“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: