the date of these transactions the bonds of the United States
rapidly advanced in value. Many similar transactions of my successors
in office have been made at a still lower rate of interest.
Among the agreeable incidents connected with the resumption of
specie payments was the adoption of resolutions by the Chamber of
Commerce of New York, on the 2nd of July, 1879. The second resolution
was as follows:
"_Resolved_, That this Chamber tenders its congratulations to the
Honorable the Secretary of the Treasury, at once the framer and
executor of the law of 1875, upon the success which has attended
his administration of the national finances; as well in the funding
of the public debt, as in the measures he has pursued to restore
a sound currency."
I subsequently received, by the hands of William E. Dodge, late
president of the Chamber of Commerce of New York, a letter from
that body asking me to sit for my portrait to be placed on the
walls of their Chamber. On the 24th of February I sent the following
reply:
"Gentlemen:--I have the honor to acknowledge the receipt, by the
hands of Wm. E. Dodge, late president of the Chamber of Commerce
of New York, of your letter of the 17th instant, covering a resolution
of your body, asking me to sit for my portrait to be placed upon
the walls of your Chamber.
"The kinds words of Mr. Dodge in delivering the resolution add
greatly to the compliment contained therein. I assure you that I
deeply appreciate the honor of being designated in this manner, by
a body so distinguished as the one you represent, composed of
members having so large an influence in the commercial transactions,
not only of our country, but of other nations, whose familiarity
with financial and commercial subjects gives to its opinions great
respect and authority.
"The resumption of specie payments has been brought about by the
co-operation, not only of many Senators and Members of Congress,
but of the leading merchants, bankers and other business men of
the country. It was my good fortune to be selected, by my colleagues
in the Senate, to present the resumption act, which was framed with
their aid and in their councils, and to hold my present office at
the time when, by its terms, the law was to be enforced. The only
merit I can claim is the honest and earnest effort, with others,
to secure the adoption of the policy of resumption, and to have
executed the law according to its letter and spirit. I feel that
I cannot accept this high compliment, without acknowledging that
I am but one of the many who have contributed to the accomplishment
of this beneficent object.
"I will, with great pleasure, give every facility to any artist
whom you may select to carry your resolution into effect.
"Expressing to you, and the gentlemen you represent, my appreciation
of a compliment so highly prized, I have the honor to be,
"Very respectfully, your obedient servant,
"John Sherman.
"Messrs. A. A. Lone, James M. Brown, Sam'l D. Babcock, Wm. E. Dodge,
Henry F. Spaulding, _Committee of the Chamber of Commerce, New
York_."
Subsequently, in compliance with this request, I gave to Mr.
Huntington, an eminent artist selected by that body, a number of
sittings, and the result was a portrait of great merit, which was
placed in the Chamber of Commerce with that of Alexander Hamilton.
I regarded this as a high compliment from so distinguished a body
of merchants, but I do not indulge in the vanity of a comparison
with Hamilton.
CHAPTER XXXVIII.
GENERAL DESIRE TO NOMINATE ME FOR GOVERNOR OF OHIO.
Death of My Brother Charles--The 46th Congress Convened in Special
Session--"Mending Fences" at My Home in Mansfield--Efforts to Put
Me Forward as a Candidate for the Governorship of Ohio--Letter to
Murat Halstead on the Question of the Presidency, etc.--Result of
My Letter to John B. Haskin--Reasons of My Refusal of the Nomination
for Governor--Invitation from James G. Blaine to Speak in Maine--
My Speech at Portland--Victory of the Republican Party--My Speech
at Steubenville, Ohio--Evidences of Prosperity on Every Hand--Visit
to Cincinnati and Return to Washington--Results in Ohio.
On the morning of January 1, 1879, I received intelligence of the
sudden death of my eldest brother, Charles T. Sherman, at his
residence in Cleveland. In company with General Miles and Senator
Cameron, his sons-in-law, and General Sherman, I went to Cleveland
to attend the funeral. My respect and affection for him has already
been stated. As the eldest member of our family he contributed
more than any other to the happiness of his mother and the success
of his brothers and sisters. He aided and assisted me in every
period of my life, and with uniform kindness did all he could to
advance my interests and add to my comfort and happiness. As
district judge of the United States, for the northern district of
Ohio, he was faithful and just. When, after twelve years service,
he was reproached for aiding in securing the reversal of an order
of the Commissioner of Internal Revenue in collecting an unlawful
and unjust tax in the city of New York, as he had a perfect right
to do, he resigned his position rather than engage in a controversy.
He was unduly sensitive of all accusations or innuendoes touching
his honor. He was honest and faithful to every engagement, and
had a larger personal following of intimate friends and associates
than either of his brothers.
On the 4th of March, 1879, President Hayes convened the 46th Congress
in special session to meet on the 18th of that month, to provide
necessary appropriations for the legislative, executive and judicial
expenses of the government, and also for the support of the army,
the 45th Congress having failed to pass bills for these objects on
account of a disagreement of the two Houses as to certain provisions
relating to the election laws. This session continued until July
1, and was chiefly occupied in political topics, such as reconstruction
and elections. The Democratic party, for the first time in twenty
years, had control of both Houses, but it neither adopted nor
proposed any important financial legislation at that session, the
only law passed in respect to coin, currency or bonds which I recall
being one to provide for the exchange of subsidiary coins for lawful
money, and making such coins a legal tender in all sums not exceeding
ten dollars. Congress seemed to be content with the operations of
the treasury department at that time, and certainly made no obstacle
to their success.
About the 1st of May, Mrs. Sherman, accompanied by our adopted
daughter, Mary Sherman, then a young schoolgirl twelve years old,
and Miss Florence Hoyt, of New York, Miss Jennie Dennison, of
Columbus, and Miss Julia Parsons, of Cleveland, three bright and
accomplished young ladies, embarked on the steamer Adriatic for a
visit to Europe. Mrs. Sherman placed Mary in a very good school
at Neuchâtel, Switzerland, and then with her companions visited
the leading cities of Europe.
After accompanying the party to New York I went to Mansfield, and
as my family was absent and the homestead occupied by comparative
strangers, I stopped at the St. James hotel where, as was natural,
I met a great many of my old neighbors and friends, both Democrats
and Republicans, who welcomed me home.
Among my visitors were several reporters from different parts of
the country who wanted to interview me and especially to learn if
I was a candidate for governor, and why I came home. In the
afternoon I visited my farm near by and my homestead of about twenty
acres adjoining the city. I found them in the usual neglected
condition of the property of a non-resident proprietor, with many
of the fences down. In the evening I was serenaded at the hotel
and made a brief speech to a large audience, commencing as follows:
"I am very happy to be again in your midst, to see your faces and
to greet you as friends. The shaking of your hands is more grateful
to me than the music of bands or any parade. I never felt like
making an explanation in coming before you until now. I found when
I arrived in my old home that the papers said I came west seeking
the nomination for governor. I came purely on private business--
to repair my fences and look after neglected property."
The reporters seized upon the reference to my fences, and construed
it as having a political significance. The phrase "mending fences"
became a byword, and every politician engaged in strengthening his
position is still said to be "mending his fences."
Previous to that time mention had been made of me in different
parts of the country, not only for the nomination of Governor of
Ohio, but for President of the United States. Charles Foster and
Alphonso Taft were then spoken of as the leading candidates for
nomination as governor. Both were my personal friends and eminently
qualified to perform the duties of the office. Although I regarded
the position of governor as dignified and important, well worthy
the ambition of any citizen, still there were reasons which would
prevent my accepting the nomination if it should be tendered me.
I felt that to abandon my duties in the treasury department might
be fairly construed as an evasion of a grave responsibility and an
important public duty. I knew that President Hayes was very anxious
that I should remain in the office of secretary until the close of
his term. I did not desire to compete with the gentlemen already
named, and did all I could to discourage the movement short of
absolute refusal to accept the nomination. The newspapers of the
day, not only in Ohio but in other states, were full of favorable
comments upon my probable nomination for governor, and my correspondence
upon the subject was very large. I have no doubt that had I
consented to be a candidate both Foster and Taft would have acquiesced
in my nomination and I, in all human probability, would have been
duly elected as Foster was.
As for the nomination for the presidency I made no movement or
effort to bring it about, but then believed that General Grant
would, upon his return from his tour around the world, be nominated
and elected. The following letter will explain fully my position
in regard to the office of both governor and president:
"Washington, D. C., May 15, 1879.
"My Dear Sir:--I notice, with heartfelt thanks for your personal
kindness in the matter, the course of the 'Commercial' in regard
to my proposed candidacy for Governor of Ohio, and this induces me
to state to you frankly and fully, in confidence, the reasons why
I could not accept the nomination if tendered, and why I hope you
will give such a turn to the matter as will save me the embarrassment
of declining.
"In ordinary circumstance an election as Governor of Ohio, after
my life in the Senate, would be extremely flattering and agreeable;
but at present, for several reasons, the least of which are personal,
I could not accept it.
"My wife has gone to Europe on a visit of recreation greatly needed
by her, my house in Mansfield is rented, and all my arrangements
are made to be here during the summer. The nomination would require
me to recall her, to resume my house, and to break up my plans for
the summer. If this alone stood in the way, I could easily overcome
it, but I know from letters received that my resignation as secretary
would be regarded as a desertion of a public trust important to
the whole country, with the selfish view of promoting my personal
ambition, not for the governorship merely but for the presidency,
which would impair rather than improve any chance I may have in
that direction.
"The President would regard this change as a great inconvenience
and as defeating a desire he has frequently expressed to maintain
his cabinet intact during his term, so that my obligations to him
forbid this.
* * * * *
"All these objections might be met except the one which I think is
unanswerable, that my presence here in the completion of a public
duty is far more important to the whole country and the cause we
advocate than if I were to run as a candidate for Governor of Ohio
and even succeed with a large majority.
"All things now tend to our success in Ohio and that is likely to
be as complete with any other candidate for governor as myself,
while if left here I will be able to so finish my business that no
one can say it is incomplete.
"As for the mention of my name for the presidency, I am not so
blind as not to perceive some favorable signs for me, but I have
thus far observed and intend strictly to adhere to the policy of
taking no step in that direction, doing no act to promote that
object, and using none of the influence of my office towards it,
except so far as a strict and close attention to duty here may
help. I am not now, and do not intend to get, infected with the
presidential fever.
"With high regard, I am, very truly yours,
"John Sherman.
"M. Halstead, Esq., Cincinnati, Ohio."
During 1879 and the following year I received a multitude of letters
and newspaper paragraphs advocating my nomination for President.
Among the first of such letters was one from an old friend, John
B. Haskin, formerly a Member of Congress from New York. On the
10th of May, 1879, I wrote him in answer a letter, not intended
for publication, but expressing what I would do in the contingency
mentioned by him, as follows:
"What I would aspire to, in case public opinion should decide to
make me a candidate for President, would be to unite in co-operation
with the Republican party all the national elements of the country
that contributed to or aided in any way in the successful vindication
of national authority during the war. I would do this, not for
the purpose of irritating the south or oppressing them in any way,
but to assert and maintain the supremacy of national authority to
the full extent of all the powers conferred by the constitution.
This, as I understand it, is the Jacksonian as well as the Republican
view of national powers.
* * * * *
"You see my general ideas would lead me to lean greatly upon the
war Democrats and soldiers in the service, who have been influenced
by political events since the war to withhold support from the
Republican party.
"The true issue for 1880 is national supremacy in national matters,
honest money and an honest dollar."
Mr. Haskin gave, or showed, this letter to a New York paper, and
it was published. I expressed my opinion, but it was not one that
should have been made public without authority. The letter was
the subject of comment and criticism, and was treated as an open
declaration of my candidacy for the office of President. It was
not written with this purpose, as the context clearly shows. This
incident was a caution to me not to answer such letters, unless I
was assured that my replies would be treated as confidential. Yet
I do not see how a man in public life can refuse to answer a friendly
letter, even if his meaning can be perverted.
During the months of May and June I had a correspondence with John
B. Henderson, of St. Louis, in which he expressed his great interest
in my nomination. This resulted in a conference, which he advised,
with President Hayes. My reply was as follows:
"Treasury Department, June 23, 1879.
"My Dear Sir:--In compliance with your suggestion, I yesterday
mentioned to the President my embarrassment from the general
discussion of my name as a possible candidate for the Republican
nomination. The points I mentioned were how far I should commit
myself to a candidacy and what I should do to promote it, and second
whether, under certain circumstances, he would not, in spite of
his declination, become a candidate for re-election. He was very
explicit on both points--first that I ought at once to let it be
understood that I was a candidate in the sense stated in the Haskin
letter, and no more--that great care should be taken that while a
candidate, I ought not to take part in any movement of opposition
to others named--especially General Grant. The feeling is growing
daily that General Grant will not allow his name to be used and
that, while his eminent services should be fully recognized and
rewarded, it is neither right nor politic to elect him to the
presidency for the third term. The President very truly said that
any appearance of a personal hostility or opposition to General
Grant, would be inconsistent with my constant support of his
administration during eight years, and would induce a concentration
that would surely defeat me. Upon the second point he was very
explicit--that he would not be a candidate under any circumstances,
and as far as he could properly, without any unseemly interference,
he would favor my election. This was the general tenor of his
conversation, which he said he would repeat to General Schurz.
This relieves me from some embarrassment, but I still think it is
better for us to remain absolutely quiet, awaiting the development
of public opinion or the voluntary action of personal and political
friends. Unless there is a clear preponderance of opinion in
preference for my nomination against all others, I do not want to
enter upon the scramble. As yet I do not see any concentration.
Hoping to see you soon, I remain,
"Very sincerely yours,
"John Sherman.
"Hon. John B. Henderson."
After a brief visit to Mansfield I went to Columbus, where I met
with a hearty reception from men of both political parties. The
legislature was in session, and the senators and members, judges
of the courts, and executive officers of the state, called upon me
and gave me cordial greetings. I attended a reception at the house
of Governor Dennison, where I met the leading citizens of Columbus.
On my return to the hotel I was serenaded by a band, and being
introduced by Governor Dennison made a brief speech of a non-partisan
character, and in closing said:
"I want to make one personal remark about myself. Some of my
newspaper friends here have tried to make me a candidate for Governor
of Ohio, but I hope none of you will vote for me in convention or
before the people. I propose to stick to my present place until
the question of resumption is settled beyond a doubt. I want to
convince everybody that the experiment of resumption is a success;
that we can resume; that the United States is not bound to have
its notes hawked about at a discount, but that a note of the United
States may travel about the world, everywhere received as equal to
gold coin, and as good as any note ever issued by any nation, either
in ancient or modern times. I want to see that our debt shall be
reduced, which will be done through four per cent. bonds. If the
present policy prevails, we shall be able to borrow all the money
needed for national uses for less than four per cent., perhaps as
low as three."
I returned directly to Washington. Finding that a determined effort
would be made to force my nomination as governor, I wrote the
following letter to prevent it:
"Treasury Department, }
"Washington, May 15, 1879.}
"My Dear Sir:--In view of the kindly interest manifested by political
friends during my recent visit home, that I should be nominated as
the Republican candidate for Governor of Ohio, I have given the
subject the most careful consideration, and have come to the
conclusion that I cannot, in my present situation, accept such a
nomination if tendered.
"I am now engaged in a public duty which demands my constant
attention and which can clearly better be completed by me than by
anyone coming freshly into the office. To now accept the nomination
for governor, though it is an honor I would otherwise highly prize
and feel deeply grateful for, would be justly regarded as a
abandonment of a trust important to the whole country, to promote
my personal advancement. I earnestly hope, therefore, that the
convention will not embarrass me by a tender of a nomination which
I would be obliged to decline.
"It may be that no such purpose will be manifested, but I write
you so that if the convention should so incline, you may at once
state why I cannot accept.
"Very truly yours,
"John Sherman.
"General J. S. Robinson, Chairman Republican State Committee,
Columbus, Ohio."
Charles Foster was nominated by the Republican convention in the
latter part of May, and Thomas Ewing by the Democratic convention.
These nominations necessarily made prominent the financial questions
of the time. After the close of the funding operations, I received
from Mr. Blaine, as chairman of the Republican committee of Maine,
the following invitation, which I accepted:
"Augusta, Me., July 3, 1879.
"Hon. John Sherman, Secy. of Treas.
"My Dear Sir:--Could you speak at Portland, Tuesday, July 23, and
then during the same week at Augusta and Bangor--say 25th-27th?
Your Portland speech we should expect to have printed the next day,
accurately from your own slips.
"Your two other speeches, hardly less important to us, might be
made with less care and accuracy, that is, more on the order of
the general stump speech.
"In your Portland speech I hope, however, you will talk on something
more than the finance, making it, however, the leading and prominent
topic--but giving a heavy hit at the conduct of the Democrats during
the extra session.
"Sincerely,
"James G. Blaine."
The election in the State of Maine preceding those of other states,
great interest was taken in it, as the result there would have much
influence in other parts of the country. That state in the previous
year had faltered in support of the Republican party. In that year
there were three candidates in the field for governor, the Republican,
whose name I do not recall, the Democratic, Garcelon, for hard
money, and the Greenback, Smith, under the lead of Solon Chase, an
alleged lunatic in favor of fiat money, the repeal of the resumption
law, and the enactment of an eight-hour law. Smith received about
40,000 votes, Garcelon about 28,000, and the Republican candidate
about 54,000. Many Republicans either did not vote or voted the
Democratic or Greenback ticket. By the constitution of that state
a majority of all the votes cast is required to elect a governor,
and in case of failure the house of representatives of the state
proceeds to ballot for choice. The names are then sent to the
senate for the action of that body. The result was the election
of Garcelon, the Democratic candidate.
This was due to a strong feeling then prevailing in favor of
irredeemable or fiat money, and to some discontent among Republicans
with the liberal measures adopted by President Hayes to secure
peace and quiet in the south, especially the recognition of Hampton
as Governor of South Carolina and of Nichols as Governor of
Louisiana.
I thought it important to turn the issues of the campaign to the
financial measures accomplished by the Republican party, and
therefore prepared with some care a speech to be delivered at
Portland, and confined mainly to this subject. This speech was
made on the 23rd of July, 1879. I regard it as the best statement
of the financial question made by me in that canvass. In it I
stated fully the action of the administration in respect to the
resumption of specie payments, and the refunding of the public
debt. The people of Maine had been greatly divided upon these
measures. The Greenback party was opposed to the effort to advance
the United States note to the value of coin which it represented,
but wished to make it depend upon some imaginary value given to it
by law. I said the people of Maine would have to choose between
those who strictly sought to preserve the national faith, and to
maintain the greenback at par with coin, and those who, with utter
disregard of the public faith, wished to restore the old state of
affairs, when the greenback could only be passed at a discount,
and could neither be received for customs duties, nor be paid upon
the public debt.
The Greenback party had embodied in their platform the following
dogmas:
"The general government should issue an ample volume of full legal
tender currency to meet the business needs of the country, and to
promptly pay all of its debts."
"The national banking system should be immediately abolished."
"We demand the immediate calling-in and payment of all United States
bonds in full legal tender money."
One of the Members of Congress from the State of Maine, Hon. G. W.
Ladd, was reported to have paid his attention to me, in a speech
in Portland, in the following language:
"Mr. Sherman has sold one hundred and ninety millions of four per
cent. bonds in one day to bloodsuckers who were choking the country,
and he should be impeached."
In closing my speech I said:
"It is to support such dogmas, my Republican friends, that we are
invited to desert the great party to which we belong. It may be
that the Republican party has made in the last twenty years some
mistakes. It may not always have come up to your aspirations.
Sometimes power may have been abused. To err is human; but where
it has erred it has always been on the side of liberty and justice.
It led our country in the great struggle for union and nationality,
which more than all else tended to make it great and powerful. It
has always taken side with the poor and the feeble. It emancipated
a whole race, and has invested them with liberty and all the rights
of citizenship. It never robbed the ballot box. It has never
deprived any class of people, for any cause, of the elective
franchise. It maintains the supremacy of the national government
on all national affairs, while observing and protecting the rights
of the states. It has tried to secure the equality of all citizens
before the law. It opposes all distinctions among men, whether
white or black, native or naturalized. It invites them all to
partake of equal privileges, and secures them an equal chance in
life. It has secured, for the first time in our history, the rights
of a naturalized citizen to protection against claims of military
duty in his native country. It prescribes no religious test.
While it respects religion for its beneficial influence upon civil
society, it recognizes the right of each individual to worship God
according to the dictates of his own conscience, without prejudice
or interference. It supports free common schools as the basis of
republican institutions. It has done more than any party that ever
existed to provide lands for the landless. It devised and enacted
the homestead law, and has constantly extended this policy, so that
all citizens, native and naturalized, may enjoy, without cost,
limited portions of this public land. It protects American labor.
It is in favor of American industry. It seeks to diversity
productions. It has steadily pursued, as an object of national
importance, the development of our commerce on inland waters and
on the high seas. It has protected our flag on every sea; not the
stars and bars, not the flag of a state, but the stars and stripes
of the Union. It seeks to establish in this republic of ours a
great, strong, free government of free men. It would, with frankness
and sincerity, without malice or hate, extend the right hand of
fellowship and fraternity to those who lately were at war with us,
aid them in making fruitful their waste places and in developing
their immense resources, if only they would allow the poor and
ignorant men among them the benefits conferred by the constitution
and the laws. No hand of oppression rests upon them. No bayonet
points to them except in their political imaginings.
"We would gladly fraternize with them if they would allow us, and
have but one creed--the constitution and laws of our country, to
be executed and enforced by our country, and for the equal benefit
of all our countrymen. If they will not accept this, but will keep
up sectionalism, maintain the solid south upon the basis of the
principles of the Confederate states, we must prepare to stand
together as the loyal north, true to the Union, true to liberty,
and faithful to every national obligation. I appeal to every man
who ever, at any time, belonged to the Republican party, to every
man who supported his country in its time of danger, to every lover
of liberty regulated by law, and every intelligent Democrat who
can see with us the evil tendencies of the dogmas I have commented
upon, to join us in reforming all that is evil, all the abuses of
the past, and in developing the principles and policies which in
twenty years have done so much to strengthen our government, to
consolidate our institutions, and to excite the respect and admiration
of mankind."
I made similar speeches at Lewiston, Augusta, Waterville and Bangor.
General Sherman's estimate of my speech at Portland, in reply to
an inquiry, is characteristic of him, viz:
"General, your brother, Secretary Sherman, seems to be doing some
telling work just now in the State of Maine; in fact, it is conceded
that his recent financial triumphs have made him a power."
"Well, yes, I think John's doing right well. He made a good speech
at Portland, one that seemed to me carefully prepared. I think he
answered his critics quite conclusively, but if I were in John's
place I would now save my breath and make no more speeches, but
simply say in reply to other invitations, 'Read my Portland speech,'
because whatever other efforts he may make during the campaign must
be more or less a rehash of that."
In the canvass that followed in Maine but little attention was paid
to the sectional question, and the Republican party gained a complete
victory.
About the middle of August the business of the treasury department,
being confined to routine duties, was left under the management of
Assistant Secretary John B. Hawley. I determined to spend the
remainder of the month in the campaign in Ohio, then actively
progressing, but confined mainly to the issue between the inflation
of paper money and the solid rock of specie payments. I made my
first speech in that canvass at Steubenville on the 21st of August.
The meeting was a very large one. Every available seat was occupied
by an intelligent audience, and the aisles and corridors were filled
with people sitting or standing. I opened my speech as follows:
"I am happy to be again among the people of Ohio, to whom I am
under the highest obligations of duty and gratitude, and especially
to be here in this good county of Jefferson, whose representatives
have thrice honored me by their vote when a candidate for the Senate
of the United States. I cheerfully come to speak on matters in
which you, as well as the whole people of the United States, have
a common interest; and I will best meet your wishes by stating, in
a plain, frank way, such facts and reasons as appear to me to
justify the support you have uniformly given to the Republican
party since its organization in 1854, and to present adequate
grounds for supporting it now.
"Three parties present candidates to the people of Ohio for the
highest offices of the state. It will not be necessary or just
for me to arraign the personal character, standing, or services of
either of the candidates on either of these tickets. They are all
respected citizens, and each would, no doubt, if elected, satisfactorily
perform the duties of the office for which he is nominated.
"But the issues involved are far more important than the candidates.
I assure you that upon the election in Ohio depend questions of
public policy which touch upon the framework of our government and
affect the interests of every citizen of the United States. The
same old questions about which we disputed before the war, and
during the war, and since the war, are as clearly involved in this
campaign as they were when Lincoln was elected, or when Grant was
fighting the battles of his country in the Wilderness.
"There are also financial questions involved in this contest. The
Republican party proposed, maintained, and executed the resumption
act as the best remedy for the evils that followed the panic of
1873. Under that act it has brought about the resumption of specie
payments. By its policy all forms of money are equal to and
redeemable in coin. It has reduced the interest on all the public
debt that is now redeemable. It has maintained and advanced the
public credit. It now declares its purpose to hold fast to what
it has done, to keep and maintain every dollar of paper money in
circulation as of equal value to the best coin issued from the
mint, and as soon as possible to complete the work of reducing
interest on all the public debt to four per cent. or less.
"The Greenback party not only denounces all we have done, but
proposes to reverse it by the issue of an almost unlimited amount
of irredeemable paper money, to destroy the system of free national
banks, and to call in and pay off all the United States bonds with
irredeemable money.
"The Democratic party of Ohio, both in its platform and by its
candidates, supports more or less all of these dogmas; but it does
so not as a matter of principle, but for political power. Its main
object is, by any sort of alliance on any real or pretended popular
issue, to gain strength enough to unite with the solid south, so
that it may restore to power, in all departments of the national
government, the very same doctrines that led to the Civil War, and
the very men who waged it against the Union. To obtain political
power, the democracy seek, by party discipline, to compel their
members to abandon the old and cherished principles of their party
of having a sound currency redeemable in coin. For this, they
overthrew Governor Bishop; for this, they propose to reopen all
the wild and visionary schemes of inflation which have been twice
rejected by the people of Ohio. Our contest with them is not only
on financial questions, but upon the old and broad question of the
power and duty of the national government to enforce the constitution
and laws of the United States in every state and territory, whether
in favor of or against any citizen of the United States.
"Let us first take up these financial questions, and in charity
and kindness, and with due deference to opposing opinions, endeavor
to get at the right, if we can.
"The great body of all parties are interested in and desirous of
promoting the public good. If they could only hear both sides
fairly stated, there would be less heat and bitterness in political
contests, and more independent voting."
I then proceeded with a full discussion of the financial questions,
referring especially to the speeches made by General Ewing, with
whose opinions I was conversant. I closed with a brief discussion
of the southern question, and especially the nullification of the
election laws in the southern states. This speech was the best of
many made by me in different parts of the state. I was engaged in
the canvass in Ohio for two weeks afterward, during which I visited
my home at Mansfield.
In traversing the state I was surprised at the remarkable change
in the condition of business and the feelings of the people, and
at the evidences of prosperity not only in the workshops but on
the farms. It was jokingly said that the revival of industries
and peace and happiness was a shrewd political trick of the
Republicans to carry the state. As I rode through the country I
saw for miles and miles luxuriant crops of thousands of acres of
wheat, corn, oats and barley. It was said that this was merely a
part of the campaign strategy of the Republicans, that really the
people were very poor and miserable and on the verge of starvation.
This was the burden of the speeches of General Ewing, who attributed
the miseries of the people to my "wicked financial policy," and
said that I was given over to the clutches of the money power and
stripped and robbed the people of Ohio for the benefit of the
"bloated bondholders."
While General Ewing was fighting in the shadows of the past, caused
by the panic of 1873, a revolution had taken place, and he who
entered into the canvass with the hope that the cry of distress
would aid him in his ambition to be governor, must have been greatly
discouraged by the evidences of prosperity all around him. I found
in my home at Mansfield that business was prosperous, the workshops
were in full blast, and smoke was issuing from the chimney of every
establishment in the place.
My coming to Ohio naturally excited a good deal of comment and of
opposition from Democratic speakers and papers. I was charged with
nepotism in appointing my relatives to office, but upon examination
it was found that I had appointed none, though several, mostly
remote, were holding office under appointments of General Grant.
On the 25th of August I left Mansfield for Columbus and Cincinnati,
and on the train met Charles Foster and others on their way to
Mount Vernon. On their arrival they were met by flags and music,
and in response to the calls I made a brief speech.
On the 27th of August I made my usual annual visit to Cincinnati
and the Chamber of Commerce of that city. That body is composed
in almost equal numbers of members of the two great parties, and
therefore, in addressing it, I carefully refrain from discussing
political topics. At that time there was a good deal of discussion
of the order made by me on the 13th of August, addressed to the
treasurer of the United States, directing him not to withdraw from
bank depositaries the money deposited for the payment of called
bonds, until it was required for that purpose. At the date of that
order over $70,000,000 of called bonds were still outstanding, but
only $52,000,000 remained on deposit with national bank depositaries
to pay them, thus showing that $18,000,000 United States notes had
been withdrawn from the depositaries into the treasury in advance
of their need for such payment. These sums were fully secured by
the deposit with the government of bonds to the amount of such
deposits and a further sum of bonds to the amount of five per cent.
of the deposit.
I felt that the withdrawal of this great sum in advance of the
presentation of the called bonds would necessarily create an
injurious contraction of the currency. To meet this condition of
affairs, upon the advice of the treasurer at Washington and the
assistant treasurer at New York, and the pressing complaints of
business men not interested in depositary banks, I issued this
order:
"Treasury Department, August 13, 1879.
"Hon. James Gilfillan, Treasurer United States.
"Sir:--With a view to closing as soon as practicable the accounts
of the department with depositary banks on loan account, without
unnecessary disturbance of the money market or the withdrawal of
legal tenders from current business, you will please receive from
such depositaries in payment called bonds to be credited when passed
through the loan division. You will require from such depositaries
sufficient money in addition to the called bonds, to insure the
withdrawal of all deposits on loan account on or before the 1st of
October next. The letter of the department of March 26 is modified
accordingly.
"Very respectfully,
"John Sherman, Secretary."
It was said that this was done to relieve the banks, and especially
the First National and the National Bank of Commerce, of New York,
which in closing out the refunding operations had, as already
stated, made large subscriptions for themselves and others, and it
was intimated that I was interested in these banks. This innuendo
was without foundation or excuse, and was made merely to create a
political sensation. This order was made, not at the request of
the banks, for they were entirely prepared to pay the money, but
at the urgent demand of business men, that the currency should not
be withdrawn from the banks where it was employed in active business,
and be deposited in the treasury where it would lay idle.
I thus explained the matter to the Chamber of Commerce, and to the
public at large. I felt that it would not be advisable for me to
drain the money market of legal tenders, and to hoard them in the
treasury to await the presentation of called bonds. If such a
course had been adopted, the clamor would have been louder and more
just. The order, no doubt, had a happy effect, as the running
accounts were rapidly and quietly closed, by the payment of the
called bonds, without any disturbance in the money market. The
clamor made was beneficial because it induced the holders of the
called bonds to send them in for payment, in which I greatly
rejoiced.
In the evening of that day a reception was given to me at the
Lincoln club. While it was going on a large crowd, headed by a
band, approached the clubhouse, and loudly insisted that I should
speak to them. As this was a political club, I felt at liberty,
on being introduced by Warner M. Bateman, to make a political
speech, mainly devoted to my early friend, General Ewing, and his
peculiar notions of finance. This was reported in the papers at
the time. If there was too much political feeling manifested in
my speeches at this period, it may be partly excused by the extreme
violence of denunciation of me by Democratic speakers and
newspapers.
Later in the evening I visited Wielert's pavilion, on Vine Street,
where the usual evening concert was being given. The visitors were
mainly German citizens, and, as such, were known to be in favor of
a sound currency based upon gold and silver. The orchestra at once
stopped the piece they were playing, and played the "Star Spangled
Banner," amid the cheering of the assemblage. They insisted upon
a speech, and I said:
"When I came here to-night I did not expect to make a speech, as
I have made one already. I only came to see the people enjoy
themselves, to drink a glass of that good old German beverage,
beer, and to listen to the music. I am very happy to meet you,
and shall carry away with me a kindly remembrance of your greeting.
All I want, and that is what we all want, is honest money. A dollar
in paper is now worth a dollar in gold or silver anywhere in this
country, and we want affairs so shaped that the paper money issued
may be exchanged anywhere or under any circumstances for gold or
silver. That is my idea of honest money. [Cries, 'That is so.'
'That is ours, too,' etc.] We may be assured that such shall be
the character of the money in our country if the people will sustain
the party which has equalized the values of the paper and metal
moneys. Again I thank you for your kind reception."
I returned to Washington and remained there during the month of
September, actively employed in the duties of the department.
During this month nearly all the outstanding called bonds were
presented and paid, and all sums deposited with national banks
during the operation of refunding were paid into the treasury and
these accounts closed.
Fruitful crops in the United States, and a large demand for them
in Europe, caused an accumulation of coin in this country. Much
of it came through the customhouse in New York, but most of it was
in payment for cotton and provisions. It was readily exchanged
for United States notes and silver certificates. As all forms of
money were of equal purchasing power and paper money was much more
convenient to handle than coin, the exchange of coin, by the holders
of it, for notes or certificates, was a substantial benefit to them
and strengthened the treasury. I promoted these exchanges as far
as the law allowed. I deemed it wise to distribute this coin among
the several sub-treasuries of the United States, maintaining always
the reserve for the redemption of United States notes in the sub-
treasury in New York as the law required. For this purpose I issued
the following order:
"Treasury Department, }
"Washington, September 19, 1879.}
"Gold coin beyond the needs of the government having accumulated
in the treasury of the United States, by the deposit in the several
public assay offices of fine bars and foreign coin, for which the
depositors have been paid, at their option, in United States notes,
the treasurer of the United States, and the several assistant
treasurers at Boston, New York, Philadelphia, Baltimore, Cincinnati,
Chicago, St. Louis, New Orleans and San Francisco, are hereby
authorized to pay out gold coin as well as silver coin and notes
upon the current obligations of the government, and upon advances
to disbursing officers, as may be convenient and practicable.
Transfers of coin for this purpose will be made to any assistant
treasurer, when necessary, by the treasurer of the United States,
upon application to him. The treasurer of the United States in
this city, upon the receipt by him of a certificate of deposit
issued by the United States assistant treasurer at New York, stating
that there has been deposited with him legal tender notes in the
sum of $100 or multiples thereof, will also cause to be shipped
from the mint to the depositor, at his risk and expense, a like
amount of gold coin. Standard silver dollars may also be obtained
as heretofore.
* * * * *
"John Sherman, Secretary."
The result of this policy was beneficial, though the demand for
coin rarely existed except for foreign exchange, and this was
generally in New York, and largely depended upon the balance of
trade. Our people had been so accustomed to the use of paper money
that they received and paid United States notes in preference to
coin, and this more readily since these notes were equal in purchasing
power to coin.
Senator Thurman, my colleague and personal friend, was active in
the canvass in Ohio. His term expired on the 4th of March, 1881,
and he was a candidate for re-election by the legislature about to
be chosen. I heard of his speeches, especially those in respect
to resumption. He commented upon the fact that United States notes
were only redeemed in the city of New York, and claimed that we
had not actually resumed, for gold was not in circulation. He
appealed to his audiences to say whether they had any gold and
whether they were not compelled to receive the same greenbacks then
as they had since the period of the war, and said if they wanted
gold they had to go to New York for it. I regarded this as a piece
of demagogism, for he knew the difference between the greenbacks
then and the greenbacks before resumption. Hearing that he was to
speak in Bellaire shortly I arranged to have certain disbursements
for wages in that neighborhood made in gold coin. When he made
his speech in Bellaire, soon afterwards, he repeated the same
statements that he had previously made, and appealed to the audience
to know whether they had seen any of the gold coin they had heard
so much about. Much to his surprise and embarrassment quite a
number of persons held up and shook gold coin. This put a stop to
his inquiries. The people appreciated the advance in the purchasing
power of their money, and neither demanded coin nor cared for it.
Early in October I yielded to the urgent request of Mr. Foster to
help in the closing days of the canvass, and, on the evening of
the 8th, addressed a meeting at the west front of the capitol in
Columbus, far exceeding in numbers any political gathering during
the campaign. My opening will indicate the general trend of my
remarks:
"It is not within my power to reach with my voice all who have
assembled on this occasion, and besides, for some time I have not
been much in the habit of speaking in the open air, and don't know
how long my voice will hold out, but I think I will be able to say
all that you will desire to hear from me, as I will be followed by
a gentleman distinguished in war and able to supply any imperfections
in my address.
"When I was here in August last it appeared that the great point
in the political contest in which we were about to engage was
whether the people of Ohio would stand fast to the resumption of
specie payments, which the Republicans, by a steady and patient
courage and unswerving conviction, had finally brought to a successful
consummation on the 1st day of January last, or whether the people
of Ohio would yield to the wild and fanciful ideas of inflation,
and desert the great good that had been accomplished after so long
a trial.
"The Democratic party, which had been holding the honored principles
of that party, seemed to be willing to go after strange gods, and
to form new alliances, to do anything to gain success, and that
old party sought to form at least temporary alliances, so that the
people would forget the great issue, and follow after these strange
and delusive ideas of which I will speak. Therefore it was that
my friend General Ewing was nominated for Governor of Ohio, with
the expectation that as he had advanced some such ideas in times
past, a coalition would be made between the parties naturally
hostile, and that the State of Ohio would be thus gained for the
Democratic ticket."
In the course of my remarks I read an extract from General Ewing's
speech of the year before, in which he stated that if we were out
of debt to foreign countries, and if our foreign commerce floated
under our own flag, resumption in gold and silver would be impossible
on the then volume of paper money; that if it were attempted the
desperadoes of Wall street and the money kings of England would
present greenbacks, and take the gold as fast as it could be paid
over the counter of the treasury. I said in reply:
"Not a year rolled around until this resumption came, and these
Wall street desperadoes and these money kings of Europe, instead
of coming and demanding our gold in exchange for greenbacks, now
bring their gold to us and want greenbacks for it.
"The money kings of Europe have brought us gold--$36,900,000 in
gold coin from France--and the English have brought their gold and
exchanged it for United States notes. And these Wall street
desperadoes are as eager to get our greenbacks as you are. They
don't want the gold at all and we cannot put it on them. Why, my
countrymen, United States notes may now travel the circuit of the
world with undiminished honor, and be everywhere redeemed at par
in coin. They are made redeemable everywhere, and at this moment
the greenback is worth a premium on the Pacific coast and in the
Hawaiian Islands, and in China and Japan it is worth par; and in
every capital of Europe, in Berlin, in Paris, in London, an American
traveling may go anywhere in the circuit of the civilized world,
and take no money with him except United States notes.
"Well, now, General Ewing was mistaken. Well, why don't General
Ewing come down and say 'I was mistaken?' [A voice, 'He will come
down.'] Yes, after next Tuesday he will."
On the next day I spoke at Springfield to an audience nearly as
large, following the general lines of my Columbus speech. On the
following day I spoke at Lancaster from a stand in front of the
town hall, in plain sight of the house in which General Ewing and
I were born. I spoke of General Ewing in very complimentary terms,
said we had been intimate friends from boyhood, that our fathers
had been friends and neighbors, but that he and I then found
ourselves on opposite sides of a very important question. I
expressed my respect for the sincerity of General Ewing's motives,
but believed that he was thoroughly and radically wrong. I said
I wished to state frankly how he was wrong, and to what dangerous
consequences the fruit of his errors would lead, and I wanted the
people of Lancaster to judge between us.
On the Saturday before the election I spoke in Massillon. By some
misunderstanding I was advertised to speak on that afternoon at
both Massillon and Mansfield, but, by an arrangement subsequently
made, I spoke at Massillon to one of the largest meetings of the
campaign, and then was taken by special train to Mansfield in time
to make my closing speech in the canvass. It was late in the
afternoon, but the crowd that met to hear me remained until my
arrival, of which the following account was given by the local
paper:
"But the grand ovation was reserved for our distinguished townsman,
Secretary Sherman. There were acres of men, women, and children
and vehicles at the depot to meet him, and as he stepped from the
cars he was greeted with the booming of cannon, the music of half
a dozen bands, and the loud and long acclaim that came from the
throats of the immense concourse of friends. A thousand hands of
old neighbors were stretched out to grasp his as he moved along
with great difficulty, piloted by the reception committee, through
the vast and surging crowd. Cheer after cheer went up on every
imaginable pretext, and many times calls for 'Three cheers for John
Sherman, our next President,' were honored with a power and enthusiasm
that left no room for doubt as to the intensity of the devotion
felt for him at his old home."
In this connection I wish to say once for all that I have been
under the highest obligations to the people of Mansfield during my
entire life, from boyhood to old age. I have, with rare exceptions,
and without distinction of party, received every kindness and favor
which anyone could receive from his fellow-citizens, and if I have
not been demonstrative in exhibiting my appreciation and gratitude,
it has nevertheless been entertained, and I wish in this way to
acknowledge it.
In opening my address in the evening I said:
"My fellow-townsmen, I regret your disappointment of to-day, that,
by some misunderstanding as to the hour of your meeting, I felt it
my duty, in obedience to the request of the state committee, to
attend the great mass meeting as Massillon this afternoon, and now
come before you wearied and hoarse, to speak of the political
questions of the day.
"When I was in Ohio in August last, the chief question in the
pending political canvass was, whether the resumption of specie
payments, so long and steadily struggled for, and happily accomplished
by the Republican party, should be maintained, or whether it should
give way to certain wild and erratic notions in favor of irredeemable
paper money. Upon this issue General Ewing was nominated by the
Democratic party, in the hope that he would gain support from a
third party committed to inflation. Since then it would appear
that the Democratic leaders seek to change the issue. The same
old questions about the rights of states to nullify the laws of
the United States--the same old policy to belittle and degrade our
national government into a mere confederacy of states--are now
thrust forward into prominence."
On the following Tuesday I voted, and immediately started for
Washington. The news of the triumphant election of Foster and
Hickenlooper, by over 30,000 majority, and a Republican majority
of twenty-five in the legislature, reached me while on the train.
The management by Governor Foster of his canvass, and his work in
it, was as laborious and effective as any ever conducted in Ohio.
He visited every county in the state, often made four or five
speeches in a day, and kept special railroad trains in motion all
the while, carrying him from place to place. He is not, in the
usual sense, an orator, but in his numerous campaigns he has always
made clear and effective statements which the people could understand.
His manner is pleasing, without pretension or gush. He had been
elected to Congress several times in a district strongly Democratic.
In the campaign of 1879 he adopted the same plan that had been so
successful when he was a candidate for Congress. He was an
experienced and efficient hand-shaker.
CHAPTER XXXIX.
LAST DAYS OF THE HAYES ADMINISTRATION.
Invitation From General Arthur to Speak in New York--Letter to Hon.
John Jay on the Subject--Mr. Evarts' Refined Specimen of Egotism--
An Anecdote of the Hayes Cabinet--Duty of the Government to Protect
the Election of All Federal Officers--My Speech in Cooper Institute
--Offers of Support to Elect Me as a Successor of Senator Thurman
--My Replies--Republican Victory in New York--President Hayes'
Message to Congress--My Report as Secretary of the Treasury--
Modification of My Financial Views Since that Time--Bank Notes as
Currency--Necessity for Paper Money--Mr. Bayard's Resolution
Concerning the Legal Tender Quality of United States Notes--Questions
Asked Me by the Finance Committee of the Senate.
In the latter part of September I was invited by General Arthur,
as chairman of the Republican state committee of New York, to speak
to the Republicans of that state during the pending canvass, in
aid of election of Mr. Cornell as governor. The circumstances of
the removal of Arthur and Cornell caused some doubt whether I should
accept the invitation, as it seemed that the nomination of Cornell
and the management of the canvass by Arthur was an expression of
triumph, and my acceptance would be regarded as a humiliation of
the President. I did not think so and in this opinion the President
concurred. I, therefore, accepted the invitation by the following
letter:
"Treasury Department, }
"Washington, September 29, 1879.}
"Dear Sir:--I have to acknowledge the receipt of your letter of
the 25th inst., inviting me to speak to the Republicans in New York
some time during the pending campaign. It will give me great
pleasure to do my utmost in aid of the election of Mr. Cornell and
the Republican ticket at the coming election, and I wish I could
accept your invitation without reserve; but in view of engagements
made in Ohio, and the official duties incumbent upon me, I cannot
make any more definite reply than to say that by the middle of
October I hope to be able to set aside two or three days to be
spent in your canvass at such places as you may think I can render
the most satisfactory service. I have also received an invitation
from Mr. Johnson, secretary of your committee. Please consider
this an answer.
"Very respectfully,
"John Sherman.
"To General C. A. Arthur,
"Chairman Republican State Committee, New York."
Shortly afterward I received a letter from Hon. John Jay, expressing
regret at my acceptance, for the reasons I have stated. To this
I replied as follows:
"October 4, 1879.
"My Dear Sir:--Your note of the 2nd is received.
"I feel as you do that the nomination of Mr. Cornell, and the
appointment of Mr. Arthur to conduct the canvass, has the look of
a reproach to the President for their removal. If only their
personal interests were involved, I should feel great indifference
to their success, but it so happens that Republican success in New
York is of such vital importance to the people of the United States,
that their personal interest in the matter, and even the motive of
the nomination and appointment, should be overlooked, with a view to
secure the country against the return to power of the Democratic
party.
"We must carry New York next year, or see all the results of the
war overthrown and the constitutional amendments absolutely nullified.
We cannot do this if our friends defeat a Republican candidate for
governor fairly nominated, and against whom, there are no substantial
charges affecting his integrity. Besides, the nomination of Mr.
Cornell could easily have been prevented if the friends of the
President and the administration had aided to defeat it. He was
nominated by our acquiescence, and we should not now complain of
it. The expediency of holding the meeting you propose, depends
entirely upon the question whether or not it would aid the Republican
cause this fall. I am inclined to think it would not, that such
a meeting would deter Republicans from supporting the regular ticket
and, therefore, is ill advised. I thus frankly state my opinion
as you ask it, but without any desire in any way to influence that
of others.
"Very truly yours,
"John Sherman.
"Hon. John Jay, Katonah, N. Y."
After the election in Ohio I received from General Arthur a list
of appointments for me in New York, which if I had attempted to
fill would have overtaxed my strength. Mr. Evarts had also been
invited, but limited his acceptance to one speech to be made in
Cooper Institute. I complained to him that it was not fair to
request of me so many speeches where he, a citizen of that state,
agreed to make but one. His answer was characteristic. He said:
"Well, Mr. Sherman, when the people of New York wish my views upon
public questions they arrange for a meeting in Cooper Institute,
or some such place. I make the speech and it is printed and is
read." I thought this, under the circumstances, a refined specimen
of egotism, meaning that he had only to pronounce his opinion to
attract universal attention and he need not therefore repeat his
speech at any other place.
This incident recalls to my mind a specimen of his keen wit. Among
the early meetings of the cabinet President Hayes announced three
or four personal appointments that he intended to make, mainly in
the foreign service, in the department of which Mr. Evarts was the
head. Evarts seemed to be surprised at these appointments, and
after some pause he said: "Mr. President, I have never had the
good fortune to see the 'great western reserve' of Ohio, of which
we have heard so much." For a moment Hayes did not perceive the
quiet sarcasm of Mr. Evarts, which was a polite expression of his
feeling that he should have been consulted about these nominations
before they were announced. We all caught the idea and the President
joined heartily in the laughter. Mr. Evarts is not only a man of
keen wit, but is a great lawyer and able advocate. I learned, from
my intimate association with him in the cabinet, and subsequently
in the Senate as a member of the committee on foreign relations,
to respect and love him.
On the 25th of October, when on my way to New York, at the request
of General Kilpatrick I made a speech at Paterson, New Jersey, on
the occasion of the ratification of the Republican nominations.
In this speech I expressed my opinions upon the subject of fraudulent
elections, especially in the south, and, while the government has
not been able at any time to completely protect the ballot box in
several states, the opinions I then expressed are still entertained.
I believe the right of each lawful voter to vote in national
elections should be enforced by the power of the national government
in every state and territory of the Union. I said at this time:
"Now I want to serve notice on the Democratic party, that the
Republican party has resolved upon two things, and it never makes
up its mind upon anything until it is determined to put it through.
_We are going to see that every lawful voter in this country has
a right to vote one honest ballot at every national election, and
no more_. If the Democratic party stands in the way, so much the
worse for the Democratic party. If the south, rebellious as it
is, stands in the way again, we will protect every voter in his
right to vote wherever the constitution gives the right to vote.
Local elections must be regulated by state laws. Southern voters
may cheat each other as they please in local elections. The
Republican party never trenched on the rights of states, and does
not intend to.
"Whenever national officers or Congressmen are elected, those are
national elections, and, under the plain provisions of the
constitution, the nation has the right to protect them. The
Republican party intends, if the present law is not strong enough,
_to make it stronger_. In the south 1,000,000 Republicans are
disfranchised. With the help of Almighty God, we intend to right
that wrong. Congress has a right to regulate congressional elections.
The Tweed frauds, reversing the vote of New York state in 1868,
led to the passage of the first federal election law, breaking up
false counts. Then the Mississippi plan was introduced in the
south.
"If Congress was purged to-day of men elected by fraud and bloodshed
in the south, the Democrats would be in a pitiful minority in the
capital. At the last session the Democrats tried to repeal the
election laws, and were met by veto after veto from the stanch
Republican President. Then they tried to nullify existing laws.
We must as firmly resist nullification now as when Jackson threatened
'by the eternal God' to hang the original nullifier, Calhoun. _We
must have free elections_. We are determined to assert the _supremacy
of the United States in all matters pertaining to the United States_,
and to _enforce the laws of the United States, come what will_."
This declaration of mine at the time created a good deal of criticism,
especially in the New York papers, but, in spite of this, my
convictions have grown stronger with time that it is the imperative
duty of the national government to protect the election of all
federal officers, including Members of Congress, by wise conservative
laws.
On the 27th of October I spoke in Cooper Institute, confining myself
mainly to an exposition and defense of the financial policy of the
administration. This was hardly needed in the city of New York
though, as Evarts said of his speech, I knew what I said would be
printed, and people who were not familiar with financial topics
could read it. The commercial papers, while approving the general
tenor of the speech, complained that I did not advocate the retirement
of the legal tender notes of the government. They seemed then, as
they do now, to favor a policy that would withdraw the government
from all participation in furnishing a currency. I have always
honestly entertained the opinion that the United States should
furnish the body of circulating notes required for the convenience
of the people, and I do yet entertain it, but the notes should
always be maintained at parity with coin. In the cities generally,
where banks have great influence and where circulating notes are
superseded in a great measure by checks, drafts and clearing house
certificates, the wants of the people for paper money secured by
the highest sanction of law and by the promise and credit of the
government are not appreciated. In this speech I referred to the
banks as follows:
"They [the banks] are interwoven with all the commercial business
of the country, and their loans and discounts form our most active
and useful capital. . . . The abolition of the national banks would
inevitably lead to the incorporation of state banks, especially in
bankrupt states, where any expedient to make paper money cheap will
be quickly resorted to. . . . It will open the question of the
repeal of the provisions of the loan laws fixing a limit to the
amount of United States notes, and thus will shock the public credit
and raise new questions of authority which the Supreme Court would
probably declare to be unconstitutional. Free banking open to all,
with prompt and easy redemption, supplies a currency to meet the
varying wants of different periods and seasons. Who would risk
such a question to the changing votes of Congress?"
I must add, however, that I do not believe the banking system would
be sustained by popular opinion unless the great body of our currency
was in the form of United States notes or certificates based upon
coin. If there is any profit in the circulation of such notes, it
ought to inure to the government. The circulation of banks should
only be equal to the local demands for currency and should always
be amply secured, as now, by the deposit of United States bonds,
or some substitute for these bonds equally valuable, when the
national bonds shall be redeemed. This security ought not to extend
beyond the amount of bank notes actually outstanding, leaving the
security of deposits by individuals to depend upon the assets of
each bank. The duty of the government is performed when it guards
with undoubted security the payment of the circulating notes issued
by the banks. In this speech I spoke of the resumption act and
the history of resumption as follows:
"The resumption act was a Republican measure, supported, advocated
and voted for by Republican Senators and Members, and without the
aid of a single Democrat in either House of Congress. It has been
adhered to and successfully executed by that party. The Republican
party has won no victory more complete than the passage, execution
and success of the resumption act. This measure was adopted in
January, 1875, in the midst of the panic, when our paper money was
worth only 85 cents on the dollar. It was a period of wild
speculation and inflation. The rate of interest was higher than
before or since--the government paying six per cent. in gold,
corporations in fair credit from eight to ten per cent., and
individuals from ten to twelve per cent. Recklessness in contracting
debts was universal. Railroads were built where they were not
needed; furnaces were put up in excess of all possible demands;
and over-production and over-trading occurred in all branches of
business. The balance of trade for ten years had been steadily
against us, with an aggregate excess of imports over exports of
over $1,000,000,000.
"The panic of 1873 put an end to all these wild, visionary schemes,
and left the country prostrate and in ruin. All business enterprises
were paralyzed. Congress, in a hopeless quandary, looked in vain
for some way of escape from the bankruptcy which threatened every
interest and every individual. Then it was the Republican party
devised and placed upon the statute book the resumption act, and,
against noisy opposition and continual speaking, steadily persevered
in its execution.
* * * * * *
"Now that resumption is a success, Democrats say the Republican
party did not bring it about, but that Providence has done it; that
bountiful crops here and bad crops in Europe have been the cause
of all the prosperity that has come since resumption. We gratefully
acknowledge that Providence has been on the side of the Republican
party, or rather, that, having sought to do right, we find ourselves
supported by Divine Providence, and we are grateful to the Almighty
for the plentiful showers and favorable seasons that brought us
good crops; but we also remember that it was the passage of the
resumption act, the steady steps toward resumption, the accumulation
of the coin reserve, the economy of the people, and their adjustment
of business affairs to the time fixed for resumption, that, with
the blessings of Divine Providence, brought us resumption.
"We should be, and are, thankful to the Almighty, but we are under
no thanks whatever to the Democratic party. It has not, for twenty-
five years, had Providence on its side, but we may fairly infer
that, as it has steadily resisted Providence and patriotic duty
for more than twenty years, it must have had the devil on its side.
Democrats can claim no credit, but stand convicted of a blundering
mistake in abandoning the old and tried principles of their party,
and following after strange gods with the hope of a brief and
partial success. They have failed, and that dogma for hard money,
which they abandoned, has been adopted by the Republican party, as
the corner stone of its greatest success."
I spoke at Albany, Rochester, and Syracuse, and, on my way to
Washington, at New Brunswick, New Jersey.
After the election in Ohio, I received several letters from members
of the legislature, offering their support to me as a candidate
for United States Senator, to be elected in January to succeed Mr.
Thurman, for the term commencing on the 4th of March, 1881. Among
them was a letter from L. M. Dayton, a member of the general assembly
from Hamilton county, to which I replied as follows:
"Washington, D. C., November 2, 1879.
"My Dear Sir:--Your note of the 30th ult., in which you inquire
whether I will be a candidate for election as Senator of the United
States in place of Senator Thurman, is received.
"Early last summer, when this subject was first mentioned to me by
personal friends, I freely expressed my conviction that as the
general assembly of Ohio had three times conferred upon me this
high and much coveted honor, I ought not to stand in the way of
others who might fairly aspire to that position. I am of the same
opinion now. During the recent canvass I stated to several gentlemen
who had been named in the public press as probable candidates, that
I would not be a candidate, and I could not now recede from that
position without just reproach.
"Please say so to your fellow members, and accept my hearty thanks
for your partiality.
"Very truly yours,
"John Sherman.
"Hon. L. M. Dayton, Cincinnati, Ohio."
I also wrote the following letter to Senator A. B. Cole, of
Portsmouth, in reply to a similar offer:
"Washington, D. C., November 11, 1879.
"My Dear Sir:--Your very kind letter of the 10th inst. is received.
I thank you again for your offer to support me for the Senate, but
you will have seen from the letter I wrote to Colonel Dayton, that
I have determined, under the circumstances stated therein, not to
be a candidate, so that members may feel entirely free to follow
their judgment in the selection of the Senator. I must be impartial
between the several candidates.
"I thank you also for what you say about the nomination for the
presidency. Such a nomination would be a very exalted honor, so
much so that I ought not to do anything to promote or to defeat
it. I would be very glad to get the hearty cordial support of the
Ohio delegation, and that being granted I am perfectly willing to
abide the decision of the national convention, and will be ready
to support anyone who is nominated.
"I should be glad to see your son, and hope you will give him a
letter of introduction to me.
"Very truly yours,
"John Sherman.
"Hon. A. B. Cole, Portsmouth, Ohio."
Cornell was elected Governor of New York, and with him a Republican
legislature. The elections generally that fall were in favor of
the Republican party, but, as both Houses of the 46th Congress were
Democratic, President Hayes had to conduct executive business with
a Congress not in political harmony with him until the 4th of March,
1881, when the term of Congress and of the President expired. I
feel bound to say that no merely obstructive financial measures
were adopted during that Congress.
The message of the President, communicated to Congress on the 1st
of December, 1879, dealt with the usual topics of such a document;
but, instead of commencing with our foreign relations as usual, he
began by congratulating Congress on the successful execution of
the resumption act and the funding of all the public debt redeemable,
into bonds bearing a lower rate of interest. He recommended the
suspension of the coinage of the silver dollar, and the retirement
from circulation of United States notes with the capacity of legal
tender. He held that the issue of such notes during the Civil War
was not authorized except as a means of rescuing the country from
imminent peril, and the protracted use of them as money was not
contemplated by the framers of the law. While I did not concur in
all the views stated by the President, especially as to the policy
of retiring United States notes then in circulation, yet his general
conclusions in favor of the coin standard were, in my view, sound
and just. I was very willing to hold on to the progress made in
making United States notes equivalent to coin rather than to attempt
to secure their retirement from circulation.
In the report made by me as Secretary of the Treasury I stated my
opinion that the existing law was ample to enable the department
to maintain resumption upon the volume of United States notes then
outstanding; but added, that in view of the large inflow of gold
into the country, and the high price of public securities, it would
seem to be a favorable time to invest a portion of the sinking fund
in United States notes to be retired and canceled, and in this way
gradually to reduce the maximum of such notes to the sum of
$300,000,000, the amount named in the resumption act.
I would not make such a recommendation now, as I am convinced that
United States notes based on coin in the treasury are the best form
of currency yet devised, and that the volume might be gradually
increased as the volume of business increases. Since resumption
such notes have been maintained at par with coin by holding in the
treasury coin to the amount of thirty per cent. of the notes
outstanding. This coin, lying idle and yielding no interest, costs
the government the interest on an equal amount of bonds, or a
fraction over one per cent. on the sum of United States notes in
circulation. These notes are a part of the debt of the United
States, and if redeemed, must be paid by the issue of $346,000,000
of bonds. I see no reason why the people of the United States
should not have the benefit of this cheap loan rather than the
national banks, and there are many reasons why the issue of a like
amount of notes by national banks cannot fill the place or perform
the functions of United States notes. The issue of bank notes
would be governed by the opinions and interest of the banks, and
the amount could be increased or diminished according to their
interests and without regard to the public good. As an auxiliary
and supplement to United States notes, bank notes may be issued as
now when amply secured by United States bonds, but it would be a
dangerous experiment to confine our paper money to bank notes alone,
the amount of which would depend upon the interest, hopes and fears
of corporations which would be guided alone by the supposed interests
of their stockholders.
There is another objection to a sole dependence on bank notes as
currency: They cannot be made a legal tender either by the states
or the United States, while it is settled by the Supreme Court that
notes of the United States may be made a legal tender, a function
that ought to belong to money.
I know that my views on this subject are not entertained by the
influential class of our citizens who manage our banks, but in this
I prefer the opinion and interest of the great body of our people,
who instinctively prefer the notes of the United States, supported
by coin reserves, to any form of bank paper that has yet been
devised. The only danger in our present currency is that the amount
may be increased to a sum that cannot be maintained at par with
coin, but the same or a greater danger would exist if the volume
of paper money should be left to the interested opinion of bankers
alone.
It is sometimes claimed that neither the government nor banks should
issue paper money, that coin only is money. It is sufficient to
say that all commercial nations have been constrained by necessity
to provide some form of paper money as a substitute for coin. The
experience of the United States has proven this necessity and for
many years our people were compelled to rely upon state bank notes
as a medium of exchange, with resulting loss and bankruptcy. For
the want of paper money at the commencement of the Civil War, the
United States was compelled to issue its notes and to make them a
legal tender. Without this the effort to preserve the Union would
have utterly failed. With such a lesson before us it is futile to
attempt to conduct the business of a great country like ours with
coin alone. Gold can only be a measure or standard of value, but
cannot be the current money of the country. Silver also can only
be used as money for the small transactions of life, its weight
and bulk forbidding its use in commerce or trade. The fluctuations
in market value of these metals make it impossible to permit the
free coinage of both at any ratio with each other without demonetizing
one of them. The cheaper money will always be the money in
circulation. Wherever free coinage now exists silver is the only
money, while where gold is the standard, silver is employed as a
subsidiary coin, maintained at par in gold by the mandate of the
government and its receipt for or redemption in gold. The only
proposed remedy for this fluctuation is an agreement by commercial
nations upon a common ratio, but thus far all efforts for such an
agreement have failed. If successful the result might not be as
satisfactory as anticipated.
I urged, in my report, the importance of adjusting the coinage
ratio of the two metals by treaties with commercial nations, and,
until this could be done, of limiting the coinage of the silver
dollar to such sum as, in the opinion of Congress, would enable
the department to readily maintain the standard dollars of gold
and silver at par with each other.
In this report I stated the refunding transactions already described,
and recommended the refunding of all bonds of the United States in
the same manner as they became redeemable. This was successfully
executed by my successors in office. I was able to say truly of
the treasury department, in conclusion:
"The organization of the several bureaus is such, and the system
of accounting so perfect, that the financial transactions of the
government during the past two years, aggregating $3,354,345,040.53,
have been adjusted without question, with the exception of a few
small balances now in the process of collection, of which it is
believed the government will eventually lose less than $13,000, or
less than four mills on each $1,000 of the amount involved."
The question of the legal tender quality of United States notes,
discussed in my report, was followed, on the 3rd of December, by
the introduction in the Senate of a resolution by Mr. Bayard as
follows:
"_Resolved, etc._, That from and after the passage of this resolution
the treasury notes of the United States shall be receivable for
all dues to the United States excepting duties on imports, and
shall not otherwise be a legal tender; and any of said notes
hereafter reissued shall bear this inscription."
This resolution, while pending in the committee, was debated at
some length, and reported back adversely on the 15th of January,
1880, by Mr. Allison, from a majority of the committee. Mr. Bayard
presented the views of the minority in favor of the resolution.
It was subsequently discussed at considerable length by Mr. Coke,
of Texas, and Mr. Bayard, on opposite sides. No definite action
was taken and the matter rested, and I do not recall that it was
ever again brought before the Senate. I felt satisfied with the
majority report, as I doubted the expediency or power of Congress
to deny to these notes any of the qualities conferred upon them by
the law authorizing their issue, as was the legal tender clause.
The beneficial result of resumption was appreciated by both parties
and there was no disposition of Congress to pass any legislation
on the subject. The speech of Mr. Bayard, made on the 27th of
January, 1880, was a careful and able review of the whole subject
of legal tender, but it was evident that neither House of Congress
agreed with him in opinion.
A bill in regard to refunding the debt maturing after the 1st of
March, 1881, was introduced in Congress on the 27th of December,
1879, by Fernando Wood, chairman of the committee of ways and means
of the House. It provided for a change of existing laws so as to
limit the rate of interest upon the bonds to be issued in such
refunding to not to exceed three and a half per cent. per annum.
This bill, if it had been passed, would have prohibited the sale
of all bonds for resumption, as well as for refunding, at a greater
rate of interest than three and a half per cent. I opposed this
proposition, as it would impair the power of maintaining resumption
in case such bonds could not be sold at par, and the existing law
did not prevent the secretary from selling those already authorized
at a premium. No action was taken upon the bill by that Congress,
and Mr. Windom, my successor, found no difficulty in refunding
these bonds on more favorable terms without any change of existing
law.
On the 30th of January, 1880, I appeared before the finance committee
of the Senate in response to their invitation. The committee was
composed of Senators Bayard (chairman), Kernan, Wallace, Beck,
Morrill, Allison and Ferry, all of whom were present. Mr. Bayard
stated that a number of propositions, upon which it was desired to
obtain my views, had been submitted by Senator Beck, and then read
them as follows:
"1. What reason, if any, there is for refusing to pass a bill
authorizing the receipt of legal tenders for customs dues.
"2. Why the trade dollar should not be converted into a standard
dollar.
"3. What has been the cost of converting the interest-bearing
debt, as it stood July 14, 1870, to what it is now, including double
interest, commissions, traveling expenses of agents, etc., and the
use of public money by banks, and the value of its use, so as to
determine whether the system should be continued or changed.
"4. The effect of the abolition of the legal tender quality of
greenbacks upon the paper currency.
"5. The necessity for a sinking fund and how it is managed.
"6. Whether silver coin received in payment of customs duties has
been paid out for interest on the public debt; and if not, why not."
Senator Allison desired to know if this interview was to be
stenographically reported, and the committee decided that it should
be.
My answers to these questions and the colloquy with the committee
in respect to details cover fifty-four printed pages, and give by
far the most comprehensive statement of treasury operations during
the two or three years before that meeting, and suggestions for
future legislation, that has been written or published. The length
of the interview prevents its introduction in full, but a statement
of some portions of it may be interesting. In answer to the first
question I said:
"The act of February 25, 1862 (section 3694, R. S.), provides that
all the duties on imported goods shall be paid in coin; and the
coin so paid shall be set apart as a special fund to be applied to
two purposes, one of which is the payment in coin of interest on
the bonds of the United States, and the balance to the sinking fund.
"This is an obligation of the government that its coin revenue
should be applied to the payment of interest on the public debt.
So long as legal tender notes are maintained at par and parties
are willing to receive them in payment of coin interest, there is
no objection to receiving legal tender notes for customs dues.
"Since resumption it has been the practice of the department to
thus receive them, but this practice can be kept up only as long
as parties holding interest obligations are willing to accept the
same notes in payment thereof. If, by any unforseen and untoward
event, the notes should again depreciate in value below coin, the
obligations of the government would still require that interest on
the public debt be paid in coin; and if customs dues were payable
in legal tender notes, the department would have no source from
which to obtain the coin necessary to the payment of interest, for
of course holders of interest obligations would not accept a
depreciated currency when they were entitled by law to coin."
I reminded the committee that in my report of December, 1878, I
stated that on the 1st of January following I would receive United
States notes for customs duties. As these notes were redeemable
in coin, it was unreasonable to require the holder of notes to go
to one government officer to get coin for his notes to pay customs
duties to another government officer. I held that the United States
notes had become coin certificates by resumption, and should be
treated as such. I informed them that I issued the order with some
reluctance, and only after full examination and upon the statement
of the Attorney General, who thought technically I could treat the
note as a coin certificate. I called their attention to the fact
that I had informed Congress of my purpose to receive United States
notes for customs duties and had asked specific authority to do
so, but no action was taken, and I was assured that none was needed.
The conversation that followed showed that they all agreed that
what I did was right. It was evidently better not to provide by
specific law that the United States notes should be receivable for
customs dues, for in case of an emergency the law would be imperative,
while, if the matter was left to the discretion of the Secretary
of the Treasury, he could refuse to receive notes for customs dues
and compel their payment in coin.
This led to a long colloquy as to whether the time might come when
the United States notes could not be redeemed in coin. I entered
into a full explanation of the strength of the government, the
amount of reserve on hand, the nature of our ability, and said:
"Still we know that wars may come, pestilence may come, an adverse
balance of trade, or some contingency of a kind which we cannot
know of in advance may arise. I therefore think it is wise to save
the right of the United States to demand coin for customs duties
if it should be driven to that exigency."
The question then arose as to the propriety of confining redemption
of notes to one place. Mr. Wallace inquired whether the government
notes should not be receivable and interchangeable at every government
depositary. I answered that the notes should be received everywhere
at par with coin, but I doubted the propriety of paying coin for
United States notes except at one place and that in New York, the
natural center for financial operations, where most of the customs
dues were paid and where coin could be most safely hoarded.
Mr. Beck examined me at considerable length, and, with his usual
Scotch tenacity, insisted, in spite of the attorney general, that
I was not authorized to receive legal tender notes for customs
dues. He asked me by what authority I claimed this power. I quoted
the third section of the resumption act, and gave him a copy of my
circular letter to officers of customs, dated on the 21st of
December, 1878, in which, after calling attention to that section,
I said:
"By reason of this act, you are authorized to receive United State
notes, as well as gold coin and standard silver dollars, in payment
of duties on imports, on and after the first day of January, 1879.
"Notes thus received will in every instance be deposited with the
treasurer, or some assistant treasurer of the United States, as
are other collections of such duties, to be redeemed, from time to
time, in coin, on government account, as the convenience of the
service may demand."
Mr. Beck then said:
"I desire to know, Mr. Secretary, whether it is not better, in your
opinion, that the Congress of the United States should prescribe
the duties of executive officers, so that they can act in pursuance
of law, rather than the executive officer should be acting on his
own notions of what is best?"
I replied:
"I say yes, decidedly."
Mr. Beck inquired:
"Is not that what we are proposing to do now, by the passage of
this law which I seek to have enacted, and are you not opposing
that condition of things?"
I replied:
"An executive officer, when there is a doubt about the law, must
give his own construction of it, but should, of course, readily
conform to the action of Congress as soon as it is declared. The
objection I make is not to the passage of a law, but that the bill
as proposed applies it to a possible future state of affairs such
as did not exist when this order was made and does not now."
The subject then turned to the exchange of trade dollars for standard
dollars. Mr. Beck said: "I have introduced several bills to
facilitate the exchange of trade for standard dollars." I said:
"The bill which I have here is a House bill. There is no objection
in my mind to the object of this bill; that is, to provide for the
exchange of the trade dollar for the standard silver dollar; the
only point is whether the trade dollar shall be treated as bullion,
or as a coined dollar of the United States. Now, I am clearly of
the opinion that it ought to be treated as so much bullion, issued
at the expense of merchants, for their convenience and benefit,
and without profit to the United States, and therefore not entitled
to any preference over other bullion, and we might say not to so
much, because it was issued to private parties for their benefit
and at their cost, but stamped by us merely to enable the coins to
be used to better advantage in a foreign market. I have not,
therefore, any objection to the bill if you allow us to pay the
same for these trade dollars as for other bullion."
This reply led to a long examination about silver at home and in
foreign markets, and the objections made to having two silver
dollars, one coined for private persons, from bullion furnished by
them, and the other coined for the United States from bullion
purchased by it.
Mr. Beck next inquired what effect the abolition of the legal tender
quality of the greenbacks would have on our paper currency. This
led to a long colloquy between him and myself, in which all the
laws relating to the subject and the practice of the government,
from its organization to that time, were discussed.
On the question whether United States notes ought still to be a
legal tender, I referred him to my report, in which I said: "The
power of Congress to make them such was asserted by Congress during
the war, and was upheld by the Supreme Court. The power to reissue
them in time of peace, after they are once redeemed, is still
contested in that court."
I soon found that Mr. Bayard and Mr. Beck were quite opposed to
each other on this topic, and I suggested that I thought that the
argument upon it should be between them. My own opinions were
sufficiently stated in the report in which I submitted to Congress
whether the legal tender should not be repealed as to all future
contracts, and parties be left to stipulate the mode of payment.
I said that United States notes should still be receivable for all
dues to the government, and ample provision should be made to secure
their redemption on demand.
The examination, or, rather, conference, took a wide range between
the members of the committee and myself. Mr. Beck pressed me to
express my opinion of the legal tender which was contained in the
bill introduced by him, providing for a mandatory legal tender of
all forms of money. I answered:
"I do not think, Mr. Senator, you ought to ask me that question,
because that is a matter you are called upon to decide and pass
upon in your sphere as a Senator. I would say, on the other hand,
that I do not think it ought to have any such effect. I suppose,
however, Mr. Bayard would very frankly tell you what the intention
of the resolution is."
Mr. Bayard then said:
"I know one thing: That banks cannot compel me to receive their
notes for debts due me, nor can any man compel me to receive them.
If the government owes me my salary, I think they could, perhaps,
pay me in the national bank notes, under the existing law, but you
cannot compel the payment of a debt between private parties with
it."
I said:
"If you will allow me, I should like to amplify a little on one
point: I think if Congress would take up this question of the
modification of the legal tender note and make certain rules of
evidence (which would be clearly constitutional), which good lawyers
undoubtedly approve, declaring that where a contract is made between
parties upon the basis of United States notes, it shall be presumed
by courts, in the affirmance of contracts, that the payment in
United States notes shall be a sufficient compliance therewith,
and that, in the absence of any absolute provision to the contrary,
paper money, or promises to pay money, shall be a legal tender in
discharge of any obligation."
In respect to the cost of refunding, the next subject of inquiry,
I was able to give them full details, with all the orders of the
treasury department from the 16th of January, 1878, until the close
of these operations in the summer of 1879. Many of these details
had not then been published, but I furnished the fullest information
available. In response to an inquiry as to the amount of commissions
paid to the national banks on account of the sale of the four per
cent. bonds, a full table was exhibited of the subscriptions of,
and commissions paid to, the twenty-six national banks chiefly
engaged in this business, in which the total amount of sales made
by them was shown to be $552,929,100, and the amount of commissions
paid was $1,363,070.34. In exhibiting these tables I said:
"Here is a table showing the sales and commissions of certain banks.
I have taken all banks who sold over $1,000,000. There were twenty-
six of them. The First National Bank, having been always connected
with the national securities and having been the agent of the
syndicate, continued to be the agent of the foreign syndicate, and
continued to have altogether the largest business. They sold of
the four per cent. bonds $262,625,000. The sales of the other
banks are kept here in the same way. The Bank of New York (National
Banking Association), I think, was the next. It sold $57,259,500.
The National Bank of Commerce sold $51,684,000; the National Bank
of the State of New York sold $46,915,000, and so on down."
I called attention to the fact that in the last sale of about
$200,000,000 four per cent. bonds, we received one-half of one per
cent. premium, or a million dollars, which nearly covered the entire
commissions paid to the twenty-six banks named. Full details were
given of the various loans, and it was shown that the cost of
selling the last loan was less expensive to the government, in
proportion to the amount sold, than any previous loan.
In reference to the sinking fund, about which I was asked my opinion,
I said it was the same old question that had been so often debated.
I explained that a sinking fund is nothing but an obligation or
promise, on the part of the government or an individual, to pay a
certain amount annually of the principal of the debt in addition
to the interest. In this way the debt is gradually liquidated and
the annual interest lessened. A sinking fund promised by a government
is nothing more or less than a name for the surplus revenue of the
government. A government without a surplus revenue cannot possibly
have a sinking fund. There is no way to pay a debt except by having
an income above your expenditures, and you can call your surplus
revenue a sinking fund if you choose. I said that under existing
law the department was required to purchase one per cent. of the
entire debt of the United States each fiscal year, and to set the
amount apart as a sinking fund, and to compute interest thereon to
be added with the amount to be subsequently purchased each year.
This act can only be construed as an authority to purchase the debt
in case of surplus revenue for the purpose.
In practice, while keeping a book account with the sinking fund,
we have reduced the debt by the application of surplus revenue more
rapidly than if the requirements of the sinking fund had been
literally complied with. At several periods we, in fact, did not
reduce the debt, but actually increased it, and especially within
the last two years, but in other years of prosperity, when the
revenues exceeded our expenditures, we were able to pay a much
larger amount of the debt than the sinking fund required by law.
Mr. Beck said: "I propose to inquire pretty carefully, before we
get through with this interview, concerning the immense reduction
of the public debt which has been made, of over $700,000,000, from
the highest point down to the present, so that we may be governed
in the future taxation by actual requirements of the public service."
He expressed his wish, after he had carefully examined the interview
thus far, to continue it at a future day, but I was not again called
upon.
CHAPTER XL.
THE PRESIDENTIAL NOMINATION IN 1880.
Talk of Grant for President for a Third Term--His Triumphal Return
from a Trip Around the World--The Candidacy of Mr. Blaine and Myself
--Many of My Opponents Those Who Disagreed with Me on Financial
Questions--Accused of Being a Catholic and of Using Patronage to
Aid in My Nomination--My Replies--Delay in Holding the Ohio State
Convention--My Interview with Garfield--Resolution of the State
Convention in My Favor--National Convention at Chicago, on June 2,
1880--Fatal Move of Nine Ohio Delegates for Blaine--Final Nomination
of Garfield--Congratulations--Letter to Governor Foster and to
Garfield--Wade Hampton and the "Ku-Klux Klan."
During the entire period of this session of Congress the nomination
for President by the Republican national convention was naturally
the chief subject of interest in political circles. General Grant
returned from his voyage around the world arriving in San Francisco
in December, 1879, and from that time until he reached Washington
his progress was a grand popular ovation. He had been received in
every country through which he passed, especially in China and
Japan, with all the honors that could be conferred upon a monarch.
He made no open declaration of his candidacy, but it was understood
that he was very willing to again accept the office of President.
His friends openly avowed their intention to support him, and
answered the popular objection against a third term by the fact
that a term had intervened since he last held the office. Mr.
Blaine was also an avowed candidate and had strong supporters in
every part of the Union. My name was mentioned as a candidate,
and it was generally supposed that one of the three would be the
nominee of the Republican convention. I soon found that the fact
that I held an office which compelled me to express my opinions
was a drawback rather than a benefit, and, while I had the natural
ambition to attain such a distinction, I was handicapped by my
official position.
The friends of General Grant succeeded in getting control of the
national committee and could dictate the time and place for holding
the convention. Senator Cameron was chosen chairman of that
committee. He openly avowed his preference for the nomination of
General Grant, and exercised all his influence and power to promote
it. It was decided to hold the convention on the 2nd of June,
1880, at Chicago.
The chief topic of all the newspapers and politicians was the merits
and demerits of the three candidates then recognized as the persons
from whom the choice was to be made. Every charge against either
the personal character or conduct of each was canvassed with the
broadest license, and often with great injustice. The life and
conduct of General Grant were analyzed, and praised or blamed
according to the bias of the speaker or writer. Mr. Blaine always
had a warm and ardent support by the younger Republicans in every
part of the United States. His brilliant and dashing manner and
oratory made him a favorite with all the young and active politicians,
but, as he was a bold and active fighter, he had enemies as well
as friends. My strength and weakness grew out of my long service
in the House, Senate and cabinet, but, as my chief active work was
connected with the financial questions, upon which men of all
parties differed widely, I had to encounter the objections of all
who were opposed to my views on these questions. The idea was that
in the certain contest between Grant and Blaine I might be nominated,
in case either of them should fail to receive a majority of the
votes cast in the convention.
It is scarcely worth while to point out the changes of opinion
during the popular discussion that preceded the meeting of the
convention of which every newspaper was full, the discussion being
universal. Votes were taken and expression of opinion sought in
every community in the United States.
My letter book at this time became a curious mixture of business
and politics, so that I was early compelled to ask two of my personal
friends to take an office, which I furnished them in the Corcoran
building in Washington, to answer such letters as grew out of the
contest, and as a place where conferences could be held by persons
interested in my nomination. In this way I severed all connection
between my duties in the treasury and the necessary correspondence
caused by my being named as a candidate for President. I was at
once charged in the newspaper and even by personal letters, with
all sorts of misdemeanors, of which I was not guilty, but which I
felt it a humiliation to reply to or even to notice. Among the
first was a statement that in some way or other I was under the
influence of the Catholic church, and was giving Catholics an undue
share of appointments. My answer is here inserted, not as important,
but as a specimen of many such communications upon various subjects:
"March 1, 1880.
"My Dear Sir:--Your note of the 20th is received.
"I appreciate your kindness and frankness and will be equally frank
with you.
"There is not one shadow of ground for the suspicion stated by you.
I was born, bred, educated and ingrained as a Protestant and never
had any affinity, directly or indirectly, with the Catholic church,
but share the common feelings and prejudices of Protestants against
the special dogmas and rites of that church. Still I believe the
Catholics have as good a right to their opinions, their mode of
worship, and religious belief as we have, and I would not weaken
or impair the full freedom of religious belief, or make any contest
against them on account of it for all the offices in Christendom.
I have no sympathy whatever with the narrow dogmatic hate and
prejudice of Mr. Cowles on this subject, though no doubt much of
this is caused by the unfortunate fact that his daughter has become
a Catholic, and I am charitable enough to take this into consideration
when thinking of him. Mrs. General Sherman, it is true, is a
Catholic. She was born so and will remain so. She is a good
Catholic, however, in good wishes and good works, but has also too
much of the dogmatism and intolerance of a sectarian for my ideas.
She neither claims to have nor has any sort of influence over me.
"It is a mean business to get up such a prejudice against me when
men are so ashamed of it that they are afraid to avow it.
"Very truly yours,
"John Sherman.
"Hon. Geo. H. Foster, Cleveland, Ohio."
Another allegation made was that I was using the patronage of my
office to aid in my nomination. In regard to this I wrote as
follows to a friend:
"I think the impression has been made upon the public mind that
the patronage of this department has been used in my favor. This
ought to be met. Of the two men who parcel out the patronage of
this department, one, General Raum, commissioner of internal revenue,
is a known personal friend of General Grant, appointed by him, and
the great majority of the officers under that bureau are believed
to be for General Grant. I have not sought to control any of them.
McCormick, my first assistant secretary, was a known Blaine man.
The second, Hawley, was a known personal friend of General Grant,
and recently resigned to run for nomination as Governor of Illinois.
McPherson, a known Blaine man, was chief of the bureau of engraving
and printing, which employs some seven hundred people. The officers
named have practically made all the appointments in the treasury
other than the presidential ones. Probably no one who ever held
my position has ever been so utterly indifferent to the distribution
of patronage, except that I always insisted that good Republicans
should be appointed to every position, small or great. I never
inquired who they were for for President. In official letters, a
copy of one of which I could furnish you if desired, I gave distinct
instructions that I would not permit anyone to remain in the service
who was making himself obnoxious to citizens generally, by pressing
my claims or advocating my nomination for President by the next
national convention, or by opposing me."
I also soon learned that nearly every applicant whose appointment
I could not give or secure harbored this as a reason why I should
not be nominated for President, and in three or four cases where
the applicants were men of influence they opposed the selection of
delegates friendly to me. I do not mention any names, for most of
these gentlemen, years afterwards, became my warm friends.
I early announced that unless the State of Ohio would give me a
substantial indorsement, my name would not be presented to the
convention. James S. Robinson was the chairman of the state
committee and A. L. Conger was a prominent member. They disagreed
as to the time of holding the state convention for the appointment
of delegates to the national convention, which my friends were
anxious to have at as early a period as possible, so that the
position of Ohio might be known to, and possibly influence the
action of, other states. The disagreement between these two
gentlemen resulted in a postponement of the convention until a
period so late that before it met most of the delegations were
selected by the other states. That was thought to be inimical to
my success, and led to ill-will and contention. Governor Dennison
and Governor Foster had frankly and openly avowed their purpose to
support my nomination, and actively did so. They advised me of
the condition of opinion from time to time, and early represented
that I might reasonably expect the support of all the districts,
except perhaps those represented by Garfield and McKinley, and the
Toledo district.
I went to Mansfield on private business about the latter part of
March, and as usual was called upon to make a speech, which I did,
at Miller's Hall, on the 31st of March, and which was reported in
full at the time. I stated my position in regard to the nomination,
as follows:
"By the course of recent events, and not by my own seeking, my name
is mentioned among those from whom the Republican party will select
one to carry its banner in the approaching presidential contest.
It is not egotistic to state this fact, and it would not be manly
to shrink from the criticism and scrutiny which such a choice
necessarily invites and provokes.
"I accepted the position without a pretense of mock modesty, because
I do not think it right to allow friends to put themselves to
trouble on my account without a frank avowal that I was willing to
accept, and without delaying until certain of success; but with a
firm determination not to detract from the merits or services of
others, nor to seek this lofty elevation by dishonorable means or
lying evasions or pretense. In this way, and in this way only, am
I a candidate; but with great doubt whether, if nominated, I would
meet the expectation of friends, and resolved in case of failure
that I will abide, cheerfully and kindly, by the choice of the
convention.
"There is one condition, scarcely necessary to state, upon which
my candidacy depends, and that is, if the Republicans of Ohio do
not fairly and fully, in their convention, express a preference
for me, and support me with substantial unanimity in the national
convention, my name will not be presented to that convention with
my consent.
"This, fellow-citizens, is about all, and is perhaps more than I
ought to say about personal matters, for in the great contest in
which we are about to engage, the hopes, ambitions, and even the
lives, of men, are of but little account compared with the issues
involved."
I proceeded, then, to discuss the political questions of the day.
During the month of April delegates were selected from the different
congressional districts of the state to attend the state convention,
to meet on the 28th of that month. Prior to the convention the
question of the nomination was the subject of discussion in every
district. The sentiment in my favor was clearly expressed in nearly
every county or district of the state. On the 8th of April I wrote
the following letter to a friend:
"McKinley is still in Ohio, and I presume will be there for some
days. I have to-day written to him at Canton covering the points
you name. You had better write to him yourself giving the list of
appointments desired.
"There is a strong feeling that Garfield, in order to save his
district, should go to the Chicago convention as a delegate. He
is placed in a very awkward attitude now. If this district should
be against my nomination it would be attributed to either want of
influence on his part, or, what is worse, a want of sincerity in
my support. In view of the past this would be a very unfortunate
thing for him. This is a delicate matter for me to take any part
in, and I leave it entirely to your good judgment and kind
friendship."
While in Ohio I had a consultation, at Columbus, with Governor
Foster, ex-Governor Dennison, and a number of other personal friends,
all of whom expressed great confidence that by the time the state
convention met, the friendly feeling in favor of Blaine, in some
of the districts of Ohio, would be waived in deference to the
apparent wishes of the great majority. In that event, in case my
nomination should prove impracticable, the whole delegation could
be very easily changed to Mr. Blaine. As to General Grant, though
he had many warm personal friends in Ohio, yet, on account of
objections to a third term, very few desired his nomination.
Prior to the state convention I had an interview with General
Garfield which he sought at my office in the department, and he
there expressed his earnest desire to secure my nomination and his
wish to be a delegate at large, so that he might aid me effectively.
He had been chosen, with little or no opposition, United States
Senator, to fill the place of Thurman, whose term expired March 4,
1881. I had not a doubt of the support of Governor Foster, with
whom I had been in close correspondence, and who expressed a strong
desire for my nomination. I was permitted practically to name the
four delegates at large, and had implicit confidence that these
delegates would take the lead in my behalf.
The state convention, which met on the 28th of April, was exceptionally
large, and was composed of the leading Republicans of Ohio, who
proceeded at once to the business before them. The persons named
by the convention as delegates at large to the national convention,
to assemble in Chicago on June 2, were William Dennison, James A.
Garfield, Charles Foster and Warner M. Bateman, who were instructed
for me. The following resolution of the convention expressed the
preference of the Republicans of Ohio in favor of my nomination,
and recommended that the vote of the state be cast for me:
"_Resolved_, That the great ability, invaluable services, long
experience, full and exalted character, and unwavering fidelity to
Republican principles of our distinguished fellow-citizen, John
Sherman, entitle him to the honors and confidence of the Republican
party of Ohio, and of the country. His matchless skill and courage
as a financier have mainly contributed to accomplish the invaluable
and difficult work of resumption and refunding the public debt,
and made him the trusted representative, in public life, of the
business interests of all classes of the American people. He has
been trained from the beginning of his public life in advocacy of
the rights of man, and no man has been more unfaltering in his
demand that the whole power of the government should be used to
protect the colored people of the south from unlawful violence and
unfriendly local legislation. And in view of his services to his
country, and his eminent ability as a statesman, we, the Republican
party of Ohio, present him to the Republican party of the country,
as a fit candidate for president, and respectfully urge upon the
Republican convention at Chicago, his nomination, and the district
delegates are respectfully requested to vote for his nomination."
The trend of public sentiment, as shown by the newspaper, indicated
that Grant and Blaine would each have a very strong following in
the national convention, but that the contest between them might
lead to my nomination. After the state convention, it was generally
assumed that I would receive the united vote of the delegation in
conformity with the expression of opinion by the convention. During
this period a few leading men, whose names I do not care to mention,
made a combination of those unfriendly to me, and agreed to disregard
the preference declared by the state convention.
During the month of May the feeling in my favor increased, and many
of the leading papers in New York and in the eastern states advocated
my nomination as a compromise candidate.
At this time I was in constant communication with General Garfield,
by letters and also by interviews, as we were both in Washington.
On the 10th of May he wrote me:
"I think it will be a mistake for us to assume a division in the
Ohio delegation. We should meet and act as though we were of one
mind, until those delegates who are hostile to you refuse to act
with us, and if we fail to win them over, the separation will be
their act, not ours."
The national convention met June 2, 1880. It was called to order
in the Exposition Hall, Chicago, by Senator J. Donald Cameron, and
a temporary organization, with Senator George F. Hoar as president,
was soon perfected. An effort was made by the friends of General
Grant to adopt the unit rule, which would allow a majority of each
state to determine the vote of the entire delegation. This was
rejected.
Four days were occupied in perfecting the permanent organization,
and the nomination of candidates for President. During this time
a minority of nine of the delegation of Ohio announced their
determination to vote for Blaine. This was a fatal move for Blaine,
and undoubtedly led to his defeat. Nearly four-fifths of the
delegation were in favor of my nomination, in pursuance of the
express wishes of the Ohio convention, but they were all friendly
to Blaine, and whenever it should have become apparent that my
nomination was impracticable, the whole delegation could easily
have been carried for him without a division, and thus have secured
his nomination. The action of those nine delegates, who refused
to carry out the wishes of the state convention, prevented the
possibility of the vote of Ohio being cast for Mr. Blaine.
Long before the convention I had declared, in a published interview,
that "Blaine is a splendid man, able and eminently fit for President.
If nominated he will find no one giving him a heartier support than
myself." We were connected by early ties of association and kinship,
and had been and were then warm friends. Blaine, when confident
of the nomination, said of me: "To no living man does the American
people owe a deeper debt of gratitude than to John Sherman, for
giving them resumption with all its blessings. As Secretary of
the Treasury he has been the success of the age. He is as eminently
fit for President as any man in America, and should he be nominated
all I am capable of doing will be done to aid in his election.
Should it be my fortune to become President, or should it fall to
the lot of any Republican, no one elected could afford to do less
than invite Secretary Sherman to remain where he is." The folly
of a few men made co-operation impracticable. I received opposition
in Ohio from his pretended friends, and he therefore lost the Ohio
delegation, which, but for this defection, would have made his
nomination sure had I failed to receive it.
The speech of General Garfield nominating me has always been regarded
as a specimen of brilliant eloquence rarely surpassed, the close
of which I insert:
"You ask for his monuments. I point you to twenty-five years of
national statutes. Not one great beneficent law has been placed
on our statute books without his intelligent and powerful aid. He
aided to formulate the laws that raised our great armies, and
carried us through the war. His hand was seen in the workmanship
of those statutes that restored the unity of the states. His hand
was in all that great legislation that created the war currency,
and in a still greater work that redeemed the promise of the
government, and made our currency the equal of gold. And when at
last called from the halls of legislation into a high executive
office, he displayed that experience, intelligence, firmness, and
poise of character which has carried us through a stormy period.
The great fiscal affairs of the nation, and the great business
interests of our country, he has preserved, while executing the
law of resumption and effecting its object, without a jar, and
against the false prophecies of one-half the press and all the
Democracy of this continent. He has shown himself able to meet
with calmness the great emergencies of the government for twenty-
five years. He has trodden the perilous heights of public duty,
and against all the shafts of malice has borne his breast unharmed.
He has stood in the blaze of 'that fierce light that beats upon a
throne,' but its fiercest ray has found no flaw in his armor, no
stain on his shield."
On the first ballot 9 of the Ohio delegation voted for Mr. Blaine,
34 for me, and 1 for Edmunds. The general result was 304 for Grant,
284 for Blaine, 93 for Sherman, 34 for Edmunds, 30 for Washburne,
10 for Windom. The vote of my friends would have nominated Blaine
at any period of the convention, but under the conditions then
existing it was impossible to secure this vote to either Blaine or
Grant.
The final result was the selection of a new candidate and the
nomination of Garfield.
It is probable that if I had received the united vote of the Ohio
delegation I would have been nominated, as my relations with both
General Grant and Mr. Blaine were of a friendly character, but it
is hardly worth while to comment on what might have been. The
course of the Ohio delegation was the object of severe comment,
and perhaps of unfounded suspicions of perfidy on the part of some
of the delegates.
As soon as I heard of the movement to nominate Garfield I sent the
following telegram to Mr. Dennison:
"Washington, June 8, 1880.
"Hon. William Dennison, Convention, Chicago, Ill.
"Whenever the vote of Ohio will be likely to assure the nomination
of Garfield, I appeal to every delegate to vote for him. Let Ohio
be solid. Make the same appeal in my name to North Carolina and
every delegate who has voted for me.
"John Sherman."
The moment the nomination was made I sent the following dispatch
to Garfield at Chicago:
"Washington, June 8, 1880.
"Hon. James A. Garfield, Chicago, Ill.
"I congratulate you with all my heart upon your nomination as
President of the United States. You have saved the Republican
party and the country from a great peril, and assured the continued
success of Republican principles.
"John Sherman."
I understood that the health of Governor Dennison, who had faithfully
represented me in the national convention, was somewhat impaired
by his confinement there, and invited him to join me in a sail on
the Chesapeake Bay, spending a few days at different points. He
accepted and we had a very enjoyable trip for about ten days.
During this trip I wrote, for the 4th of July issue of the New York
"Independent," an article on Virginia and state rights. I had
promised to do this some time before but could not find an opportunity,
and availed myself of the quiet of the cruise to fulfill my promise.
The history of Virginia has always had for me a peculiar interest,
mainly because of the leading part taken by that state in the
American Revolution. The great natural resources of the state had
been neglected, the fertility of the soil on the eastern shore had
been exhausted, and no efforts had been made to develop the vast
mineral wealth in the mountains along its western border. The
destruction of slavery and the breaking up of the large farms and
plantations had discouraged its people, and I thought, by an
impartial statement of its undeveloped resources, I might excite
their attention and that of citizens of other states to the wealth
under its soil. This article, written in a friendly spirit, excited
the attention and approval of many citizens of the state, and
brought me many letters of thanks.
In time I became thoroughly advised of what occurred at the Chicago
convention and had become entirely reconciled to the result, though
frequently afterwards I heard incidents and details which occasioned
me great pain and which seemed to establish the want of sincerity
on the part of some of the delegates, and tended to show that for
some time before the meeting of the convention the nomination of
General Garfield had been agreed upon. After its close I had
numerous letters from delegates of other states, complaining bitterly
of the conduct of the Ohio delegation and giving this as a reason
why they had not voted for me. I was assured that large portions
of the Massachusetts, Connecticut, New Jersey, and other delegations,
had notified General Foster that they were ready to vote for me
whenever their vote was required, but no such request came from
him. The matter had been made the subject of public discussion in
the newspapers. I was content with the result, but was deeply
wounded by what I could not but regard as a breach of faith on the
part of some of the Ohio delegation, and especially of Governor
Foster, who had been fully advised of my feelings in regard to his
course. I received a letter from him, on the 23rd of June, answering
the allegations that had been publicly made in regard to him, and
explaining his action. In reply I wrote him the following letter:
"Washington, D. C., June 30, 1880.
"Dear Sir:--Your letter of the 23rd came while I was still absent
on the Chesapeake Bay. I regret that I did not see you, for a free
conversation would be far more satisfactory than letter writing.
"I wish to be perfectly frank with you, as since I first became
acquainted with you I have felt for you warm friendship, and have
always had entire confidence in you. I confess, however, that the
information I received in regard to your operations at Chicago had
greatly weakened this feeling and left a painful impression upon
my mind that you had not done by me as I would have done by you
under like circumstances. Your letter chased away much of this
impression, and, perhaps, the better way would be for me to write
no more, but to treat your letter as entirely satisfactory and
conclusive. Still I think it right for me to give you the general
basis of the impressions I had formed.
"My first impulse was to send you at once a mass of letters from
delegates and others attending the convention, but this would only
create a controversy, and, perhaps, betray confidence, which I
could not do. The general purport of these letters is that, while
you spoke freely and kindly of me, yet there was always a kind of
reserve in favor of Blaine and a hesitation in pressing me that
indicated a divided opinion, that partly by the divisions in the
Ohio delegation and partly by the halfway support of yourself, and,
perhaps others, the Ohio delegation lost its moral strength and,
practically, defeated me before any ballot was had.
"This general impression I could have passed by, but it was distinctly
stated to me, by delegates and friends of delegates present at the
convention, that they proffered the votes of large portions of
their respective delegations to you with the understanding that
they were to be cast for me whenever you indicated the proper
moment. This was specifically said as to Indiana, Massachusetts,
Connecticut and the Blaine portion of the Pennsylvania delegation.
It was said that you prevented Massachusetts from voting for me
from about the tenth to the fifteenth ballot on Monday, that nine
of the Connecticut delegates held themselves ready to vote for me
on your call, but that you put it off, and Harrison is quoted as
saying that twenty-six votes from Indiana were ready to be cast
for me on Monday, at any time after a few ballots, but they were
withheld on account of representations from the Ohio delegation.
Mr. Billings, of Vermont, is quoted as saying that the Vermont
delegation, with two or three exceptions, were ready to vote for
me, but were discontented with the position taken by you, and
doubted whether you desired their vote for me.
"These and many other allegations of similar import, coming one
after the other, led me to believe that you had changed the position
you took in the early part of the canvass, and had come to the
conclusion that it was not wise to nominate me, and that other
arrangements for your future influenced you in changing your opinion.
This impression caused me more pain than anything that has transpired
since the beginning of the contest.
"I assure you I have no regrets over the results of the convention.
Indeed, the moment it was over, I felt a sense of relief that I
had not had for six months.
"The nomination of Garfield is entirely satisfactory to me. The
only shade that rests on this feeling is the fact that Garfield
went there by my selection to represent me and comes from the
convention with the honor that I sought. I will do him the justice
to say that I have seen no evidence that he has contributed to this
result except by his good conduct in the presence of the convention.
I had always looked with great favor upon the contingency that if
I was not nominated after a fair and full trial and Blaine was,
you would be the candidate for the Vice Presidency, and had frequently
said to mutual friends that this was my desire. The contingency
of Garfield's nomination I did not consider, for I supposed that
as he was secure in the Senate for six years, he would not desire
the presidential nomination, but as it has come to him without his
self-seeking it is honorable and right and I have no cause of
complaint. If I believed that he had used the position I gave him
to supplant me, I would consider it dishonorable and would not
support him; but, while such statements have been made to me, I
feel bound to say that I have never seen nor heard from credible
sources any ground for such an imputation, and, therefore, he shall
have my earnest and hearty support.
"There are one or two features of this canvass that leave a painful
impression upon me. The first is that the opposition to me in Ohio
was unreasonable, without cause, either springing from corrupt or
bad motives, or from such trivial causes as would scarcely justify
the pouting of a schoolboy.
"I receive your frank statement with confidence and act upon it,
will treat you, as of old, with hearty good will and respect, and
will give no further credence to the stories I hear. You can have
no knowledge of the extent of the accusations that have been made
against you.
"Very truly yours,
"John Sherman.
"Hon. Charles Foster, Columbus, Ohio."
With this letter I sought to divest myself of all feeling or
prejudice growing out of the recent canvass.
At the close of the fiscal year and the preparation of the usual
statements made at that time, there was a period of rest, of which
I availed myself by taking an excursion along our northeastern
coast. The quiet of the voyage, the salt air, and the agreeable
companions, were a great relief from the confinement and anxiety
of the previous months. Upon my return to New York from this
outing, on the 19th of July, I found two letters from General
Garfield, both relating to the progress of the canvass, and asking
my opinion of his letter of acceptance. In reply I wrote him:
"New York, July 19, 1880.
"My Dear Sir:--Your letter of the 16th was received by me this
morning. When I left Washington, about the 1st of July, I felt
very much debilitated by the heat and by the long mental struggle
through which I had passed. I have had the benefit now of three
weeks quiet and rest, mostly on the ocean, avoiding, whenever
possible, all political talk, and feel, in consequence, greatly
refreshed and invigorated. I take the outward voyage _via_ Fortress
Monroe to Washington, arriving there on Thursday.
"I received the telegraphic invitation to speak at Chicago but
could not accept, as I must give some relief to French and Upton
upon my return.
"I have received letters and telegrams from Nash about his proposed
canvass, and highly approve it. I do not see, however, how it is
possible for me to prepare a speech during the present month. I
now propose to write a political letter in response to one from
Chicago, which I believe will have a wider circulation than a
campaign speech. During the latter part of August or the first of
September, which is as early as the active campaign ought really
to commence, I will be prepared to make several speeches in Ohio,
and, perhaps, in other states. This is my present plan. I regard
Indiana and New York as the pivotal states, and there the struggle
should be.
"Your letter of acceptance I approve heartily, although I thought
you yielded a little too much in one or two sentences on the civil
service question. Although politicians have undertaken to ridicule
and belittle the efforts of President Hayes to bring about some
sort of civil service reform, yet the necessity of such a reform
is so ingrafted in the minds of the leading sensible people of the
northern states that anything like an abandonment of that idea will
not meet favor. I agree with you that it can only be done by the
co-operation of Congress, and it would be a great stroke of public
policy if Congress could be prevailed upon to pass a law prescribing
a reasonable tenure for civil office, with such guards against
arbitrary removals as would make the incumbents somewhat independent
in their opinions and actions. I had a conversation with Fletcher
Harper, at Long Beach, on Saturday, which leads me to think that
he is anxious upon this subject and also upon the financial
question.
"The silver law threatens to produce within a year or so a single
silver standard, and already there is a feeling of uneasiness in
New York as to whether we can maintain resumption upon the gold
standard while the silver law remains. I could at any moment, by
issuing silver freely, bring a crisis upon this question, but while
I hold my present office I certainly will not do so, until the gold
reserve is practically converted into silver, a process that is
going on now at the rate of nearly two millions a month. I have
no fear, however, of being forced to this issue during my term,
and I hope Congress will come together next winter in such temper
that it may arrest the coinage of the silver dollar, if it will
not change the ratio. This question, however, is a very delicate
one to discuss in popular assemblages, and I propose, therefore,
in my speeches, to make only the faintest allusions to it, not
surrendering, however, our views upon the subject, for upon this,
I take it, we are entirely agreed.
"I feel very hopeful of success. In this state business men are
generally satisfied, and your support is so strong that, even if
inclined, the Conkling Republicans will not dare oppose or shirk
the contest. I hear different stories about Conkling, but believe
that in due time he will do what he can, though his influence is
greatly overrated. A too active support by him would excite the
prejudices of hosts of people here who are determined not to follow
where he leads.
"Very sincerely yours,
"John Sherman.
"Hon. James A. Garfield, Mentor, O."
After the 19th of July I was at my desk, busily engaged in the
routine duties of my office, until, in accordance with the following
request of General Garfield, I visited New York to attend a conference
of Republicans, as to the conduct of the pending canvass:
"Mentor, O., July 31, 1880.
"Dear Mr. Sherman:--I understand that the national Republican
committee have asked you to meet with them for consultation, in
New York, on the 5th prox.
"At their unanimous and urgent request, I have reluctantly consented
to attend, but I shall esteem it a great favor if you will also go.
"Very truly yours,
"J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
More than two hundred prominent Republicans from all parts of the
country met on the 5th of August, among whom were Senators Blaine
and Logan, Marshall Jewell, Thurlow Weed, and Edwards Pierrepont.
I was called upon to make an address. The only passage I wish to
quote is this:
"The Republican party comes before the business men of this country
--with all its evidences of reviving prosperity everywhere--and
asks whether they will resign all these great affairs to the solid
south, headed by Wade Hampton and the Ku-Klux Klan, and a little
segment of these northern states, calling themselves the Democratic
party."
More than a month afterwards, Governor Hampton wrote me a letter
complaining of my connecting him with the "Ku-Klux Klan," and the
following correspondence ensued:
"Doggers' Springs, September 17, 1880.
"To Hon. John Sherman, Secretary of the Treasury.
"Sir:--Some days ago I saw a report of your speech at a conference
held by the national Republican committee, at the Fifth Avenue
Hotel, New York, and you were quoted as having used the following
language: 'And now you are asked to surrender all you have done
into the hands of Wade Hampton and the Ku-Klux, and the little
segment in the north that is called the Democratic party.' May I
ask if you used these words, and, if you did so, did you mean to
connect me, directly or indirectly, with what was known as the Ku-
Klux Klan?
"Requesting an early reply, addressed to me, care of Augustus
Schell, Esq., New York, I am, very respectfully, your obedient
servant,
"Wade Hampton."
"Washington, D. C., September 21, 1880.
"Hon. Wade Hampton, care of Augustus Schell, Esq., New York.
"Sir:--Your note of the 17th inst. is received, in which you inquire
whether, at the conference held by the national Republican committee,
at the Fifth Avenue Hotel, New York, I used the language attributed
to me as follows: 'And now you are asked to surrender all you have
done into the hands of Wade Hampton and the Ku-Klux, and the little
segment in the north that is called the Democratic party.' In
reply, I have to advise you, that while I do not remember the
precise language, I presume the reporter correctly stated, in a
condensed way, his idea of what I said. I no doubt spoke of you
as the leading representative of the Democratic party in the south,
and referred to the Ku-Klux Klan as the representative of the
barbarous agencies by which the Democrats have subverted the civil
and political rights of the Republicans of the south.
"I did not connect you personally with the Ku-Klux Klan. Indeed,
I knew that you had, in one or two important instances, resisted
and defeated its worst impulses. I appreciate the sense of honor
which makes you shrink from being named in connection with it.
Still, you and your associates, leading men in the south, now enjoy
benefits of political power derived from the atrocities of the Ku-
Klux Klan, in which phrase I include all the numerous _aliases_ by
which it has, from time to time, been known in the south. Your
power in the southern states rests upon the actual crimes of every
grade in the code of crimes--from murder to the meanest form of
ballot-box stuffing committed by the Ku-Klux Klan and its kindred
associates, and, as you know, some of the worst of them were
committed since 1877, when you and your associates gave the most
solemn assurance of protection to the freedmen of the south.
"These crimes are all aimed at the civil political rights of
Republicans in the south, and, as I believe, but for these agencies,
the very state that you represent, as well as many other states in
the south, would be represented, both in the Senate and House, by
Republicans. But for these crimes the boast attributed to you,
that one hundred and thirty-eight solid southern votes would be
cast for the Democratic ticket, would be but idle vaporing; but
now we feel that it is a sober truth.
"While I have no reason to believe that you or your northern
associates personally participated in the offenses I have named,
yet, while you and they enjoy the fruits of these crimes, you may,
in logic and morals be classed as I classed you, as joint copartners
with the Ku-Klux Klan in the policy which thus far has been successful
in seizing political power in the south, and which it is hoped, by
the aid of the small segment of the Democratic party in the north,
may be extended to all the departments of the government. It is
in this sense that I spoke of you, the Ku-Klux Klan and the northern
Democratic party.
"Permit me, in conclusion, while frankly answering your question,
to say the most fatal policy for the south would be by such agencies
as I have mentioned to secure again political ascendency in this
country, for I assure you that the manhood and independence of the
north will certainly continue the struggle until every Republican
in the south shall have free and unrestricted enjoyment of equal
civil and political privileges, including a fair vote, a fair count,
free speech and free press, and agitation made necessary to secure
such results may greatly affect injuriously the interests of the
people of the south.
"Very respectfully, your obedient servant,
"John Sherman."
"Charlottesville, Va., October 1, 1880.
"To Hon. John Sherman.
"Sir:--Your letter has been received. As you do not disclaim the
language to which I called your attention, I have only to say that
in using it you uttered what was absolutely false, and what you
knew to be false. My address will be Columbia, S. C.
"I am your obedient servant,
"Wade Hampton."
"Treasury Department, }
"Washington, D. C., October 18, 1880.}
"To Hon. Wade Hampton, Columbia, S. C.
"I have to acknowledge the receipt of your note of the 1st inst.,
handed me unopened by Mr. C. McKinley, a few moments ago, after my
return from the west. I had this morning read what purported to
be an extract of a speech made by you, published in the Charleston
'News and Courier,' and upon your general reputation as a gentleman
had denied that you had made such a speech or written such a letter
as is attributed to you in that paper. What I stated to you in my
letter of September 21, I believe to be true, notwithstanding your
denial, and it can be shown to be true by public records and as a
matter of history. As you had, long before your letter was delivered
to me, seen proper to make a public statement of your views of the
correspondence, I will give it to the press without note or comment,
and let the public decide between us.
"Very respectfully,
"John Sherman."
This correspondence excited a good deal of attention, and broke
off all social relations between us. We afterwards served for many
years in the Senate together, but had no intercourse with each
other except formal recognition while I was president of the Senate.
I always regretted this, for I did not feel the slightest enmity
to General Hampton, and recognized the fact that while enjoying
the office he held as the result of the crimes of the Klan, yet he
and his colleague, M. C. Butler, were among the most conservative
and agreeable gentlemen in the Senate, and the offenses with which
I connected his name were committed by his constituents and not by
himself.
CHAPTER XLI.
MY LAST YEAR IN THE TREASURY DEPARTMENT.
Opening of the 1880 Campaign in Cincinnati--My First Speech Arraigned
as "Bitterly Partisan"--Letter from Garfield Regarding the Maine
Election--Ohio Thought to Be in Doubt--Many Requests for Speeches
--Republican Ticket Elected in Ohio and Indiana--A Strange Warning
from Detroit Threatening Garfield with Assassination--The Latter's
Reply--My Doubts About Remaining in the Treasury Department or
Making an Effort for the Senate--Letter to Dalzell--Last Annual
Report to Congress in December, 1880--Recommendations Regarding
Surplus Revenue, Compulsory Coinage of the Silver Dollar, the
Tariff, etc.--Bills Acted Upon by Congress.
During July and August I received many invitations to speak on
political topics, but declined all until about the 1st of September.
In anticipation of the election of Garfield, and his resignation
as Senator, I was, as early as July, tendered the support of several
members of the legislature who had voted for him for Senator, and
who wished to vote for me in case he resigned. I replied that I
would prefer the position of Senator to any other, that I resigned
my seat in the Senate to accept the office of Secretary of the
Treasury, and would be gratified by a return to my old position,
but only in case it came to me as the hearty choice of the general
assembly. During the month of August the two assistant secretaries,
who had been for a year confined to the department and upon whom
the duties of secretary had devolved during my recent absence, went
on their usual vacation, so that I was fully occupied during office
hours with the routine business of the department.
My first speech of the campaign was made on Monday, the 30th of
August, in Cincinnati. It was carefully prepared, and delivered
in substance as printed. My habit has been for many years, at the
beginning of a political canvass, to write or dictate a speech and
hand it to the press associations, to be printed in the newspapers
only after the speech is made. This is done for the convenience
of the press and to secure an accurate report. The speech at
Cincinnati, thus prepared, was not read by me, but I spoke from
briefs which enabled me to substantially follow it. Subsequent
speeches had to vary according to the nature and mood of the
audience, or the political subject exciting local interest and
attention. At Cincinnati I gave a comparison of the principles,
tendency, and achievements of the two great parties, and the reasons
why the Democratic party wanted a change in the executive branch
of the government. I contrasted the aims and policy of that party,
at each presidential election from 1860 to 1880, with those of the
Republican party, and expressed my opinion of the effects that
would have followed their success at each of those elections. I
stated in detail the results secured during the last four years by
the election of a Republican President. These included the resumption
of specie payments, the refunding and the steady reduction of the
public debt, the faithful collection of the revenue, economy of
public expenditures, and business prosperity for which I gave the
causes, all of which were opposed or denied by the Democratic party.
I entered into detail on the measures proposed by the then Democratic
Congress, the motive of them, and the ruinous effects they would
produce, and alleged that the changes proposed were dictated by
the same policy that was adopted by Buchanan and the active leaders
of the War of the Rebellion and by the corrupt power that controlled
the city of New York. I replied to the charges of fraud made as
to the election of President Hayes, that the alleged fraud consisted
in the judgment of the electoral commission created by the Democrats
that Hayes was duly elected. I narrated the gross crimes of the
Ku-Klux Klan and kindred associations to control the elections in
the south, and the attempted bribery of an elector in Oregon.
This speech was arraigned as bitterly partisan, but it was justified
by facts proven by the strongest evidence. I have recently carefully
read it, and, while I confess that its tone was bitter and partisan,
yet the allegations were clearly justified. At this time such
fraud and violence could not be practiced in the south, for the
tendency of events has quieted public sentiment. The lapse of time
has had a healing effect upon both sections, and it is to be hoped
that hereafter parties will not be divided on sectional lines.
The Cincinnati speech had one merit, in that it furnished speakers
and the public the exact statistics of our financial condition in
advance of my annual report to Congress in December. I made speeches
each week day in Ohio and Indiana until the 11th of September, when
I returned to Washington.
The election in Maine, which occurred early in September, was
unfavorable to the Republican party, and caused General Garfield
some uneasiness. He wrote me the following letter:
"Mentor, Ohio, September 17, 1880.
"Hon. John Sherman, Washington, D. C.
"My Dear Sir:--Yours of the 15th inst. is received. I hear in many
ways the same account which you give of the cause of our falling
off in Maine. The latest news indicates that we have carried the
election after all, but our people claimed too much, and the moral
effect of it may be bad in some of the doubtful states. Still, so
far as I can see, every Republican is more aroused and determined
than ever.
"I think we should now throw all our force into Indiana and Ohio
until the October election. Indiana is now more thoroughly organized
by our people than it has been for many years, and I believe that
nothing can defeat us, except importations and purchases by the
Democracy. I have not known the Republicans of that state so
confident in six years as they now are, and every available help
should be given them to win the fight. I have learned certainly
that the Democrats intend to make a powerful raid upon Ohio, for
the double purpose of beating us if they can, and specially in
hopes that they may draw off our forces in Indiana.
"I know you can accomplish a great deal, even while you are in
Washington, but I hope you will give as much time as possible to
the canvass here and in Indiana--especially give us the last ten
days.
"Very truly yours,
"J. A. Garfield."
I replied on the 22nd of September that the assured election of
Plaisted, the fusion electoral ticket in Maine, and many things in
my correspondence, made me feel exceedingly anxious about the result
of the election, that my advices from Ohio were not satisfactory,
and I felt that we must exert ourselves to the utmost to insure
victory at our October election. "I think from my standpoint here,"
I said, "I can get more certain indications of public opinion than
anyone can while canvassing. I therefore have determined to go to
Ohio the latter part of this week, and to devote the balance of
the time, until the election, to the campaign." I also advised
him that I had arranged to have several other speakers go to Ohio.
To this he replied:
"Mentor, Ohio, September 25, 1880.
"My Dear Sir:--Yours of the 22nd inst. is received. I am glad that
you are coming back to take part in the canvass. Within the last
ten days it has become evident that money is being used in large
amounts in various parts of this state. Reports of this come to
me in so many independent ways that I cannot doubt it. I was in
Toledo on the 22nd to attend the reunion of the 'Army of the
Cumberland,' and my friends there were thoroughly alarmed. They
said the Democrats had an abundance of money, and that those in
Toledo were contributing more than they had done for many years.
"I think our friends should push the business aspect of the campaign
with greater vigor than they are doing, especially the tariff
question which so deeply affects the interests of manufacturers
and laborers. The argument of the 'solid south' is well enough in
its way, and ought not to be overlooked, but we should also press
those questions which lie close to the homes and interests of our
own people.
"Very truly yours,
"J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
About this period I received an invitation to speak in New York,
but doubted the policy of accepting, and answered as follows:
"Washington, D. C., September 20, 1880.
"My Dear Sir:--Your note of the 17th, inviting me to address the
citizens of New York, under the auspices of your club, during the
campaign, is received. Please accept my thanks for the courteous
manner in which your invitation is expressed.
"I will be compelled to remain here until the 4th of October and
then go to Ohio and Indiana to engage in the canvass, which will
carry me to the 15th or 16th of October. I have been urged also
to go to Chicago and Milwaukee, and have made promises in several
cities in the eastern states, especially in Brooklyn; so that I do
not see how it is possible for me to accept your kind invitation.
I have also some doubt whether it would be politic to do so. It
seems to be the determination of a certain class of Republicans in
New York to ignore or treat with dislike President Hayes and his
administration, and to keep alive the division of opinion as to
the removal of Arthur. From my view of the canvass the strength
of our position now is in the honesty and success of the administration.
While I have no desire to contrast it with General Grant's, yet
the contrast would be greatly in favor of President Hayes. The
true policy is to rise above these narrow family divisions, and,
without disparagement of any Republican, unite in the most active
and zealous efforts against the common enemy. Senator Conkling
does not seem to have the capacity to do this, and the body of his
following seems to sympathize with him. I doubt, therefore, whether
my appearance in New York would not tend to make divisions rather
than to heal them, to do harm rather than good. I am so earnestly
desirous to succeed in the election that I would even forgo a self-
defense to advance the cause.
"Very truly yours,
"John Sherman.
"Hon. B. F. Manierre, Ch. Rep. Central Campaign Club, New York."
On the first of October I left Washington for Mansfield and spoke
at a mass meeting there on Saturday evening, the 2nd. The canvass
on both sides was very active and meetings were being held in all
parts of the state. The meeting at Mansfield held in the open
square both in the afternoon and evening, was very large. I spoke
each day except Sunday during the following week, at different
places in Ohio and Indiana. Confidence in Republican success grew
stronger as the October election approached. After the vote was
cast it was found that the Republican state ticket was elected by
a large majority in both these states. In pursuance of previous
engagements, I spoke at Chicago, Racine, and Milwaukee, after the
October election. The speeches at Chicago and Milwaukee were
reported in full and were circulated as campaign documents. During
the latter part of the month of October I spoke at the city of
Washington and in Bridgeport, Norwalk and New Haven, Connecticut,
and at Cooper Institute in the city of New York, and then returned
home to vote at the November election.
The result was the election of a large majority of Republican
electors and the certainty of their voting for Garfield and Arthur
as President and Vice President of the United States. I had done
all that it was possible for me to do to bring about that result
and rejoiced as heartily as anyone, for I thoroughly believed in
the necessity of maintaining Republican ascendency in the United
States, at least until a time when the success of the opposite
party would not endanger any of the national results of the war or
the financial policy of President Hayes' administration.
On the day after the election General Garfield wrote me the following
letter:
"Mentor, Ohio, November 4, 1880.
"My Dear Sir:--Yours of the 1st inst. came duly to hand, and was
read with much interest. The success of the election is very
gratifying. The distrust of the solid south, and of adverse
financial legislation, have been the chief factors in the contest.
I think also that the country wanted to rebuke the attempt of the
Democrats to narrow the issue to the low level of personal abuse.
I am sure that all our friends agree with me that you have done
very important and efficient work in the campaign.
"I may go to Washington before long to look after my personal
affairs. If I do not, I hope to have some other opportunity of
seeing you.
"Very truly yours,
"J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
I received a letter from a Mr. Hudson, of Detroit, which expressed
a fear that General Garfield was in serious danger of assassination,
giving particulars. I sent it at once to Garfield, and received
from him the following answer, very significant in view of the
tragedy that occurred the following summer:
"Mentor, O., November 16, 1880.
"My Dear Sir:--The letter of Mr. Hudson, of Detroit, with your
indorsement, came duly to hand. I do not think there is any serious
danger in the direction to which he refers, though I am receiving
what I suppose to be the usual number of threatening letters on
that subject. Assassination can no more be guarded against than
death by lightning; and it is not best to worry about either. I
expect to go to Washington before long to close up some household
affairs, and I shall hope to see you.
"With kind regard, I am, very truly yours,
"J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
Immediately after the election of General Garfield, and until the
18th of December, there was a continuous discussion as to who should
be the successor to Senator Thurman. This was the senatorship to
which Garfield had been elected and now declined to fill. I received
many letters from members of the legislature expressing their wish
that I should be restored to the Senate, and offering to vote for
me. They generally assumed that I would have the choice between
remaining in the treasury department under President Garfield and
becoming a candidate for the Senate. Among the letters received
by me was one from Mr. Thorpe, a member from Ashtabula county,
Ohio, and a personal friend. I thought it right to tell him frankly
the dilemma in which I was placed by the discussion in the papers.
This letter expressed my feelings in regard to the matter and I
therefore insert it:
"Washington, D. C., November 15, 1880.
"My Dear Sir:--Your letter of the 11th relieves me from some
embarrassment. I am very thankful to you for the tender of your
services and continued hearty friendship. I will avail myself of
it to tell you confidentially the difficulty under which I labor.
"The letter to Dalzell was not intended for publication, but was
simply a hurried reply to one of two or three long letters received
from him. Still the letter stated in substance my feeling, and he
probably intended no wrong but rather thought he would benefit me.
Both before and since, I have been overwhelmed with letters
remonstrating against my leaving my present position, as if I had
any choice.
"As a matter of course, General Garfield must decide this without
haste and free from all embarrassment, but in the meantime I am at
a loss what to do. I cannot properly say to my correspondents that
I would stay in the treasury if invited to do so, nor can I ask
gentlemen to commit themselves until they know definitely what I
wish. I cannot afford to be a candidate unless I expect to succeed.
I believe, from information already received, that I can succeed,
but only after a struggle that is distasteful to me, and which I
cannot well afford. I can only act upon the assumption that General
Garfield will desire to make an entire change in his cabinet, and
upon that basis I would gladly return to the Senate as the only
position I could hold, or, if there was any doubt about election,
I would cheerfully and without discontent retire from public life.
I have now at least a dozen unanswered letters on my table from
members of the legislature, tendering their services, and stating
that I ought to explicitly inform them my wishes, most of them
assuming that I have a choice. I intend to answer them generally
that, if elected, I would consider it the highest honor and I would
then accept and serve. So I say to you: If I enter the canvass
I must depend upon my friends without being able to aid them
actively, and with every advantage in the possession of Foster.
Such a contest, I see, will open up trouble enough in the politics
of Ohio, whatever may be the result. With this explicit statement
you will understand best how to proceed. I would regard the support
of Senator Perkins as of the utmost importance. After awhile I
can give you the names of a score at least of others who avow their
preference for me.
"Very truly yours,
"John Sherman.
"Hon. F. Thorpe, Geneva, O."
The letter to Dalzell referred to was hastily and carelessly written,
without any expectation of its publication. It was as follows:
"To Hon. J. M. Dalzell, Caldwell, Ohio.
"My Dear Sir:--Your kind note of the 4th is received, for which
please accept my thanks. I prefer to do precisely what you recommend,
await the judgment of the general assembly of Ohio, unbiased by
any expression of my wish in the matter referred to. I do not know
what is the desire of General Garfield, but I can see that my
election might relieve him from embarrassment and free to do as he
thinks best in the formation of his cabinet. Again thanking you
for your kind offer, I am very truly yours,
"John Sherman."
The papers, while taking sides between Foster and myself, exaggerated
the danger and importance of the contest and thus unduly excited
the public mind, for either of us would have cheerfully acquiesced
in the decision of the general assembly. Strong appeals were made
to Foster to withdraw, especially after it was known that I would
not be Secretary of the Treasury in the incoming administration.
No such appeals came to me, nor did I take any part in the controversy,
but maintained throughout the position taken in my letter to Mr.
Thorpe.
In November, 1880, I was engaged in the preparation of my annual
report sent to Congress December 6. The ordinary receipts for the
fiscal year ending June 30, 1880, were $333,526,610.98. The total
ordinary expenditures were $267,642,957.78, leaving a surplus
revenue of $65,883,653.20, which, with an amount drawn from cash
balance in treasury, of $8,084,434.21, made a surplus of $73,968,087.41,
which sum was applied to the reduction of the public debt. The
sinking fund for this year was $37,931,643.55, which, deducted from
the amount applied to the redemption of bonds, left an excess of
$35,972,973.86 over the amount actually required for the year.
Compared with the previous fiscal year, the receipts for 1880
increased $62,629,438.23. The increase of expenditures over the
previous year was $25,190,360.48. I estimated that the receipts
over expenditures for the fiscal year ending June 30, 1881, would
be $50,198,115.52.
During the period from 1874 to 1879 the United States had failed
to pay on the public debt $87,317,569.21, that being the deficiency
of the sum fixed by law to be paid during those years for sinking
fund. Deducting from this sum the amount paid in excess for the
fiscal year 1880, there was a balance still due on account of the
sinking fund of about $50,000,000. This would be met by the
estimated surplus of receipts over expenditures during the fiscal
year, 1881, thus making good the whole amount of the sinking fund
as required by law.
The estimated revenue over expenditures for the fiscal year ending
June 30, 1862, including the sinking fund, was $48,000,000.
Upon this favorable statement I recommended to Congress that instead
of applying this surplus revenue, accruing after the current fiscal
year, to the extinction of the debt, taxes be repealed or modified
to the extent of such surplus. A large portion of the surplus of
revenue over expenditures was caused by the reduction of the rate
of interest and the payment on the principal of the public debt.
The reduction of annual interest caused by the refunding since
March 1, 1877, was $14,290,453.50, and the saving of annual interest
resulting from the payment of the principal of the public debt
since that date was $6,144,737.50. The interest was likely to be
still further reduced during the following year, to an amount
estimated at $12,000,000, by the funding of the bonds. To the
extent of this annual saving, amounting to $32,000,000, the public
expenditures would be permanently diminished.
In view of this statement, I recommended that all taxes imposed by
the internal revenue laws, other than those on bank circulation
and on spirits, tobacco and beer, be repealed. I urged that the
tax on state banks should be maintained, not for purposes of revenue,
but as a check upon the renewal of a system of local state paper
money, which, as it would be issued under varying state laws, would
necessarily differ as to conditions, terms and security, and could
not, from its diversity, be guarded against counterfeiting, and
would, at best, have but a limited circulation.
The public debt which became redeemable on and after the 1st of
July, 1881, amounted to $687,350,000. I recommended that to redeem
these bonds there should be issued treasury notes running from one
to ten years, which could be paid off by the application of the
sinking fund as they matured. Such treasury notes would have formed
a popular security always available to the holder as they could
have been readily converted into money when needed for other
investment or business. They would have been in such form and
denominations as to furnish a convenient investment for the small
savings of the people, and fill the place designed by the ten dollar
refunding certificates authorized by the act of February 26, 1879.
I stated my belief that with the then state of the money market a
sufficient amount of treasury notes, bearing an annual interest of
three per cent., could be sold to meet a considerable portion of
the maturing bonds.
Congress did not pass such a law as I recommended, but the plan
adopted and executed by my successor, Mr. Windom, was the best that
could have been devised under existing law, resulting in a very
large reduction of the amount paid for interest yearly. He allowed
the holders of the maturing bonds to retain them at the pleasure
of the government, with interest at the rate of three and a half
per cent.
I recited the action of the department under the resumption act,
but this has already been fully described by me. In respect to
the United States notes I said:
"United States notes are now, in form, security, and convenience,
the best circulating medium known. The objection is made that they
are issued by the government, and that it is not the business of
the government to furnish paper money, but only to coin money.
The answer is, that the government had to borrow money, and is
still in debt. The United States note, to the extent that it is
willingly taken by the people, and can, beyond question, be maintained
at par in coin, is the least burdensome form of debt. The loss of
interest in maintaining the resumption fund, and the cost of printing
and engraving the present amount of United States notes, is less
than one-half the interest on an equal sum of four per cent. bonds.
The public thus saves over seven million dollars of annual interest,
and secures a safe and convenient medium of exchange, and has the
assurance that a sufficient reserve in coin will be retained in
the treasury beyond the temptation of diminution, such as always
attends reserves held by banks."
I expressed the opinion that the existing system of currency, the
substantial features of which were a limited amount of United States
notes (with or without the legal tender quality), promptly redeemable
in coin, with ample reserves in coin and power if necessary to
purchase coin with bonds, supplemented by the circulating notes of
national banks issued upon conditions that would guarantee their
absolute security and prompt redemption, all based on coin of equal
value, and generally distributed throughout the country, was the
best system ever devised, and more free from objection than any
other, combining the only safe standard with convenience for
circulation and security and equality of value.
After a statement of the amount of standard silver dollars issued
under existing law, I described the measures adopted to facilitate
the general distribution and circulation of those coins, and the
great expense incurred by the United States in transporting them.
With all these efforts it was found difficult to maintain in
circulation more than thirty-five per cent. of the amount then
coined. While, at special seasons of the year and for special
purposes, this coin was in demand, mainly in the south, it returned
to the treasury, and its reissue involved an expense for transportation
at an average rate of one-third of one per cent. each time. Unlike
gold coin or United States notes, it did not, to the same extent,
form a part of the permanent circulation, everywhere acceptable,
and, when flowing into the treasury, easily paid out with little
or no cost of transportation. At a later period, when the amount
of silver dollars had largely increased, the department was never
able to maintain in circulation more then $60,000,000.
For the reasons stated I earnestly recommended that the further
compulsory coinage of the silver dollar be suspended, or, as an
alternative, that the number of grains of silver in the dollar be
increased so as to make it equal in market value to the gold dollar,
and that its coinage be left as other coinage to the Secretary of
the Treasury, or the Director of the Mint, to depend upon the demand
for it by the public for convenient circulation. After a statement
of the great cost of the coinage of these dollars, I recommended
that Congress confine its action to the suspension of the coinage
of the silver dollar, and await negotiations with foreign powers
for the adoption of an international ratio. I expressed the
conviction that it was for the interest of the United States, as
the chief producer of silver, to recognize the great change that
had occurred in the relative market value of silver and gold in
the chief marts of the world, to adopt a ratio for coinage based
upon market value, and to conform all existing coinage to that
ratio, while maintaining the gold eagle of our coinage at its
present weight and fineness.
I called attention, also, to the tariff as it then existed. It
was a compilation of laws passed during many succeeding years, and
to meet the necessities of the government from time to time. These
laws furnished the greater part of our revenue, and incidentally
protected and diversified home manufactures. The general principle
upon which they were founded was believed to be salutary. No marked
or sudden change, which would tend to destroy or injure domestic
industries built up upon faith in the stability of existing laws,
should be made in them. I recommended that _ad valorem_ duties
should be converted into specific duties as far as practicable,
and that articles which did not compete with domestic industries,
and yielded but a small amount of revenue, should be added to the
free list. I urged the importance of stability in the rates imposed
on spirits, tobacco and fermented liquors. These articles were
regarded by all governments as proper subjects of taxation. Any
reduction in the rates imposed a heavy loss to the owner of the
stock on hand, while an increase operated as a bounty to such owner.
During that year, the excess of exports over imports amounted to
$167,683,912. The aggregate exports amounted to $835,638,658, an
increase over the previous year of $125,199,217.
The usual statement of the operations of the different bureaus of
the department was made, and, in closing my last annual report as
Secretary of the Treasury, I said:
"The secretary takes pleasure in bearing testimony to the general
fidelity and ability of the officers and employees of this department.
As a rule they have, by experience and attention to duty, become
almost indispensable to the public service. The larger portion of
them have been in the department more than ten years, and several
have risen by their efficiency from the lowest-grade clerks to high
positions. In some cases their duties are technical and difficult,
requiring the utmost accuracy; in others, they must be trusted with
great sums, where the slightest ground for suspicion would involve
their ruin; in others, they must act judicially upon legal questions
affecting large private and public interests, as to which their
decisions are practically final. It is a just subject of congratulation
that, during the last year, there has been among these officers no
instance of fraud, defalcation, or gross neglect of duty. The
department is a well organized and well conducted business office,
depending mainly for its success upon the integrity and fidelity
of the heads of bureaus and chiefs of division. The secretary has,
therefore, deemed it both wise and just to retain and reward the
services of tried and faithful officers and clerks.
"During the last twenty years the business of this department has
been greatly increased, and its efficiency and stability greatly
improved. This improvement is due to the continuance during that
period of the same general policy and the consequent absence of
sweeping changes in the public service; to the fostering of merit
by the retention and promotion of trained and capable men; and to
the growth of the wholesome conviction in all quarters that training,
no less than intelligence, is indispensable to good service. Great
harm would come to the public interests should the fruits of this
experience be lost, by whatever means the loss occurred. To protect
not only the public service, but the people, from such a disaster,
the secretary renews the recommendation made in a former report,
that provision be made for a tenure of office for a fixed period,
for removal only for cause, and for some increase of pay for long
and faithful service."
The chief measure of importance, aside from the current appropriation
bills, acted upon during that session of Congress was a bill to
facilitate the refunding of the national debt. It was pending
without action during the two preceding sessions, but was taken up
in the early part of the third session. As the bill was originally
reported, by Mr. Fernando Wood, from the committee of ways and
means of the House of Representatives, it provided that in lieu of
the bonds authorized by the refunding act of July 14, 1870, bearing
five, four and a half, and four per cent. interest, bonds bearing
interest at the rate of three and a half per cent. to the amount
of $500,000,000, redeemable at the pleasure of the United States,
and also notes to the amount of $200,000,000, bearing interest at
the rate of three and a half per cent., redeemable at the pleasure
of the United States after two years and payable in ten years, be
issued.
The Secretary of the Treasury was authorized to issue any of these
bonds or notes for any of the bonds of the United States, as they
became redeemable, par for par. The bill further provided that
the three and a half per cents. should be the only bonds receivable
as security for national bank circulation.
Had this bill passed, as introduced, any time before the 4th of
March, 1881, it would have saved the United States enormous sums of
money and would have greatly strengthened the public credit. It
was in harmony with the recommendations made by the President and
myself in our annual reports. It was called up in the House of
Representatives for definite action on the 14th of December, 1880,
when those reports were before them. Instead of this action
amendments of the wildest character were offered, and the committee
which reported the bill acquiesced in radical changes, which made
the execution of the law, if passed, practically impossible. The
rate of interest was reduced to three per cent., and a provision
made that no bonds should be taken as security for bank circulation
except the three per cent. bonds provided for by that bill.
Discussion was continued in the House and radical amendments were
made until the 19th of January, 1881, when the bill, greatly changed,
passed the House of Representatives. It was taken up in the Senate
on the 15th of February. Mr. Bayard made a very fair statement of
the terms and objects of the bill in an elaborate speech, from
which I quote the following paragraphs:
"In little more than sixty days from this date a loan of the United
States, bearing five per cent. interest, and amounting to $469,651,050,
will, at the option of the government, become payable. On the 30th
day of June next, two other loans, each bearing six per cent.,
the first for $145,786,500, and the other $57,787,250, will also
mature at the option of the government. These facts are stated in
the last report of the Secretary of the Treasury, and will be found
on page ten of his report of last December. He has informed us
that the surplus revenue accruing prior to the 1st of July, 1881,
will amount to about fifty million dollars, and can and will be
applied in part to the extinguishment of that debt. Bonds maturing
on the 31st of December last were paid out of the accruing revenues.
So that there will remain the sum of $637,350,000, to be provided
for and funded at the option of the government, at such rate of
interest as may be deemed advisable by Congress and can practicably
be obtained.
"The sums that we are dealing with are enormous, affecting the
welfare of every branch of our country's industry and of our entire
people. The opportunity for reducing the rate of interest upon
this enormous sum, and, not only that, but of placing the national
debt more under the control of the government in regard to future
payments, is now before us. The opportunity for doing this upon
favorable terms should not be lost, and the only question before
us, as legislators, is how we can best and most practically take
advantage of the hour."
The bill as modified by the committee of the Senate would have
enabled the treasury department to enter at once on the refunding
of the public debt, and, in the then state of the money market,
there would have been no doubt of the ready sale of the bonds and
notes provided for and the redemption of the five and six per cent.
bonds outstanding. The Senate, however, after long debates,
disagreed to the amendments of the committee, and in substance
passed the bill as it came from the House. The few amendments made
were agreed to by the House, and the bill passed and was sent to
the President on the 1st of March. On the 3rd of March it was
returned by the President with a statement of his objections to
its passage. These were based chiefly on the provision which
required the banks to deposit in the treasury, as security for
their circulating notes, bonds bearing three per cent. interest,
which, in his judgment, was an insufficient security. His message
was as follows:
"To the House of Representatives:--Having considered the bill
entitled 'An act to facilitate the refunding of the national debt,'
I am constrained to return it to the House of Representatives, in
which it originated, with the following statement of my objections
to its passage.
"The imperative necessity for prompt action, and the pressure of
public duties in this closing week of my term of office, compel me
to refrain from any attempt to make a full and satisfactory
presentation of the objections to the bill.
"The importance of the passage, at the present session of Congress,
of a suitable measure for the refunding of the national debt, which
is about to mature, is generally recognized. It has been urged
upon the attention of Congress by the Secretary of the Treasury
and in my last annual message. If successfully accomplished, it
will secure a large decrease in the annual interest payment of the
nation; and I earnestly recommend, if the bill before me shall
fail, that another measure for this purpose be adopted before the
present Congress adjourns.
"While in my opinion it would be wise to authorize the Secretary
of the Treasury, in his discretion, to offer, to the public, bonds
bearing three and a half per cent. interest in aid of refunding,
I should not deem it my duty to interpose my constitutional objection
to the passage of the present bill if it did not contain, in its
fifth section, provisions which, in my judgment, seriously impair
the value and tend to the destruction of the present national
banking system of the country. This system has now been in operation
almost twenty years. No safer or more beneficial banking system
was ever established. Its advantages as a business are free to
all who have the necessary capital. It furnishes a currency to
the public which, for convenience and the security of the bill-
holder, has probably never been equaled by that of any other banking
system. Its notes are secured by the deposit with the government
of the interest-bearing bonds of the United States.
"The section of the bill before me which relates to the national
banking system, and to which objection is made, is not an essential
part of a refunding measure. It is as follows:
'Sec. 5. From and after the 1st day of July, 1881, the three per
cent. bonds authorized by the first section of this act shall be
the only bonds receivable as security for national bank circulation,
or as security for the safekeeping and prompt payment of the public
money deposited with such banks; but when any such bonds deposited
for the purposes aforesaid shall be designated for purchase or
redemption by the Secretary of the Treasury, the banking association
depositing the same shall have the right to substitute other issues
of the bonds of the United States in lieu thereof: _Provided_,
That no bond upon which interest has ceased shall be accepted or
shall be continued on deposit as security for circulation or for
the safe-keeping of the public money; and in case bonds so deposited
should not be withdrawn, as provided by law, within thirty days
after interest has ceased thereon, the banking association depositing
the same shall be subject to the liabilities and proceedings on
the part of the comptroller provided for in section 5234 of the
Revised Statutes of the United States: _And provided further_,
That section 4 of the act of June 20, 1874, entitled: "An act
fixing the amount of United States notes, providing for a redistribution
of the national bank currency, and for other purposes," be, and
the same is hereby, repealed; and sections 5159 and 5160 of the
Revised Statutes of the United States be, and the same are hereby,
re-enacted.'
"Under this section it is obvious that no additional banks will
hereafter be organized, except possibly in a few cities or localities
where the prevailing rates of interest in ordinary business are
extremely low. No new banks can be organized, and no increase of
the capital of existing banks can be obtained, except by the purchase
and deposit of three per cent. bonds. No other bonds of the United
States can be used for the purpose. The one thousand millions of
other bonds recently issued by the United States, and bearing a
higher rate of interest than three per cent., and therefore a better
security for the bill-holder, cannot, after the 1st of July next,
be received as security for bank circulation. This is a radical
change in the banking law. It takes from the banks the right they
have heretofore had under the law to purchase and deposit, as
security for their circulation, any of the bonds issued by the
United States, and deprives the bill-holder of the best security
which the banks are able to give, by requiring them to deposit
bonds having the least value of any bonds issued by the government.
"The average rate of taxation of capital employed in banking is
more than double the rate of taxation upon capital employed in
other legitimate business. Under these circumstances, to amend
the banking law so as to deprive the banks of the privilege of
securing their notes by the most valuable bonds issued by the
government will, it is believed, in a large part of the country,
be a practical prohibition of the organization of new banks, and
prevent the existing banks from enlarging their capital. The
national banking system, if continued at all, will be a monopoly
in the hands of those already engaged in it, who may purchase
government bonds bearing a more favorable rate of interest than
the three per cent. bonds prior to next July.
"To prevent the further organization of banks is to put in jeopardy
the whole system, by taking from it that feature which makes it,
as it now is, a banking system free upon the same terms to all who
wish to engage in it. Even the existing banks will be in danger
of being driven from business by the additional disadvantages to
which they will be subjected by this bill. In short, I cannot but
regard the fifth section of the bill as a step in the direction of
the destruction of the national banking system.
"Our country, after a long period of business depression, has just
entered upon a career of unexampled prosperity.
"The withdrawal of the currency from circulation of the national
banks, and then enforced winding up of the banks in consequence,
would inevitably bring a serious embarrassment and disaster to the
business of the country. Banks of issue are essential instruments
of modern commerce. If the present efficient and admirable system
of banking is broken down, it will inevitably be followed by a
recurrence to other and inferior methods of banking. Any measure
looking to such a result will be a disturbing element in our
financial system. It will destroy confidence and surely check the
growing prosperity of the country.
"Believing that a measure for refunding the national debt is not
necessarily connected with the national banking law, and that any
refunding act would defeat its own object, if it imperiled the
national banking system, or seriously impaired its usefulness; and
convinced that section 5 of the bill before me would, if it should
become a law, work great harm, I herewith return the bill to the
House of Representatives for that further consideration which is
provided for in the constitution.
"Rutherford B. Hayes.
"Executive mansion, March 3, 1881."
Preceding this message, during the last week in February, there
was a serious disturbance in the money market, especially in
connection with the national banks, caused by a fear that the bill
would become a law. Appeals were made to me to furnish relief.
All I could do was to purchase $10,000,000 of bonds to be paid from
an overflowing treasury, but the veto of the President settled the
fate of the bill.
CHAPTER XLII.
ELECTED TO THE SENATE FOR THE FOURTH TIME.
Blaine Appointed Secretary of State--Withdrawal of Governor Foster
as a Senatorial Candidate--I Am Again Elected to My Old Position
to Succeed Allen G. Thurman--My Visit to Columbus to Return Thanks
to the Legislature--Address to Boston Merchants on Finances--Windom
Recommended to Succeed Me as Secretary of the Treasury--Personal
Characteristics of Garfield--How He Differed from President Hayes
--The Latter's Successful Administration--My One Day out of Office
in Over Forty Years--Long Animosity of Don Piatt and His Change of
Opinion in 1881--Mahone's Power in the Senate--Windom's Success in
the Treasury--The Conkling-Platt Controversy with the President
Over New York Appointments.
In the latter part of November, 1880, General Garfield came to
Washington and called upon Mr. Blaine, who, it was understood, was
to be Secretary of State. Garfield came to my house directly from
Blaine's and informed me that he had tendered that office to Blaine
and that it was accepted. He said that Blaine thought it would
not be politic to continue me as Secretary of the Treasury, as it
would be regarded as an unfriendly discrimination by other members
of Hayes' cabinet. I promptly replied that I agreed with the
opinion of Blaine, and was a candidate for the Senate. It was then
understood that Garfield was committed to Foster for the vacancy
in the Senate, but this he denied, and, whatever might have been
his preference, I am convinced he took no part in the subsequent
contest.
On the 16th of December, Thomas A. Cowgill, speaker of the House
of Representatives, of Ohio, wrote a note to Governor Foster advising
his withdrawal "for harmony in our counsels and unity in our action."
On the next day, after advising with leading Republicans, Foster,
in a manly letter, declined further to be a candidate for Senator.
Prior to the withdrawal of Foster I received a note from General
Garfield from Mentor, Ohio, under date of December 15, 1880, in
which he said: "I am glad to see that the unpleasant matters
between yourself and Governor Foster have been so happily adjusted,
and I am quite sure that a little further understanding will remove
all dangers of a personal contest, which might disturb the harmony
of the party in Ohio."
I subsequently received the following note from Garfield:
"Mentor, O., December 22, 1880.
"My Dear Sir:--Yours of the 20th inst. came duly to hand. I
appreciate what you say in reference to personal and Ohio appointments.
The case of Swaim is so exceptional that I hope it will not be
taken as a precedent for what is to come. I am greatly gratified
at the happy turn which the relations between Foster and yourself
have taken.
"I will forward my declination of the senatorship in time to reach
the general assembly on the first day of its session.
"I hope you will not fail to visit me on your trip to Ohio. Mrs.
Garfield joins me in the hope that Mrs. Sherman will accompany you.
"Very truly yours,
"J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
In response to this and former requests I visited General Garfield
at his residence at Mentor, and discussed with him a multitude of
subjects that he suggested, among them the selection of his cabinet,
and the public questions pending in Congress.
The proceedings in the Republican caucus, on the 11th of January,
1881, soon after the Ohio legislature met, as narrated in the public
press at the time, were exceedingly flattering. General Jones, of
Delaware, made the nominating speech, reciting at considerable
length, and with high praise, my previous public service. Peter
Hitchcock, a distinguished member, seconded the nomination with
another complimentary speech. It was supposed that Judge W. H.
West, a leading lawyer and citizen, would be placed in nomination,
but his spokesman, Judge Walker, no doubt with the approval of
Judge West, moved that my nomination be made unanimous, which was
done. Upon being notified of this I sent the following telegram:
"Washington, D. C., January 11, 1881.
"Hon. J. Scott, Chairman.
"Please convey to the Republican members of the two houses of the
general assembly my heartfelt thanks for their unanimous nomination
for the position of United States Senator. No words can express
my sense of grateful obligation to the people of Ohio for their
long continued partiality. I can assure you that, if elected, I
will, with diligence and fidelity, do my utmost to discharge the
duties assigned me.
"John Sherman."
On the 18th of January I was duly elected Senator as successor of
Allen G. Thurman, who received the Democratic vote.
In accordance with an old custom in Ohio I went to Columbus on the
20th of January to return my thanks to the legislature, and was
received in the senate chamber by the two houses. I was escorted
to a chair with Governor Foster on my right and Governor Dennison
on my left, Governor Foster presiding. I was introduced by Governor
Foster in a generous and eloquent speech, closing as follows:
"Now, gentlemen, a year ago at this time we were here present to
meet General Garfield, to greet him as United States Senator, and
to listen to his words of thanks for the great honor conferred upon
him. We are met to-night for the purpose of greeting the Senator
elected to-day, and to listen to his words of thanks for the great
honor conferred upon him. This gentleman has been in public life
twenty-six years. For six years he served as a Member of Congress
from the Mansfield district, with credit and with distinction.
Thrice elected a United States Senator before, for sixteen years
he occupied the position of United States Senator, ever in the
front rank of the intellectual giants composing that body. Called
hence to be Secretary of the Treasury, this distinguished gentleman
has filled that place with honor. He has been at all times the
friend of resumption and of the prosperity of the people. To him,
perhaps, more than to any other one man, is due the resumption of
specie payments and the prosperity of this people to-day. As a
great financier he stands as a peer with Hamilton, with Chase.
Gentlemen, you have selected wisely and well. I now have the
pleasure of presenting John Sherman, Senator-elect from the State
of Ohio."
To this I responded, in part, as follows:
"Gentlemen, Senators, Members of the General Assembly:--My first
duty is to return to you my grateful thanks for the high honor you
have conferred upon me in selecting me for the fourth time a Member
of the Senate of the United States. Four years ago I assumed a
somewhat different office. And now, having been honored by you by
being transferred to the position formerly occupied by me, I feel
very much like a traveler who has made a long journey into a far
distant country and who is returning home in safety and honor.
The place I now occupy has been one of great embarrassment and
difficulty. I have been away from the people of my native state,
with but scarce a few fleeting, short visits, and have lost the
acquaintances I have had with so many of you, and have not been
able to form new acquaintances among you. I find among the members
of the general assembly but comparatively few of those whom I knew
in the olden times.
"I assumed the duties of the office of which I speak under
circumstances of great embarrassment. I was held up before the
public for a long time as one who was pursuing a policy that brought
woes unnumbered--greater than befell the Greeks between Achilles
and Agamemnon. All the evils that fell upon society in the United
States during the period, all the grave distress, was simply
attributed to me as a fault. I was compelled to say 'No' a thousand
times where I would gladly have said 'Yes.' I was compelled to
decline the advice of men honestly given for a good purpose, because
in my judgment that advice would not promote the public good. And
now, having been elected by you under those adverse circumstances,
I feel my heart overflowing with gratitude, and have no words with
which to utter my thanks. I am glad, however, of the assurance
you have given me by the unanimous nomination of my Republican
friends, and by the courtesy, kindness and forbearance of my
adversaries.
"I am glad to know and feel the assurance that you now believe
that, under the trying circumstances, I did the best I could to
advance the common interest of our common country.
"And I am glad to approve the votes that were given by my Democratic
fellow-citizens here in the contest yesterday and to-day. If any
man could be chosen from the State of Ohio to advocate in the
American Senate the principles of the Democratic party, there is
no man in Ohio, or in the United States, more deserving of that
honor than Allen G. Thurman. For many years he and I served together
as representatives of opposing parties. We, each with the vigor
and power we could, endeavored to impress our views upon the public,
to carry out the line of policy to which our political friends were
devoted. And in all that time no words of unkindness, no words of
asperity, have passed between us. We never brought Ohio quarrels
before the Senate of the United States, and always found that
honesty and ability were entirely consistent with gentlemanly
courtesy between political opponents.
"And I wish also to return my grateful acknowledgments to Governor
Foster for the kindly language with which he has introduced me to
you, and to many distinguished citizens of Ohio who, by their kind
and generous forbearance, have enabled you, without division, to
send a Senator to the Congress of the United States without a
quarrel, a contest or a struggle, and I feel under obligations to
the gentleman who has introduced me largely for this distinguished
honor and courtesy.
"I can only say then, in conclusion, fellow-citizens, that I am
glad that the opportunity of the office you have given me will
enable me to come back here home to Ohio to cultivate again the
relations I had of old. It is one of the happiest thoughts that
comes to me in consequence of your election that I will be able to
live again among you and to be one of you, and I trust in time to
overcome the notion that has sprung up within two or three years
that I am a human iceberg, dead to all human sympathies. I hope
you will enable me to overcome that difficulty. That you will
receive me kindly, and I think I will show you, if you doubt it,
that I have a heart to acknowledge gratitude--a heart that feels
for others, and willing to alleviate where I can all the evils to
which men and women are subject. I again thank you from the bottom
of my heart."
Among the many incidents in my life I recall this as one of the
happiest, when the bitterness and strife of political contests were
laid aside and kindness and charity took their place. I am glad
to say that the same friendly relations that existed between Senator
Thurman and myself have always been maintained with each of my
colleagues, without distinction of party.
Early in January I had accepted an invitation of the merchants of
Boston to attend the annual dinner of their association on the 31st
of that month. While the dinner was the stated object, yet I knew
that the speeches to be made were the real cause of the meeting.
These were to be made by Governor Long, Stewart L. Woodford and
others, real orators, while I was expected to talk to them about
money, debt and taxes. I met their wishes by a careful statement
of the mode of refunding, or, to define the word, the process of
reducing the burden of the public debt by reducing the rate of
interest. I stated at length the measures executed by Hamilton,
Gallatin and others, in paying in full the Revolutionary debt and
that created by the War of 1812, and those adopted in recent times.
The mode at each period was similar, but the amount of recent
refundings was twenty times greater than the national debt at the
beginning of the government, and our surplus revenue for that one
year just past would have paid the debt of the United States at
the close of the Revolutionary War. In all stages of our history
we have preserved the public faith by the honest discharge of every
obligation. Long, Woodford and others made eloquent speeches, and,
on the whole, the "dinner" was a pronounced success.
After my return to Washington, Garfield continued to write me
freely, especially about the selection of the Secretary of the
Treasury. In a note dated February 14 he gave me the names of a
number of prominent men and his impressions about them, but I do
not feel at liberty to insert it. In my answer of the date of
February 16, after expressing my opinion of those named, I said:
"Since our last conversation in Mentor I have turned this important
matter over and over again in my mind, and I drift back pretty
nearly to the opinion I then expressed, that, assuming that a
western man is to be appointed, my judgment would lead me to select,
first, Windom. . . . He is certainly a man of high character, of
pleasant manners, free from any political affiliations that would
be offensive to you, on good terms with all, yet a man of decision."
