Section 18 Prohibited All Coins Except Those Named, as Follows
“Sec. 18. And be it further enacted, That no coins, either gold, silver, or minor coinage, shall hereafter be issued from the mint other than those of the denominations, standards, and weights herein set forth.”
Special attention was called to the dropping out of the silver dollar, both by Secretary Boutwell and Mr. Knox, and the opinion of experts was invited and given on this special matter and communicated to Congress. These sections, in the three years that the bill was pending in Congress, were changed either in the House or Senate in only one or two unimportant particulars.
Accompanying the report of Mr. Knox were the statements of Robert Patterson, of Philadelphia, confessedly one of the ablest scientists and metallists in the United States, in favor of dropping from our coinage the silver dollar. Dr. Linderman, the director of the mint, made the same recommendation. In the report accompanying the introduction of the bill, under date of April 25, 1870, Comptroller Knox gives the history of the silver dollar and the reasons for its discontinuance as follows:
“The dollar unit, as money of account, was established by the act of Congress April 2, 1792, and the same act provides for the coinage of a silver dollar, ‘of the value of a Spanish milled or pillar dollar, as the same is now current.’ The silver dollar was first coined in 1794, weighing 416 grains, of which 371¼ grains were pure silver, the fineness being 892.4. The act of January 18, 1837, reduces the standard weight to 412½ grains, but increases the fineness to 900, the quantity of pure silver remaining 371¼ grains as before, and at these rates it is still coined in limited amounts.”
He then says:
“The coinage of the silver dollar piece, the history of which is here given, is discontinued in the proposed bill. It is, by existing law, the dollar unit, and assuming the value of gold to be fifteen and one-half times that of silver, being about the mean ratio for the past six years, is worth in gold a premium of about three per cent. (its value being 103.12) and intrinsically more than seven per cent. premium in our other silver coin, its value thus being 107.42. The present laws consequently authorize both a gold dollar unit and a silver dollar unit, differing from each other in intrinsic value. The present gold dollar piece is made the dollar unit in the proposed bill, and the silver dollar piece is discontinued. If, however, such a coin is authorized, it should be issued only as a commercial dollar, not as a standard unit of account, and of the exact value of the Mexican dollar, which is the favorite for circulation in China and Japan and other oriental countries.
“Note.—Assuming the value of gold to be fifteen and one-half times that of silver, the French 5-franc piece is worth about 96½ cents (96.4784); the standard Mexican dollar 104.90, our silver dollar piece 103.12, and two of our half-dollar pieces 96 cents.”
The finance committee carefully examined the bill. We were not in any hurry about it. It was sent to us in April, 1870, and was printed and sent, by order of the Senate, to everyone who desired to read it or look over it.
That committee was composed of Messrs. Sherman, Williams, Cattell, Morrill, Warner, Fenton and Bayard.
The bill was reported unanimously to the Senate December 19, 1870, after lying in the committee room for eight months.
The dollar was dropped from the coins in the bill framed in the treasury department. It was then an unknown coin. Although I was quite active in business which brought under my eye different forms of money, I do not remember at that time ever to have seen a silver dollar. Probably if it had been mentioned to the committee and discussed it would have been thought, as a matter of course, scarcely worthy of inquiry. If it was known at all, it was known as a coin for the foreign market.
No one proposed to reissue it. The Pacific coast had six intelligent, able, and competent Senators on the floor of the Senate. They would have carefully looked out for the interest of silver, if the bill affected them injuriously. The authority given in the bill as it finally passed for coining the so-called trade dollar, met all the demands of the silver producing states. But the silver dollar at that time was worth more than the gold dollar. California and Nevada were on the gold standard.
The bill was printed over and over again, finally reported, and brought before the Senate. It was debated there for three days. Every Senator from the Pacific coast spoke upon the measure. Representing the committee, I presented the questions as they occurred from time to time, until finally we differed quite seriously upon the question of a charge for the coinage of gold. The only yea and nay vote in the Senate on the passage of that bill, after two days debate, occurred on the 10th of January, 1871. Those who voted in favor of the bill were Messrs. Bayard, Boreman, Brownlow, Casserly, Cole, Conkling, Corbett, Davis, Gilbert, Hamlin, Harlan, Jewett, Johnston, Kellogg, McCreary, Morton, Nye, Patterson, Pomeroy, Pool, Ramsey, Rice, Saulsbury, Spencer, Stewart, Stockton, Sumner, Thurman, Tipton, Trumbull, Vickers, Warner, Willey, Williams, Wilson and Yates—36.
Every one of the six members of the Pacific coast voted for the bill after full debate.
Against this bill were Messrs. Abbott, Ames, Anthony, Buckingham, Carpenter, Chandler, Fenton, Hamiliton, of Texas, Harris, Howell, Morrill, of Vermont, Pratt, Scott and Sherman—14.
So on the only yea and nay vote which was ever taken upon the bill I voted against it. It was not on account of demonetizing the silver dollar. I did not do it because of that, but I did it because gold was then only coined for the benefit of private depositors; we were not using gold except for limited purposes. Gold was the standard in California, and we thought the people of that state ought to continue to pay the old and reasonable rate for coinage of one-fifth of one cent to the dollar. No action was taken on the bill in the House of Representatives, and it failed to pass during that Congress. At the beginning of the next Congress the bill was introduced by Wm. D. Kelley, and reported by him favorably to the House of Representatives. It gave rise to considerable debate, especially the section defining the silver coins. No one proposed to restore the old silver dollar, but the House inserted a coin precisely the equivalent of five francs, or two half dollars of our subsidiary coin, and this franc dollar, as it was called, was made, like other subsidiary coins, a legal tender only for five dollars. On the 9th of April, 1872, Mr. Hooper, having charge of the bill, called especial attention to the dropping of the old dollar and the substitution of the French dollar. He said, on April 9, 1872:
“Section 16 re-enacts the provisions of existing laws defining the silver coins and their weights, respectively, except in relation to the silver dollar, which is reduced in weight from 412½ to 384 grains; thus making it a subsidiary coin in harmony with the silver coins of less denomination, to secure its concurrent circulation with them. The silver dollar of 412½ grains, by reason of its bullion and intrinsic value being greater than its nominal value, long since ceased to be a coin of circulation, and is melted by manufacturers of silverware. It does not circulate now in commercial transactions with any country, and the convenience of those manufacturers, in this respect, can better be met by supplying small stamped bars of the same standard, avoiding the useless expense of coining the dollar for that purpose. The coinage of the half dime is discontinued for the reason that its place is supplied by the copper nickel five-cent piece, of which a large issue has been made, and which, by the provisions of the act authorizing its issue, is redeemable in United States currency.”
When the bill was sent to the Senate it, in compliance with the memorial of the legislature of the State of California, inserted in place of the French dollar, of 384 grains of standard silver, a dollar containing 420 grains of standard silver, called the “trade dollar.” This was urged upon the ground that, as the Mexican dollar contained 416 grains, or 3½ grains more than the old silver dollar, it had an advantage in trade with China and Japan over our dollar, and that a coin containing a few grains more than the Mexican dollar would give our people the benefit of this use for silver. This dollar was, in conference, agreed to by the House, but was a legal tender for only five dollars. On final action on that bill, the conferees on the part of the Senate were Messrs. Sherman, Scott and Bayard. The amendment of the Senate adopting the trade dollar was agreed to by the House, and the bill passed in both Houses without a division.
There never was a bill proposed in the Congress of the United States which was so publicly and openly presented and agitated. I know of no bill in my experience which was printed, as this was, thirteen times, in order to invite attention to it. I know no bill which was freer than any immoral or wrong influence than this act of 1873.
During the pendency of this bill, the Senators and Representatives from the Pacific coast were in favor of the single standard of gold alone. This was repeatedly shown during the debates, but now they complain that the silver dollar was demonetized, and that, though present, taking the most active interest in the consideration of the bill, they did not observe that the silver dollar was dropped from the coinage. The public records are conclusive against this pretense. Mr. Stewart, Senator from Nevada, and all the Senators from the Pacific coast, who took an active part in the debate on the bill, must have known of the dropping of the silver dollar from the coinage. It appears from the “Congressional Record” that, on the 11th of February, 1874, Mr. Stewart said:
“I want the standard gold, and no paper money not redeemable in gold; no paper money the value of which is not ascertained; no paper money that will organize a gold board to speculate in it.”
Again, only a few days after this, on the 20th of February, when he was speaking in favor of the resolution, instructing the committee on finance to report a bill providing for the convertibility of treasury notes into gold coin of five per cent. bonds, he said:
“By this process we shall come to a specie basis, and when the laboring man receives a dollar it will have the purchasing power of a dollar, and he will not be called upon to do what is impossible for him or the producing classes to do, figure upon the exchanges, figure upon the fluctuations, figure upon the gambling in New York; but he will know what his money is worth. Gold is the universal standard of the world. Everybody knows what a dollar in gold is worth.”
To review the history of the act of 1873: It was framed in the treasury department after a thorough examination by experts, transmitted to both Houses of Congress, thoroughly examined and debated during four consecutive sessions, with information called for by the House of Representatives, printed thirteen times by order and broadly circulated, and many amendments were proposed, but no material changes were made in the coinage clause from the beginning to the end of the controversy. It added the French dollar for a time, but that was superseded by the trade dollar, and neither was made a legal tender but for five dollars. It passed the Senate on the 10th of January, 1871—36 yeas and 14 nays—every Senator from the Pacific coast voting for it.
It was introduced in the House of Representatives by Mr. Kelley, at the next session. It was debated, scrutinized, and passed unanimously, dropping the silver dollar, as directly stated by Mr. Hooper. It was reported, debated, amended, and passed by the Senate unanimously. In every stage of the bill, and every print, the dollar of 412½ grains was prohibited, and the single gold standard recognized, proclaimed, and understood. It was not until silver was a cheaper dollar that anyone demanded it, and then it was to take advantage of a creditor.
It has always been within the power of Congress to correct this error, if error was made; but Congress has refused over and over again to do it. When the controversy arose, in 1878, on the Bland bill, and the House of Representatives proposed the free coinage of silver, the Senate rejected it after a deliberate contest, and substituted in place of it what is called the Bland-Allison act, which required the purchase, by the government, of silver bullion at its market value, and its coinage to a limited amount. Every effort has been made, from that time to this, to have the Congress of the United States pass a free coinage act.
If this is done, it will be to secure a cheaper dollar of less purchasing power, with the view to enable debtors to pay debts, contracted on the basis of gold coin, with silver coins, worth, with free coinage, less than one-half of gold coins.
In reviewing, at this distance of time, the legislation of 1873, in respect to the coinage of silver, I am of the opinion that it was fortunate that the United States then dropped the coinage of the old silver dollar. No one then contemplated the enormous yield of silver from the mines, and the resulting fall in the market value of silver, but, acting upon the experience of the past, that a parity between silver and gold could not be maintained at any fixed value, Congress adopted gold as the standard of value, and coined silver as a subsidiary coin, to be received and maintained at a parity with gold, but only a legal tender for small sums. This was the principle adopted in the act of 1853, when silver was more valuable than gold at the legal ratio. Silver was not then coined into dollars, because it was then worth more as bullion than as coin. It was needed for change, and, under the law of 1853, it was furnished in abundance. Similar laws are now in force in all countries where gold is the sole standard. Under these laws, a larger amount of silver is employed as subsidiary coins than when the coinage of silver was free.
The same condition of coinage now exists in the United States. While silver is reduced in market value nearly one-half, silver coins are maintained at par with gold at the old ratio, by fiat of the government. It is true that the purchase of silver, under recent laws, involved a heavy loss to the government, but the free coinage of silver, under the ratio of sixteen to one, would exclude gold from our currency, detach the United States from the monetary standard of all the chief commercial nations of the world, and change all existing contracts between individuals and with the government. In view of these results, certain to come from the free coinage of silver, I am convinced that until some international arrangement can be made, the present system of coinage should continue in force. This has now became a political, or, rather a monetary question, to be decided sooner or later, by popular opinion, at the polls. This subject will be further discussed at a later period, when efforts were made to adopt the free coinage of silver at the old ratio.
Prior to the meeting of Congress in December, 1870, a controversy had arisen between Senator Sumner and Secretary Fish, which created serious embarrassment, and I think had a very injurious influence during that and succeeding sessions of Congress. Mr. Sumner had long been chairman of the committee on foreign relations, and no doubt exercised a domineering power in this branch of the public service. Mr. Fish and Mr. Sumner had differed widely in respect to the annexation of San Domingo and certain diplomatic appointments and former treaties, among them the highly important English negotiations for the settlement of claims growing out of the war. On these topics the President and Mr. Sumner could not agree. Mr. Sumner insisted that the hasty proclamation by Great Britain of neutrality between the United States and the Southern Confederacy was the gravamen of the Alabama claims. The President and Mr. Fish contended that this proclamation was an act of which we could not complain, except as an indication of an unfriendly spirit by Great Britain, and that the true basis of the Alabama claims was that Great Britain, after proclaiming neutrality, did not enforce it, but allowed her subjects to build cruisers, and man, arm and use them, under cover of the rebel flag, to the destruction of our commercial navy.
This difference of opinion between the President and Mr. Sumner led to the removal of John L. Motley, our minister to England, who sided with Sumner, and unquestionably intensified the feeling that had arisen from the San Domingo treaty.
As to that treaty it was a conceded fact that before the President had become publicly committed to it he had, waiving his official rank, sought the advice and counsel of Mr. Sumner, and was evidently misled as to Mr. Sumner’s views on this subject. The subsequent debating, in both open and executive session, led to Mr. Sumner’s taking the most extreme and active opposition to the treaty, in which he arraigned with great severity the conduct of the naval officers, the Secretary of the Navy, Mr. Fish and the President. This was aggravated by alleged public conversations with Mr. Sumner by “interviewers,” in which the motives of the President and others were impugned.
In the meantime, social relations between the Secretary of State and Mr. Sumner had become impossible; and—considering human passion, prejudice and feeling—anything like frank and confidential communication between the President and Mr. Sumner was out of the question.
A majority of the Republican Senators sided with the President. We generally agreed that it was a false-pretended neutrality, and not a too hasty proclamation of neutrality, that gave us an unquestionable right to demand indemnity from Great Britain for the depredations of the Alabama and other English cruisers. And as for the San Domingo treaty, a large majority of Republican Senators had voted for it—though I did not; and nearly all of us had voted for the commission of inquiry of which Mr. Wade was the chief member.
When we met in March, it was known that both these important subjects would necessarily be referred to the committee on foreign relations, and that, aside from the hostile personal relations of Mr. Sumner and the Secretary of State, he did not, and could not, and would not, represent the views of a majority of his Republican colleagues in the Senate, and that a majority of his committee agreed with him. Committees are and ought to be organized to represent the body, giving a majority of the members to the prevailing opinion, but fairly representing the views of the minority. It has been the custom in the Senate to allow each party to choose its own representatives in each committee, and in proportion to its numbers.
In the Republican conference the first question that arose was as to Mr. Sumner. He was the oldest Senator in consecutive service. He was eminent not only as a faithful representative of Republican principles, but as especially qualified to be chairman of our foreign relations. He had long held that position, and it was not usual in the Senate to change the committees, but to follow the rule of seniority, placing Senators of the majority party in the order of their coming into the Senate and those of the minority at the foot of the list.
In deciding Mr. Sumner’s case, in view of the facts I have stated, two plans were urged;
First—To place him at the head of the new and important committee of privileges and elections, leaving the rest of the committee on foreign relations to stand in the precise order it had been, with one vacancy to be filled in harmony with the majority.
Second—To leave Mr. Sumner to stand in his old place as chairman, and to make a change in the body of the committee by transferring one of its members to another committee, and fill the vacancy by a Senator in harmony with the majority.
My own opinion was that the latter course was the most polite and just; but the majority decided, after full consideration and debate, upon the first alternative.
Simon Cameron was next to Mr. Sumner on the list of Republican members of the committee, and, by uniform usage, became its chairman.
This affair created feeling in the Senate which it is difficult now to realize, but it was decided in a Republican caucus, in which there was an honest difference of opinion. We foresaw, whichever way it should be decided, that it would create—and it did create —bad feeling among Senators, which existed as long as Mr. Sumner lived. I think it proper to make this statement of my own views at the time, though by the happening of great events this incident has almost passed out of memory.
Mr. Sumner died in Washington, March 11, 1874. He was distinguished for his literary attainments, and his strong opposition to the institution of slavery and his severe arraignment of it. The brutal attack made upon him by Preston S. Brooks created profound sympathy for him.
CHAPTER XXIII. SOME EVENTS IN MY PRIVATE LIFE. Feuds and Jealousies During Grant’s Administration—Attack on Me by the Cincinnati “Enquirer”—Reply and Statement Regarding My Worldly Possessions—I Am Elected to the Senate for the Third Term —Trip to the Pacific with Colonel Scott and Party—Visit to the Yosemite Valley—San Diego in 1872—Return via Carson City and Salt Lake—We call on Brigham Young—Arrival Home to Enter Into the Greeley-Grant Canvass—Election of General Grant for the Second Term.
I have purposely followed the legislation of Congress on financial questions until the passage of the act of 1873, passing over other events in my personal history and that of President Grant.
It can hardly be said that we had a strictly Republican administration, during his two terms. While Republicans were selected to fill the leading offices, the policy adopted and the controlling influence around him were purely personal. He consulted but few of the Senators or Members, and they were known as his personal friends. Mr. Conkling, by his imperious will, soon gained a strong influence over the President, and from this came feuds, jealousies and enmities, that greatly weakened the Republican party and threatened its ascendency. This was a period of bitter accusations, extending from the President to almost everyone in public life. During the entire period of Grant’s administration, I was chairman of the committee on finance of the Senate, and had to act upon all questions of taxation, debt, banking or finance, and had occasion to talk with the President upon such measures, but he rarely expressed any opinion or took any interest in them. His veto of the bill to increase the amount of United States notes, on the 22nd of April, 1874, was an exception, but on this he changed his mind, as he had expressed his approval of the bill when pending. He was charged with being in a whisky ring and with other offensive imputations, all of which were without the slightest foundation. General Grant was, in every sense of the word, an honest man. He was so honest that he did not suspect others, and no doubt confided in, and was friendly with, those who abused his confidence. It was a period of slander and scandal.
I did not escape the general crimination. I usually met accusations with silence, as my accusers were answered by others. In March, 1871, the Cincinnati “Enquirer” contained the following imputation:
“We are informed that a gentleman who lately filled a responsible office in this city, who has recently returned from Washington, says that the Southern Railroad bill would have passed the United States Senate if it had not, unfortunately, happened that Senator Sherman had no direct pecuniary interest in it. In these days, and with such Congresses, it takes grease to oil the wheels of legislation.”
On the 12th of March I wrote to the editors of the “Enquirer” the following note, after quoting the editorial:
“United States Senate Chamber,}
“Washington, March 12, 1871. }
“To the Editors of the ‘Enquirer:’
“Gentlemen:—Some one, perhaps in your office, sends me the following editorial, cut from your paper:
“All I can say in reply is that it contains a falsehood and a calumny. I introduced the bill for the Southern Railroad; am strongly in favor of it, and pressed it at every stage as rapidly as the rules of the Senate and the strong opposition to it would allow. This is known by every Senator, and I am quite sure Judge Thurman and Mr. Davis would say so. I alone took an active interest in the bill, and at the very moment your editorial was received I was pressing a Republican caucus to make it an exception to a resolution not to take up general legislation at this session. Everyone familiar with our rules knew that it was the sheerest folly to try to pass the bill on the last day of the session, especially as against our appropriation bills. When it does pass it will take days of debate, and will not receive support from any of your political associates, who think Kentucky can block up all intercourse between the north and south. Still I yielded to the earnest desire of the trustees to try to get a vote, but failed to get the floor at 3 o’clock in the morning, the only moment it was possible to submit even the motion to take it up. The bill to abolish the duty of coal was taken up and was not acted on, nor would the railroad bill, or any other contested bill, have passed at that stage of the session.
“As to the base imputation you attribute to ‘a gentleman who lately filled a responsible office in this city,’ I can only say that, whether it originates with you or anyone else, it is utterly false. Neither in this nor in any measure that has passed Congress, or is pending, have I had any direct pecuniary interest. I respectfully ask that you print this, and also the name of the ’gentleman’ you refer to.
“I intend, in the interests of the city of Cincinnati and of the whole country, to press the Southern Railroad bill, and to secure its passage as soon as possible, but it is rather poor encouragement to read such libels in a prominent paper in your city.
“Yours etc.,
“John Sherman.”
This was followed by an article in the “Enquirer” embodied in my reply, as follows:
“Washington, March 20, 1871. “Gentlemen:—In your editorial in the ‘Enquirer’ of March 17, in commenting on my card to you as to my action on the Cincinnati Southern Railroad bill, you repeat my statement that ‘neither in this nor in any measure that has passed Congress, or is pending, have I any pecuniary interest,’ and you say:
‘If this is true, he has certainly been a very badly slandered gentleman. Somehow or other there is a popular impression that Mr. Sherman has contrived to make his connection with politics a highly lucrative business, and that he has exhibited, since he has been in Congress, a worldly thrift that is remarkable. There is a further impression that he is now a very rich man, whereas, a few years ago, before he was in public affairs, his circumstances were decidedly moderate. Perhaps our senatorial friend may not be aware of the existence of these derogatory reports, and will thank us for giving him an opportunity, now that he knows of their existence, to disprove them.’
“I have not been ignorant that there has been a studied effort— ascribed by me to the common tactics of political warfare—to create the impression, by vague innuendo, that I have used my official position to make money for myself. I know that this charge or imputation is without the slightest foundation, and I now repeat that I never was pecuniarily interested in any question, bill or matter before Congress; that I never received anything in money, or property, or promise, directly or indirectly, for my vote or influence in Congress or in the departments; that I have studiously avoided engaging in any business depending upon legislation in Congress. The only enterprise in which I ever engaged, which rests upon an act of Congress, is that in 1862, after the bill passed authorizing the construction of a street railroad in this city, I, with others, openly subscribed stock, and undertook to build it in pursuance of the act of Congress.
“From the position assigned me here, I have had to deal with great questions involving our financial system of currency, taxes and debt, and I can appeal to all my associates in Congress, to each of the eminent men with whom, as Secretaries of the Treasury, I have been intimate, and to every man of the multitude with whom I have been brought into contact, to say whether I have ever been influenced in my course by pecuniary interest.
“But you say that the impression is that I am a very rich man, whereas, before I was in public affairs, my circumstances were decidedly moderate. This allegation contains two gross exaggerations. When I entered public life, I was largely engaged in my profession and other lucrative business. If I had not engaged in politics, I might have been the rich man you suppose. I am not this day relatively richer, considering the changed value of property, than I was when I entered the Senate. Some time ago it was stated in your paper that I was worth millions. A very small fraction, indeed, of one million dollars will cover all I am worth. My property consists mainly of real estate, palpable to the eye, and the rest of it is chiefly in a railroad with which I was connected before I entered public life.
“I have managed my business affairs with reasonable care, prudence, economy and success. What I have is the result of this.
“You kindly offer me an opportunity to disprove to you these reports. Well, how can I? What charge is made against me? How can I fight shadows? How can a man prove himself innocent against an innuendo?
“But as you offer me the opportunity, I now invite Mr. Faran to come to my home at Mansfield, and I will show him all I possess there, and render him a full account of all I have elsewhere, and if I can’t fairly account for it without being suspected of receiving bribes, or gifts, or stealing, then he can repeat these baseless accusations with an easy conscience.
“You may ask why I have not met these derogatory reports before. Perhaps I ought, but I feel the humiliation of such a controversy, and thought it time enough when a specific charge was made. And I am told by Mr. Hedges, my former law partner, that in my absence, last summer, he corrected some gross misstatements in your paper about me, and that you refused or neglected to publish it—even to notice it. As, however, you now, in a courteous way, invite this letter, I take great pleasure in accepting your offer.
“Very truly yours,
“John Sherman.
“Messrs. Faran & McLean, editors of the ‘Enquirer.’”
I doubted the policy of my publishing such a letter, or of taking any notice of so indefinite a charge, but the response from the press was fair, especially from the “Shield and Banner,” a Democratic paper printed in Mansfield, as follows:
“We publish a letter of Hon. John Sherman to the editors the Cincinnati ‘Enquirer.’ It is hardly necessary that we should say that we have no sympathy with the political creed of John Sherman. Between him and us there is a vast and wide difference; but we are not, we trust, so much of the partisan that we cannot do justice to a neighbor, if that neighbor differs with us. We have known John Sherman, not only during all his public life, but from the time we became a resident of Mansfield, now covering a period of thirty years, and we have always known him as industrious, prudent and careful in his profession, and economical and thrifty in his business. We placed very little credence in the rumors that he was a man of immense wealth. His property is mostly in real estate. He was fortunate in getting hold of very desirable property in and around our city, and the advance in that has doubtless given him a competence; but it is folly to charge him with being a millionaire. We have, in common with our neighbors, enjoyed his hospitality, and his style of living is neither extravagant nor ostentatious.
“Mr. Sherman is one of our townsmen, and although all wrong as a politician and statesman, and holding to a creed we utterly disapprove, he is a highminded and honorable man, and we are bound to accept his statement about his pecuniary affairs as true.”
I have often since been accused of the crime of “being rich,” but as nearly all my possessions are visible to the naked eye, and their history and acquisition are known to so many, I think I am not required to prove that I have not made them as the result of legislation or my holding public trusts.
My second term in the Senate expired on the 4th of March, 1873. The election of my successor devolved upon the legislature that convened on the first Monday of January, 1872.
The canvass in Ohio, in the summer and fall of 1871, was an active and exciting one and attracted great interest in other states. The result would indicate the strength or weakness of Grant’s administration. I felt it was necessary, not only for my re-election, but for the success of the Republican party, that every effort should be made to elect a Republican majority in the legislature, and I, therefore, at the state convention and in most of the congressional districts of Ohio, made earnest speeches in behalf of the state ticket and members of the legislature. I received many letters of encouragement, one of which, from Senator Carpenter in reference to my speech in the convention, I insert:
“Washington, D. C., July 20, 1871.
“Hon. John Sherman.
“Dear Sir:—I have just read your speech to the state convention of Ohio. It is splendid. The only fault I have to find with it is, that you have covered the whole ground and reduced us ‘lesser lights’ to the necessity of repeating and elaborating. This is very mean of you; you might have left some topic of the next campaign untouched, for us to dwell upon. But you have pre-empted everything and we must follow after.
“Very truly yours,
“Matt H. Carpenter.”
The legislature was elected in October, 1871, but the majority for the Republicans was so small that the election of a Republican Senator was in doubt.
I received many hearty letters of congratulation on our success in Ohio from my colleagues in the Senate, among them one from Senator Conkling as follows:
“Utica, N. Y., October 13, 1871.
“Hon. John Sherman, Mansfield, Ohio.
“My Dear Sir:—Having waited for certainties touching your election and the legislature, and having watched the canvass with sincere solicitude, I congratulate you most heartily upon the result.
“Your own speeches have been among the best you ever made, and your canvass has been full of the pluck without which no canvass and no political contest is thorough or truthful.
“This state is ours unless the people are discouraged from voting in the country by the belief that with Tammany to count, it matters not what majority rolls up above the Highlands.
“Notwithstanding the grievous statements of the ‘Tribune’ and inspired by the ‘Tribune,’ we have done nothing harsh to the anti-administration minority, but the least and mildest thing which would prevent a split in our organization with trouble for the future, and probably a double delegation in the next national convention.
“Yours sincerely,
“Roscoe Conkling.”
It was conceded that a decided majority of the Republican members of the legislature were in favor of my re-election, but it was believed that an effort would be made by five Republican members to combine with the Democratic members and thus secure the election of ex-Governor Jacob D. Cox.
A Republican legislative caucus was convened on the evening of January 4th, to nominate a candidate. The first and informal ballot gave me 61 votes to 14 scattering and the second ballot 71 votes to 4 scattering. This settled the matter unless the few dissenting votes could combine with the solid Democratic vote upon some other candidate. It was soon found that this attempt would be abortive, as several Democrats, and especially those from Richland and Fairfield counties, would vote for me it the choice came between Cox and myself. Every effort was made by General Ashley and the few others who were opposed to my nomination to combine upon anyone who could defeat me. They offered their support to Governor Hayes, but this was promptly refused by him. The same effort was made with Governor Dennison, General Garfield and General Schenck, and failed.
The joint convention for the election of a Senator was held on the second Tuesday of January. It was an open meeting. The voting was soon over on roll call, and the result was as follows: Sherman 73; Morgan 64; Cox 1; Schenck 1; Perry 1. Thus I was elected by six majority over all. When this result was known five Democrats changed from Morgan to Cox, and others were preparing to do so when Lieutenant Governor Mueller announced the result of the vote. He was an educated German of high standing, but his English was very imperfect. His decision that I, having received a majority of the votes cast, was duly elected, was clearly right, and this was conceded, but his imperfect English created great noise and merriment. It was printed in the “Ohio Statesman,” on the same day, as follows:
“John Sherman, having received seventy-three votes for President in Congress [laughter], I mean for Senator in Congress, which being a majority over all them others, I declares John Sherman duly elected Senator in Congress from Ohio.”
If the changing of the minority vote had proceeded, some of the Democratic votes would have been cast for me, and my majority would have been increased, but I preferred the election as it occurred. My election for the third term was after a hot political contest, but it left no wounds unhealed. Most of the gentlemen opposed to me became afterwards my warm friends.
In July, 1872, two months after the close of the session of Congress, I received the following letter from Thomas A. Scott, President of the Texas and Pacific Railroad Company:
“Philadelphia, July 19, 1872.
“Hon. John Sherman, Mansfield, Ohio.
“My Dear Sir:—A few gentlemen connected with the Texas and Pacific road, and myself, propose to go to the Pacific coast, leaving Philadelphia about the 12th to the 15th of August.
“If your engagements will permit, I shall be very glad indeed to have you go with us.
“I am going from San Francisco to San Diego, and shall return by way of San Francisco; the trip will occupy about thirty days.
“Please let me hear from you, and, if possible, let me have the pleasure of your company.
“Very truly yours,
“Thomas A. Scott, President.”
I accepted the invitation, and with a very agreeable party of ladies and gentlemen, among whom were Mr. W. T. Walters, of Baltimore, and his daughter, made my first voyage to the Pacific coast. Mr. Scott, as president of the Pennsylvania Railroad Company, had command, by courtesy, of every convenience of travel. We had a dining car which we could attach to any train, with ample room for beds, and a full supply of provisions. The journey to San Francisco was broken by several stops on the way at places that we thought interesting.
Great changes had occurred in the brief period since my trip in an ambulance with General Sherman. The Indians and buffaloes had disappeared from the plains, the former placed on reservations distant from the railroad, and the latter by gradual extinction. When we crossed the Laramie plains I was in, to me, a “terra incognita.” The great basin of Salt Lake, with the varied and picturesque scenery to the east and west of it, attracted our attention, but the want of water, the dry air, the dust and the absence of tress and vegetation of any kind, condemn all that country to waste and desolation, except in a few places where irrigation can be had. The Nevada range of mountains was crossed at night, but we were to explore them on our return. When the broad valley of the Sacramento opened to our view, we could hardly express our delight. Here, indeed, was the land of gold, with its clear air, its grand mountains, its rich plains.
Aside from the wonderful variety of its scenery, the history of California has always excited poetic interest—its long settlement by mixed races living in quiet peaceful harmony, mainly as herdsmen and shepherds, suddenly disturbed and conquered without firing a gun, by an aggressive race who soon revolutionized the habits of the natives, and planted a new civilization, with all the bad as well as the good elements of our race. Then the discovery of gold, immediately following the conquest of California, drew to it, from all parts of the United States, the most restless and adventurous of our population, some of the worst and many of the best. The rapid admixture of these diverse elements threatened for a time hostile conflicts, in which criminals, under cover of law, committed murder and other crimes, and peaceful, law-abiding citizens were compelled to appeal to force and mob law to preserve civilization.
The railway soon brought us through Sacramento to San Francisco, where we remained several days. We were kindly received and entertained. The enterprise of Scott was not then favored in San Francisco, but this did not prevent our hearty welcome. Here I met Mr. Hollister, whom I had known in Ohio. He was the great shepherd of California. I was informed that he owned 100,000 sheep, divided into flocks of about 3,000 each. These flocks were wintered at a large ranch near the Pacific coast belonging to him. The climate was mild, and the sheep could live without shelter during the winter. The flocks would start eastwardly over the great valley, each flock cared for by a shepherd, a boy and a dog, feeding in the open country, some of the flocks reaching the Mariposa valley, one hundred miles away. When the grass failed they were turned to the west to their home. Whether this tale is an exaggeration I cannot say, but certain it is that at that time sheep raising and the production of wool was one of the chief industries of California. Hollister was also interested in woolen manufacture, especially of blankets, equal to any in the world. When I knew him in Ohio, he and his brother were the owners, by inheritance, of a large and valuable farm in Licking county. When gold was discovered in California, Hollister sold to his brother one-half of the farm, and with the proceeds purchased a large flock of the best Ohio sheep, and drove them to California, taking two years for the journey. He was fond of telling his adventures, and proud of his success. He died a few years since in California, but whether his good fortune followed him to the close of his life I do not know. He was very kind to our party and accompanied us to San Diego.
From San Francisco we made a trip to the Mariposa Grove, and the Yosemite valley. We traveled by rail to a small station nearest the grove. Then by stage we rode to the terminus of the line. From there we went but a short distance to the grove. This majestic survivor of the forest has been so often been described that details are not necessary. We measured the trees, and rode on horseback nearly one hundred feet through one of the fallen monsters. We also attempted to form a ring with hands and arms extended around one of these trees, but our party was not numerous enough to encircle it. I felt a sense of insignificance when I realized the long life of some of these trees, estimated to span forty generations of men, and still in health and strength. We returned to the stage station and again mounted our horses and mules for the perilous adventure of a descent into the Yosemite valley. It so happened that Mr. Bell, the keeper of the station, was a former resident of Bellville, in Richland county, Ohio, in which I live. He knew me well, and his wife I knew as the daughter of a leading farmer of that county. I thought I might utilize this acquaintance by asking him to see that I was well mounted to descend to the valley. Much to my surprise a spirited horse, well accoutered, was brought out for Colonel Scott, and a shaggy short-legged mule, with a California saddle and a common but stout bridle, was brought out for me. I felt that Bell had disregarded the obligation of “auld acquaintance,” but said nothing.
My mount started at the heels of the cavalcade in a steady walk, but I noticed he was sure-footed, and that, at the end of two or three weary hours, he had passed most of the party and soon after was close in the wake of Colonel Scott. In the meantime, I had noticed that I was the subject of merriment. My feet were in close proximity to the ground. The length of my legs was out of proportion to that of the legs of the mule. When we came to descend the mountain, however, at an angle of nearly forty-five degrees, on a very narrow path, I found that my mule could turn the bends of the track, and, by a peculiar gathering of his feet, could slide down difficult places, while Colonel Scott, on his already jaded horse, was troubled and worried. He dismounted when the path widened and asked me to go ahead. He then followed me, leading his horse. After that, I made up my mind that my Richland county friend had not failed me in my hour of need.
As for the scenery through which we were passing, no language could describe it. We saw, four thousand feet below, a beautiful little valley about half a mile wide at the widest part, with what appeared to be a very small stream dancing along from side to side of the valley, and surrounded by precipitous mountains in every direction. The eye and mind can now vividly recall the picture of the scenes than around me. My mule had my confidence, but I feared lest some fatal mishap might befall some of my companions, and especially I feared for a lady who ventured the journey, but she fortunately displayed pluck and coolness, and at the end of the day we all arrived at the hut in the valley safe and sound, but very weary. Since that time, I understand that a good road has been made up the valley, by which tourists can enjoy the grandest scenery in nature, without the risk we took.
We enjoyed a hearty supper of plain food, and a sound sleep on corn-husk mattresses. The next day we explored the valley, and enjoyed the changing views of near and distant mountains. These have often been described, but they can only be appreciated by a personal visit. We left the valley by another route to the north, and reached the railroad by a different line of stages.
Returning to San Francisco, we took the boat for San Diego, stopping, on the way, at Santa Barbara and San Pedro. From this place we drove to Los Angeles, then a typical Mexican town of great interest. The good people hoped for the railroad, but Colonel Scott expected the road of which he was president would be able to reach San Diego.
Our arrival at San Diego was an event of interest to the few people of that town. We inspected the remarkable harbor and the surrounding country. It was apparently a good site for a great city. Fresh water was the great want and rain-falls were rare, but it was claimed that an ample supply of water could be had from the hills. The real obstacle to that site, as a terminus for the railroad, was the mountains east of San Diego, which, upon a survey, were found to be extremely difficult, and this turned the route to Los Angeles, over natural passes and through the beautiful region of San Bernardino.
We returned, by boat, to San Francisco, and soon after turned our way eastward. We stopped at Reno, and went by rail to Carson City, the capital of Nevada. It was then an embryo town. From there we went to Lake Tahoe, one of the finest bodies of water on the earth. Its clear, cold waters filled a natural basin in the midst of the Nevada range of mountains, which was supplied by the melting snows. We then returned to Carson City, ascended, by rail, an inclined plane of high grade, to Virginia City. Most of the party descended into the mines, but I was prevented from doing so by an attack of neuralgia, a complaint from which I never suffered before or since, caused, as it was said, by the high altitude and thin air. Here I met several natives of Ohio, who had sought their fortunes in the far west. They were very kind to the party and to myself. It got to be a common remark, that Ohio has everything good in the west. I could answer that they all seemed to deserve what they had. I was disposed to be proud of them and of my native state, but soon after, on the way east, we heard of an atrocious murder committed by two Ohio men. This turned the tables on my native state, and I was compelled to confess that bad men came from Ohio as well as from other states; but, if so, Ohio people excelled in the atrocity of their crimes as well as in the excellence of their merits!
Our next stopping place was at Salt Lake City. Whatever opinion we may have of the religious creed and dogmas of the Mormons, we cannot deny the industry and courage of that sect in building up a city in a wilderness where natural conditions seemed to forbid all hope of success in such an enterprise. And yet there it was, a well-ordered city laid out with squares, avenues, streets, and reservations for schools, churches and other public uses, with water introduced in great abundance. All the needs of city life were provided, such as stores, markets and shops. We were invited by the delegate to Congress, from Utah, to call on Brigham Young, and did so. He was a large, well-built man, then about sixty years old. He took great interest in the enterprise of Colonel Scott and seemed familiar with all the railways built or projected in the western country. There was nothing in his conversation or manner that indicated the “crank,” nor did he exhibit any of the signs of a zealot or fanatic. He made no allusions to his creed or the habits of his followers and betrayed no egotism or pride. He has died since but the organization he left behind him is still in existence, and the Mormon faith is still the creed and guide of the great body of those who followed Brigham Young into the wilderness, and of their numerous descendants. It is to be hoped that the government and people of the United States will let the Mormons severely alone, allowing them to believe what they will, and to do in the way of worship what they choose. In this way only can their confidence in alleged revelations be shaken, and Mormonism will disappear among the many vain attempts of humanity to explore the mysteries of life and death. Persecution never weakens delusions, nor disturbs faith, however ignorant and groundless.
From Salt Lake our party went to Cheyenne and thence to Denver. This city was growing rapidly and was plainly destined to be the principal center of the mineral development of several states. I had, on a previous trip, visited the interesting region of the “Garden of the Gods,” Colorado Springs and Pike’s Peak. Our party left Denver for home. On the long stretch via Kansas City, St. Louis and Indianapolis we saw nothing new, as we were traveling over familiar ground. It was early in September, when corn, the great western staple, was approaching maturity, and the earth was giving forth its increase. We were crossing the largest and perhaps most fertile valley of the world. All of it had been redeemed from nature and the Indians, within one hundred years. During our trip we had passed through great cities, prosperous towns and amidst wonderful scenery. All of the route except through the Yosemite valley was passed over in a palace car. The ocean voyage was in a steamboat even more luxurious then the palace car. All this rapid development did not satisfy the desire of Colonel Scott and Mr. Walters. Their minds were occupied with vast railroad projects, some of which were accomplished before their death. I also had my dreams but they related to public policies rather than internal improvements and some of these have been realized.
I was awakened one bright morning in September and told that the car was in Ohio. This was enough to drive sleep from my eyelids. I looked out upon the rich lands of the Miami valley, the comfortable homesteads on every farm, the fat cattle and herds of sheep, the broad fields of yellow corn, and every sign of fertility. All these, and perhaps a little admixture of state pride, led me to say that, after all, the people of Ohio need not go beyond the bounds of that state with any hope to improve their condition or to secure a better opportunity for a happy life. I soon parted with my friends with sincere regrets, for in our journeyings we were in truth a happy family.
The canvass in Ohio was then progressing for the election of a President and Members of Congress, in which I was expected, as usual, to take a part. The strange anomaly of Horace Greeley running on a Democratic ticket was enough in itself to excite opposition, especially in the southern states. The result was that General Grant, in November, 1872, was elected President by 31 states with 286 electoral votes. Greeley died after the election, and before the electors voted, so that no electoral vote was counted for him. If he had lived he would probably have received 60 electoral votes.
CHAPTER XXIV. THE PANIC OF 1873 AND ITS RESULTS. Failure of Jay Cooke and Co.—Wild Schemes “for the Relief of the People”—Congress Called Upon for Help—Finance Committee’s Report for the Redemption of United States Notes in Coin—Extracts from My Speech in Favor of the Report—Bill to Fix the Amount of United States Notes—Finally Passed by the Senate and House—Vetoed by President Grant and Failure to Pass Over His Objection—General Effect Throughout the Country of the Struggle for Resumption— Imperative Necessity for Providing Some Measure of Relief.
During the first four years of General Grant’s administration the financial condition of the United States was eminently prosperous. The total reduction of the national debt, from the 1st of March, 1869, to the 1st of November, 1873, was $383,629,783, the annual saving of interest resulting therefrom being $27,432,932. During this period the value of United States notes compared with coin steadily increased. The funding of the six per cent. bonds into five per cent. bonds, under the refunding act, continued at the rate of about $85,000,000 a year. The credit of the United States steadily advanced during this period, so that the Secretary of the Treasury, in his report of 1873, stated that it had not stood higher since the close of the Rebellion than it did at that time. This improvement of the public credit was accompanied with a large reduction of internal taxes and duties on imported goods. The business of the country was prosperous, the increase and extension of railroads and the development of new industries was marked, indicating great prosperity.
All this was subsequently changed by the happening of a panic in September, 1873. The cause of this was attributed to over-trading, to the expansion of credits, and to rash investment made in advance of public needs. This panic commenced by the failure of Jay Cooke & Co., of Philadelphia, an enterprising firm of high standing, then engaged in selling the bonds of the Northern Pacific Railroad Company. I was engaged at that time, with a committee of the Senate, of which William Windom was chairman, in examining many plans of public improvements, especially in the increase of facilities for water transportation at the mouth of the Mississippi river, and at the great lakes on our northern boundary, improvements since then made with great benefit to the commerce of the United States. Roscoe Conkling, of New York, was a member of that committee. We were at Buffalo when the failure of Cooke & Co. was announced. We all felt that for the present, at least, our duties as a committee were at an end. The panic spread so that in a month all industries were in a measure suspended. The wildest schemes for relief were proposed, in and out of Congress. The panic spread to the banks, which were compelled in self-defense to call in their loans, to withhold their circulating notes, and contract their business. As usual on the happening of such a panic, an appeal was made to the treasury for relief, a demand was made for an increase in the volume of the United States notes, and that the Secretary of the Treasury should use the money of the government to buy exchange.
The New York Produce Exchange applied to the Secretary of the Treasury on the 29th of September, 1873, in resolutions, as follows:
“Whereas, The critical condition of the commercial interests of the country requires immediate relief by the removal of the block in negotiating foreign exchange; therefore be it
“Resolved, That we respectfully suggest to the Secretary of the Treasury the following plans for relief in this extraordinary emergency:
“First, That currency be immediately issued to banks or bankers, upon satisfactory evidence that gold has been placed upon special deposit in the Bank of England, by their correspondents in London, to the credit of the United States, to be used solely in purchasing commercial bills of exchange.
“Second, That the President of the United States and the Secretary of the Treasury are respectfully requested to order the immediate prepayment of the outstanding loan of the United States due January 1, 1874.”
This request had, as a matter of course, to be denied. But the secretary did purchase $13,000,000 of bonds for the sinking fund, to the full extent the condition of the treasury allowed. It is difficult to realize or to convey by description the wild ideas developed by such a panic. The government for the time being is expected to provide a remedy for a condition it did not create, but, instead of aiding, the government is most likely to need aid. The revenues from importations fell off and the value of United States notes declined.
When Congress convened in December, 1873, the wildest schemes for relief to the people were proposed. A large increase of United States notes was demanded. More than sixty bills, resolutions and propositions were introduced in the Senate in respect to the currency, the public debt and national banks, all bearing upon the financial condition of the country, expressing every variety of opinion, from immediate coin payments to the wildest inflation of irredeemable paper money. All these were referred to the committee on finance, then composed as follows: Messrs. Sherman (chairman), Morrill, of Vermont, Scott, Wright, Ferry, of Michigan, Fenton and Bayard.
The several measures referred to the committee were taken up and considered, but the same wide divergence of opinion was developed in the committee as existed outside of Congress among the people.
The majority of the committee reported to the Senate the following resolution:
“Resolved, That it is the duty of Congress during its present session to adopt definite measures to redeem the pledge made in the act approved March 18, 1869, entitled ‘An act to strengthen the public credit,’ as follows: ‘And the United States also pledges its faith to make provision, at the earliest practicable period, for the redemption of United States notes in coin;’ and the committee on finance is directed to report to the Senate, at as early a day as practicable, such measures as will not only redeem the pledge of the public faith, but will also furnish a currency of uniform value, always redeemable in gold or its equivalent, and so adjusted as to meet the changing wants of trade and commerce.”
Mr. Ferry, of Michigan, a member of the committee, offered the following substitute for the pending resolution:
“That the committee on finance is directed to report to the Senate, at as early a day as practicable, such measures as will restore commercial confidence and give stability and elasticity to the circulating medium through a moderate increase of currency.”
Upon these adverse propositions a long debate followed without practical results. I made a long speech on the 16th day of January, 1874, in favor of the resolution of the committee. I then said:
“At the outset of my remarks I wish to state some general propositions established by experience, and the concurring opinions of all writers on political economy. They may not be disputed, but are constantly overlooked. They ought to be ever present in this discussion as axioms, the truth of which has been so often proven that proof is no longer requisite.
“The most obvious of these axioms, which lies at the foundation of the argument I wish to make to-day, is that a specie standard is the best and the only true standard of all values, recognized as such by all civilized nations of our generation, and established as such by the experience of all commercial nations that have existed from the earliest period of recorded time. While the United States, as well as all other nations, have for a time, under the pressure of war or other calamity, been driven to establish other standards of value, yet they have all been impelled to return to the true standard; and even while other standards of value have been legalized for the time, specie has measured their value as it now measures the value of our legal tender notes.
“This axiom is as immutable as the law of gravitation or the laws of the planetary system, and every device to evade it or avoid it has, by its failure, only demonstrated the universal law that specie measures all values as certainly as the surface of the ocean measures the level of the earth.
“It is idle for us to try to discuss with intelligence the currency question until we are impressed with the truth, the universality, and the immutability, of this axiom. Many of the crude ideas now advanced spring from ignoring it. The most ingenious sophistries are answered by it. It is the governing principle of finance. It is proved by experience, is stated clearly by every leading writer on political economy, and is now here, in our own country, proving its truth by measuring daily the value of our currency and of all we have or produce. I might, to establish this axiom, repeat the history of finance, from the shekels of silver, ‘current money with the merchant,’ paid by Abraham, to the last sale of stock in New York. I might quote Aristotle and Pliny, as well as all the writers on political economy of our own time, and trace the failure of the innumerable efforts to establish some other standard of value, from the oxen that measured the value of the armor of Homeric heroes to the beautifully engraved promise of our day; but this would only be the hundred-times-told tale which every student may find recorded, not only in schoolbooks, but in the writings of Humboldt, Chevalier, Adam Smith, and others of the most advanced scientific authorities. They all recognize the precious metals as the universal standard of value. Neither governments, nor parliaments, nor congresses can change this law. It defies every form of authority, but silently and surely asserts itself as a law of necessity, beyond the jurisdiction of municipal law.
“Of late years much difficulty has grown out of the slightly varying value of silver and gold, as compared with each other, and the tendency of opinion has been to adopt gold alone as the standard of value. The United States has twice changed the relative value of these metals, and other modern nations have been driven to similar expedients. At the Paris monetary conference, held in 1867, which I had the honor to attend, the delegates of twenty nations represented agreed to recommend gold alone as the standard of value. The United States, and nearly all the commercial nations, have adopted this standard, and reduced the use of silver to a mere token coinage of less intrinsic value than gold, but maintained at par with gold by the right to be converted into gold at the will of the holder. So that for all practical purposes we may regard gold as the only true standard, the true money of the world, by which the value of all property, of all productions, of all credits, and of every medium of exchange, and especially of all paper money, is tested.
“Specie, in former times, was not only the universal standard of value, but it was the general medium of all exchanges. In modern times this is greatly changed. Specie is still the universal standard of value, but it has ceased to be even the usual medium of exchange. The failure to distinguish between the standard of value and the medium of exchanges occasions many of the errors into which so many fall, and nearly every Senator who has spoken on one side of the question has fallen into this error. Specie has lost a portion of its sovereign power, for with the enormous increase of exchanges it was found that, valuable as it is, it is too heavy to transport from place to place as a medium of exchange. The perils of the sea, the dangers of theft and robbery, led to devices to substitute promises to pay gold in place of the actual gold.
“Mr. president, thus far my remarks are founded upon the experience of ages, applicable to all countries and to all commercial nations of our time. I present them now as axioms of universal recognition. And yet I have heard these axioms denounced in this debate as ‘platitudes,’ useless for this discussion in the Senate of the United States. The wisdom of ages, the experience of three thousand years, the writings of political economists, are whistled down the wind as if we in the Senate were wiser than all who have reasoned and thought and legislated upon financial problems—that all this accumulated wisdom consists of ‘platitudes’ unworthy to influence an American Senate in the consideration of the affairs of our day and generation.
“Sir, I do not think so. If we disregard these ‘platitudes,’ we only demonstrate our own ignorance and punish our constituents with evils that we ought to avoid. I purpose now to pursue the argument further, and to prove that we are bound, both by public faith and good policy, to bring our currency to the gold standard; that such a result was provided for by the financial policy adopted when the currency was authorized; that a departure from this policy was adopted after the war was over, and after the necessity for a depreciated currency ceased; and that we have only to restore the old policy to bring us safely, surely, and easily to a specie standard.
“First, I present to you the pledge of the United States to pay these notes in coin ‘at the earliest practicable period.’ In the ‘act to strengthen the public credit,’ passed on the 18th day of March, 1869, I find this obligation:
‘And the United States also solemnly pledges its public faith to make provision, at the earliest practicable period, for the redemption of the United States notes in coin.’
“The Congress of the United States, in order to put into form its sense of this obligation, passed the act ‘to strengthen the public credit,’ and the last and most important clause of this act is the promise which I have just read, that these notes should be paid, ‘at the earliest practicable period,’ in coin.
“On the day we made that promise, the 18th of March, 1869, the greenbacks, the notes of the United States, were worth 75¾ cents in gold; or in other words, gold was at a premium of thirty-two per cent.... What was the result? After you enacted that law— the faith of the people of the United States that you would redeem this pledge—the value of your greenbacks advanced, not rapidly, but gradually, and in one year, to within twelve per cent. of par in gold.
“Mr. president, we see, then, the effect of this promise. And I here come to what I regard as a painful feature to discuss—how have we redeemed our promise? It was Congress that made it, in obedience to the public voice; and no act of Congress ever met with a more hearty and generous approbation. But I say to you, with sorrow, that Congress has done no single act the tendency of which has been to advance the value of these notes to a gold standard; and I shall make that clearer before I get through. Congress made this promise five years ago. The people believed it and business men believed it. Four years have passed away since then, and your dollar in greenbacks is worth no more to-day than it was on the 18th of March, 1870; and no act of yours has even tended to advance the value of that greenback to par in gold, while every affirmative act of yours since that time has tended to depreciate its value and to violate your promise.
“Every bond that was issued was issued only upon the sacred pledge contained in this act, that the interest of that bond should be paid in coin; and the principal should be paid, when due, in coin. The fifth section of the act provides that all duties on imported goods shall be paid in coin; and that this money shall be set aside as a special fund to pay the interest on the bonded debt in coin. Then, in order to secure the greenbacks, it authorized any holder of greenbacks to pay any government debt with them; it authorized the holder of greenbacks to pay any debt, public or private, with them; and every citizen of the United States was bound to take them. Then it authorized them to be converted into six per cent. bonds of the United States—those bonds payable, principal and interest, in gold. If the policy provided for by this act had been maintained, we would long since have been at specie payments, without any serious disturbance of our monetary affairs.
“Now, Mr. president, I come to show the Senate how this provision, the convertible clause of the act of February 25, 1862, was repealed. On the 3rd of March, 1863, Congress passed ‘An act to provide ways and means for the support of the government.’ This act was passed during the dark hours of the war. The currency of the country did not flow into the treasury rapidly enough to pay our army. I remember that at about the time this act was passed there were very large unpaid requisitions. The Secretary of the Treasury, instead of issuing any more six per cent. bonds, desired to float a 10-40 five per cent. bond; in other words, to reduce the burden of interest upon the public debt. At this time there were three hundred millions of circulation outstanding, and with all the rights, and all the privileges, conferred upon the greenbacks, they did not flow into the treasury fast enough to furnish means to carry on the operations of the war.
“In other words, the suspension of this convertibility clause was passed with a view to promote conversion; to encourage conversion; to induce conversion; and, if possible, to induce a conversion into a five per cent. gold bond instead of into a six per cent. bond. When the Secretary of the Treasury presented this view to Congress he was at once met with the pledge of the public faith; with the promise printed upon the back of the greenbacks that they could be converted into six per cent. bonds at the pleasure of the holder; and that we could not take away that right. This difficulty was met by the ingenuity of the then Senator from Vermont (Mr. Collamer). He said that no man ever exercised a right which could not properly be barred by a statute of limitations; and if this right was injurious to the people of the United States, and prevented the conversion of these notes into bonds, we might require the holder of these notes to convert them within a given time; that we could give them a reasonable time within which they could convert them into six per cent. bonds, and after that take away the right.
“The act of March 3, 1863, was amended by inserting this clause:
‘And the holders of United States notes, issued under or by virtue of said acts, shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the 1st day of July, 1863; and thereafter the right so to exchange the same shall cease and determine.’
“Now, Mr. president, I have shown you that the greenbacks were based upon coin bonds; that they had the right to be converted into coin bonds; that that right was taken away as to the 5-20 bonds; but that, in practice and in effect, the greenback was convertible into an interest-bearing bond of the United States up to 1866, and until the passage of the law to which I will now refer.
“If this act had contained a simple provision restoring to the holder of the greenback the right to convert his note into bonds there would have been no trouble. Why should it not have been done? Simply because the then Secretary of the Treasury believed that the only way to advance the greenbacks was by reducing the amount of them; that the only way to get back to specie payments was by the system of contraction. If the legal tender notes could have been wedded to any form of gold bond by being made convertible into it, they would have been lifted, by the gradual advance of our public credit, to par in gold, leaving the question of contraction to depend upon the amount of notes needed for currency. Sir, it was the separation of our greenbacks from the funding system that created the difficulty we have upon our hands to-day; and I say now that, in my judgment, the only true way to approach specie payments is to restore this principle, and give to the holder of the greenback, who is your creditor, the same right that you give to any other creditor. If he has a note which you promised to pay and cannot, and he desires interest on that note by surrendering it, why should you not give it to him? No man can answer that. It is just as much a debt as any other portion of the debt of the United States.”
Finally, after more than three months study and debate, a majority of the committee agreed upon a measure and directed me to report it to the Senate. It fixed the maximum limit of the United States notes at $382,000,000. It provided for a gradual payment of these notes in coin or in five per cent. bonds, at the option of the Secretary of the Treasury, from the 1st of January, 1876. It was entitled “An act to provide for the redemption and reissue of United States notes and for free banking.”
In obedience to the instructions of the committee, on the 23rd of March, 1874, I reported the bill as an original measure, and said:
“It is due to the members of the committee on finance that I should say that the bill which I have just reported, as it appears on its face, is in the nature of a compromise measure, which is more or less acceptable all around, but at the same time there are certain features of the bill which members of the committee on finance will feel at liberty to express their opposition to, and also to propose amendments to. It is due to them that I should make this statement. The bill itself, as appears on its face, is the result of great labor, long consideration, and the consequence of compromise. In many cases we were not able, however, to reconcile conflicting opinions; and on those points, of course, members of the committee will feel themselves at liberty to oppose certain features of the bill.”
Mr. Thurman said:
“I should like to inquire of my colleague whether he proposes to-day or to-morrow, when he makes the motion that he indicated, to state what, in the opinion of the committee reporting this bill, will be its practical effect, so that we may have the views of the committee as to the workings of the bill should it become a law. I am sure I, for one, should like very much to know what the committee, who have devoted so much time to this subject, think will be the practical working of the measure, at any time that it suits the convenience of the chairman of the committee to make such statement.”
I replied:
“When the subject is introduced, if it be convenient, to-morrow, I propose to make a very brief statement of the effect of each section, as we understand it; but I do not intend, by any long speeches or any remarks, to prolong this matter unnecessarily. I have expressed my own individual views, and each member of the committee, I suppose, stands to the opinion expressed by him in the speeches he has made in the Senate—speeches that were carefully considered, and by which the position of each Senator was stated; but undoubtedly I shall feel it my duty, when the bill is called up, to state what I regard as the actual practical effect of these different propositions; and some of them, I will now say, I assented to with great reluctance.”
On the next day the bill was taken up in the Senate, and I then stated the general provisions of the bill. I insert extracts from my speech, which indicate the difficulties we encountered:
“Mr. president, some complaint has been made in the Senate and in the country at the delay in the presentation, by the committee on finance, of some bill covering the financial question; but a moment’s reflection will, I am sure, convince every Senator that there has been no fault on the part of that committee. From the beginning of the session to this hour that committee, under the direction of the Senate, has been studying and discussing the various plans and propositions which were referred to the committee; and I may say that over sixty different propositions, either coming in the form of petitions or in the form of bills, have been sent to the committee, all of these suggesting different plans and ideas. It was impossible to consider all these and to agree upon any comprehensive measures until within a day or two.
“There was another consideration. The committee found itself divided in opinion, precisely as the country is, and precisely as the Senate is, into as many as three different classes of opinion. There were, first, those who desired to take a definite and positive step toward the resumption of specie payments. There were, second, those who desired an enlargement of the currency, or what we commonly call an inflation of the currency. There were, third, those who, while willing to see the amount of bank notes increased and the question of the legal tender settled in some form, were also desirous that some definite step should be taken toward a specie standard. There were these differences of opinion.
“For the purpose of ascertaining the views of the Senate, and not involving ourselves in reporting a bill that would be defeated as the bill of the last session was, we presented, early in the session, resolutions of a general character which stated these three ideas: First, the resolution of the majority of the committee that some definite step should be taken toward specie payments. Then there was the amendment offered by the gentleman who now occupies the chair [Mr. Ferry, of Michigan], that there ought to be an increase of the currency without reference to any plan of redemption. Third, there was the proposition made by the Senator from Delaware [Mr. Bayard], that measures should be taken at once looking to the resumption of specie payments.
“These propositions were discussed, and the committee were enlightened by that discussion; at least they obtained the opinions of Members of the Senate. Subsequently, in the course of our investigation, a question about the $25,000,000 section (section 6 of the act of July 12, 1870) came up, and the committee deemed it right, by a unanimous vote, to ascertain the sense of the Senate as to whether they wished this section carried into execution. As it stood upon the statute book it was a law without force. It was a law so expressed that the comptroller said he could not execute it. Therefore the committee reported a bill which would have provided the necessary details to carry into execution that section of the existing law. But in the present temper of the public mind, in the Senate and in the country, that bill was discussed, and has been discussed day after day, without approaching the question at all. During all this time the committee have been pursuing their inquiries, and finally they have reported the bill which is now before us.
“The measure that is reported is not a satisfactory one to any of us in all its details. Probably it is not such as the mind of any single Member of the Senate would propose. It is in the nature of a compromise bill, and therefore, while it has the strength of a compromise bill, it has also the weakness of a compromise bill. There are ideas in it which, while meeting the views of a majority, taken separately will be opposed by others. I am quite sure I say nothing new to the Senate when I say it does not in all respects meet my own views. But there is a necessity for us to yield some of our opinions. We cannot reconcile or pass any measure that will be satisfactory to the country unless we do so. Any positive victory by either extreme of this controversy will be an absolute injury to the business of the country. Therefore, any measure that is adopted ought to be so moderate, pursuing such a middle course, such a middle ground, that it will give satisfaction to the country. It must be taken as a whole; and therefore the effect of amending this proposition will be simply to destroy it. If an amendment in the direction of expansion is inserted, it will drive away some who would be willing to support it as is. If an amendment in the way of contraction is proposed and carried by a majority of the Senate, it will drive away those who might be willing to take this measure as a compromise. The only question before the Senate now is, whether this is a fair compromise between the ideas that have divided the people of this country and the Members of the Senate; whether it will surely improve our currency while giving the relief that is hoped for by a moderate increase of the currency. Now I ask the secretary to read the first section of the bill.”
The chief clerk read section 1, as follows:
“Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the maximum limit of United States notes is hereby fixed at $382,000,000, at which amount it shall remain until reduced as hereinafter provided.”
I then continued:
“It is manifest to every Senator that the initial step in this controversy is to fix the aggregate limit of United States notes. The United States notes, although they are very popular, and justly so, in this country, are at this moment inconvertible; they are irredeemable, and they are depreciated. These are facts admitted on all hands. In making that statement I do not intend at all to deny that the United States notes have served a great and useful purpose; and though I was here at the birth of them and advocated them in all stages of their history, yet I am compelled to say at this moment, twelve years after their issue, that they are inconvertible; they are irredeemable; and they are depreciated this day at the rate of twelve per cent. They have been legally inconvertible since July 1, 1863, and practically inconvertible since the close of the war; that is, the government refuses to receive them, either in payment of customs or in payment at par of any bond of the United States offered by it. They are irredeemable on their very face. They have depreciated almost from the date of their issue, at one time being worth only forty cents in gold, and to-day only worth ninety cents. That is the condition of the United States notes.
“Now, there is another thing admitted by all Senators. I do not trespass on any disputed ground when I say that every addition to the volume of these notes, while they thus stand depreciated, irredeemable, and inconvertible, is as certain to further depreciate them, as it is that to pour water into an overflowing bucket will cause it still more to overflow; as certain as the law of gravitation; as certain as anything human or divine. It is equally true that any contraction of this currency, any withdrawal of the amount of it, is undoubtedly an appreciation of its value, making it nearer and nearer to the standard of gold.
“This is so plain a proposition that it is not necessary to discuss it; and the whole people of the country understand it; the plainest and simplest people understand it as well as the wisest. Those who desire to increase prices, to start and put in operation new enterprises, desire an increase of the currency without any plan of redemption. Those, on the other hand, who want to get back to the specie standard, to appreciate the value of these notes, desire to withdraw them, get them out of the way, or give new uses and new values to them so as to advance them nearer and nearer the standard of gold. Therefore it is that I say the very first step at the outset of this controversy is to settle what is the legal limit of these notes; how many are there now authorized by law; how many are there outstanding. And here it is a strange thing that on this very point, a purely legal question, the most important one in our financial discussion, there is a great difference of opinion. There ought not to be uncertainty or room for a difference of opinion upon a question of this kind. It ought to be settled. On the one hand it is insisted by Senators who compose the majority of the committee on finance that the legal limit of United States notes is $356,000,000; that the amount which has been already issued, of what is known as the $44,000,000 reserve, was unlawfully issued, although under great press of circumstances and without any intention on the part of the secretary to do more than he thought he had a lawful right to do. On the other hand it is insisted by other Senators that the legal limit of United States notes is $400,000,000; and here is a margin of $44,000,000 upon which there is a dispute of law as to the power of the secretary to issue it. That dispute ought to be settled at once. It is a question that ought not to be in doubt a moment, because the power to issue that $44,000,000 places it in the discretion of the Secretary of the Treasury either to advance or to lower the value of all property in the United States, of all debts in the United States, of everything that is measured by United States notes.
“Should we undertake to say that the secretary did wrong in exceeding the limit at $356,000,000? A majority of the committee believe that that is now the legal limit, and believe it conscientiously. But should be undertake to fix that as the legal limit? Twenty-six million dollars of the $44,000,000 are outstanding. They are now issued; they are now a part of the currency of the country. They are just as much the currency as that which was issued before. You cannot distinguish between them. You cannot say which of the $382,000,000 now outstanding is legal and which is illegal. So far as the United States are concerned, they are all debts of the United States which we are bound to pay, whether they have been issued legally or illegally. I do not understand even my friend from Delaware to dispute the duty and obligation of the United States to pay these notes, even if they have been illegally issued. There can be no question about it. It is impossible to distinguish between them. The only question is whether our agent exceeded his authority or not. Therefore, without raising the question as to the legality of this issue, reserving to each Senator his own opinion on the subject, we have adopted as the status quo $382,000,000, the amount now outstanding; and we recognize that amount as the maximum legal obligation of the United States in the form of notes, and we propose upon that basis to erect our superstructure. We therefore say that we will raise no question as to the mode of retiring the $26,000,000; we will simply say that the amount now outstanding shall never be exceeded. That is a recognition, at least, that they are outstanding lawfully and properly; at any rate, so far as the obligation of the United States to pay them is concerned.
“Mr. president, a limit ought to be fixed. But there is a difference of opinion as to what should be the limit. If I had the power to fix this limit I should say that the limit which was fixed by the old law should remain at $356,000,000; and I would provide a mode and manner of issuing United States bonds to retire the $26,000,000 slowly and gradually, without disturbing the ordinary business of the country. I would thereby seek to recover the ground we have lost by what has occurred since the panic, and go back to the standard prior to that time. But I know that would be very difficult; that would involve an increase of the bonded debt. Our revenues are not sufficient to call in this $26,000,000. We have no surplus revenue now as we had a year or two ago. We could only do it by the issue of bonds, and the process itself would be a very hard one. Besides, it is probable that public opinion and the judgment of Congress would not sustain such a proposition; and therefore it is hardly worth while to recommend it. We assume, therefore, that the $382,000,000 is the present limit, and we say that shall be the maximum limit.
“I said it was a compromise by the committee. I speak of a majority of the committee. As a matter of course my friend is at liberty to dissent from any of its propositions. On question of this kind committees are very rarely unanimous; but I will say that on this point a very decided majority of the committee concurred in the section.
“To the second section I wish to invite the careful and earnest attention of the Senate. This section is an honest effort to deal with the great problem of redemption. Every Senator who has spoken contemplates that a time must come when all the United States notes must be redeemed in coin. The public faith of the United States is so pledged. The notes were issued with the understanding that they should be paid in coin. No man could survive politically in this country who would declare that it was his purpose never to pay these notes in coin. My friend who now presides [Mr. Ferry, of Michigan], speaks always of his measure of inflation as a means of bringing about at some time specie payments; and I will say that in the Senate I have not heard any Senator deny that it is the duty of the United States at some time to pay these notes in coin. In all this discussion there is at least that one point agreed upon. If I state this too strongly I hope I will be here corrected.
“Now, Mr. president, how shall it be done, and when shall it be done? I say that now, nine years after the close of our Civil War, twelve years after these notes have been authorized and issued, five years after the dominant party has declared its purpose to pay them at the earliest day practicable, there should be no longer delay. The United States ought to do something toward the fulfillment of that pledge and the performance of that duty. There must be something very peculiar in the condition of our country that will justify a longer delay; a longer procrastination in the performance of this solemn pledge, this public policy—our own political obligation.
“Mr. president, this section is the result of the patient consideration of the committee on finance as to how this result is to be brought about; and upon this very section there is most likely to be a contrariety and difference of opinion among Senators, because the mode and manner of redemption is the thing which has excited the public mind and upon which men all over the country differ. I wish, therefore, to deal with this question. We have got to pay these notes in coin. The time when is not defined by the law. Are we prepared now to fix a day when we will pay these notes in coin? If the condition of our country was such as to justify it, I would greatly prefer fixing the time when these notes should be paid in coin; but I am disposed to agree with what has been stated by the Senator from Indiana, and by other Senators, that in the present condition of our coinage, the present condition of our foreign trade, we are not prepared to fix a definite day when we will pay in coin. Why? I find, by reference to official documents, that we now have in gold and silver coin in this country about $140,000,000. This statement of Dr. Linderman does not include the bullion on hand. How much that is I am not prepared to state. The whole amount of gold and silver coin in the country, however, is about $140,000,000. Some of that is in circulation in the Pacific states, but the bulk of it is in the treasury of the United States, the property of individuals and the property of the United States. The total annual production of gold and silver in this country cannot be estimated at over $70,000,000; and heretofore, at least $50,000,000 of this has been exported over and above the amount that has been imported. The balance of trade has been against us; and although I do not regard that as entering much into the calculation, yet it is a fact that until recently, perhaps, the balance of trade has been against us. The annual coinage of the United States for the last year or two has been largely increasing, and last year the coinage of the United States was $38,689,183, besides stamping into fine bars, which operate as a kind of coinage, of $27,517,000. So that there has been in fact converted, of gold and silver, into coin, or bars stamped by the United States, $66,000,000 during the last year, showing a use and employment of gold in this country that is now rapidly increasing.
“But still this state of affairs would not justify us in saying that we are prepared to declare a resumption of specie payments absolutely upon the basis of $800,000,000 of paper money, including our fractional currency. I am, therefore, not prepared to say that the United States can, on a fixed day, within a reasonable time— within such a time as would give confidence in our ability to perform it—say that we will absolutely redeem our notes in coin.
“I know that Senators here, for whose opinion I have the highest respect, who are probably more sanguine of our ability and capacity to do this than I am—many of those who have agreed with me and co-operated with me—think we are able and strong enough to fix the time for the absolute resumption of specie payments; but I have always doubted it. Indeed I have thought there was a better way to reach the great result. But if we cannot fix the time when we will redeem in coin, can we not give additional value to our United States noes, so as to gradually appreciate them to the coin standard, and thus advance toward specie payments if we cannot reach the goal? Because we cannot accomplish all that we have agreed to do in a given time, does that relieve us from the necessity of progressing in that direction? When we have before us a long journey that will take months to pass, perhaps years, shall we delay starting on that journey because we cannot reach the end of it in a year or two? Not at all. I therefore say that the time has arrived this moment when the United States ought to do something to advance its notes to the specie standard.
“Now what is that something? There are two propositions, and only two propositions, that have been made, aside from absolute coin redemption, that have had any strength whatever. One is to allow the United States notes to be received in payment of customs duties, the other is to allow United States notes to be converted into bonds. In regard to the first, I agree entirely that if the matter was open now to our choice and selection, one of the best methods we could adopt to advance our notes to par in gold would be by repealing that restriction which prevents the receiving of them for customs duties; but we are met there by the sacred pledge of the United States; we are met there by the fact that customs duties are, by the law of 1862, agreed to be collected in coin.”
Mr. Bayard inquired:
“Does not the law provide that the customs duties shall be paid in coin or in notes of the United States? Is not the alternative given by the law?”
I replied:
“O, no. If the Senator will look at section 5 of the act of February 25, 1862—my friend from Vermont can turn to it in a moment—he will find that there is an express stipulation that the customs duties shall be collected in coin, and that this coin shall be set aside as a pledge—legal language is used—and shall only be applied, first, to the payment of the interest on the public debt, and, secondly, to the establishment of a sinking fund of one per cent. That was the basis of the obligation of the United States to pay in coin, and but for the fact that we collected our customs duties in coin during the war we could not have paid the interest on our public debt in coin, and therefore our bonds would have sunk out of sight. That pledge we cannot now violate; and I never have yet been able to bring my mind to the consideration of any proposition whatever which would ever shock or excite the fear of the public creditors in that respect. The safety of the public creditors consists in having a specific fund for the payment of their interest; the principal will take care of itself; and that fund has always been maintained in the darkest hours of the war. Except the propositions that have been made here and there to impair that fund by allowing a portion of the customs duties to be paid in currency, it has never been either invaded or threatened; but all such propositions have been voted down. I, therefore, while I see the policy and the expedience of allowing these notes to be used in payment of customs duties, simply say we are precluded from that remedy because we have mortgaged that fund, and we have no power to take them for any purpose except that which the mortgage stipulates.
“We then come to the redemption in bonds. There is the moral obligation, on the part of the United States, which has issued its notes payable in coin, but for reasons of public policy does not pay in coin, to give to its creditors its notes bearing interest in place of coin. The United States cannot plead inability to pay interest on its notes if it will not or cannot pay the principal. Why should not the United States give its obligation bearing interest just as any individual would have to do? There is a moral obligation which rests upon the United States every day of the year to every holder of these notes, because, although the United States has not said when it will redeem these notes in coin, yet it is bound to do what it can to give them additional value. Although it may not receive these notes for customs duties, why can it not receive these notes in payment of bonds? Why discriminate against these notes in the sale of bonds? The answer is, that during the war we were compelled to do it; and so we were. I very reluctantly yielded to that necessity. We were compelled to do it; but, sir, it was only expected that that would continue to the close of the war; and, practically, during the whole of the war these notes were received at par for bonds at par.
“If, therefore, we are to take any step toward specie payments, why not give to the holder of United States notes who demands it, a bond of the United States bearing a reasonable rate of interest in exchange for his notes? This should only be done after a reasonable time, so as to prevent any injury to the private contracts between debtor and creditor. When we cannot pay the coin, we are honorably and sacredly bound to pay in a bond of the United States, which in ordinary times would approximate to par in gold. In other words, this is a qualified redemption. The Senator from Indiana calls it a ‘half-way measure.’ It is a half-way measure in the right direction, and indeed it is practical specie payment.”
The bill led to a long continuous debate which extended to the 6th of April, 1874. Several amendments were offered and adopted which enlarged the maximum of notes to $400,000,000, and greatly weakened the bill as a measure of resumption of specie payments. By reason of these amendments many of those who would have supported the bill as introduced voted against it on its passage, I among the number. The bill, however, passed the Senate by a vote of yeas 29 and nays 24. The title of the bill was changed to “A bill to fix the amount of United States notes and the circulation of national banks, and for other purposes.” This change of title indicates the radical change in the provisions of the bill. Instead of a return to specie payments, it provided for an expansion of an irredeemable currency.
The bill, as it passed the Senate, was as follows:
“Be it enacted, etc.,, That the maximum amount of United States notes is hereby fixed at $400,000,000.
“Sec. 2. That forty-six millions in notes for circulation, in addition to such circulation now allowed by law, shall be issued to national banking associations now organized and which may be organized hereafter, and such increased circulation shall be distributed among the several states as provided in section 1 of the act entitled ‘An act to provide for the redemption of the three per cent. temporary loan certificates and for an increase of national bank notes,’ approved July 12, 1870. And each national banking association, now organized or hereafter to be organized, shall keep and maintain, as a part of its reserve required by law, one-fourth part of the coin received by it as interest on bonds of the United States deposited as security for circulating notes or government deposits; and that hereafter only one-fourth of the reserve now prescribed by law for national banking associations shall consist of balances due to an association available for the redemption of the circulating notes from associations in cities of redemption, and upon which balances no interest shall be paid.”
The bill was taken up in the House of Representatives on the 14th of April, 1874, and, without any debate on its merits, was passed by the vote of 140 yeas and 102 nays.
On the 22nd of April, President Grant returned the bill to the Senate with his veto, and the Senate, upon the question, “Shall the bill pass notwithstanding the objections of the President of the United States,” voted 34 yeas and 30 nays. I voted nay. The president of the Senate declared “that two-thirds of the Senators present not having voted in the affirmative the Senate refuses to pass the bill.”
Thus, for that session, the struggle for resumption ended; but the debate in both Houses attracted popular discussion, and tended in the right direction. The evil effects of the stringency in monetary affairs, the want of confidence, the reduction of the national revenue, the decline of domestic productions, all these contributed to impress Congress with the imperative necessity of providing some measure of relief. Instead of inflation, of large issues of paper money by the United States and the national banks, there grew up a conviction that the better policy was to limit and reduce the volume of such money to an amount that could be maintained at par with coin.
During the canvass that followed I spoke in many parts of Ohio, confining myself chiefly to financial questions. The stringency of the money market which occurred the preceding year still continued, and great interest was manifested in the measures proposed during the preceding session, especially in the defeat of the bill to prevent the contraction of the currency. At the request of General Garfield I spoke in Warren in his Congressional district, where he met, for the first time, a decided opposition. I insert his autograph letter, the original being in his familiar hand writing:
“Hiram, Ohio, September 25, 1874. “Dear Senator:—In accordance with the arrangement which I made with you and with the central committee, we have posted you for a mass meeting at Warren, on Saturday afternoon, October 10. I hope I shall not embarrass you by suggesting that in your speech you take occasion to say a few words in reference to my standing and public service as a representative. It will do much to counteract the prejudice that a small knob of persistent assailants have created against me. I write also to inquire if you will be willing to speak at another place the same evening. If so, we are very anxious to have you do so. Please telegraph me to Garrettsville, Ohio, and oblige,
“Very truly yours,
“J. A. Garfield.”
CHAPTER XXV. BILL FOR THE RESUMPTION OF SPECIE PAYMENTS. Decline in Value of Paper Money—Meeting of Congress in December, 1874—Senate Committee of Eleven to Formulate a Bill to Advance United States Notes to Par in Coin—Widely Differing Views of the Members—Redemption of Fractional Currency Readily Agreed to—Other Sections Finally Adopted—Means to Prepare for and Maintain Resumption —Report of the Bill by the Committee on Finance—Its Passage by the Senate by a Vote of 32 to 14—Full Text of the Measure and an Explanation of What It Was Expected to Accomplish—Approval by the House and the President.
When Congress met in December, 1874, the amount of United States notes outstanding was $382,000,000. The fractional notes outstanding convertible into legal tenders amounted to $44,000,000, and the amount of national bank notes redeemable in lawful money was $354,000,000, in all $780,000,000. Each dollar was worth a fraction less than 89 cents in coin. While these notes were at a discount coin did not and could not circulate as money. The government exacted coin for customs duties and paid coin for interest on its bonds. If there was an excess of coin received from customs to pay interest then the excess was sold at a premium. If the receipts from customs were insufficient to pay the interest on bonds, the government had to buy the coin and pay the premium. The people who were demanding more money to relieve the stringency did not see that the best way to get more money into circulation was to adopt measures that would make United States notes and bank notes equal to coin, when all three forms of money would enter into circulation and thus give them more money and all kinds of equal value.
While our paper money was depreciated the gold and silver bullion from our mines went abroad and was converted into foreign coin, while a large portion and perhaps a majority of our people demanded more paper money, which declined in value in exact proportion to its increase. During the war vast expenditures compelled us to use paper money; the return of peace and the excess of revenue over expenditures should have been promptly followed by coin payments or notes payable in coin. We delayed this process so long that the popular mind rested content with depreciated money, but the panic of 1873, and the feverish speculation which preceded it, convinced the great body of our business men that there was no remedy for existing evils but a return to specie payments.
Another bill concerning currency and free banking was reported by Horace Maynard, of Tennessee, on the 29th of January, 1874, from the committee on banking and currency of the House of Representatives, which provided for free banking and a gradual reduction and cancellation of United States notes by the issue of notes payable in gold in two years from the passage of the bill. This was fully debated in the House of Representatives and amended and passed. In the Senate it was reported by me from the committee on finance, with a substitute which provided for free banking and that on and after the 1st of January, 1877, and holder of United States notes might present them for payment either in coin or five per cent. bonds of the United States, at the suggestion of the Secretary of the Treasury. This substitute was amended in the Senate by striking out all provisions for the redemption of United States notes, leaving the measure one for free banking alone. The House disagreed to the amendments and a committee of conference was appointed, which resulted in a measure fixing the amount of United States notes outstanding at $382,000,000, and making no provision for their redemption. It was a crude and imperfect measure. I voted for it because it provided for a redistribution of national banks among the states. I said: “Because I cannot get a majority of both Houses of Congress to agree to specie resumption I ought not therefore to refuse to vote for a bill on the subject of banking and currency.” The bill was approved by the President on the 20th of June, 1874. This long struggle prepared the way for the result accomplished at the next session.
When Congress met in December, 1874, the feeling that the remedy for existing evils was the return to specie payments, was general among Republican Senators and Members. The abortive efforts of the previous session and the veto of President Grant of one of the bills referred to contributed to it. At the first Republican conference I called attention to the necessity of our uniting, if possible, on some measure that would advance United States notes to par in coin and moved that a committee of eleven Senators be created to formulate a bill for that purpose. It was agreed to, and, as the names of the Senators composing the committee have already been published, I feel justified in repeating them: The committee consisted of Senators John Sherman (chairman), William B. Allison, George S. Boutwell, Roscoe Conkling, George F. Edmunds, Thomas W. Ferry, F. T. Freylinghuysen, Timothy O. Howe, John A. Logan, Oliver P. Morton, and Aaron A. Sargent.
When the committee met it was agreed that each member should state how far he would go in the direction of specie resumption. When these statements were made it was manifest that the divergence of opinion was so great that an agreement was almost impossible. Yet, the necessity of an agreement was so absolute that a failure to agree was a disruption of the Republican party.
The first section of the act to provide for the resumption of specie payments, which related to the coinage and issue of fractional silver under the act of February 21, 1853, and the redemption of an equal amount of fractional currency outstanding should be redeemed, and was readily agreed to. This fractional currency was so worn and filthy, and it cost so much to reissue, that by general consent its destruction was agreed to, and its replacement by bright new silver coin, which followed, was heartily welcomed.
The second section was an unjust concession to the miners of gold. It repealed the coinage charge for converting standard gold bullion into coin. This charge had been maintained, not only to cover the cost of coining, but to prevent the exportation of American coins. If the coins were of less value than the bullion of which they were made, however small the difference, they would not be exported while bullion could be had for exportation. The concession was made and the charge for coinage of gold was prohibited.
The free banking provisions in the third section were not seriously contested. The contraction of the volume of United States notes as national bank notes increased, was one of the chief subjects of disagreement. It was finally agreed that this contraction should extend only to the retirement of United States notes in excess of $300,000,000.
The most serious dispute was upon the question whether United States notes presented for redemption and redeemed could be reissued. On the one side it was urged that, being redeemed, they could not be reissued without an express provision of law. The inflationists, as all those who favored United States notes as part of our permanent currency were called, refused to vote for the bill if any such provision was inserted, while those who favored coin payments were equally positive that they would vote for no bill that permitted notes once redeemed to be reissued. This appeared to be the rock upon which the party in power was to split. I had no doubt under existing law, without any further provision, but that United States notes could be reissued. It was finally agreed that no mention should be made by me for or against the reissue of notes, and that I must not commit either side in presenting the bill.
The date for general resumption of specie payments on all United States notes was fixed on the first of January, 1879, four years from the framing of this bill. The important and closing clause of the bill was referred to Mr. Edmunds and myself. It provided the means to prepare for and to maintain resumption. It placed under the control of the Secretary of the Treasury all the surplus revenue in the treasury, and gave him full power to issue, sell and dispose of, at not less than par in coin, any of the bonds described in the refunding act. We were careful to select phraseology so comprehensive that all the resources and credit of the government were pledged to redeem the notes of the United States, as fully and completely as our Revolutionary fathers pledged to each other their lives, their fortunes, and their sacred honor, in support of the declaration of American independence.
After every sentence and word of this bill had been carefully scrutinized, I was authorized by every member of the committee to submit it to the committee on finance, and to report it from that committee as the unanimous act of the Republican Senators. We naturally expected some support from Mr. Bayard and other Democratic Senators, who, no doubt, were in favor of specie payments, but they perhaps thought it best not to share the risk of the measure.
I reported the bill from the committee on finance on the 21st of December, 1874, and gave notice that on the next day I would call it up with a view to immediate action. On the 22nd, after the morning business, I moved to proceed to the consideration of the bill, and gave notice that I intended to press it to its passage, from that hour forward, at the earliest moment practicable. It was well understood that the bill was the result of a Republican conference. It was taken up by the decisive vote of 39 yeas to 18 nays.
It was not my purpose to do more than to present the provisions of the bill. My brief statement led to a desultory debate, participated in almost exclusively by Democratic Senators, the Republican Senators remaining silent. Several votes were taken, each showing a majority of more than two-thirds in favor of the bill and against all amendments. It passed the Senate without change by the vote of 32 yeas to 14 nays.
I here insert the bill as introduced and passed, with my statement in support of its provisions:
“AN ACT TO PROVIDE FOR THE RESUMPTION OF SPECIE PAYMENTS. “Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized and required, as rapidly as practicable, to cause to be coined, at the mints of the United States, silver coins of the denominations of ten, twenty-five, and fifty cents, of standard value, and to issue them in redemption of an equal number and amount of fractional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the sub-treasuries, public depositaries, and post offices of the United States; and, upon such issue, he is hereby authorized and required to redeem an equal amount of such fractional currency, until the whole amount of such fractional currency outstanding shall be redeemed.
“Sec. 2. That so much of section three thousand five hundred and twenty-four of the Revised Statutes of the United States as provides for a charge of one-fifth of one per centum for converting standard gold bullion into coin is hereby repealed; and hereafter no charge shall be made for that service.
“Sec. 3. That section five thousand one hundred and seventy-seven of the Revised Statutes, limiting the aggregate amount of circulating notes of national banking associations, be, and hereby is, repealed; and each existing banking association may increase its circulating notes in accordance with existing law, without respect to said aggregate limit; and new banking associations may be organized in accordance with existing law, without respect to said aggregate limit; and the provisions of law for the withdrawal and redistribution of national bank currency among the several states and territories are hereby repealed. And whenever, and so often, as circulating notes shall be issued to any such banking association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal tender United States notes in excess only of three hundred millions of dollars, to the amount of eighty per centum of the sum of national bank notes so issued to any banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of three hundred million dollars of such legal tender United States notes, and no more. And on and after the first day of January, anno Domini eighteen hundred and seventy-nine, the Secretary of the Treasury shall redeem in coin the United States legal tender notes then outstanding, on their presentation for redemption at the office of the assistant treasurer of the United States in the city of New York, in sums of not less than fifty dollars. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues from time to time in the treasury not otherwise appropriated, and to issue, sell, and dispose of, at not less than par in coin, either of the descriptions of bonds of the United States described in the act of Congress approved July fourteenth, eighteen hundred and seventy, entitled ‘An act to authorize the refunding of the national debt,’ with like qualities, privileges, and exemptions, to the extent necessary to carry this act into full effect, and to use the proceeds thereof for the purposes aforesaid. And all provisions of law inconsistent with the provisions of this act are hereby repealed.”
I said:
“Mr. president, I do not intend to reopen the debate on financial topics of last session. That debate was carried to such great length that it was not only exhaustive, but it was exhausting, not only mentally but physically. The Senate is composed of the same persons who shared in that debate, and it is utterly idle for us, in this short session, to reopen it and to invite the discussion of the various topics presented in that debate. The Senate is now within less than three months, a little more than two months, of its adjournment, and there is a general feeling throughout the country, shared by all classes of people, that this Congress ought to give some definite notice to the people of this country as to their purpose in the important topics embraced in this bill; and I say to Senators on all sides of the House that this bill contains enough to accomplish the important object declared by the title of the bill, and this without reviving all the troublesome and difficult questions which were discussed at the last session. It contains a few simple propositions which may be separated from the mass of financial topics discussed at the last session. Its purpose is declared upon the title of the bill, ‘An act to provide for the resumption of specie payments.’ Every word, every line, and every provision, of this bill is in harmony with that title. It will tend to promote the resumption of specie payments. It may fall short in many particulars of the desire of some Senators; and it does go further in that direction than some Senators were willing to support at the last session. It is a bill which demands reasonable concession from every Member of the Senate. If we undertake now to seek to carry out the individual views of any Senator, we cannot accomplish the passage of any bill to promote this object, and therefore this bill has demanded of everyone who has consented to it thus far a surrender of some portions of his opinions as to measures and means to accomplish the great purpose. I will consider my duty done, so far as this bill is concerned, by simply stating its provisions and calling attention to the character of those provisions, without entering into a single topic that gave rise to the long discussion at the last session.
“The bill is intended to provide for the resumption of specie payments. The first section of the bill provides for the resumption of specie payments on the fractional currency. It is confined to that subject alone. It so happens that at this particular period of time the state of the money market, the state of the demand for silver bullion, and more especially the recent action of the German Empire, which has demonetized silver and thus cheapened that product, enables us now, without any loss of revenue, without any sacrifice, to enter the market for the purchase of bullion and resume specie payments on our fractional currency. The market price of bullion to-day will justify the government of the United States, without any sacrifice, at a price about equivalent to, or perhaps a trifle above, our fractional currency—scarcely a shadow above our fractional currency—to purchase silver bullion in the money markets of the world, mostly of our own production, perhaps entirely of our own production. This bill simply directs that the Secretary of the Treasury shall purchase this bullion and shall coin silver coin and substitute that in the place of fractional currency. This section is recommended not only by the Secretary of the Treasury and the President of the United States, but I believe will meet the general concurrence of every Member of the Senate, and we fortunately are enabled to embrace the present time to commence this operations without any loss to the government, except perhaps the cost of the coinage of this silver may have to be paid out of the treasury of the United States. That coinage may be done in the ordinary course of business without any increase of expenditures. The mints of the United States are now prepared, immediately upon the passage of this bill, to resume the coinage of silver coins of all the legal denominations. Therefore the committee has provided that the Secretary of the Treasury shall proceed to coin the silver coins, and in one of several ways to issue them in place of fractional currency.
“I need not dwell further upon this section, because I believe it will meet with the general assent of the Senate. It provides for the immediate resumption of specie payments upon the fractional currency, or at least as immediate as possible; that is, as soon as the government of the United States can, in the mints of the United States, coin the silver coin. That process may continue one, two, or three years, how long we cannot tell, depending entirely upon the force that may be employed in that direction. It takes a much longer time to coin these small coins than gold coins, and the operation will probably take more time than it would to coin any considerable amount of gold coin.”
Mr. Hamilton, of Maryland, inquired:
“I would ask the Senator if there is authority to reissue that fractional currency?”
I said:
“I will come to that in a moment. The second section of this bill simply removes an inducement that now exists to export our gold bullion from the United States to Great Britain, where, by the long established laws of that country, they coin money free of charge. This section involves the surrender of about $85,000 a year of revenue; that is, the government of the United States received last year for coining gold coins, $85,000, or one-fifth of one per cent. on forty-five millions of gold coined. The only sacrifice of revenue, therefore, by the second section of the bill, is the sacrifice or surrender of $85,000, which heretofore has been levied upon those who produce gold bullion in order to convert it into coin. In the opinion of many men, among them the Secretary of the Treasury, the director of the mint, and perhaps a large number of Senators heretofore, this will tend, in a slight degree at any rate, to prevent the exportation of the gold of our own country into foreign parts, because when the government of the United States undertakes to put gold bullion in the form of gold coin without additional charge the tendency will inevitably be for the gold bullion to flow into the mints for coinage, and being put into the form of American coin, it is thought by a great many people that this will tend to prevent its exportation. To the extent it does so it prepares us for specie payments. That is the whole of the second section.
“The third section of the bill contains only two or three affirmative propositions. The first is that after the passage of this act banking shall be free. Perhaps there is no idea stronger in the minds of the American people than a feeling of hostility against a monopoly—a privilege that one man or set of men can enjoy which is denied to another man or set of men. Under the law as it now stands banking is substantially free in the southern and some of the western states; but banking is not free in the great commercial states, in the older states, where wealth has accumulated for ages. This may be a mere sentimental point, but it is well enough to meet it; and by the operation of this bill banking is made free, so that there will be no difficulty hereafter for any corporation organized as a national bank either to increase its circulation or for banks, to be organized under the provisions of existing law, to issue circulating notes to any extent within the limits and upon the terms and provisions of the banking law. This section, therefore, by making banking free, provides for an enlargement of the currency in case the business of the community demands it, and in case any bank in the United States may think it advisable or profitable to issue circulating medium in the form of bank notes, under the conditions and limitations of the banking law. Coupled with that is a provision, an undertaking, on the part of the United States, that as banks are organized or as circulating notes are issued, either by old or new banks, the government of the United States undertakes to retire eighty per cent. of that amount of United States notes. In other words, it proposes to redeem the United States notes to the extent of eighty per cent. of the amount of bank notes that may be issued; and here is the first controversial question that arises on this bill and the first that is settled.
“It may be asked if we provide for the issue of circulating notes to banks, why not provide for the retirement of an equal amount of United States notes. The answer is that under the provisions of the banking act, by the law as it now stands, a bank cannot be organized and maintained in existence unless the reserve which is in that bank, or required for that bank in the ordinary course of business, either on its deposits or circulation, is at least equal to twenty per cent. of the amount of its circulating notes, so that it was believed, according to the judgment of the best business men of the country, and I may say with the comptroller of the currency, that the retirement of eighty per cent. of the amount of bank notes is fully equivalent to keeping the amount of circulating medium in actual circulation on the same footing, so that this provision of the bill neither provides for a contraction nor expansion of the currency, but leaves the amount to be regulated by the business wants of the community, so that when notes are issued to a bank eighty per cent. of the amount in United States notes is redeemed, and this process continued until United States notes are reduced to three hundred millions.”
Mr. Schurz asked:
“Will the Senator permit me to ask him a question in reference to this section? When the eighty per cent. of greenbacks are retired will they be destroyed and never used again?”
I replied:
“I will speak of that in a moment in connection with other sections. Now, Mr. president, that is all there is in regard to banking in this bill and also in regard to the retirement of the United States notes until the time for the resumption of specie payments comes, when this bill provides for actual redemption in coin of all notes presented. It has always been a question in the minds of many people as to whether it is wise to fix a day for specie payments. That matter was discussed at the last session of Congress by many Senators, and the general opinion seemed to be that if we would provide the means by which specie payments would be resumed it might not be necessary to fix the day; but, on the other hand, it is important to have our laws in regard to the currency fix a probable time, or a certain time, when everybody may know that his contracts will be measured by the coin standard. We also know, by the example of other nations which have found themselves in the condition in which we are now placed, and by some of the states when specie payments were suspended, that they have adopted a specific day for the resumption of specie payments. In England, by the bank act of 1819, they provided for the resumption of specie payments in 1823, making four years. In our own states—in New York, in Ohio, in nearly all the states—when there has been a temporary suspension of specie payments a time has been fixed when the banks were compelled to resume, and this bill simply follows the example that has been set by the states, by England, and by other nations, when they have been involved in a like condition.
“This bill also provides ample means to prepare for and to maintain resumption. I may say the whole credit and money of the United States is placed by this bill under the direction of the proper executive officers, not only to prepare for but to maintain resumption, and no man can doubt that if this bill stands the law of the land from this time until the 1st day of January, 1879, specie payments will be resumed, and that our United States notes will be converted at the will of the holder into gold and silver coin.
“These are all the provisions contained in this bill. They are simple and easily understood, and every Senator can pass his judgment upon them readily.
“Now I desire to approach a class of questions that are not embraced in this bill. Many such, and I could name fifty, are not included in this bill, and I may say this: That if there should be a successful effort, by the Senate of the United States, to ingraft any of this multitude of doubtful or contested questions upon the face of this bill it would inevitably tend to its defeat. I am free to say that if I were called upon to frame a bill to accomplish the purpose declared in the title of this bill, I would have provided some means of gradual redemption between this and the time fixed for final specie payments. All these means are open to objection.
“There have been three different plans proposed to prepare for specie payments, and only three. They are all grouped in three classes. One is what is called the contraction plan. The simplest and most direct way to specie payments is, undoubtedly, the gradual withdrawal of United States notes or the contraction of the currency. Now, we know very well the feeling with which that idea is regarded, not only in this Senate, but all through the country. It is believed to operate as a disturbing element in all the business relations of life; to add to the burden of the debtor by making scare that article in which he is bound to pay his debts; and there has been an honest, sincere opposition to this theory of contraction. Therefore, although it may be the simplest and the best way to reach specie payments, it is entirely omitted from this bill.
“The second plan, that I have favored myself often, and would favor now, if I had my own way, and had no opinion to consult but my own, is the plan of converting United States notes into a bond that would gradually appreciate our notes to par in gold. That has always been a favorite idea of mine. There is nothing of that kind in this bill, except those provisions which authorize the Secretary of the Treasury to issue bonds to retire the greenbacks as bank notes are issued; and it also authorizes the Secretary of the Treasury to issue bonds to provide for and to maintain resumption. I therefore have been compelled to surrender my ideas on this bill in order to accomplish a good object without using these means that have been held objectionable by many Senators.
“The third plan of resumption has been favored very extensively in this country, which is the plan of a graduated scale for resumption in coin or bullion; what I call the English plan. That is, that we provide now for the redemption, at a fixed rate or scale or rates, of so much gold for a specific sum of United States notes. At present rates we would give about $90 of gold for $100 of greenbacks, and then provide for a graduated scale by which we would approach specie payments constantly, and reach it at a fixed day. This may be called a gradual redemption. This, also, is objectionable to many persons, from the idea that it compels us to enter the money markets of the world to discount our own paper. It is an ideal objection, but a very strong objection; an objection that has force with a great many people. We have undertaken to redeem these notes in coin, and it is at least a question of doubtful ethics whether we ought to enter into the markets of the world and buy our own notes at a discount. Although that plan has been adopted in England and successfully carried into execution, yet there is a strong objection to it in this country, and therefore that mode is abandoned.
“Either of these plans I could readily support; but they have met and will meet with such opposition that we cannot hope to carry them or ingraft them in this bill without defeating it. We have then fallen back on these gradual steps: First, to retire the fractional currency; second, to reduce United States notes as bank notes are increased; and then to rest our plan of redemption upon the declaration, made on the faith of the United States, that at the time fixed by the bill we will resume the payment of the United States notes in coin at par. That is the whole of this bill.”
On the 7th of January, 1875, the bill was considered in the House of Representatives and, after a very brief conversational debate, passed by the vote of yeas 136, nays 98.
On the 14th day of January, 1875, the President sent a message to the Senate approving the bill but also containing recommendations of further legislation upon matters that had been carefully excluded from the bill. He added at the close of the message this paragraph:
“I have ventured upon this subject with great diffidence, because it is so unusual to approve a measure—as I most heartily do this, even if no further legislation is attainable at this time—and to announce the fact by message. But I do so, because I feel that it is a subject of such vital importance to the whole country, that it should receive the attention of, and be discussed by, Congress and the people, through the press and in every way, to the end that the best and most satisfactory course may be reached of executing what I deem most beneficial legislation on a most vital question to the interests and the prosperity of the nation.”
Thus, after a memorable debate, extending through two sessions of Congress, a measure of vital importance became a law, and when executed completely accomplished the great object proposed by its authors. The narrative of the steps leading to resumption under this act will be more appropriate hereafter.
CHAPTER XXVI. RESUMPTION ACT RECEIVED WITH DISFAVOR. It Is Not Well Received by Those Who Wished Immediate Resumption of Specie Payments—Letter to “The Financier” in Reply to a Charge That It Was a “Political Trick,” etc.—The Ohio Canvass of 1875— Finance Resolutions in the Democratic and Republican Platforms—R. B. Hayes and Myself Talk in Favor of Resumption—My Recommendation of Him for President—A Democrat Elected as Speaker of the House— The Senate Still Republican—My Speech in Support of Specie Payments Made March 6, 1876—What the Financial Policy of the Government Should Be.
The resumption act was generally received with disfavor by those who wished the immediate resumption of specie payments. It was the subject of much criticism in the financial journals, among others “The Financier,” which described it as a political trick, an evasion of a public duty, and as totally inadequate for the purpose sought to be accomplished. I took occasion to reply to this article in the following letter:
“United States Senate Chamber,} “Washington, January 10, 1875.} “Dear Sir:—As I am a subscriber to ‘The Financier,’ you will probably allow me to express my surprise at the course you have pursued in respect to the finance bill recently passed by Congress. Claiming as you do to be a ‘monetary and business’ journal, you might be expected to treat fairly a measure affecting so greatly the interests you represent; but you have not done so. You have treated it as a political trick, an evasion, a disgrace to Congress. You complained that it was passed without debate and that its inception and passage were shameful. But as you say in your last number ‘that it is well to examine it hopefully, to find what good may have been done, if any, although from a bad motive,’ I take the liberty to correct errors even in your ‘hopeful’ view of the law, so that you may be more hopeful still. You assume that the Secretary of the Treasury is not authorized to issue five per cent. gold bonds to prepare for and to maintain resumption, because the amount of five per cent. bonds authorized in the act of 1870 is nearly exhausted. This is an error. The secretary can issue either four and a half or five per cent. gold bonds to an amount sufficient to execute the law. The act of 1870 is only referred to for the ’description’ of the bonds to be issued, and the only limit to their amount is the sum necessary, and the only limit to their sale is that they must not be sold at less than par in coin.
“You say that one trick of the bill is ‘that there is no provision for carrying on the withdrawal of legal tenders after their maximum reaches $300,000,000.’ Now this ‘trick’ was advocated by you one year ago; it was voted for by every specie paying Member of Congress at the last session, and nearly every writer on the subject has contended that if the legal tenders were reduced to $300,000,000, and the treasury was supported by a reasonable reserve, specie payments could be resumed and maintained. Besides, no one believes that $100,000,000 of bank notes will be issued under this act, and this provision only relieves some people from an idle fear of an improbable event. You must have noticed that when banks retire their notes, as they have done and will do rapidly, this is a reduction of the currency, while every issue of notes to new or old banks involves a retirement of a ratable amount of United States notes. What you say about playing with a movable ‘reserve’ is equally wrong. Neither the fractional currency nor the ’eighty-two million’ redeemed can be reissued, and I stated so when the bill was pending under debate, and no lawyer could put a different construction upon the bill. As to United States notes, a part of the $300,000,000 redeemed after resumption of specie payments, we did refuse to provide whether they could be reissued or not, and we acted wisely. When the question is hereafter determined by Congress, the controversy will be whether the notes when reissued shall have the legal tender quality, or be simple treasury notes receivable for public dues.
“Last session the public press scolded at our long and fruitless debate on finances, and I agreed with the press. This session the same Senators, enlightened by the long debate and heeding the call of the press, gave to the subject the most careful and deliberate consideration, and agreed upon this bill without much debate, and yet the press is not happy. The act does not go as far as I wished, but everything in it is right in itself, and is in the right direction. Its chief merit is that it establishes a public policy which no political party or faction will be strong enough to overthrow, and which if it had not been adopted now, the Democratic party in the next Congress would have defeated. The pretense that the Democratic party, as represented in the next House, would have favored any bill for specie payments is utterly false. Therefore the measure grants to the Secretary of the Treasury powers enough to execute it, but if we can secure the aid of a Democratic House we can make it certain and effective.
“Very truly yours,
“John Sherman.
“Editor of ‘Financier.’”
In the Ohio canvass of 1875 the resumption act became the chief subject of controversy. R. B. Hayes, after having previously served for four years as governor of the state, was against nominated for that office. William Allen, then governor, was renominated upon the Democratic ticket, in opposition to the resumption act and in favor of fiat money, upon which issue the election mainly turned.
The eighth resolution of the Democratic platform was as follows;
“That the contraction of the currency heretofore made by the Republican party, and the further contraction proposed by it, with a view to the forced resumption of specie payment, have already brought disaster to the business of the country, and threaten it with general bankruptcy and ruin. We demand that this policy be abandoned, and that the volume of currency be made and kept equal to the wants of trade, leaving the restoration of legal tenders to par with gold, to be brought about by promoting the industries of the people and not by destroying them.”
The Republican convention in their second resolution declared:
“That a policy of finance be steadily pursued, which, without unnecessary shock to business or trade, will ultimately equalize the purchasing capacity of the coin and paper dollar.”
Ex-Governor Hayes and I opened the state canvass in the county of Lawrence on July 31, 1875, and took strong ground in favor of the resumption act. At the beginning it appeared that the people were not quite prepared for any measure looking to resumption, but as the contest progressed and the subject was fully and boldly presented by Mr. Hayes and myself, the tide of opinion ran in our favor and Hayes was elected by a small majority. The ex-governor did not evade the issue, but in every speech supported and urged the policy of resumption as a matter of the highest interest.
In the approaching nomination for President, Governor Hayes was frequently spoken of as a candidate to succeed General Grant, and I also was mentioned in the same connection, but, feeling confident that Mr. Hayes would be a stronger candidate than myself, and fully determined not to stand in his way, on the 21st of January, 1876, I wrote a letter to a personal friends, and the Member of the Senate from the district in which I live, in which I urged the nomination of Governor Hayes as the most available candidate in the approaching presidential canvass. This letter no doubt contributed to his strength and prevented any possibility of the division of the vote of Ohio in the convention. The letter I give in full:
“Washington, D. C., January 21, 1876. “Dear Sir:—Your letters of the 2nd and 10th inst. were duly received, and I delayed answering the first sooner partly from personal reasons, but mainly that I might fully consider the questions raised by you as to the approaching presidential contest, the importance of which cannot be overstated. The election of a Democratic President means a restoration to full power in the government of the worst elements of the rebel Confederacy.
“The southern states are to be organized, by violence and intimidation, into a compact political power only needing a small fragment of the northern states to give it absolute control where, by a majority rule of the party, it will govern the country as it did in the time of Pierce and Buchanan.
“If it should elect a President and both Houses of Congress, the constitutional amendments would be disregarded, the freedmen would be nominally citizens but really slaves; innumerable claims, swollen by perjury, would be saddled upon the treasury, the power of the general government would be crippled, and the honors won by our people in subduing rebellion would be a subject of reproach rather than of pride. The only safeguard from these evils is the election of a Republican President, and the adoption of a liberal Republican policy which should be fair and even generous in the south, but firm in the maintenance of all the rights won by the war. Our election in Ohio last fall shows that even under the most adverse circumstances we can win on this basis.
“Every movement made by this Democratic House of Representatives is an appeal to every man who ever voted with the Republican party to rally to its support again, and to every man who fought in the Union army to vote with us to preserve the results of his victory.
“All we need is such a presidential ticket as will give assurance that we mean to stand by our principles, and that will administer the government honestly and economically.
“As to candidates, the drift of public opinion is rapidly reducing the list and has already settled adversely the chances of many of them. Above all, it has positively closed the question of a third term. The conviction that it is not safe to continue in one man for too long a period the vast powers of a President, is based upon the strongest reasons, and this conviction is supported by so many precedents set by the voluntary retirement at the end of a second term of so many Presidents that it would be criminal folly to disregard it. I do not believe General Grant ever seriously entertained the thought of a third term, but even if he did, the established usage against it would make his nomination an act of suicide.
“It would disrupt our party in every Republican state.
“Happily for us we do not need to look for the contingency of his nomination.
“Among the candidates now generally named, I have no such preference that I could not heartily support either of them. They are men of marked ability, who have rendered important public services, but, considering all things, I believe the nomination of Governor Hayes would give us the more strength, taking the whole country at large, than any other man. He is better known in Ohio than elsewhere, and is stronger there than elsewhere, but the qualities that have made him strong in Ohio will, as the canvass progresses, make him stronger in every state. He was a good soldier, and, though not greatly distinguished as such, he performed his full duty, and I noticed, when traveling with him in Ohio, that the soldiers who served under him loved and respected him. As a Member of Congress he was not a leading debater, or manager in party tactics, but he was always sensible, industrious, and true to his convictions and the principles and tendencies of his party, and commanded the sincere respect of his colleagues. As a governor, thrice elected, he has shown good executive abilities and gained great popularity, not only with Republicans but with our adversaries. On the currency question, which is likely to enter largely into the canvass, he is thoroughly sound, but is not committed to any particular measure, so as to be disabled from co-operating with any plan that may promise success. On the main questions, protection for all in equal rights, and the observance of the public faith, he is as trustworthy as any one named. He is fortunately free from the personal enmities and antagonisms that would weaken some of his competitors, and he is unblemished in name, character or conduct, and a native citizen of our state.
“I have thus, as you requested, given you my view of the presidential question, taken as dispassionately as if I were examining a proposition in geometry, and the result drawn from these facts, not too strongly stated, is that the Republican party in Ohio ought, in their state convention, to give Governor Hayes a united delegation instructed to support him in the national convention, not that we have any special claim to have the candidate taken from Ohio, but that in General Hayes we honestly believe the Republican party of the United States will have a candidate for President who can combine greater popular strength and a greater assurance of success than other candidates, and with equal ability to discharge the duties of President of the United States in case of election. Let this nomination be thus presented, without any wire pulling or depreciation of others and as a conviction upon established facts, and I believe Governor Hayes can be and ought to be nominated. But if our state is divided or is not in earnest in this matter it is far better for Governor Hayes and the state that his name be not presented at all. We have never sufficiently cultivated our state pride, with every reason for indulging it, and thus our proper influence has been wasted and lost. Now we have a good opportunity to gratify it, and at the same time contribute to the common good. Remember me kindly to personal friends in the Senate.
“Very truly yours,
“John Sherman.
“Hon. A. M. Burns.”
The election of Members of Congress in 1874 resulted in the choice of a large majority of Democrats in the House of Representatives of the 44th Congress, the term of which commenced on the 4th of March, 1875. A majority of the Senate being still largely Republican, it became difficult to pass any measure of a political character during that Congress. President Grant, on the 17th of February, 1875, issued his proclamation convening the Senate at 12 o’clock on the 5th of March following, to receive and act upon such communications as might be made to it on the part of the Executive. The session continued until the 24th of March. It was largely engaged in questions affecting the State of Louisiana, which had been the scene of violent tumult and almost civil war. As these events are a part of the public history of the country I do not deem it necessary to refer to them at length. These disturbances continued during the whole of that Congress, and, in 1876, approached the condition of civil war.
The regular meeting occurred on the 6th of December, 1875, when Thomas W. Ferry, of Michigan, was elected president pro tempore of the Senate, and Michael C. Kerr, a Democratic Representative from the State of Indiana, was elected by a large majority as speaker of the House.
This political revolution was no doubt caused largely by the financial panic of 1873, and by the severe stringency in monetary affairs that followed and continued for several years. Many financial measures of the highest importance in respect to the public credit were acted upon, but were generally lost by a disagreement between the two Houses. I do not deem it necessary to refer to the political questions that greatly excited the public mind during that session. Congress was largely occupied in political debate on questions in respect to the reconstruction of the states lately in rebellion, upon which the two Houses disagreed. Among other measures which failed was the act amendatory of the acts authorizing the refunding of the national debt, which passed the Senate but was not considered by the House.
During this session of Congress all sorts of financial plans were presented in each House, but all were aimed, directly or indirectly, at the resumption act, although that act itself was adopted as a remedy for existing financial evils, and especially to deal with and prevent the recurrence of such a panic as that of 1873. I took occasion, on the presentation of the resolution of the New York Chamber of Commerce in favor of the resumption of specie payments, at the time provided by the resumption act, to discuss the policy of that measure more fully than I thought it expedient to do so when, as a bill, it was pending in the previous Congress. This speech was made in the Senate on the 6th of March, 1876. It was the result of great labor and care, and was intended by me to be, and I believe it is now, the best presentation I have ever been able to offer in support of the financial policy of the government, and especially in support of the resumption of specie payments. I said:
“Mr. president, I have taken the unusual course of arresting the reference to the committee of finance of the memorial of the Chamber of Commerce of New York, in order to discuss, in an impersonal and nonpartisan way, one of the questions presented by that memorial, and one which now fills the public mind and must necessarily soon occupy our attention. That question is, ‘Ought the resumption act of 1875 be repealed?’ The memorial strongly opposes such repeal, while other memorials, and notably those from the boards of trade of New York and Toledo, advocate it. These opposing views are supported in each House of Congress, and will, when our time is more occupied than now, demand our vote.
“And, sir, we are forced to consider this question when the law it is proposed to repeal is only commencing to operate, now, three years before it can have full effect—during all which time its operation will be under your eye and within your power—and while the passions of men are heated by a presidential combat, when a grave questions, affecting the interests of every citizen of the United States, will be influenced by motives entirely foreign to the merits of the proposition. And the question presented is not as to the best means of securing the resumption of a specie standard, but solely whether the only measure that promises that result shall be repealed. We know there is a wide and honest diversity of opinion as to the agency and means to secure a specie standard.
“When any practicable scheme to that end is proposed I am ready to examine it on its merits; but we are not considering the best mode of doing the thing, but whether we will recede from the promise made by the law as it stands, as well as refuse all means to execute that promise. If the law is deficient in any respect it is open to amendment. If the powers vested in the secretary are not sufficient, or you wish to limit or enlarge them, he is your servant, and you have but to speak and he obeys. It is not whether we will accumulate gold or greenbacks or convert our notes into bonds, nor whether the time to resume is too early or too late. All these are subjects of legislation. But the question now is whether we will repudiate the legislative declaration, made in the act of 1875, to redeem the promise made and printed on the face of every United States note, a promise made in the midst of war, when our nation was struggling for existence, a promise renewed in March, 1869, in the most unequivocal language, and finally made specific as to time by the act of 1875.
“And let us not deceive ourselves by supposing that those who oppose this repeal are in favor of a purely metallic currency, to the exclusion of paper currency, for all intelligent men agree that every commercial nation must have both; the one as the standard of value by which all things are measured, which daily measures your bonds and notes as it measures wheat, cotton, and land; and also a paper or credit currency, which, from its convenience of handling or transfer, must be the medium of exchanges in the great body of the business of life. Statistics show that in commercial countries a very large proportion of all transfers is by book accounts and notes, and more than nine-tenths of all the residue of payments is by checks, drafts, and such paper tools of exchange.
“Of the vast business done in New York and London not five per cent. is done with either paper money or gold or silver, but by the mere balancing of accounts or the exchange of credits. And this will be so whether your paper money is worth forty per cent. or one hundred per cent. in gold. The only question is whether, in using paper money, we will have that which is as good as it promises, as good as that of Great Britain, France, or Germany; as good as the coin issued from your mints; or whether we will content ourselves with depreciated paper money, worth ten per cent. less than it promises, every dollar of which daily tells your constituents that the United States in not rich enough to pay more than ninety per cent. on the dollar for its three hundred and seventy millions of promises to pay, or that you have not courage enough to stand by your promise to do it.
“Nor are we to decide whether our paper money shall be issued directly by the government or by banks created by the government; nor whether at a future time the legal tender quality of United States notes shall continue. I am one of those who believe that a United States note issued directly by the government, and convertible on demand into gold coin, or a government bond equal in value to gold, is the best currency we can adopt; that it is to be the currency of the future, not only in the United States, but in Great Britain as well; and that such a currency might properly continue to be a legal tender, except when coin is specifically stipulated for it.
“But these are not the questions we are to deal with. It is whether the promise of the law shall be fulfilled, that the United States shall pay such of its notes as are presented on and after the 1st day of January, 1879, in coin; and whether the national banks will, at the same time, redeem their notes either in coin or United States notes made equal to coin; or whether the United States shall revoke its promise and continue, for an indefinite period, to still longer force upon the people a depreciated currency, always below the legal standard of gold, and fluctuating daily in its depreciation as Congress may threaten or promise, or speculators may hoard, or corner, or throw out your broken promises. It is the turning point in our financial history, which will greatly affect the life of individuals and the fate of parties, but, more than all, the honor and good faith of our country.
“At the beginning of our national existence, our ancestors boldly and hopefully assumed the burden of a great national debt, formed of the debts of the old confederation and of the states that composed it; and, with a scattered population and feeble resources, honestly met and paid, in good solid coin, every obligation. After the War of 1812, which exhausted our resources, destroyed our commerce, and greatly increased our debt, a Republican administration boldly funded our debt, placed its currency upon the coin basis, promptly paid its interest, and reduced the principal; and within twenty years after that war was over, under the first Democratic President, paid in coin the last dollar, both principal and interest, of the debt. And now, eleven years after a greater war, of grander proportions, in which, not merely foreign domination threatened us, but the very existence of our nation was at stake, and after our cause has been blessed with unexampled success, with a country teeming with wealth, with our credit equal to that of any nation, we are debating whether we will redeem our promises, according to their legal tenor and effect, or whether we will refuse to do so and repeal and cancel them.
“I would invoke, in the consideration of this question, the example of those who won our independence and preserved it to us, to inspire us so to decide this question that those who come after us may point to our example of standing by the public faith now solemnly pledged, even though to do so may not run current with the temporary pressure of the hour, or may entail some sacrifice and hardship.
“What then is the law it is proposed to repeal? I will state its provisions fully in detail, but the main proposition—the essential core of the whole—is the promise, to which the public faith is pledged, that the United States will redeem in gold coin any of its notes that may be presented to the treasury on and after the 1st day of January, 1879. This is the vital object of the law. It does not undertake to settle the nature of our paper money after than, whether it shall be reissued again, whether it shall thereafter be a legal tender, nor whether it shall or shall not supersede bank notes. All this is purposely left to the future. But it does say that on and after that day the United States note promising to pay one dollar shall be equal to the gold dollar of the mint.
“The questions then arise—
“First. Ought this promise be performed?
“Second. Can we perform it?
“Third. Are the agencies and measures prescribed in the law
sufficient for the purpose?
“Fourth. If not, what additional measures should be executed?
“Let us consider these questions in their order, with all the serious deliberation that their conceded importance demands.
“And first, ought this promise be fulfilled?
“To answer this we must fully understand the legal and moral obligations contained in the notes of the United States. The purport of the note is as follows:
‘THE UNITED STATES PROMISES TO PAY THE BEARER ONE DOLLAR.’
“This note is a promise to pay one dollar. The legal effect of this note has been announced by the unanimous opinion of the Supreme Court of the United States, the highest and final judicial authority in our government.
“The legal tender attribute given to the note has been the subject of conflicting decisions in that court, but the nature and purport of it is not only plain on its face, but is concurred in by every judge of that court and by every judicial tribunal before which that question has been presented.
“In the case of Bank vs. Supervisors, 7 Wallace, 31, Chief Justice Chase says:
‘But, on the other hand, it is equally clear that these notes are obligations of the United States. Their name imports obligation. Every one of them expresses upon its face an engagement of the nation to pay to the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coined dollar of the United States, a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the government. No other dollars had before been recognized by the legislation of the national government as lawful money.’
“Again, in the case of Bronson vs. Rhodes, 7 Wallace, 251, Chief Justice Chase says:
‘The note dollar was the promise to pay a coined dollar.’
“In the Legal Tender Cases, 12 Wallace, 560, Justice Bradley says:
‘It is not an attempt to coin money out of a valueless material, like the coinage of leather, or ivory, or cowrie shells. It is a pledge of the national credit. It is a promise by the government to pay dollars; it is not an attempt to make dollars. The standard of value is not changed. The government simply demands that its credit shall be accepted and received by public and private creditors during the pending exigency....
‘No one supposes that these government certificates are never to be paid, that the day of specie payments is never to return. And it matters not in what form they are issued.... Through whatever changes they pass, their ultimate destiny is to be paid.’
“In all these legal tender cases there is not a word in conflict with these opinions.
“Thus, then, it is settled that this note is not a dollar, but a debt due; a promise to pay a dollar in gold coin. Congress may define the weight and fineness of a dollar, and it has been done so by providing a gold coin weighing twenty-five and eight-tenths grains of standard gold nine-tenths fine. The promise is specific and exact, and its nature is fixed by the law and announced by the court. Here I might rest as to the nature of the United States note; but it is proper that I state the law under which it was issued and the subsequent laws relating to it.
“The act of February 25, 1862, gave birth to this note as well as the whole financial policy of the war. The first section of that act authorizes the Secretary of the Treasury to issue, upon the credit of the United States, United States notes to the amount of $150,000,000, payable to bearer at the treasury of the United States. The amount of these notes was subsequently increased during the war to the maximum sum of $450,000,000, but the nature and character of the notes was the same as the first ones. The enlargement of the issue did not in the least affect the obligation of the United States to pay them in coin. This obligation was recognized in every loan law passed during the war; and to secure the note from depreciation the amount was carefully limited, and every quality was given to it to maintain its value that was possible during the exigencies of the war. I might show you, from the contemporaneous debates in Congress, that at every step of the war the notes were regarded as a temporary loan, in the nature of a forced loan, but a loan cheerfully borne, and to be redeemed soon after the war was over.
“It was not until two years after the war, when the advancing value of the note created an interest to depreciate it in order to advance prices for the purpose of speculation, that there was any talk about putting off the payment of the note. The policy of a gradual contraction of the currency with a view to specie payments was, in December, 1865, concurred in by the almost unanimous vote of the House of Representatives, and the act of April 12, 1866, authorized $4,000,000 of notes a month to be retired and canceled. No one then questioned either the policy, the duty, or the obligation of the United States to redeem these notes in coin.
“Why has not this obligation been performed? How comes it that fourteen years after these notes were issued, and eleven years after the exigency was over, we are debating whether they shall be paid, and when they shall be paid? We may well pause to examine how this plain and positive obligation has so long been deferred by a nation always sensitive to the public honor.
“The fatal commencement of this long delay was in this provision of the act, approved March 3, 1863, as follows:
‘And the holders of United States notes issued under, and by virtue of, said acts, shall present the same, for the purpose of exchanging the same for bonds as therein provided, on or before the 1st day of July, 1863, and thereafter the right so to exchange the same shall cease and determine.’
“Thus, under the pressure of war, and the plausible pretext of a statute of limitations, the most essential legal attribute of the note was taken away. This act, though convenient in its temporary results, was a most fatal step, and for my part in acquiescing in, and voting for it, I have felt more regret than for any act of my official life. But it must be remembered that the object of this provision was not to prevent the conversion of notes into bonds, but to induce their conversion. It was the policy and need of the government to induce its citizens to exchange the notes freely for the bonds, so that the notes might again be paid out to meet the pressing demands of the war. It was believed that if this right to convert them was limited, in time this would cause them to be more freely funded; and Mr. Chase, then Secretary of the Treasury, anxious to prevent a too large increase of the interest of the public debt, desired to place in the market a five per cent. bond instead of a six per cent. bond. The fatal error was in not changing the right to convert the note into a five per cent. bond instead of a six per cent. bond. This was, in fact, proposed in the committee on finance, but it was said that a right to convert a note into a bond at any time, was not so likely to be exercised as if it could only be exercised at the pleasure of the government. And this plausible theory to induce the conversion of notes into bonds was made the basis, after the war was over, for the refusal of the United States to allow the conversion of its notes into bonds, and has been the fruitful cause of the continued depreciation and dishonor of United States notes for the last five years, during which, our five per cent. bonds have been at par with gold, while our notes rise and fall in the gamut of depreciation from six to twenty per cent. below gold.
“Notwithstanding that the right to convert notes into bonds was taken away, yet, in fact, they were, during the war, received par for par for bonds; and after the war was over all the interest-bearing securities were converted into bonds; but the notes—the money of the people—the artificial measure of value, the most sacred obligation, because it was past due, was refused either payment or conversion, thus cutting it off from the full benefit of the advancing credit of the government, and leaving to it only the forced quality of legal tender in payment of debts.
“Shortly after the war was over, and notably during the presidential campaign of 1868, the question arose whether the bonds of the United States were payable in coin or United States notes. Both notes and bonds were then below par in coin, the notes ranging from sixty-seven to seventy-five cents in coin; and five per cent. bonds from seventy-two to eighty cents in coin. Here again the opportunity was lost to secure the easy and natural appreciation of our notes to the gold standard. Had Congress then authorized the conversion of notes into bonds, when both were depreciated, both would have advanced to par in gold; but, on the one hand, it was urged that this would cause a rapid contraction, and, on the other, that the right to convert the note into a bond was not specie payment; it was only the exchange of one promise for another. It was specie payment they very much favored, but did not have the wisdom then to secure. If the advocates for specie payment had then supported a restoration of the right to convert notes into bonds, they would have secured their object with but little opposition. But all measures to fund the notes at the pleasure of the holder were defeated, and, instead, there was ingrafted into the act to strengthen the public credit—
“First, a declaration ‘that the faith of the United States is already pledged to the payment in coin, or its equivalent, of all the obligations of the United States not bearing interest, known as United States notes, and of all the interest-bearing obligations of the United States,’ except such as by the law could be paid in other currency than gold and silver.
“Second, ’and the United States also solemnly pledges its faith to make provision, at the earliest practicable period, for the redemption of the United States notes in coin.’
“Here again, the obligation of the government to pay these notes in coin was recognized, its purpose declared, and the time fixed ‘as early as practicable.’ What was the effect of this important act of Congress? Without adding one dollar to the public debt, or the burden of the debt, both bonds and notes rose in value. Within one year, the bonds rose to par in gold, making it practicable to commence the refunding of six per cent. bonds into five per cent. bonds. The notes rose under the stimulus of this new promise, in one year, from seventy-six cents to eighty-nine cents in gold, but no steps whatever were made to redeem them.
“The amount of bank notes authorized was increased fifty-four millions. The executive department pursued the policy of redeeming debts not due, and did, from an overflowing treasury, reduce very largely the public debt, but no steps whatever were taken to advance the value of our notes. The effect of the act of 1869 was exhausted on the adjournment of Congress in March, 1870, when the United States notes were worth eighty-nine cents in gold; and thereabouts, up and down, with many fluctuations, they have remained to this day. The bondholder, secure in the promise to him, is happy in receiving his interest in gold, with his bond above par in gold. The note holder, the farmer, the artisan, the laborer, whose labor and production is measured in greenbacks, still receives your depreciated notes, worth ten per cent. less than gold you promised him ‘at the earliest day practicable.’ The one has a promise performed and the other a promise postponed.
“Thus we stood when the panic of 1873 came upon us; with more paper money afloat than ever circulated before in any country of the world. Even then, had we stood firmly, the hoarding tendency of the panic would have advanced our notes toward the gold standard, and, in fact, did so during the months of September and October, until the premium on gold had fallen to eight per cent. But, sir, at this critical moment, the Secretary of the Treasury, acting, no doubt, in good faith, but I think without authority of law, issued twenty-six millions more United States notes—part of the notes retired and canceled under previous acts. And now, notwithstanding all the talk about the contraction of the currency, we have not withdrawn one-half of this illegal issue. On the 1st of September, 1873, we had three hundred and fifty-six million notes outstanding. Three months afterward, we had three hundred and eighty-two million; and now we have three hundred and seventy-one million.
“Sir, it was under the light of these events, after the fullest discussion ever given in Congress, of any question—after debate before the people during the recess of Congress, and full deliberation last winter—this act was passed. There was and is now great difference of opinion as to the details, but the vital promise made to the note holder to make his note as good as gold in January, 1879, was concurred in by a large majority of both Houses, and by many who opposed the bill as too slow in its operation. This act of honor and public faith was applauded by the civilized world and concurred in by our constituents, the doubts only being as to the machinery to carry it into effect. The time was fixed by those who most feared resumption, and no one proposed a longer time. My honorable friend from Indiana [Mr. Morton] truly said (in the recent campaign in Ohio) that he participated in framing it; and he and those who agreed with him fixed the time so remote as to excite the unfounded charge that the bill was a sham, a mere contrivance to bridge an election.
“And now, sir, to recapitulate this branch of the question, it is shown that the holder of these notes has a promise of the United States, made in February, 1862, to pay him one dollar in gold coin; that the legal purport of this promise has been declared by the Supreme Court; that we have taken away from this note one of the legal attributes given it, which would long since have secured its payment in coin—that when the note was authorized and issued, it was understood as redeemable in coin when the war was over; that our promise to pay it was renewed in 1869—‘at as early a day as practicable;’ that by reason of our failure to provide for its payment, it is still depreciated below par more than one-tenth of its nominal value; that we renewed this promise, and made it definite as to time, by act of 1875; that it is a debt due from the United States, and in law and honor due now in coin. Yet it is proposed to recall our promise to redeem this note in coin three years hence. I say, sir, this would be national dishonor. It would destroy the confidence with which the public creditor rests upon the promises contained in your bonds. It would greatly tend to arrest the process by which the interest on your bonds is reduced. It would accustom our people to the substitution of a temporary wave of popular opinion for its written contract or promise. It would weaken in the public mind that keen sense of honor and pride which has always distinguished the English-speaking nations in dealing with public obligations.
“An old writer thus describes ‘public credit:’
‘Credit is a consequence, not a cause; the effect of a substance, not a substance; it is the sunshine, not the sun; the quickening something, call it what you will, that gives life to trade, gives being to the branches and moisture to the root; it is the oil of the wheel, the marrow in the bones, the blood in the veins, and the spirits in the heart of all the negoce, trade, cash, and commerce in the world.’
‘It is produced, and grows insensibly from fair and upright dealing, punctual compliance, honorable performance of contracts and covenants; in short, it is the offspring of universal probity.
‘It is apparent even by its nature; it is no way dependent upon persons, parliament, or any particular men or set of men, as such, in the world, but upon their conduct and just behavior. Credit never was chained to men’s names, but to their actions; not to families, clans, or collections of men; no, not to nations. It is the honor, the justice, the fair dealing, and the equal conduct of men, bodies of men, nations, and people, that raise the thing called credit among them. Wheresoever this is found, credit will live and thrive, grow and increase; where this is wanting, let all the power and wit of man join together, they can neither give her being nor preserve her life.
‘Arts have been tried on various occasions in the world to raise credit; art has been found able with more ease to destroy credit than to raise it. The force of art, assisted by the punctual, fair, and just dealing abovesaid, may have done much to form a credit upon the face of things, but we find still the honor would have done it without the art, but never the art without the honor. Nor will money itself, which, Solomon says, answers all things, purchase this thing called credit or restore it when lost....
‘Our credit in this case is a public thing. It is rightly called by some of our writers national credit. The word denominates its original. It is produced by the nation’s probity, the honor and exact performing national engagements.’
“And, sir, passing from considerations of public honor, there are many reasons of public policy which forbid the repeal of the act of 1875. That act was generally regarded as the settlement of a financial policy by which at least the party in power is bound, and upon the faith of which business men have conducted their affairs and made their contracts. Debts have been contracted and paid with the expectation that at the time fixed the gold standard would measure all obligations, and a repeal of the act would now reopen all the wild and dangerous speculation schemes that feed and fatter upon depreciated paper money. The influence that secures this repeal will not stop here. If we can recall our promise to pay our notes outstanding why should we not issue more? If we can disregard our promise to pay them, why shall we regard our promise not to issue more than $400,000,000, as stipulated for by the act of 1864? If we can reopen the question of the payment of our notes, why may we not reopen the question as to the payment of our bonds? Is the act of 1869 any more sacred than the act of 1875? And if we can reopen these questions, why not reopen the laws requiring the payment of either interest or principal of the public debt? They rest upon acts of Congress which we have the power to repeal. If the public honor cannot protect our promise to the note holder, how shall it protect our promise to the bondholder? Already do we see advocated in high places, by numerous and formidable organizations, all forms of repudiation, which, if adopted, would reduce our nation to the credit of a robber chief—worse than the credit of an Algerine pirate, who at least would not plunder his own countrymen. And if the public creditor had no safety, what chance would the national banks—creations of our own and subject to our will—have in Congress? It has already been proposed to confiscate their bonds, premium and all, as a mode of paying their notes with greenbacks. What expedient so easy if we would make money cheap and abundant? Or, if so extreme a measure could be arrested, what is to prevent the permanent dethronement of gold as a measure of value, and the substitution of an interconvertible currency bond, bearing three and sixty-five hundredths per cent. interest, as a standard of value; and when it become too expensive to print the notes to pay the interest, reduce the rate. Why not? Why pay three and sixty-five hundredths per cent., when it is easier to print three? It is but an act of Congress. And when the process of repudiation goes so far that your notes will not buy bread, why then declare against all interest, and then, after passing through the valley of humiliation, return again to barter, and honor, and gold again.
“Sir, if you once commence this downward course of repudiation then there is but one ending. You may, like Mirabeau and the Girondists, seek to stem the torrent, but you will be swept away by the spirit you have evoked and the instrument you have created. You complain now of a want of confidence which makes men hoard their money. Will you, then, destroy all confidence? No, sir, no; the way to restore confidence is to inspire it by fulfilling your obligations. You cannot make men lend you; you cannot make men sell you anything —either bread, or meat, or wool, or iron, or anything that is or that can be created—except for that which they choose to take. You may depreciate the money which you offer, but it will only take more of it to buy what you want. It is true that the creditor may, by your laws, be compelled to take your money however much you depreciate it, but he cannot buy back that which he sold, or its equivalent in other necessaries of life, and thus he is cheated of part of what he sold. During the war, when money was depreciating, many a simple man gladly counted his gains as he sold his goods or crops at advancing prices, but he found out his mistake when, with his swollen pile, he tried to replace his stock in trade or laid in his supplies. Sir, this policy exhausts itself in cheating the man who buys or sells or loans on credit, who produces something to sell on credit; whether that something be food or clothing; whether it be a necessity or a luxury of life. Productive labor, honest toil, whether of the farmer or the artisan, is deeply interested in credit. It is credit that gives life and competition to trade; and credit is destroyed by every scheme that impairs, delays, or even clouds an obligation.
“Again, sir, an irredeemable and fluctuating currency always raises the rate of interest on money, while a stable currency or an improving currency always reduces the rate of interest. This is easily shown by statistics, but the reason is so obvious that proof is not needed. If a man lends his money he wants it back again with its increase; but if the money, when it is to be paid back, is like to be worth less than when he thinks of loaning it, he will not loan it except at such rates as will cover the risk of depreciation. He will prefer to buy land or something of stable value. If money is at the gold standard, or is advancing toward that standard, he will loan it readily at a moderate interest, for he knows he will receive back money of at least equal value to that he loaned. Again, sir, with a depreciated currency great domestic productions are cut off from the foreign market; for it is impossible that with such a currency we can compete on equal terms with rival nations, whose industry rests upon a specie standard. As we approach such a standard, we are now able, as to a few articles, to compete with foreign industry; but it is only as to articles in the manufacture of which we have peculiar advantages. Let us rest our industries on that standard, and soon we could compete in the markets of the world in all the articles produced from iron, wood, leather, and cotton, the raw basis of which are our national productions. And it must be remembered that all the countries with which we compete are specie-paying countries.
“A country that does not rest her industry upon specie is necessarily excluded from the great manufacturing industries of modern civilization, and is self-condemned to produce only the raw basis for advanced industry. Cheap food, climate, soil, or natural advantages, such as cheap land, vast plains for pasture, or rich mines, may give to a country wealth and prosperity in spite of the evils of depreciated paper money; but when we come in competition with the world in the advanced grades of production which give employment to the skilled mechanic, we must rest such industry upon the gold basis, or we enter the lists like a knight with his armor unbound.
“Again, sir, a depreciated and fluctuating currency is a premium and bounty to the broker and money changer. Under his manipulation our paper standard of value goes up and down, and he gambles and speculates, with all the advantages in his favor. Good people look on and think that it is gold that is going up and down; that their money is a dollar still, and trade and traffic in that belief. But the shrewd speculator calculates daily the depreciation of our note, the shortening of the yard stick, the shrinkage of the acre, the lessening of the ton, and thus it is that he daily adds to his gains from the indifference or delusion of our people.
“Sir, it is an old story, often repeated in our day, and most eloquently epitomized by Daniel Webster in the often-quoted passage of his speech, in which he said:
‘A disordered currency is one of the greatest of political evils. It undermines the virtues necessary for the support of the social system and encourages propensities destructive of its happiness. It wars against industry, frugality, and economy; and it fosters the evil spirit of extravagance and speculation. Of all contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deluded them with paper money. Ordinary tyranny, oppression, excessive taxation, these bear lightly upon the happiness of the mass of the community, compared with the fraudulent currencies and the robberies committed by depreciated paper. Our own history has recorded for our instruction enough, and more than enough, of the demoralizing tendency, the injustice, and the intolerable oppression of the virtuous and well-disposed, of a degraded paper currency authorized by law or in any way countenanced by government.’
“Sir, we must meet this question of specie payments, not only because the public honor is pledged to do so, but also for the lesser reason that it is our interest to do so. The only questions we should permit ourselves to discuss are the means and measures of doing so.
“And now, sir, let us examine the reasons that have been given for the repeal of the resumption act by those who, though favoring resumption, yet think the act should be repealed for one or other of the following reasons:
“First. That it is not advisable to fix a day for resumption.
“Second. Or at least until the balance of trade is in our favor.
“Third. That it produces a contraction of the currency.
“Fourth. That it injuriously adds to the burden of existing
debts.
“Let us glance at these objections.
“First. As to fixing a day for resumption.
“If it was possible to agree upon measures that would secure resumption without fixing a time, I agree it would not be indispensable, though not unadvisable, to fix a time; but such agreement is utterly impossible. Of the multitude of schemes that have been presented to me by intelligent men trying to solve this problem, many could have been selected that in my opinion would be practicable; but of all of them not one ever has or is likely to secure the assent of a majority of a body so numerous as Congress. One difficulty we have encountered is that the Democratic party, though in the minority, has never presented in any form, through any leading member, a plan for resumption, but with widely differing opinions has joined in opposing any and every measure from the other side. I understand from the papers that our Democratic friends, through a caucus, and through a caucus committee of which my colleague is chairman, have been laboring to agree upon a plan for specie payments. After his frequent speeches to us about secret conclaves, about shams and deceptions, and such like polite and friendly comments upon the work of the Republican party, I might greet my colleague with such happy phrases about his caucus; but I will not, but, on the contrary, I commend his labors, and sincerely hope that he and his political friends may agree upon some plan to reach a specie standard, and not one to avoid to, to prevent it, to defer it. Under color of intending to prepare for it, I hope they will not make their measure the pretext for repealing the law as it stands, which fixes a day for resumption and will secure the end we both aim at.
“I frankly state for the Republican party that, while we could agree to fixing the time for specie payments and upon conferring the ample and sufficient powers upon the Secretary of the Treasury contained in the law, we could not agree in prescribing the precise mode in which the process should be executed. Nor, in my opinion, was it at all essential that we should. Much must be left to the discretion of the officer charged with the execution of such a law. The powers conferred, as I shall show hereafter, are ample; and the discretion given will be executed under the eye of Congress.
“And, sir, there is a strong force in the fact that in every example we have of the successful resumption of specie payments, in this and other countries, a fixed day has been named by legislative authority, and the details and power of execution have been left to executive authority. Thus, in Great Britain, the act of parliament of July 2, 1819, fixed the time for full resumption at the 1st day of May, 1823, and for a graduated resumption in gold at intermediate dates; and for fractional sums under forty shillings to be paid in silver coin; and the governor and directors of the Bank of England were charged with its execution, and authorized at their discretion to resume payment in full on the 1st day of May, 1822. France is now successfully passing through the same process of resumption, the time being fixed (two years ago) for January 1, 1878, and now practically attained.
“In our own country many of the states have presented similar laws in case of suspended bank payments, and in some cases the suspended banks have, by associated action, fixed a time for general resumption, and each bank adopted its own expedient for it. Sir, the light of experience is the lamp of wisdom. I can recall no case of successful resumption where a fixed future time has not been presented beforehand, either by law or agreement; while the historical examples of repudiation of currency have come by the drifting process, by a gradual decline of value, by increased issues, and a refusal to provide measures of redemption, until the whole mass disappeared, dishonored and repudiated.
“This concurrence in the mode of resumption by so many governments was the strongest possible instruction to Congress when fixing a plan of resumption for the United States, and should satisfy reasonable men of its wisdom.
“Besides, it would seem to be but fair that everyone should have plain notice of so important a fact. If the measures only were presented and no time fixed it would be a matter of speculation, and the discretionary powers of the Secretary of the Treasury could be exercised with a view to hasten or postpone the time to the injury of individuals.
“As to the date selected, I can only repeat it was placed as remote as any one suggested; far more so than is necessary to secure the object, and so that the fluctuations of value will scarcely exceed in four years what they have frequently been in a single year. It allows ample time to arrange all the relations of debtor and creditor, and to enable Congress to provide any additional measure in aid of redemption, or, if events make it expedient, to postpone the time.”
CHAPTER XXVII. MY CONFIDENCE IN THE SUCCESS OF RESUMPTION. Tendency of Democratic Members of Both Houses to Exaggerate the Evil Times—Debate Over the Bill to Provide for Issuing Silver Coin in Place of Fractional Currency—The Coinage Laws of the United States and Other Countries—Joint Resolution for the Issue of Silver Coins—The “Trade Dollar” Declared Not to Be a Legal Tender—My Views on the Free Coinage of Silver—Bill to Provide for the Completion of the Washington Monument—Resolution Written by Me on the 100th Anniversary of the Declaration of Independence—Unanimously Passed in a Day by Both Houses—Completion of the Structure Under the Act.
It seemed to be the policy of a majority of the Democratic Members of both the Senate and the House to exaggerate the evils and discouragements of the times, while in fact the people were rapidly recovering from the results of the panic of 1873, and all branches of industry were, to a greater or less extent, starting into life anew, and to prevent the resumption of specie payments, and, if possible, to repeal the act providing for such resumption. This policy undoubtedly checked the process of refunding the public debt, which progressed slowly, and was confined to an exchange of bonds bearing five per cent. interest for those bearing six per cent.
I took a much more hopeful view of the situation, and in the many speeches I made in that Congress, I stated my confidence, not only in the process of resumption and refunding, but in the rapid improvement of all branches of industry as we progressed towards specie payments. In a speech I made in the Senate on the 6th of January, 1876, on a bill “to further provide for the redemption of legal tender United States notes in accordance with existing law,” I said:
“Sir, we ought to take a hopeful view of things in this centennial year of our country. Look at the aggregate results. A century ago we were three million people; now forty million; then we had a little border on the Atlantic; we are now extended to the Pacific. See what has been accomplished in a hundred years. During that time there have been periods of darkness and doubt. Every seven or ten or twelve years, periodically, there have been times of financial distress. We have lived through them all. I believe, and I trust in God, that this very year is the beginning of another period of prosperity, and that all these dark clouds, which gentlemen are trying to raise up from the memory of the past two or three years and from their own clouded imaginations, will entirely disappear. I believe that even now we are in the sunshine of increasing prosperity, and that every day and every hour will add to our wealth and relieve us from our distress.
“Sir, things are not so unhopeful as Senators seem to think. We have made a promise to be executed three years hence, and every step of our legislation, if any is had, should look in that direction. We may not adopt any measure or may not deem that any is necessary; but, if any be adopted, it ought to look to the execution of that promise, and we ought to enter on the performance of this duty with hopeful trust in the continued prosperity of our country. All this gloom and doubt, all this arraignment of official statements, this doubt of our sufficient revenues, this doubt of our ability to meet and advance our destiny, always falls upon my ear with painful surprise. Senators, the task we have before us may be a difficult one, as it has always proved to be difficult to resume the specie standard whenever, for any reason, a nation has fallen from it, but it is a duty that must be executed, and it ought to be executed without the spirit of party warfare, without these appeals, directly or indirectly, to party tactics. The pledges made one year ago, although not voted for by the Democratic party, are pledges binding upon their honor and their faith as they are upon mine, and I trust in God that we shall join together in all the proper steps to carry out those pledges.”
This bill was referred to the committee on finance, but no action was taken upon it, as the committee preferred to await the action of the House.
The resumption act provided for the payment and destruction of the fractional currency then in circulation, to the amount of $40,000,000, and the substitution of silver coins in all respects, such as were defined by the coinage act of 1853. This was to be the first step in preparation for the general resumption of coin payments in January, 1879. It became necessary to provide for the coinage of fractional silver coins, and a bill for this purpose, entitled “A bill to provide for a deficiency in the Printing and Engraving Bureau, and for the issue of the silver coin of the United States, in place of the fractional currency,” was reported by Mr. Randall, on the 2nd of March, 1876, from the committee on appropriations of the House. It was subsequently considered, amended and passed by the House, after a long debate, participated in by many of the leading Members. Much to my surprise, Mr. Hewitt and Mr. Ward, prominent Members from New York, opposed the measure, denounced the resumption act, and prophesied its failure. Mr. Hewitt, in support of his position, quoted passages from the reports of Mr. Bristow, then Secretary of the Treasury, and predicted the utter failure of resumption, unless the United States notes were entirely withdrawn. He insisted that if silver coin was issued to replace fractional currency, the coin would disappear from circulation, leaving the people without any currency for the smaller necessities of life. In the progress of the debate, it became manifest that the larger portion of the Democratic Members would vote against every measure proposed to aid in the execution of the resumption act.
The bill passed the House on the 31st of March by the vote of 123 yeas and 100 nays. In the Senate it was referred to the committee on finance, and reported back with amendments. The third section of the bill, as it came from the House, provided for the coinage of the silver dollar, of the weight of 412.8 grains troy, standard silver, and made that dollar a legal tender at its nominal value, to an amount not exceeding twenty dollars in any one payment, except for customs duties and interest on the public debt, and that the “trade dollar” should not, thereafter, be a legal coin. This section was stricken out.
In the remarks made by me, upon this bill, on the 10th day of April, 1876, I gave, in detail, the history of each of the coinage laws of Great Britain, France, Belgium, Germany, Switzerland and Italy. I had taken great pains to collect this information and to procure translations of the laws of the several countries named. The then recent changes, made by Germany, and their effect upon the coinage of other nations, were carefully stated. The general conclusion which I drew from a reference to these statutes of various countries, were:
“First. It is impossible, in the nature of things, to fix the precise value of silver and gold. We have tried it three times and failed.
“Second. Whenever either coin is worth more in the market than the rate fixed by the law, it flees from the country. That we have twice proved. That is the admitted economic law. It is the Gresham law; a law of currency named from the name of its discoverer. He wrote a book to show that always the poorer currency would drive out of circulation a superior currency; and his book gave name to the theory that is called the law of Gresham. It is the universal law of political economy that, whenever two metals or two moneys are in circulation, the least valuable will drive out the most valuable; the latter will be exported.
“The third proposition is that the example of several great European nations, as well as of the United States, proves that to prevent the depreciation of silver the tendency of modern nations is to issue it as a token coinage somewhat less in intrinsic value than gold, and maintain its value by issuing it only as needed, at par with the prevailing currency, and to make it a limited legal tender. I may say that has been acted upon by every great Christian nation. Russia and Austria have not yet gold coinage at all, but still they have their values based upon gold.
“Fourth. That the demonetization of silver tends to add to the value of gold, and that though the relative value ebbs and flows it is more stable compared to gold than any other metal, grain, or production. Its limit of variation for a century is between fifteen to seventeen for one in gold.
“Fifth. That both coins are indispensable, one for small and the other for large transactions.
“Sixth. That the causes of the decline of silver are temporary. It is still used by a great majority of mankind as the standard of value. Its use in France and the United States will, on resumption, more than counteract its decline in Germany.
“Seventh. The general monetizing of silver now, when it is unnaturally depreciated, would be to invite to our country, in exchange for gold or bonds, all the silver of Europe, and at last it would leave us with a depreciated currency.
“Eighth. The decline of silver enables us now to exchange silver coin of the old standard for fractional currency, leaving the exchange optional with the holder, until we have the courage, as we now have the ability, to redeem it in gold.
“Ninth. More silver can be maintained at par than we have now of fractional currency.
“Tenth. The redemption of a part of our currency would advance its purchasing power, while the silver in circulation will counteract the contraction of the currency.”
This bill became a law on the 17th of April, 1876. The second section provided:
“That the Secretary of the Treasury is hereby directed to issue silver coins of the United States of the denomination of ten, twenty, twenty-five and fifty cents of standard value, in redemption of an equal amount of fractional currency, whether the same be now in the treasury awaiting redemption, or whenever it may be presented for redemption; and the Secretary of the Treasury may, under regulations of the treasury department, provide for such redemption and issue by substitution, at the regular sub-treasuries and public depositaries of the United States, until the whole amount of fractional currency outstanding shall be redeemed. And the fractional currency redeemed under this act shall be held to be a part of the sinking fund provided for by existing law, the interest to be computed thereon as in the case of bonds redeemed under the act relating to the sinking fund.”
A joint resolution for the issue of silver coin was introduced in the House by Mr. Frost, of Massachusetts, on the 1st of May, 1876. The object of this resolution was to expedite the issue of minor coin and the retirement of fractional currency. It was referred to the committee on finance, reported favorably and passed with amendments June 21. The House disagreed to the amendments of the Senate, and a committee of conference was appointed composed of John Sherman, George S. Boutwell, and Louis V. Bogy, managers on the part of the Senate, and H. B. Payne, and Samuel J. Randall, managers on the part of the House. The report of the conferees was agreed to, and the bill having passed both Houses it was approved by the President on the 22nd of July. It provided:
“That the Secretary of the Treasury, under such limits and regulations as will best secure a just and fair distribution of the same through the country, may issue the silver coin at any time in the treasury to an amount not exceeding ten million dollars, in exchange for an equal amount of legal tender notes; and the notes so received in exchange shall be kept as a special fund, separate and apart from all other money in the treasury, and be reissued only upon the retirement and destruction of a like sum of fractional currency received at the treasury in payment of dues to the United States; and said fractional currency, when so substituted, shall be destroyed and held as part of the sinking fund, as provided in the act approved April seventeen, eighteen hundred and seventy-six.”
It also provided: “That the trade dollar shall not hereafter be a legal tender, and the Secretary of the Treasury is hereby authorized to limit, from time to time, the coinage thereof to such an amount as he may deem sufficient to meet the export demand for the same.”
It also provided that the amount of subsidiary silver coin authorized should not exceed $50,000,000. The silver bullion was to be purchased from time to time at market price by the Secretary of the Treasury from any money in the treasury not otherwise appropriated, and any gain or seigniorage arising from the coinage was to be paid into the treasury.
These provisions in respect to subsidiary coin were in a large measure executed prior to the 4th of March, 1877, and tended, in my opinion, to facilitate the progress of the resumption of specie payments on the 1st of January, 1879. The debate on these measures occupied a large portion of the time of both Houses of Congress, and presented in every possible aspect all the financial questions involved in coinage, resumption and refunding. Anyone desiring a full knowledge of the view then taken of the act revising the laws in respect to coins and coinage, approved February 12, 1873, will find in the debate a full history of that act, given at a time when it was fresh in the memory of the great body of Senators and Members.
I supported the coinage of the old silver dollar in a speech in the Senate made on the 8th of June, 1876, two years before the appearance of the “Bland bill,” or the “Allison bill.” Silver bullion was then declining in market value. The resumption act provided for the gradual replacement of fractional currency by silver coins of the character and form provided for by the coinage act of 1853. When that act passed the old silver dollar was not coined or in circulation. It was more valuable in the market than a dollar in gold, and, if coined, would have been exported as bullion. In the revision of the coinage laws of 1873, it was dropped from the list of coins, and its further coinage was prohibited by a clause providing that no coins should be made at the mint except those provided for in that act. The history of this act and the reasons for prohibiting the coinage of the old dollar have been fully stated in a previous chapter of this work. In place of the old dollar the trade dollar, containing 420 grains of silver, was provided for. This trade dollar, coined for, and at the expense of, the owner of the bullion deposited at the mint, was, in the revision of the laws of the United States, unintentionally made a legal tender for five dollars, the same as the minor coins issued by the mint on government account. As silver declined in value, the trade dollar became less valuable than a dollar in gold, and the owners of bullion deposited it in the mint, and received in exchange trade dollars costing less than a dollar in gold, but, being a legal tender for five dollars, it could be forced upon the people of California, then upon the gold standard, at a profit to the owner of the bullion. Mr. Sargent, a Senator from California, early in the session introduced a bill enlarging the limit of legal tender of minor coins, and repealing the legal tender quality of the trade dollar. This bill was referred to the committee on finance, and was reported with an amendment to strike out all after the enacting clause, and insert:
“That section 3586 of the Revised Statutes of the United States be, and hereby is, amended to read as follows:
“The silver coins of the United States, except the trade dollar, shall be a legal tender at their nominal value for any amount not exceeding five dollars in any one payment.”
This simple bill was made the text of a long debate in the Senate that continued during the greater part of that session. The provision that “the trade dollar shall not hereafter be a legal tender” was transferred to the joint resolution already mentioned which became a law on the 22nd of July.
In my speech on Mr. Sargent’s bill I said:
“This bill proposes to restore the old silver dollar, and with it and the subsidiary coins of the United States to redeem the United States notes and fractional currency. The dollar to be restored is the same dollar that had existed from 1792 to 1873; and the subsidiary coins to be issued are the same in form and value as have been issued since 1853. I have already stated in my remarks, made on the 11th of April last, the history of these silver coins and the relation of silver and gold to each other, not only in the United States, but in the countries with which we have the most extensive commercial relations.
“The two main questions are:
“First. Shall silver coin be exchanged for United States notes as well as for fractional currency? And,
“Second. Is it wise to recoin the old silver dollar with a view to exchange it for United States notes?”
In this speech I favored the restoration of the silver dollar of the precise character and description of the dollar that existed from 1792 to 1873, but, as the market value of the silver in this dollar had greatly fallen, I insisted that the dollar should be coined from bullion purchased by the government at market price, so that the people of the United States would receive the difference between the cost of the bullion and the face value of the coin, the same principle that was adopted in what is known as the Bland-Allison act of 1878. I did not, however, propose the full legal tender quality that was given to the dollar by the act when adopted, but that it should be placed among the other silver coins, and be a legal tender only for twenty dollars.
The plan proposed by me was to set aside a portion of the surplus revenue or sinking fund of each year applicable to the payment of the public debt, for the purchase of silver bullion to be coined into silver dollars of the old standard. I said:
“The bill reported by the committee on finance thus provides for an immediate resumption of specie payments in silver coin, and thus completes the first and most difficult step of the problem. It neither disturbs nor deranges business, nor stirs up the phantom of contraction. It is in exact accordance with existing law, and leaves the silver coin, as now, a subsidiary coin, a legal tender only for limited amounts.
“The next question presented by this bill is, shall we return to our silver coinage the old silver dollar. And here I am met by the objections of the Senator from Vermont, but his objections are rather to the amendments proposed by the Senator from Missouri, than to the report of the committee. The committee propose the silver dollar, not as a legal tender for gold contracts, but only as a tender for currency contracts not exceeding twenty dollars in any one payment. I would prefer to leave the silver dollar and stand upon its intrinsic value as a legal tender the same as the smaller coin; but there is no injustice in enlarging the limit to twenty dollars, and but for the reasons I will state hereafter there is no injustice in making it a legal tender for all currency contracts. The silver dollar has that intrinsic value which in all periods of our history has made it a favorite coin, not only for domestic uses but for exportation. It furnishes silver bullion in a shape and form more convenient for handling than any other form of coin.
“When the old silver dollars are issued at par with the United States notes, a large amount of them will be taken as a reserve by the people to meet future needs, with or without a legal tender quality. As their issue is not peremptory, and the aggregate cannot exceed the surplus revenue or sinking fund, there is no danger of an overissue, while their existence among the people will be the best reserve when gold alone becomes the full standard of value.
“Every argument already mentioned in favor of subsidiary silver coins is equally potent in favor of the silver dollar. It will be eagerly taken in payment of United States notes. It is purely a voluntary exchange. It is the cheapest mode in which we can redeem United States notes. It is specie resumption in the old time-honored standard of silver dollars of full weight and fineness. It will accustom our people to distinguish between the real dollar that pays where it goes and a paper dollar which only promises to pay. It will prepare the way for full resumption in gold. To the extent proposed by the committee, and to be used as a purely voluntary approach to a full specie standard, it is open to no objection or criticism, and should be assented to by gentlemen who have differed with each other on the present resumption law or on the merits and dangers of contraction and expansion.”
The vital difference between the free coinage of silver, and the limited coinage of that metal on government account, is that with free coinage the standard of value would be the cheaper money. With silver at its present price in the market the dollar would be worth but a little over fifty cents. The coinage being free to the holders of silver bullion no other coins would be made except the cheaper coins of least purchasing power. On the other hand, the coinage of silver on government account enables us to maintain the silver coins at par with gold, without respect to the market value of the silver bullion. Any nominal profit from this coinage inures to the benefit of the whole people of the United States and not merely to the producers of silver bullion. This distinction has always appeared to me so marked and clear, and the argument so strong in favor of limiting the coinage of silver to the amount demanded as a convenience of the people for the smaller transactions of life, that I cannot sympathize with a policy that aims merely to secure the cheapest money for the discharge of obligations contracted upon more valuable money.
Among the measures that became a law at this session was a concurrent resolution, introduced by me in the Senate on the 5th of July, 1876, to provide for the completion of the Washington monument.
On the morning of the 4th of July, 1876, the 100th anniversary of American independence, I was making some preparation for the celebration of that day in the vicinity of Washington. Animated by the patriotic feeling inspired by the day, and sitting in view of the unfinished monument of George Washington, I felt that the time had come when this monument should no longer continue a standing reproach to a patriotic people. Shortly after the death of Washington, a resolution providing for the erection of a monument to his memory, was agreed to by both Houses of Congress. Subsequently, on January 1, 1801, a bill was passed by the House of Representatives appropriating $200,000 for this purpose, but, in the political excitements of that day, the Senate failed to concur. In the absorbing public questions that ensued, resulting in the War of 1812, the subject was dropped in Congress for the time.
In 1833 the “Washington Monument Society” was formed, with Chief Justice Marshall as its president. This society proposed to raise the necessary sum to erect such a monument by voluntary subscriptions of individuals, and in 1854 it had, by such means, constructed about one-third of the height of the monument and then suspended work. Thus it had remained for years for want of means to complete it, a glaring evidence of failure. The portion of the monument already reared to the height of 156 feet stood in rude outline, an abandoned failure in the midst of a reservation partly covered with water and broken stone. The society was incorporated by Congress in 1859, but no further progress was made. It was manifest that the work could not be completed by the existing organization, and doubts were expressed whether the foundation was sufficient to bear the superstructure. Under these conditions, on the 100th anniversary of the declaration of American independence, it occurred to me the time had arrived when a great country like ours should complete this unfinished monument to George Washington. Under the inspiration of this thought I wrote this resolution on the morning of the 4th of July, and on the next morning offered it for adoption in the Senate:
“Whereas, It has pleased Almighty God to guide the United States of America safely through one hundred years of national life, and to crown our nation with the highest blessing of civil and religious liberty, Therefore,
“The Senate and House of Representatives in Congress assembled, in the name of the people of the United States, in reverent thankfulness acknowledge the fountain and source, the author and giver of all these blessings, and our dependence upon His providence and will; and,
“Whereas, We recognize, as our fathers did, that George Washington, ‘first in peace, first in war, and first in the hearts of his countrymen,’ was one of the chief instruments of Divine Providence in securing American independence and in laying broad and deep the foundations of our liberties in the constitution of the United States:
“Therefore, as a mark of our sense of the honor due to his name and to his compatriots and associates, our revolutionary fathers,
“We, the Senate and House of Representatives in Congress assembled, in the name of the people of the United States at this, the beginning of the second century of national existence, do assume and direct the completion of the Washington monument in the city of Washington, and instruct the committees on appropriations of the respective Houses to propose suitable provisions of law to carry this resolution into effect.”
In submitting this resolution I said:
“I desire to offer at this time a concurrent resolution I wish to say before it is read that I believe if it were passed to-day it would be a matter of profound satisfaction to the great body of the people of the United States. I ask that it be read.”
After the resolution was read, there was a pause, when Mr. Edmunds said: “Let us consider this resolution. It will be agreed to unanimously, I am sure.”
The resolution was therefore considered and agreed to unanimously. It was sent to the House of Representatives the next morning, when Mr. Hopkins, of Pennsylvania, pending a motion to adjourn, asked unanimous consent to take from the speaker’s table the concurrent resolution in reference to the Washington monument. Upon the resolution being read, the House seemed to be impressed, as was the Senate, with the fitness of the time, and the propriety of the measure proposed, and it was unanimously adopted without debate.
Thus Congress undertook to execute the unfinished work of the Washington Monument Society. The requisite appropriations were subsequently made, and the monument, as completed, is now the most impressive token of the appreciation, by the American people, of the name and fame of George Washington. It is visited daily by nearly every American or stranger who enters the city of Washington. Its dedication will be hereafter mentioned.
CHAPTER XXVIII. THE HAYES-TILDEN PRESIDENTIAL CONTEST. Nomination of R. B. Hayes for President—His Fitness for the Responsible Office—Political Shrewdness of Samuel J. Tilden, His Opponent—I Enter Actively Into the Canvass in Ohio and Other States —Frauds in the South—Requested by General Grant to Go to New Orleans and Witness the Canvassing of the Vote of Louisiana— Departure for the South—Personnel of the Republican and Democratic “Visitors”—Report of the Returning Board—My Letter to Governor Hayes from New Orleans—President Grant’s Last Message to Congress —Letter from President Hayes—Request to Become his Secretary of the Treasury.
The Republican national convention of 1876 met at Cincinnati on the 14th of June of that year. After the usual organization the following eight nominations for President were made: Blaine, Morton, Conkling, Bristow, Hayes, Hartranft, Wheeler and Jewell. The total number of delegates was 754. Blaine was greatly in the lead, receiving on the first ballot 285 votes, some from nearly every state. Morton received 124, Bristow 113, Conkling 99, Hayes 61, Hartranft 58, Jewell 11, and Wheeler 3. There were 7 ballots, in which Blaine steadily held his vote and slightly gained, receiving on the final ballot 351 votes. The vote for Hayes increased at each ballot until on the seventh ballot he received 384 votes, a majority over all.
Undoubtedly Blaine was the favorite of the convention, but the antagonisms that existed between him and Conkling probably defeated his nomination. I still believe that the nomination of Hayes was not only the safest, but the strongest, that could be made. The long possession of power by the Republicans naturally produced rivalries that greatly affected the election of anyone who had been constantly prominent in public life, like Blaine, Conkling and Morton. Hayes had growing qualities, and in every respect was worthy of the high position of President. He had been a soldier, a Member of Congress, thrice elected as Governor of Ohio, an admirable executive officer, and his public and private record was beyond question. He was not an aggressive man, although firm in his opinions and faithful in his friendships. Among all the public men with whom I have been brought in contact, I have known none who was freer from personal objection, whose character was more stainless, who was better adapted for a high executive office, than Rutherford B. Hayes.
Governor Hayes wrote me the following letter in recognition of my aid in his nomination.
“Columbus, O., June 19, 1876. “My Dear Sir:—I trust you will never regret the important action you took in the inauguration and carrying out of the movement which resulted in my nomination. I write these few words to assure you that I appreciate, and am gratified for, what you did.
“My kindest regards to Mrs. Sherman.
“Sincerely,
“R. B. Hayes.
“Hon. John Sherman.”
His opponent, Samuel J. Tilden, was a man of singular political sagacity, of great shrewdness, a money-making man, who professed to represent, and perhaps did represent, as fairly as anyone, the ideas of the New York politicians of the school of Van Buren and Marcy. I knew Mr. Tilden personally and very favorably, as we were members of a board of railroad directors which frequently met. He seemed to take pleasure in talking with me about political events, and especially of the famous New York politicians, of whom Silas Wright and Mr. Van Buren were his favorites. He had acquired great wealth as the attorney of corporations, and was undoubtedly a man of marked ability and sagacity. He had taken an active part in defeating the corruption of Tweed in New York politics. He had been elected governor of the State of New York, as the candidate of reform and honesty in politics.
The long and important session of Congress adjourned on the 15th of August. It had been the arena for long debates, mostly on political topics growing out of reconstruction, and financial measures heretofore referred to. The pending presidential contest also excited much debate in both Houses. The administration of General Grant had not been entirely satisfactory, and the long continuance of the Republican party in power was an element of weakness. The complaints, unavoidable in the most honest administration, and the disappointments of office-seekers, placed that party on the defensive. The south had, by reconstruction, been practically restored to political power, and the body of the negroes had been substantially disfranchised, though legally entitled to the suffrage. Riots and crimes of every degree were committed in the south, notably in Louisiana, South Carolina and Florida. Organized mobs and violence had deterred many from voting, and in some cases had prevented even the semblance of a free election.
I entered actively into this canvass, more so than in any previous one. Three days before the adjournment, I made my opening speech at Marietta, Ohio, in which I discussed fully the dangers of the restoration of the Democratic party to power, the probability of their failure to enforce the constitutional amendments, and the protection of the rights of the freedmen. I claimed that the election of Mr. Tilden would result in the virtual nullification of the constitutional amendments, and amount to a practical restoration to power of the old Democratic party. The revival of the rebel claims, the refunding of the cotton tax, and the damages done to rebels, were fully commented upon, as were the outrages committed upon freedmen during the second administration of General Grant, the organization of Ku-Klux Klans, and the White League, and the boldness with which the laws were disregarded in the south. It is difficult now to realize the condition of public affairs in all the states then lately in rebellion. The people of the south are certainly entitled to the highest credit for the great change that has recently been made in the government of their states, but it cannot be denied that during the ten years after the war their condition bordered on the despotism of mob rule and violence. Financial questions, no doubt, entered into the canvass, but in this respect Governor Tilden and Governor Hayes did not materially differ, while public opinion in the southern states was almost a unit in favor of the larger use of paper money. Their bankrupt condition made this policy almost universal there.
I continued until the day of election to make speeches, not only in Ohio, but in several of the states. I engaged in a joint debate with Senator Voorhees, of Indiana, at Columbia City, in that state, in September, which probably had more fun and humor in it than argument. It so happened that appointments were made for each of us at Columbia City, on the same day, and the managers of the two parties concluded that they would have a joint debate, and arranged for it, to which we both assented. There was a great crowd, and besides Mr. Voorhees and myself, “Blue Jeans” Williams, the candidate for governor, was to open the meeting in his peculiar way, to which, as it would not at all interfere with our debate, I did not object. The debate was fully reported in the Chicago “Inter-Ocean,” and is a very graphic specimen of popular debates in which each side claims to be the victor. I think it would be safe to say that from the close of Congress until the day of election I spoke on nearly every week day in some one of the five or six states which I visited.
The result of the presidential election in November, 1876, was extremely doubtful. It was soon asserted that the majority either way would be very small, and that the probabilities were that Mr. Tilden was elected. Zachariah Chandler, chairman of the national Republican committee, however, confidently telegraphed, on the morning after the election, that Hayes was elected by a majority of one in the electoral college. Further reports developed that on account of intimidation, frauds and violence, committed in the election in Louisiana, South Carolina, and Florida, the vote of each of those states was doubtful, and could only be ascertained by the reports of the returning boards. All of their electoral votes were needed to give Hayes the majority of one. Both parties claimed in each of the states a majority of the popular vote. In the heated state of political feeling in those states, it was a matter of grave doubt whether the count of the vote might not result in violence, tumult or war. On the evening of November 11, I received from President Grant the following telegram:
“Philadelphia, Pa., November 11, 1876.
“Received at Mansfield, O., 8:35 p. m.
“Senator John Sherman.
“I would be much pleased if you would join other parties, who have already accepted same invitation, to go to New Orleans to witness the canvassing of the vote of Louisiana.
“U. S. Grant.”
I replied that I would go as soon as practicable, and received the following answer:
“Washington, D. C., November 12, 1876.
“Received at Mansfield, O., 4 p. m.
“Hon. John Sherman.
“Unless you can reach there by Friday morning it will be too late.
“U. S. Grant.”
I at once started for New Orleans, stopping on the way at Columbus to confer with Governor Hayes, who said he wished I would go to New Orleans, and witness the count, but expressed, in the strongest possible language, his opposition to any movement on the part of anyone to influence the action of the returning board in his favor. He said that if Mr. Tilden was elected he desired him by all means to have the office. I proceeded to Cincinnati, where I met some of the gentlemen whom General Grant had requested to witness the count. When we arrived in New Orleans I found far less excitement in respect to the count than in Ohio. I there met the other gentlemen who had been, like myself, invited by General Grant. They were Messrs. Stanley Matthews, Ohio; J. A. Garfield, Ohio; E. W. Stoughton, New York; J. H. Van Alen, New York; Wm. D. Kelley, Pennsylvania; Job E. Stevenson, Ohio; Eugene Hale, Maine; J. M. Tuttle, Iowa; J. W. Chapman, Iowa; W. R. Smith, Iowa; W. A. McGrew, Iowa; Sidney Clarke, Kansas; C. B. Farwell, Illinois; Abner Taylor, Illinois; S. R. Haven, Illinois; J. M. Beardsley, Illinois; John Coburn, Indiana; Will Cumback, Indiana; C. Irving Ditty, Maryland.
At New Orleans I was for the first time introduced to the members of the returning board, who, under the laws of Louisiana, were required to verify the count and whose return was final. We met also a large number of gentlemen who were there at the request of the national Democratic committee to perform the same duty that had been imposed upon us by General Grant. These gentlemen were John M. Palmer, Illinois; Lyman Trumbull, Illinois; William R. Morrison, Illinois; Samuel J. Randall, Pennsylvania; A. G. Curtin, Pennsylvania; William Bigler, Pennsylvania; J. R. Doolittle, Wisconsin; George R. Smith, Wisconsin; J. E. McDonald, Indiana; George W. Julian, Indiana; M. D. Manson, Indiana; John Love, Indiana; Henry Watterson, Kentucky; J. W. Stevenson, Kentucky; Henry D. McHenry, Kentucky; Oswald Ottendorfer, New York; J. B. Stallo, Ohio; Lewis V. Bogy, Missouri; James O. Brodhead, Missouri; C. Gibson, Missouri; John Lee Carroll, Maryland; William T. Hamilton, Maryland; W. G. Sumner, Connecticut; P. H. Watson, Ohio; F. R. Coudert, New York.
Before my arrival a correspondence had occurred between what was called the Democratic visitors and the Republican visitors in regard to our respective duties. This correspondence, all of which was reported to President Grant, resulted in the attendance of a certain number of each of the bodies of visitors at each session of the returning board, and thus a constant surveillance of the proceedings of the board was had. At the same time we received from the returning board the following letter:
“State of Louisiana, Office Board of Returning-Officers,} “New Orleans, November 18, 1876. } “Sir:—At a meeting of the board of returning-officers, held this day, the following preamble and resolution, introduced by General Thomas C. Anderson, was unanimously adopted, viz:
“Whereas, This board has learned with satisfaction that distinguished gentlemen of national reputation from other States, some at the request of the President of the United States, and some at the request of the national executive committee of the Democratic party are present in this city with a view to witness the proceedings of this board in canvassing and compiling the returns of the recent election in this state for presidential electors, in order that the public opinion of the country may be satisfied as to the truth of the result and the fairness of the means by which it may have been attained; and whereas, this board recognizes the importance which may attach to the result of their proceedings, and that the public mind should be convinced of its justice by a knowledge of the facts on which it may be based, therefore, be it
Resolved, That this board does hereby cordially invite and request five gentlemen from each of the two bodies named, to be selected by themselves respectively, to attend and be present at the meetings of the board while engaged in the discharge of its duties, under the law, in canvassing and compiling the returns, and ascertaining and declaring the result of said election for presidential electors, in their capacity as private citizens of eminent reputation and high character, and as spectators and witnesses of the proceedings in that behalf of this board.
“J. Madison Wells,
“Chairman Board of Returning-Officers.
“Hon. John Sherman, St. Charles Hotel, New Orleans.”
On the same day I answered in behalf of my associates as follows:
“St. Charles Hotel, } “New Orleans, November 18, 1876.} “Sir:—I have received your note of to-day, with a copy of the resolution of the board of returning-officers of the State of Louisiana, and have communicated the invitation contained in it to the gentlemen who are here at the request of the President of the United States to witness the canvassing of the vote at the recent election in this state for presidential electors, and am instructed by them to inform you of their acceptance of the invitation, and that they will designate a committee of five of their number to attend the meetings of the board. And I take this occasion to express my thanks for the courteous terms of this invitation, my deep sense of the importance of your proceedings, and my confident hope that they will be so conducted as to convince the public mind of the justice of your finding.
“John Sherman.
“Hon. J. Madison Wells.”
A similar invitation was extended to the Democratic visitors, and substantially the same reply made. The returning board then proceeded to perform its duty under the law. At each session the Republican and Democratic visitors were present, and I neither know of nor have ever heard of any act being done or testimony taken by the board except in the presence of committees of the two bodies of visitors. The proceedings of the returning board were reported for each body of visitors and for the returning board, and all the evidence taken was not only delivered in the presence of the two visiting bodies, but was reported to the President and was published by Congress. Whatever opinions may be expressed as to the correctness of the findings of the returning board, there can be no doubt that its proceedings were open, fair and impartial. The board arrived at the conclusion that the Republican electors received a majority of the votes cast in Louisiana at that election, and were entitled to cast the vote of the state for President of the United States.
During the great excitement over this controversy, and also over that in South Carolina and Florida, exaggerated statements, without the slightest foundation, of frauds and improper conduct on the part of the returning officers were made and published. As to the action of the returning board of Louisiana, I feel bound now, after a long lapse of time, to repeat what was reported to General Grant by the Republican visitors, that it made a fair, honest and impartial return of the result of the election. In concluding our report we said:
“The proof of violence and intimidation and armed disturbance in many other parishes, is of the same general character, although more general and decisive, as to the five parishes particularly referred to. In the others, these causes prevailed at particular polling places, at many of which the Republican vote was, to a considerable extent, prevented.
“We hope to be able to furnish full copies of all testimony taken by the board, that the justice of its conclusions may be appreciated. It is a tribunal, from which there can be no appeal, and, in view of the possible consequences of its adjudication, we have closely observed its proceedings and have carefully weighed the force of a large mass of the testimony upon which that adjudication has been reached.
“The members of the board, acting under oath, were bound by law, if convinced by the testimony that riot, tumult, acts of violence, or armed disturbance did materially interfere with the purity and freedom of election at any poll or voting place, or did materially change the result of the election thereat, to reject the votes thus cast, and exclude them from their final return. Of the effect of such testimony, the board was sole and final judge, and if, in reaching a conclusion, it exercised good faith and was guided by an honest desire to do justice, its determination should be respected, even if, upon like proof, a different conclusion might have been reached by other tribunals or persons.
“To guard the purity of the ballot; to protect the citizen in the free and peaceful exercise of his right to vote; to secure him against violence, intimidation, outrage, and especially murder, when he attempts to perform his duty, should be the desire of all men, and the aim of every representative government. If political success shall be attained by such violent and terrible means as were resorted to in many parishes in Louisiana, complaint should not be made if the votes thus obtained are denounced by judicial tribunals and all honest men as illegal and void.”
Pending the action of the board I wrote to Governor Hayes the following letter, giving a general view of the testimony:
“State of Louisiana, Executive Department,} “New Orleans, November 23, 1876. } “My Dear Sir:—I have not written you sooner, for the progress of our visitation will be known to you through the papers sooner than from my letters, and the telegraph office here is more public than a sheriff’s sale. We sometimes hear of private telegrams before they are delivered. The action of the returning board has thus far been open and fair and only confirms the general result known before. We are now approaching the contested parishes. To five of them, viz: Baton Rouge, East and West Feliciana, Morehouse and Ouachita, the evidence of intimidation is so well made out on paper that no man can doubt as to the just exclusion of their vote. In these parishes alone we ought to have a majority of 7,000, but under the law the entire return must be excluded of all election districts where intimidation has affected or changed the result. If this is done the result will give the Hayes electors majorities aggregating 24,111, and the Tilden electors 22,633, but in almost every parish the official return varies somewhat from the stated majorities, and thus far slightly reduces the Republican majority.
“The vote of each disputed parish has thus far been laid aside, and among them two parishes where a most foolish blunder, or something worse, was made in omitting from the Republican tickets the names of all the electors but the two Senatorial and one district elector. The Democrats claim this will lose over 2,000 votes, but our friends, whose information we have generally found confirmed, say it will lose us at most 1,193 votes. The law seems conclusive that the defective ballots cannot be counted for any electors but those named on the ticket; though it is conclusively shown that the remaining electors were omitted by reason of the mistaken idea that the district could only vote for one elector. The whole trouble has grown out of the fact that in these two parishes a candidate for district judge was not named on the ticket printed by the state committee. We undertook to correct this by printing new tickets, which were voted in those parishes. The result of this blunder will leave the poll so close as to render it probable that one or more of the Tilden electors would have a majority.
“There are other parishes where the organized intimidation was not so general as in the parishes named, though in single election precincts it was effective. These parishes, where formal protests have been filed, are Bienville, Bossier, Caldwell, Franklin, Grant, Iberia, Lincoln, Richland and Sabine. How far the proof in these parishes will sustain the protests we cannot judge till the evidence is heard before the returning board.
“We are now collecting the testimony as to the bulldozed parishes. It seems more like the history of hell than of civilized and Christian communities. The means adopted are almost incredible, but were fearfully effective upon an ignorant and superstitious people. That you would have received at a fair election a large majority in Louisiana, no honest man can question; that you did not receive a majority is equally clear. But that intimidation of the very kind and nature provided against by the Louisiana law did enter into and control the election, in more election polls than would change the result and give you the vote, I believe as firmly as that I write this. The difficulty of gathering this testimony and putting it in the legal form has been very great, but I believe has been fully met.
“The whole case rests upon the action of the returning board. I have carefully observed them, and have formed a high opinion of Governor Wells and Colonel Anderson. They are firm, judicious, and, as far as I can judge, thoroughly honest and conscientious. They are personally familiar with the nature and degree of intimidation in Louisiana. They can see that the intimidation, as organized, was with a view of throwing out Republican parishes rather than endangering Democratic parishes. Our little party is now dividing out the disputed parishes, with the view of a careful examination of every paper and detail. Many are impatient of the delay, and some have gone home. We will probably be able to keep about ten here. We have incurred some liabilities for reporting, printing, etc., but hope the Republican national committee will make this good. If not, we must provide for it ourselves. We are in good hope and spirit. Not wishing the return in your favor, unless it is clear that it ought to be so, and not willing to be cheated out of it, or to be ’bulldozed’ or intimidated, the truth is palpable that you ought to have the vote of Louisiana, and we believe that you will have ti, by an honest and fair return, according to the letter and spirit of the law of Louisiana.
“Very truly yours,
“John Sherman.”
To this General Hayes responded as follows:
“Columbus, O., November 27, 1876. “My Dear Sir:—I am greatly obliged to you for your letter of the 23rd. You feel, I am sure, as I do about this whole business. A fair election would have given us about forty electoral votes at the south—at least that many. But we are not to allow our friends to defeat one outrage and fraud by another. There must be nothing crooked on our part. Let Mr. Tilden have the place by violence, intimidation and fraud, rather than undertake to prevent it by means that will not bear the severest scrutiny.
“I appreciate the work doing by the Republicans who have gone south, and am especially proud of the acknowledged honorable conduct of those from Ohio. The Democrats make a mistake in sending so many ex-Republicans. New converts are proverbially bitter and unfair towards those they have recently left.
“I trust you will soon reach the end of the work, and be able to return in health and safety.
“Sincerely,
“R. B. Hayes.”
I met Governor Hayes on my return and his conversation was to the same effect, that he wished no doubtful votes and would greatly prefer to have Mr. Tilden serve as President if there was any doubt about his (Hayes’) election. The Republican visitors did not return until after the meeting of Congress at its regular session on the 4th of December, 1876.
President Grant, in the beginning of his annual message of that date, said:
“In submitting my eighth and last message to Congress, it seems proper that I should refer to, and in some degree recapitulate, the events and official acts of the past eight years.
“It was my fortune, or misfortune, to be called to the office of Chief Executive without any previous political training. From the age of seventeen I had never even witnessed the excitement attending a presidential campaign but twice antecedent to my own candidacy, and at but one of them was I eligible as a voter. Under such circumstances it is but reasonable to suppose that errors of judgment must have occurred. Even had they not, differences of opinion between the Executive, bound by an oath to the strict performance of his duties, and writers and debaters must have arisen. It is not necessarily evidence of blunder on the part of the Executive because there are these differences of views. Mistakes have been made, as all can see and I admit, but, it seems to me, oftener in the selections made of the assistants appointed to aid in carrying out the various duties of administering the government, in nearly every case selected without a personal acquaintance with the appointee, but upon recommendations of the representatives chosen directly by the people. It is impossible, where so many trusts are to be allotted, that the right parties should be chosen in every instance. History shows that no administration, from the time of Washington to the present, has been free from these mistakes. But I leave comparison to history, claiming only that I have acted in every instance from a conscientious desire to do what was right, constitutional within the law, and for the very best interests of the whole people. Failures have been errors of judgment, not of intent.”
This modest statement by General Grant was appreciated by Congress and by the country. No one doubted the sincerity and patriotism of the President. His modest confession of errors did not in the slightest degree impair the universal confidence in him.
On the 18th of January, 1877, Mr. Edmunds, of the select committee of the Senate on the counting of electoral votes, submitted a report in writing with an accompanying bill. It was, with one exception, signed by the members of the committees of the two Houses without distinction of party. The bill provided in full detail a prescribed manner for counting the electoral vote. It was adopted by both Houses and voted for by a great majority, but, believing that it was extra constitutional, I, with other Republicans, did not vote for it. The history of the electoral commission provided for in this bill is part of the history of the country, and it is not necessary to here enter into it in detail. It is sufficient to say that it resulted in the counting of the votes of Louisiana, South Carolina and Florida for Mr. Hayes, electing him President by a majority of one vote. I took an active part in the debates on the questions involved and gave in detail my view of the action of the returning board of Louisiana.
During this period I received a number of personal letters from Governor Hayes, some of which may be of interest:
“Columbus, O., December 25, 1876. “My Dear Sir:—I have your esteemed favor, and have also met Judge Taft and Governor Dennison. There will not be the slightest difficulty growing out of the matter you refer to. You know my general course of conduct. It has always seemed to me wisest, in case of decided antagonisms among friends, not to take sides—to heal by compromise, not to aggravate, etc., etc. I wish you to feel authorized to speak in pretty decided terms for me whenever it seems advisable—to do this not by reason of specific authority to do it, but from your knowledge of my general methods of action.
“Sincerely,
“R. B. Hayes.
“Hon. John Sherman, etc., etc.”
“Columbus, O., January 5, 1877. “My Dear Sir:—I have your note of the 3rd. I do not wish to influence the action of our friends, and do not volunteer opinions. But you have a right to my opinion. I believe the Vice President alone has the constitutional power to count the votes and declare the result. Everything in the nature of a contest as to electoral votes is an affair of the states. The rest is a mere ministerial duty. Therefore it is not right, in my judgment, for Congress to interfere.
“Sincerely,
“R. B. Hayes.
“Hon. John Sherman, U. S. S.”
“Columbus, O., February 15, 1877. “My Dear Sir:—I have two letters from you since I last wrote. It if becomes my duty to make a cabinet I want your views fully and specifically. If possible a personal interview would be extremely desirable. Boynton writes to Smith that an assurance of my views on the southern question, which are truly set forth in my letter, with such additions as I could properly make, would be useful. I prefer to make no new declarations. But you may say if you deem it advisable that you know that I will stand by the friendly and encouraging words of that letter and by all that they imply. You cannot express that too strongly.
“Sincerely,
“R. B. Hayes.
“Hon. John Sherman.”
“Columbus, O., February 16, 1877. “My Dear Sir:—If the issue of the contest is in our favor I shall want to see you at once if it is at all practicable. Don’t you want to visit Mansfield? I can meet you there or here—or possibly at a point east of there.
“Sincerely,
“R. B. Hayes.
“Hon. John Sherman.”
“Columbus, O., February 19, 1877. “My Dear Sir:—The more I think of it the more difficult it seems for me to get ready to come to Washington before Wednesday or Thursday of next week. I must fix affairs at Fremont, and cannot begin it until I know the result. Why can’t friends be sent or come here?
“It seems to me proper now to say that I am extremely desirous that you should take the treasury department. Aside from my own personal preference, there are many and controlling reasons why I should ask you to do this. It will satisfy friends here in Ohio. I understand Governor Morton and our friends in Washington like it. The country will approve it. You are by all odds the best fitted for it of any man in the nation. Your resignation from the Senate will be a great loss to that body, but it will cause no serious dissensions or difficulty in Ohio. Do not say no until I have had a full conference with you. There is no reason why you should not visit Ohio as soon as you can be spared from Washington. Of course the public will know of our meeting. But they will be gratified to know it. No possible harm can come of it. I should have said all this before, but I did not want to embarrass you in your action on the presidential question.
“Sincerely,
“R. B. Hayes.
“Hon. John Sherman.”
(Telegram.)
“Columbus, O., February 20, 1877.
“Hon. John Sherman.
“I will be greatly obliged if you can come to Columbus, but will meet you at Zanesville if you think it important.
“R. B. Hayes.”
“Columbus, O., February 28, 1877.
“Hon. John Sherman, Washington, D. C.
“Dear Sir:—Governor Hayes will be obliged to you if you will be kind enough to speak to Mr. Evarts with respect to his acceptance of the place in the cabinet referred to in the interview with you last week. It was the governor’s intention to make this request at that time, and he may have done so, but not being quite sure of the fact, desires me to write you with reference to it.
“Yours very respectfully,
“W. K. Rogers, Secretary.”
President Hayes frequently, in personal conversation and in writing, had expressed a strong desire that I should become the Secretary of the Treasury. I was disinclined to accept this position, as I was content to serve my constituents in the Senate. It was not until after his urgent request in his letter of February 19, 1877, that I seriously considered his desire that I should accept that office. I went to Columbus to ascertain the views of the legislature, and whether there would be any difficulty in selecting a Republican to my place in the Senate. Having found that there would not be, I, with reluctance, accepted his offer. Stanley Matthews was elected on the 21st of March to serve out my unexpired term, which ended on the 3rd of March, 1879.
President Hayes arrived at Washington a few days before the 4th of March and was my guest until he was inaugurated as President. The 4th day of March was on Sunday, and to avoid any questions about an interregnum, he was sworn into office on that day, but took the formal oath on the next day, the 5th of March, and made his inaugural address. He nominated the members of his cabinet to the Senate and they were promptly confirmed.
I received many letters of congratulation and encouragement in assuming the duties of Secretary of the Treasury, two of which I insert:
“New York, March 6, 1877. “My Dear Mr. Secretary:—Allow me to congratulate you on having been selected by President Hayes to administer the financial affairs of the nation.
“I deem it a happy augury that the President’s choice of members of his cabinet has fallen upon men who have made their mark as statesmen, and whose advent to power will, I feel convinced, inaugurate an era of prosperity for our country.
“With yourself at the head of the treasury department, there is no fear of public credit being shaken and commercial interests imperiled by crude and experimental legislation.
“With great respect, I remain, my dear Mr. Sherman,
“Very truly your friend,
“Cyrus W. Field.
“Hon. John Sherman, Washington.”
“Consulate General of the United States for Great Britain and
Ireland,}
“London, E. C., March 12, 1877.}
“The Hon. John Sherman, Secretary of the Treasury.
“My Dear Sir:—When I begin to write to you, I am reminded of what General Sherman said, in my hearing, to General Grant, after the latter was made General in Chief: ‘I cannot congratulate you; the responsibility is too great.’ You have certainly succeeded to the most difficult post in the government, one in whose successful administration Americans abroad feel an especial interest, for no department is more important to foreigners or more discussed by them.
“It may not be unsatisfactory to you to know that Americans—both those long domiciled here and those in transit—applaud the appointment of the new Chief of the Treasury.
“I beg to offer my best wishes and belief that the reputation he has already achieved in the Senate will be increased in the cabinet; and to say how glad I was that the unanimity of his late compeers showed that they were of the same mind.
“With great respect, I am, my dear sir,
“Very faithfully yours,
“Adam Badeau.”
CHAPTER XXIX. I BEGIN MY DUTIES AS SECRETARY OF THE TREASURY. Legislative Training of Great Advantage to Me in My New Position— Loan Contract in Force When I Took the Portfolio—Appointment of Charles F. Conant as Funding Agent of the Treasury Department in London—Redeeming Called Bonds—Sale of Four Per Cent. Bonds Instead of Four and a Half Per Cents.—Popularity of the New Loan—Great Saving in Interest—On a Tour of Inspection Along the Northern Atlantic Coast—Value of Information Received on This Trip—Effect of the Baltimore and Pittsburg Railroad Strikes in 1877 Upon Our Public Credit.
When I assumed the office of Secretary of the Treasury I had the advantage of some of my predecessors in that I was acquainted with the organization and duties of the treasury department. Ever since 1859 my connection with the committee of ways and means in the House and with the committee on Finance in the Senate had brought me into official relations with the head of that department. This legislative training gave me a full knowledge of the several laws that were to be executed in relation to public revenue, to all forms of taxation, to coinage and currency, and to the public debt. The entire system of national finance then existing grew out of the Civil War, and I had participated in the passage of all the laws relating to this subject. My intimate association with Secretaries Chase, Fessenden and McCulloch, and my friendly relations with Secretaries Boutwell and Richardson, led me, as chairman of the Senate committee on finance, to have free and confidential intercourse with them as to legislation affecting the treasury. Secretary Bristow had not had the benefit of experience either in Congress or the department. He was a good lawyer and an able man. He doubted whether resumption would be effective without a gradual retirement of United States notes, a measure that Congress would not agree to. Congress repealed even the limited retirement of such notes provided for by the resumption act. Secretary Morrill, of Maine, my immediate predecessor, was in hearty sympathy with the policy of Congress, of which he had been a useful Senator, and but for his failing health would have been an efficient secretary. Upon my assuming the duties of secretary, and for some time before, he had been confined by illness to his lodgings in Washington. The treasury department was then well organized. Most of the principal officers had been long in the service. But few changes were made by President Hayes or by myself, and only as vacancies occurred or as incompetency was demonstrated. The following loan contract was in force at the beginning of my administration of the treasury department:
“This agreement, entered into this 24th day of August, in the year of our Lord, 1876, between the Secretary of the Treasury of the United States of America, of the first part, and Messrs. August Belmont & Co., of New York, in behalf of Messrs. N. M. Rothschild & Sons, of London, England, and associates, and Messrs. J. & W. Seligman & Co., of New York, for themselves and associates, and Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., of London, England, and Messrs. Morton, Bliss & Co., of New York, representing the First National Bank of the city of New York, the American Exchange National Bank of New York, the Merchants’ National Bank of New York, the Third National Bank of New York, Messrs. Kuhn, Loeb & Co., of New York, the Bank of New York National Banking Association, and Messrs. Morton, Rose & Co., of London, and themselves, of the second part:
“Witnesseth, That the said Messrs. August Belmont & Co. of New York, on behalf of Messrs. N. M. Rothschild & Sons and associates, hereby agrees to purchase from the Secretary of the Treasury sixteen million five hundred thousand dollars ($16,500,000) of the United States bonds known as the four and a half per cent. funded loan of 1891, issued under the acts of July 14, 1870, and January 20, 1871; and that Messrs. J. & W. Seligman & Co., for themselves and their associates, hereby agree to purchase from the Secretary of the Treasury six million seven hundred and fifty thousand dollars ($6,750,000) of the bonds hereinbefore described; and that Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., of London, England, hereby agree to purchase from the Secretary of the Treasury six million seven hundred and fifty thousand dollars ($6,750,000) of the bonds hereinbefore described; and that Messrs. Morton, Bliss & Co., of New York, representing the First National Bank of the city of New York, to the extent of four million dollars ($4,000,000); the American Exchange National Bank of New York, to the extent of one million and fifty thousand dollars ($1,050,000); the Merchants’ National Bank of New York, to the extent of six hundred thousand dollars ($600,000); the Third National Bank of the city of New York, to the extent of seven hundred and fifty thousand dollars ($750,000); Messrs. Kuhn, Loeb & Co., of New York, to the extent of one million and fifty thousand dollars ($1,050,000); the Bank of New York National Banking Association, to the extent of three hundred thousand dollars ($300,000); Messrs. Morton, Rose & Co., of London, to the extent of one million one hundred and twenty-five thousand dollars ($1,125,000), and Messrs. Morton, Bliss & Co., of New York, to the extent of one million one hundred and twenty-five thousand dollars ($1,125,000), hereby agree, to the extent severally for each as above stated, to purchase from the Secretary of the Treasury ten million dollars ($10,000,000) in the aggregate of the bonds hereinbefore described, making a total aggregate of forty million dollars ($40,000,000), upon the terms and conditions following, to-wit:
“First. Of the said aggregate amount, not less than ten million dollars ($10,000,000) are hereby subscribed for, the subscription to take effect on the 1st day of September, 1876, and the remaining amount, namely, thirty million dollars ($30,000,000), may be divided at the pleasure of the parties of the second part into several successive subscriptions of not less than five million dollars ($5,000,000) each, to be made prior to the 4th day of March, 1877.
“Second. The parties of the second part shall have the exclusive right to subscribe, in the same proportion to each of the subscribers, for the remainder, namely, two hundred and sixty million dollars ($260,000,000), or any portion of said loan authorized to be issued by the acts of Congress aforesaid, by giving notice thereof to the Secretary of the Treasury on or before the 30th day of June, 1877; but the party of the first part reserves the right to terminate this contract at any time after March 4, 1877, by giving ten days’ notice thereof to the parties of the second part.
“Third. That the Secretary of the Treasury shall, when subscriptions are made by the said parties of the second part, issue calls with even date with said subscriptions for the redemption of an equivalent amount of six per cent. 5-20 bonds of the United States, as provided by said act of July 14, 1870.
“Fourth. The parties of the second part agree to pay for said four and a half per cent. bonds par and interest accrued to the date of application for delivery of said bonds, in gold coin, matured United States gold coin coupons, or any of the six per cent. 5-20 bonds called for redemption, or in United States gold certificates of deposit issued under the act of March 3, 1863, with the understanding that payment to the extent of the amount of any call shall be made within the time during which such call shall mature: Provided, That, if the parties of the second part shall elect so to do, they may have the privilege of making any of said subscriptions payable specifically in uncalled six per cent 5-20 bonds of the United States, in which case the Secretary of the Treasury may, to the extent of such payments, omit the calls mentioned in condition No. 3.
“Fifth. The parties of the second part shall receive in coin a commission of one-half of one per cent. on all bonds taken by them, as allowed by the act of July 14, 1870, and shall assume and defray all expenses which may be incurred in sending bonds to London upon their request, or by transmitting bonds, coupons, or coin from there to the treasury department at Washington, including all cost of making exchange of bonds, and shall also be charged with the preparation and issuing of the bonds.
“Sixth. No bonds shall be delivered to the parties of the second part, or either of them, until payment shall have been made in full therefor in accordance with the terms of this contract.
“Seventh. During the continuance of this contract any sales of bonds ordered by the Secretary of the Treasury, by authority of law, except those that it may become necessary to sell to pay judgments of the Court of Commissioners of Alabama Claims, shall be made through the parties of the second part, who shall be allowed thereon a commission of one per cent. in gold coin. And it is provided that the amount of bonds so ordered shall not exceed in the aggregate $25,000,000, unless by mutual agreement of the parties.
“Lot M. Morrill, Secretary of the Treasury.
“Aug. Belmont & Co., On behalf of N. M. Rothschild & Sons, London.
“J. & W. Seligman & Co., On behalf of Seligman Brothers.
“Drexel, Morgan & Co., On behalf of J. S. Morgan & Co., of London.
“Morton, Bliss & Co., For themselves and associates, as named
above.”
By its terms the contract provided for the sale of $40,000,000, four and a half per cent. bonds of the United States at par in gold coin. The contractors had the exclusive right to subscribe for all or any portion of the remainder of the four and a half per cent. bonds, amounting to $260,000,000. The right to terminate this contract at any time after March 4, 1877, after ten days’ notice, was reserved by the United States. The proceeds of the bonds sold were to be applied solely to the payment of the six per cent. 5-20 bonds of the United States. No provision was made in this contract for the accumulation of coin for the redemption of United States notes. The process of refunding under it progressed slowly.
I felt it to be important that I should have some personal representative in London, to protect the interests of the United States in the execution of this contract, and, therefore, on the 31st of March, 1877, I appointed Charles F. Conant, as the funding agent of the treasury department, and directed him to assume the general management and supervision of all business in London, arising from the funding of bonds. A letter of instructions prescribing his duties was given him. He was directed to pursue the same general plan under which former negotiations had been conducted, except as modified by these instructions, which were based upon the contract before mentioned. All bonds, money, or coupons received by him were to be securely kept in safes, furnished by the department for that purpose, to be deposited in the vaults of the Messrs. Rothschild. Combination locks were provided for each safe, and no safe could be unlocked except by three persons on distinct combinations, each person using a combination unknown to the others. He was to keep me fully advised as to the course of the market, of the price not only of American securities, but of foreign securities, and was to receive the new bonds and deliver them to the Rothschilds in exchange for the bonds redeemed. He proved to be a very competent and faithful agent, and furnished me important financial information, which aided me greatly in refunding operations. His compensation and allowances, as well as those of all persons sent to London in connection with the refunding of the public debt, were paid by the syndicate, so that no expense whatever was incurred by the treasury on this account.
I gave the following notice to the parties to this contract that I would, on the part of the United States, terminate it.
“Treasury Department, }
“Washington, D. C., April 6, 1877.}
“Gentlemen:—I received your friendly cable message of the 10th
ultimo, and return my thanks and hearty good wishes.
“I am very solicitous to promote the funding of our six per cent. bonds as rapidly as practicable, and feel indebted to you for the aid you have given in placing the four and a half per cent. bonds.
“I propose no change at present; but it is my desire, if practicable, to withdraw the four and a half per cent. bonds from the market and substitute in their place the four per cent. bonds authorized by the funding act.
“These bonds, as you know, are a very desirable investment, running thirty years from the date of issue, with every guard and security that has been given to any bond of the United States, and we think as safe and desirable as the securities of any other nation. It is probably the bond into which all the debt of the United States will in time be converted. I hope you and your associates will be able to engage with me to place this bond on the market when $200,000,000 of the four and a half per cent. bonds have been sold.
“The public policy of the United States to resume specie payments on or before the 1st of January, 1879, is fully established by the law and by public opinion. It may be that the surplus revenue will be sufficient to enable me to carry out this policy without the sale of bonds. I am authorized by the resumption act to sell five, four and a half, or four per cent. bonds to prepare for resumption, and it may be desirable to sell through the syndicate, under that act, a limited amount of bonds, not exceeding, I hope, $30,000,000 a year. I do not wish in the execution of this duty to disturb the exchanges between Europe and this country. For this purpose I desire to sell only the four per cent. bonds and must sell at par in coin, but could receive in payment coin coupons maturing within a limited time. I invite from you and your associates such suggestions and offers as you may think proper to make for the purchase of such bonds.
“The operations of the syndicate have become so important that I have deemed it proper to ask Mr. Charles F. Conant, late Assistant Secretary of the Treasury, to take charge of the business in London in connection with the gentlemen already there. He is well informed as to our laws, and I trust his services may be of advantage to the government and agreeable to you.
“I will give my personal attention to this business, and will receive with pleasure any suggestions from you that will promote our common object.
“Very truly,
“John Sherman, Secretary.
“Messrs. N. M. Rothschild & Sons, London, England.”
I received the following letter:
“New York, April 12, 1877. “Hon. John Sherman, Secretary of the Treasury, Washington.
“My Dear Sir:—I had an interview with Messrs. Drexel, Morgan & Co., and conveyed to them your wishes respecting limiting the sale of the four and a half and taking the four per cent. bond in hand with the co-operation of the Messrs. Rothschild.
“I told Mr. Drexel that you would be happy to see him and Mr. L. P. Morton in Washington, whenever convenient for them to go, and that on receipt by you of favorable advices from Mr. Conant after his arrival in London, you desired that Drexel, Morton and I should repair to Washington, in company with other leading members of the syndicate, with a view of entering into a contract with the government, in conformity with your views as expressed to me, or perhaps with some slight modifications, which, if suggested by the London people, through Mr. Conant, you may deem proper to adopt.
“I shall see Mr. Morton in the course of this day, and have no doubt but that he, as well as Drexel and myself, will be happy to aid you in raising the credit of our common country, and assist the President and you in this patriotic work. I remain, dear Mr. secretary, yours, very faithfully.
“Jos. Seligman.”
A month later I wrote to Mr. Conant as follows:
“Treasury Department, } “Washington, May 14, 1877.} “Dear Mr. Conant:—... On Friday last I concluded a modification of the present syndicate contract, which provides for the sale of five million four and a half per cent. bonds at par in coin for resumption purposes. A further negotiation is pending as to the renewal and modification of the contract, of which I will give you due notice when completed. In the meantime I wish to keep steadily in view the sale of the balance of two hundred million four and a half per cent. bonds, and, if possible, I wish to make the necessary calls during this month and next.
“You can assure Messrs. Rothschild of every disposition on the part of the government to meet their views, and to extend the contract with the necessary modifications. Their efforts in maintaining the credit of the bonds and securing this result will be highly appreciated.
“I would like to have you write me at least twice a week as fully as practicable.
“Very truly,
“John Sherman.
“Mr. C. F. Conant, London.”
As the process of redeeming called bonds required a notice of ninety days, I postponed the termination of the existing contract until after that period. My purpose in terminating the contract was to substitute for sale the four per cent. bonds of the United States instead of the four and a half per cent. bonds. I believed that the advancing credit of the United States would justify this reduction of the rate of interest. Another reason for this step was that, in addition to refunding at a lower rate of interest, I wished to commence preparation for the resumption of specie payments on January 1, 1879, according to law. This could only be done by the sale of bonds for gold coin. I reserved the remainder of the four and a half bonds, amounting to $100,000,000, authorized by the refunding act, for resumption purposes in case the four per cent. bonds could not be sold at par in coin.
Another reason for a change in the existing contract was that it gave to the syndicate a monopoly in the sale of bonds while I wished to sell the bonds directly to the people. The new contract was as follows:
“This agreement, entered into this 9th day of June, 1877, between the Secretary of the Treasury of the United States, of the first part, and Messrs. August Belmont & Co., of New York, on behalf of Messrs. N. M. Rothschild & Sons, of London, England, and associates and themselves; Messrs. Drexel, Morgan & Co., of New York, on behalf of Messrs. J. S. Morgan & Co., of London, and themselves; Messrs. J. & W. Seligman & Co., of New York, on behalf of Messrs. Seligman Brothers, of London, and themselves; Messrs. Morton, Bliss & Co., of New York, on behalf of Messrs. Morton, Rose & Co., of London, and themselves; and the First National Bank of the city of New York—
“Witnesseth: That the said Messrs. August Belmont & Co., on behalf of Messrs. N. M. Rothschild & Sons, and associates and themselves, hereby agree to purchase from the Secretary of the Treasury $10,312,500 of the bonds known as the four per cent. consols of the United States, issued under the acts of July 14, 1870, January 20, 1871, and January 14, 1875, and that Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., and themselves, agree to purchase $4,062,500 of said bonds, and that Messrs. J. & W. Seligman & Co., on behalf of Messrs. Seligman Brothers, and themselves, agree to purchase $4,062,500 of said bonds, and that the First National Bank of the city of New York agree to purchase $2,500,000 of said bonds, making a total aggregate of $25,000,000 of said bonds, on the terms and conditions following:
“First. Of the said aggregate amount not more than $5,000,000 shall be sold for resumption purposes, the remaining $20,000,000 to be sold for funding purposes, and subscribed for by the parties of the second part during the months of July and August, 1877.
“Second. The parties of the second part shall have the exclusive right to subscribe in the same proportion to each of the subscribers, for the remainder of the four per cent. consols of the United States, or any portion of said consols authorized to be issued by the acts of Congress aforesaid, by giving notice thereof to the Secretary of the Treasury on or before the 30th day of June, 1878; but the party of the first part reserves the right to terminate this contract at any time after the 31st day of December, 1877, by giving ten days’ notice thereof to the parties of the second part.
“Third. That the Secretary of the Treasury shall not sell for resumption purposes exceeding five millions per month during the continuance of this contract, except by mutual agreement of the parties hereto. When subscriptions are made for other than resumption purposes by the parties of the second part, the party of the first part shall issue calls of even date with said subscriptions for the redemption of an equal amount of six per cent. 5-20 bonds of the United States, as provided for in said act of July 13, 1870.
“Fourth. The parties of the second part agree to pay for said four per cent. bonds par and interest accrued to the date of application for delivery of said bonds in gold coin, matured United States gold coin coupons, or any of the six per cent. 5-20 bonds called for redemption, or in United States gold certificates of deposit issued under the act of March 3, 1863, with the understanding that payment to the extent of the amount of any call shall be made within the time during which call shall mature: Provided, That if the parties of the second part shall elect so to do, they may have the privilege of making any of said subscriptions payable specifically in uncalled six per cent. 5-20 bonds of the United States, in which case the Secretary of the Treasury may, to the extent of such payments, omit the calls mentioned in condition No. 3.
“Fifth. The parties of the second part shall receive in coin a commission of one-half of one per cent. on all bonds taken by them, as allowed by the act of July 14, 1870, and shall assume and defray all expenses which may be incurred in sending bonds to London or elsewhere upon their request, or by transmitting bonds, coupons, or coin to the treasury department at Washington, including all cost of making the exchange of bonds, and shall also be charged with the cost of the preparation and issuing of the bonds.
“Sixth. No bonds shall be delivered to the parties of the second part, or either of them, until payment shall have been made in full therefor in accordance with the terms of this contract.
“Seventh. During the continuance of this contract any sales of bonds ordered by the Secretary of the Treasury, by authority of law, shall be made through the parties of the second part, who shall be allowed thereon a commission similar in amount and subject to the same deductions as prescribed in the fifth clause of this contract.
“Eighth. It is also agreed that the parties of the second part shall offer to the people of the United States, at par and accrued interest in coin, the four per cent. registered consols and four per cent. coupon consols of the denominations of fifty dollars and one hundred dollars, embraced in this contract, for a period of thirty days from the public notice of such subscriptions, and in such cities and upon such notice as the Secretary of the Treasury may prescribe prior to the opening of the lists, and further, to offer to the subscribers the option of paying in installments, extending through three months.
“John Sherman, Secretary of the Treasury.
“August Belmont & Co., On behalf of N. M. Rothschild & Sons, of
London, And associates and themselves.
“Drexel, Morgan & Co., On behalf of J. S. Morgan & Co., of London,
And themselves.
“J. & W. Seligman & Co., On behalf of Seligman Brothers and
themselves.
“Morton, Bliss & Co., On behalf of Morton, Rose & Co., of London,
And themselves.
“The First National Bank of the city of New York, by H. C.
Fahnestock.
“Witnesses as to all:
“R. C. McCormick.
“E. J. Babcock.”
By this contract the syndicate was to take $25,000,000 of the four per cent. bonds at par, or in exchange of six per cent 5-20 bonds. Of this sum $5,000,000 in gold coin was to be paid to the treasury for resumption purposes. The eighth section was a new provision, and required the syndicate to offer to the people of the United States, at par and accrued interest in coin, the four per cent. bonds, for a period of thirty days, in such cities and upon such notice as the Secretary of the Treasury might prescribe.
The result of this contract was not only to save one-half of one per cent. on the annual interest of the bonds redeemed, but to so popularize the loan that within a brief period I was able to terminate the contract according to its terms, and to sell the four per cent. bonds directly to the people at par, without a commission, or the aid of a syndicate.
I wrote to Mr. Conant as follows:
“Treasury Department, } “Washington, May 31, 1877.} “Dear Mr. Conant:—Your letter of the 19th is received. Since its date matters here have changed greatly for the better, and I have made two calls for ten millions each.
“There is a strong, steady demand for our bonds, and I have now no fear but the two hundred millions four and a halfs will be exhausted before the 1st of July, when they will be withdrawn. The prospect of placing the four per cent. bonds, commencing July 1, is very good. I have submitted to the syndicate a proposition in substance requiring them to take twenty-five millions four per cents., during July and August, of which five millions will be for resumption purposes, with a stipulation that if they take fifty millions additional in September and October the contract will be extended to January 1, 1878, five millions a month to be applied for resumption purposes. I do not propose to vary essentially from the proposition. I have another offer almost as good from other parties, but I hope to combine these two offers into a modified syndicate, and, if possible, reserve the right to sell bonds at par, in coin or 5-20 bonds, to persons who apply directly to me for exchange, giving, however, the syndicate the half per cent. commission. We will considerably reduce the cost of the bonds, I think, to one-tenth of one per cent., so that the contracting parties will have a reasonably fair commission. I am already assured of many sales of the bonds whenever offered, without the aid of the syndicate, so that I consider myself strong enough to undertake the placing the bonds even without their aid, if they will not agree to reasonable terms. If I can secure the active, hearty co-operation of all the parties who wish to engage in selling the bonds, and they will be content with a reasonable profit, the operation of funding can go on so rapidly that they ought to be satisfied with the profit they will make.
“I have not overlooked the possibility that some movement of coin will be made to meet called bonds in Europe in excess of bonds sold there, but hope to perfect arrangements by which I will secure American bullion to meet this demand, without stopping accumulations of coin in the treasury.
“The prospects here are favorable for a good crop in all the states of the Mississippi valley, but there will probably be a bad crop in California.
“What we must do is push the loan so that it will be an established success before the meeting of Congress. If you can succeed in inspiring the Rothschilds to aid this purpose I am sure of success. My proposition has been sent to them, and I was advised would be answered by telegram about this time; but by the 15th I hope to have the arrangements completed.
“If upon receipt of this letter there is anything of striking interest affecting the loan you may cable me.
“All well in the department. Matters are going along quietly and steadily.
“Very truly yours,
“John Sherman.
“Hon. Chas. F. Conant, London.”
This letter he received about the time the new contract was executed. I subsequently sent him the following cable telegram:
“Washington, June 9, 1877.
“Conant, London:
“Contract of August 24, 1876, closed new four and a half per cent. bonds of $200,000,000. New contract twenty-five millions four per cent. bonds taken firm. Particulars by mail.
“Sherman.”
Two days later I received a reply, as follows:
“London, June 11, 1877.
“Sherman, Washington:
“Congratulations. Rothschilds request me to say that it is important for this market that the public subscriptions in America for four per cents. should be a success, and this will make the market for London. N. M. Rothschild & Sons hope Secretary of the Treasury will advise that banks subscribe immediately. J. S. Morgan & Co., N. M. Rothschild & Sons, think subscription should be opened soon, in view of preparing London market.
“Conant.”
This new agreement gave at once a great impetus to the new loan in all parts of the United States, as well as in London. The following letters received indicate this:
“Merchants’ National Bank, }
“Cleveland, O., June 11, 1877.}
“Hon. John Sherman, Secretary Treasury United States.
“Dear Sir:—We learn that you propose to offer the public a certain portion of the new four per cent. loan for a limited time, the amount subscribed to be paid in gold at the par value of the bonds.
“This bank, being a public depositary of the government of the United States, shall be glad to further your plans, and act as agent for the sale of such portion of the loan as you may suggest, and endeavor to give it such publicity as would secure the sale of a portion of these bonds in this part of Ohio.
“Wishing you success in the effort, I remain, very respectfully and truly,
“T. P. Handy, President.
“Treasury Department, June 12, 1877.
“John P. Hunt, Esq., Philadelphia, Pa.
“Sir:—Your note is received. The department will be happy to receive your subscription in a short time. The bonds are not prepared, and the treasury regulations for the popular subscription cannot be issued for a few days, when a copy will be sent you.
“It is the purpose to give you, and all other citizens of the United States, an opportunity to subscribe at some convenient place in the city of your residence, to be designated in due time, requiring only a small deposit at the time of subscription, and allowing the privilege of paying at any time within ninety days thereafter.
“The bonds will bear date the 1st of July, and will be sold at par in coin and accruing interest to date of payment.
“Very respectfully,
“John Sherman, Secretary.”
Contemporaneous with this contract for selling the four per cent. bonds for gold coin, there appeared in the New York “Times” a suggestion that these bonds could be paid in silver. Henry F. French, Assistant Secretary of the Treasury, in a published letter of the date of June 11, asserted his opinion that the bonds issued under the act of July 14, 1870, for refunding, were redeemable in coin of the standard value at that date, and that “as it cannot be known what bonds have been transferred since the act of 1873, all bonds under the act of 1870 must be paid in gold coin of the standard value named in the act of 1873.”
I received a letter from Messrs. Seligman & Co., inclosing an extract from the New York “Times,” as follows:
“New York, June 12, 1877. “Hon. John Sherman, Secretary of the Treasury, Washington.
“Dear Mr. Secretary:—We beg to inclose a short editorial article which appeared in to-day’s New York ‘Times,’ which, coming from a Republican paper, may frighten investors in our country and abroad. Intelligent people know that you, sir, as well as President Hayes, are sound on the silver question, and yet it may appear to you proper, and highly advantageous to the prompt marketing of the four per cent. bonds, to disabuse those who have been led to believe that the President and you favor the remonetizing of silver, with a view of paying our national debt in a metal so fluctuating as silver has become since the principal nations of Europe have demonetized it. We remain, dear Mr. secretary, your obedient servants,
“J. & W. Seligman & Co.”
The article in the New York “Times,” of June 12, 1877, said:
“In a dispatch received by the Secretary of the Treasury yesterday from Mr. Conant, the syndicate agent in London, it was stated that the contract touching the four per cent. bonds is well received in London, and the new bond bids fair to be the most popular of American securities. There is no doubt that the bond has many advantages both for home and foreign investors. It has only one point of weakness, and that is, if the silver ring should succeed in getting an unlimited issue of legal tender silver dollars, this bond would be payable, principal and interest, in that coin. Shrewd men, who know what silver has done and is liable to do in the way of ups and downs, will take this fact into consideration, and the government will ultimately be compelled to do the same. At present the strength of the silver movement is estimated to be small, but if this estimate should prove to be mistaken, the new four per cents. would suffer.”
Mr. August Belmont wrote me a letter upon this subject of the date of June 14th, in which he said:
“Permit me to add a few words to the letter of my house of this day, in order to urge upon you the vital importance of an official expression of yours over you own signature, in the sense of the letter of Assistant Secretary French, published in this morning’s papers.
“You are placed at this moment, by a large portion of your political friends, in a somewhat similar position as the late Mr. Chase was by the attempt of Thad. Stevens to have Congress pass a law to declare the principal of the 5-20 bonds payable in currency.
“Mr. Chase took the bull by the horns by declaring, over his own signature, that the principal as well as the interest of the 5-20 bonds were payable in gold, the faith of the United States being pledged to this by the tacit understanding of the government and its creditors.
“Nothing has reflected more credit and renown upon that great statesman—then as prominent and favored a son of the noble State of Ohio as you are to-day—and nothing more effectually paved the way to the great work of reducing the burden of our people by lowering our interest one-third than that expression, sanctioned and confirmed by subsequent enactment of Congress in 1869.
“You will, in my opinion, insure the success of your financial measures, and add greatly to your high and prominent political position, if you will unequivocally declare that the funded debt of the government can only be redeemed, principal and interest, in gold coin, and that until otherwise agreed upon by the mutual consent of the great commercial nations of the United States, England, France, and Germany, the silver dollar can only be accepted as an auxiliary standard for the payment of fractional indebtedness.”
To this I replied as follows:
“Treasury Department, } “Washington, June 16, 1877.} “Dear Sir:—Your private note, the letter of your firm, and one from Messrs. Seligman & Co., asking me to make a public statement over my own signature, similar to that of Mr. French, are received. I have given to this important suggestion the most serious consideration, and have come to the firm conclusion that such an act on my part would be inexpedient, and defeat the very object you have in view. As a purely executive officer, I have no power to pass upon the question mooted. My attempt to do so would at once unite all those who are seized with this mania, and those who oppose executive encroachment upon legislative power. It would create excitement, personal and political animosities would mingle with it, and it would tend more than anything else to defeat the success of the law. I am quite sure this would be the result.
“As to whether Congress or the people would ever undertake to pay either principal or interest of the bonded debt, and especially the bonds sold since 1873, in silver, I have a firm conviction that the question will never seriously be raised. These bonds will be paid, principal and interest, in gold coin. The people of the United States have always been extremely sensitive as to the public credit. They never have, for the sake of an apparent profit, yielded any question involving the public honor.
“The great satisfaction that will arise from the funding of the loan at a low rate of interest, together with their strong sense of public honor and public faith, will always secure the payment of these bonds, principal and interest, in coin.
“Parties or factions may, for a time, raise and contest questions, but they are but bubbles, and will pass away, and, like all other questions involving the public credit, will be rightfully settled, in due time, by Congress and the people.
“Nothing would so tend to disturb this result as unauthorized ‘theses,’ or dogmas, by an executive officer, upon a question purely legislative or judicial. Indeed, it may be that too much has already been said about this matter by both the President and myself, and I assure you that you will have no occasion to be disturbed by anything truthfully reported of either of us hereafter. The better way is to move right along, making your own statements, and if, at any time, I see a proper occasion for a strong expression of my opinion, I will give it.
“Please show this to Mr. Seligman, and such of your associates as you deem proper, as an answer to all.
“Very truly yours,
“John Sherman.
“Hon. August Belmont, New York.”
The new loan was promptly placed on the market on the 14th of June by the following circular letter signed by the members of the syndicate:
“Under the authority of a contract with the Secretary of the Treasury, the undersigned hereby give notice that from this date until July 16, at 3 p. m., they will receive subscriptions for the four per cent. funded loan of the United States in denominations as stated below, at par and accrued interest in gold coin.
“The bonds are redeemable after thirty years from July 1, 1877, and carry interest from that date, payable quarterly, and are exempt from the payment of taxes or duties to the United States, as well as from taxation in any form, by or under state, municipal, or local authority.
“The interest on the registered stock will be paid by check, issued by the treasurer of the United States to the order of the holder, and mailed to his address. The check is payable on presentation, properly indorsed, at the offices of the treasurer and assistant treasurers of the United States.
“The subscriptions will be for coupon bonds of $50 and $100, and registered stock in denominations of $50, $100, $500, $1,000, $5,000, and $10,000.
“The bonds, both coupon and registered, will be ready for delivery July 2, 1877.
“Forms of application will be furnished by the treasurer at Washington, the assistant treasurers at Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and San Francisco, and by the national banks and bankers generally. The applications must specify the amount and denominations required, and for registered stock the full name and post office address of the person to whom the bonds shall be made payable.
“Two per cent. of the purchase money must accompany the subscription. The remainder may be paid, at the pleasure of the purchaser, either at the time of the subscription or at any time prior to October 16, 1877, with interest added at four per cent. to date of payment.
“The payments may be made in gold coin to the treasurer of the United States at Washington, or assistant treasurers at Baltimore, Boston, Chicago, Cincinnati, New Orleans, and St. Louis, and to the assistant treasurer at San Francisco, with exchange on New York, or to either of the undersigned.
“To promote the convenience of subscribers, the undersigned will also receive, in lieu of coin, United States notes or drafts on New York, at their coin value on the day of receipt in the city of New York.
“August Belmont & Co., New York.
“Drexel, Morgan & Co., New York.
“J. & W. Seligman & Co., New York.
“Morton, Bliss & Co., New York.
“First National Bank, New York.
“Drexel & Co., Philadelphia.
“June 16, 1877.”
A few days later I wrote the following letter:
“Treasury Department, } “Washington, D. C., June 19, 1877.} “Sir:—Your letter of the 18th instant, in which you inquire whether the four per cent. bonds now being sold by the government are payable, principal and interest, in gold coin, is received. The subject, from its great importance, has demanded and received careful consideration.
“Under laws now in force, there is no coin issued or issuable in which the principal of the four per cent. bonds is redeemable, or the interest payable, except the gold coins of the United States of the standard value fixed by laws in force on the 14th of July, 1870, when the bonds were authorized.
“The government exacts, in exchange for these bonds, payment at par in such gold coin, and it is not to be anticipated that any future legislation of Congress, or any action of any department of the government, would sanction or tolerate the redemption of the principal of these bonds, or the payment of the interest thereon, in coin, of less value than the coin authorized by law at the time of the issue of the bonds, being the coin exacted by the government in exchange for the same.
“The essential element of good faith, in preserving the equality in value between the coinage in which the government receives and that in which it pays these bonds, will be sacredly observed by the government and the people of the United States, whatever may be the system of coinage which the general policy of the nation may at any time adopt.
“This principle is impressed upon the text of the law of July 14, 1870, under which the four per cent. bonds are issued, and requires, in the opinion of the executive department of the government, the redemption of these bonds and the payment of their interest in coin of equal value with that which the government receives from its issue.
“Very respectfully,
“John Sherman, Secretary.
“Francis O. French, Esq., 94 Broadway, New York.”
The subscriptions were taken in every part of the United States, and within thirty days $67,600,000 were taken in this country and $10,200,000 in Europe, making $77,800,000 sold. This sum, when applied to the payment of the six per cent. bonds, made an annual saving to the people of the United States of $1,556,000. Since the 1st of March, 1877, there had been sold under the refunding act $135,000,000 four and a half per cent. bonds and that amount of six per cent. bonds was paid off and canceled, thus saving to the people of the United States $2,025,000 in coin each year. The aggregate reduction of interest by both classes of bonds from the 1st of March to the close of the popular loan, was $3,581,000 a year in coin. This was regarded as a great success.
Early in July I set out on the revenue cutter “U. S. Grant” on a visit of inspection along the north Atlantic coast, accompanied by the chief of the coast survey, the secretary of the lighthouse board, the superintendent of the life-saving service, and the chief of the revenue marine service, and also by Webb Hayes, the son of the President. We visited the life-saving stations along the New Jersey coast. I was deeply interested in this service, which I regard as the most deserving humanitarian branch of the public service. We also visited some of the leading lighthouses along the coast and the principal customhouses between the Chesapeake Bay and Eastport, Maine. We were everywhere received with great kindness and many social courtesies were extended to us, especially in New York, Boston and Portland. This outing was a great relief from the close confinement I had undergone since the 4th of March. The information I gathered as to these branches of the service, with which I had not previously had much acquaintance, was of great value to me. Such trips are sometimes treated by the press as “junketing” at the public expense. This is a great error. Each of us paid his share of the expenses and the vessel only pursued its usual course of duty. I was brought into close association with these subordinate officers of the department and became informed of their duties, and their fitness for them, and was enabled to act with intelligence on their recommendations.
The only unpleasant incident that occurred on the trip was the running of the cutter upon a rock upon the coast of Maine. This happened in the afternoon of a beautiful day. All the gentlemen with me and the officers of the vessel were on deck. The various buoys were being pointed out and a map of the channel was lying before us. Some mention was made of a buoy that ought to be near the place where we were to mark the location of a rock, but none was found, and suddenly we heard the scraping of the vessel upon the rock. The cutter trembled and careened over. The captain was somewhat alarmed and turned the vessel toward the beach, where it was speedily examined and found to be somewhat injured. We ascertained afterwards that the buoy had been displaced by a storm and that a vessel was then on its way to replace it. The sinking of the revenue cutter “U. S. Grant” was reported in the morning dispatches and created some excitement; but the vessel did not sustain any substantial injury. We thought it best to leave it for a time to be thoroughly examined and repaired and took another vessel to complete our journey to Eastport, the northeastern port of the United States. From thence Webb Hayes and myself returned to Portland and crossed over the Burlington, Vermont, on Lake Champlain, and from thence went to Saratoga, where we remained a few days, and then returned to Washington on the 22nd of July. We passed through Baltimore on the day the riots occurred in that city, and soon after heard of the much more dangerous outbreak in Pittsburg.
On the 6th of August I wrote to Mr. Conant as follows:
“Your letter of the 26th ultimo is received. You can safely say to the Messrs. Rothschild that the strikes have been totally disconnected with the government, but grow purely out of a contract between the managers of the leading lines of railway and their employees as to rates of pay.
“The railroad companies have, for several years, competed with each other in a very improvident and reckless way, and are now, and have been for some time, carrying freight for less than cost. This has caused a large reduction of the net income of roads, has led to the loss of dividends, and now to the reduction of wages of employees to rates scarcely sufficient to support life. Hence the strikes.
“The government has been appealed to by both railroads and strikers, by states and by cities, for relief, and has promptly extended it in every proper case, and, without shedding blood, has, in every case, suppressed the riot, and maintained the peace, so that the government is really stronger by reason of these unfortunate events than before. I do not observe that any change has been made by them, either in the price of bonds or in the price of gold, nor in the payment of subscriptions to four per cent. bonds.
“No effort is made to sell the bonds now, nor do I care to press the home market, until enough bonds are sold abroad to provide for called bonds abroad.
“The month of August must necessarily be a languid one, and I do not advise any unusual efforts to force sales.
“Your supplemental cipher was received after your telegram, but was soon found and dispatch made out.”
I no doubt was mistaken in the effect of the strikes upon our public credit. From that time forward for many months there was scarcely any sale of government bonds at any price. The contracting parties informed me that no bonds were then selling in the market and that in New York they were a trifle below par. Practically, for the remainder of the year, government securities were greatly affected in price and value.
CHAPTER XXX. POLICY OF THE HAYES ADMINISTRATION. Reception at my Home in Mansfield—Given by Friends Irrespective of Party—Introduced by My Old Friend and Partner, Henry C. Hedges —I Reply by Giving a Résumé of the Contests in South Carolina and Louisiana to Decide Who Was Governor—Positions Taken by Presidents Grant and Hayes in These Contests—My Plans to Secure the Resumption of Specie Payments—Effects of a Depreciated Currency—Duties of the Secretary of the Treasury—Two Modes of Resuming—My Mansfield Speech Printed Throughout the Country and in England—Letters to Stanley Matthews and General Robinson—Our Defeat in Ohio—An Extra Session of Congress—Bills Introduced to Repeal the Act Providing for the Resumption of Specie Payments—They All Fail of Passage— Popular Subscription of Bonds All Paid For.
About the 10th of August I made my usual visit to my home at Mansfield. Soon after my arrival I received the following invitation, signed by a great number of my neighbors and friends, without respect to party, expressing a desire to tender me a reception:
“Hon. John Sherman.
“Dear Sir:—The undersigned, your townsmen, and fellow-citizens of Richland county, desire to give you some manifestation of the very high regard in which we hold your public services. We are glad to know that you are permitted to again be at your own home, and for a week or two mingle with us in all the unrestrained freedom of friends and townsmen.
“Financial and other public questions are, however, of importance to us always, and especially now. We recognize your great ability and long experience, and cannot but think that an expression of your views on these questions will be very highly prized by the people of Ohio, irrespective of party. We therefore desire, with your sanction, on some day during the next week, to give you a hearty welcome to your old home, and shall be glad to have you, on the occasion, give your views on the public questions, now of such vast importance to all. With our kindest regards, we are,
“Your friends, etc., etc.”
I replied as follows:
“Mansfield, O., August 13, 1877. “Gentlemen:—I received with much pleasure your kindly letter of the 10th inst., signed by so many of my old friends and neighbors of Mansfield, and assure you of my high appreciation of your generous words of courtesy and regard.
“I always return with satisfaction to my home on the western slope of our little city, and always enjoy the fresh air and picturesque country around us, but, more than all, the cordial greetings of old friends, with whom I have been acquainted since boyhood. It will give me much pleasure, at any time or place, to meet you, and to speak to you on current public questions, and I venture to name next Friday evening.
“Very truly yours,
“John Sherman.”
The gathering was one of the largest that had come together in Mansfield for years. The evening was delightful, cool and balmy, a bright moonlight adding attraction to the scene. A stand decorated with flags had been erected near the center of the park, with seats in front, and lights gleamed on either hand. I was introduced to the audience by my old friend and partner, Henry C. Hedges, whose remarks were too flattering for me to insert. In closing he said:
“Regarding you as our friend, our neighbor, our townsman, we are glad and rejoice. We welcome you home, though your stay may be only a few days, and we sincerely trust that, rested by your stay, you may go back to your work reinvigorated, and that frequently we may have the pleasure of your temporary visits, and in the future, when your labors are finished, among us you may spend your old age, honored and happy.”
As my speech expressed my views upon important questions of that time, I think it well to embody extracts from it as part of the history of the then recent events, and my anticipations for the future:
“The kindly words of welcome uttered by my friend and associate of many years move me beyond expression. They recall to me the scene of the early time when I came to Mansfield, then a scattered hamlet of about 1,100 inhabitants, without pavements and without any of the modern conveniences of cities and towns. As Mr. Hedges has told you, very many of those I then met here are dead and gone. I was a boy then. A generation has passed away, and the sons of those I met then as citizens of Richland county now fill places of trust and responsibility. I have every reason in the world for being strongly attached to this town of Mansfield. You have always been kind to me. Here I studied law, here I practiced my profession for several years, here I married my wife, a native of your town, here I have lived ever since, and when this mortal coil shall be shuffled off, here, probably, will my body rest with your fathers. But pardon me, fellow-citizens, if, under the kinds words of welcome of your spokesman, my old and honored friends, Mr. Hedges, I had forgotten that we are not here merely to exchange courtesies, but to discuss grave matters of far more importance than the life or memories of an individual.
“In doing so I wish it distinctly understood that I speak for myself alone, as a citizen of Ohio, to you my fellow-citizens and my neighbors, to whom I am under the highest obligations of gratitude and duty.
“The President authorized me to say one thing, and one thing only, for him, and in his name, and that is that all reports that impute to him any participation whatever in the nomination of candidates on your state ticket, or any desire or purpose to influence in any way the senatorial contest in Ohio, are utterly groundless.
“These are your matters, and I can assure you for him, that he does not and will not, interpose in any such contest between political friends.
“You all know that I am now, and have been, warmly attached to the Republican party. I believe in its principles and honor its work. With my strong convictions I could not conceal my partisan bias, or my earnest hope for the success of the Republican party, but the subjects of which I intend to speak to you to-night will not lead me to say much of former political struggles, or to fight our old battles over again, but chiefly to discuss the actual administrative questions of the day as they have arisen since the 4th of March last, and in all of which you are alike interested, whether you may call yourselves Republicans or Democrats. As to those questions I wish fairly to appeal to the candor and good judgment of honest men of both parties, only asking for the administration of President Hayes that considerate charity of judgment which must be extended to all human agents.
“When Mr. Hayes was inaugurated as President he found thirty-six states in the full and uncontested exercise of all the powers of states in the Union. In two states only there were contests as to who was governor. Both contests had existed from January to March, 1877, while General Grant was President.
“In South Carolina Governor Chamberlain claimed to have been elected on the Republican ticket, and General Hampton on the Democratic ticket. The President is not made the judge of who is elected governor of a state, and an attempt to exercise such a power would be a plain act of usurpation. The constitution of South Carolina is much like that of Ohio. The count of the vote was to be made by the general assembly of the state. Unfortunately for Chamberlain a controlling question in the contest had been decided against him by a Republican court, and he was only kept in possession of the state house by the actual presence of United States troops in the building. He had appealed again and again to President Grant to recognize him as governor and give him the aid of Federal troops in the enforcement of his claim, which General Grant had refused, seeking only to preserve the public peace.
“When President Hayes was inaugurated both contestants were called to Washington and both were patiently heard and the questions presented were patiently and carefully examined. The President held that a case was not presented in which, under the constitution and the laws, he was justified in using the army of the United States in deciding a purely local election contest. The soldiers and bayonets of the United States were then withdrawn from the state house—not from the state, nor the capital of the state—but from the building in which the legislature, that alone could lawfully decide this contest, must meet. This was all that was done by the President, and Governor Chamberlain, without further contesting his claim, abandoned it and left the state.
“I say to you now that, strongly as I desired the success of Governor Chamberlain and the Republican party in South Carolina, the President had not a shadow of right to interpose the power of the army in this contest, and his attempt to do so would have been rash and abortive as well as without legal right.
“The case of Louisiana was far more difficult. The local returning officers of that state had, after a full examination, certified to the election of the legislature, showing a Republican majority in both houses. This had been done by excluding from their return the votes of certain parishes and counties wherein intimidation, violence and fraud had prevailed to an extent sufficient to change the result of the election. I was present, at the request of General Grant, to witness the count, and I assure you, as I have said officially, that the proof of this intimidation, violence and fraud, extending to murder, cruelty, and outrage in every form, was absolutely conclusive, showing a degree of violence in some of those parishes that was more revolting and barbarous than anything I could conceive of. It was plain that the returning officers had the legal right to pass upon and certify, in the first instance, who were elected members of the legislature, and that they were justified by the evidence in excluding bulldozed parishes, but it was equally clear that their return was not conclusive upon the members elected, and that each house had the constitutional right to pass upon the returns and elections of its members, and to set aside the action of the returning board. The two houses, when organized, had also the power to pass upon the returns of the election of governor, and they alone and no one else. Neither the President of the United States nor the returning board has any power or right to pass upon the election of governor. And here the difficulty in the Louisiana case commences.
“Governor Packard contends that a majority of the two houses, as duly returned, did pass upon the election of the governor, and did return that he was duly elected, but this was stoutly denied by Governor Nichols. This vital point was strongly asserted and denied by the adverse parties, and the legislature of Louisiana divided into two hostile bodies, holding separate session, each asserting its legal power, and denouncing the other as rebels and traitors. Governor Packard and his legislature called upon President Grant for the aid of the army to put down insurrection and domestic violence; and here I confess that if I had been President, instead of General Grant, I would have recognized Packard and sustained him with the full power of the general government. My intense feeling, caused by the atrocities in Louisiana, may have unduly influenced me. But General Grant did not think this was his duty. I do not criticise his action, but only state the facts, He would only maintain the peace. He would not recognize Packard as governor, but I know, what is now an open secret, the strong bent of his mind, and at one time his decision was to withdraw the troops, to recognize Nichols and thus end this dangerous contest. He did not do this, but kept the peace.
“But during these two months the whole condition of affairs had slowly changed in Louisiana. The government of Packard had dwindled away until it had scarcely a shadow of strength or authority, except at the state house, where it was upheld by federal bayonets. The government of Nichols had extended its authority over the state and was in full existence as the de facto government of Louisiana, supported by the great body of the white men and nearly all the wealth and intelligence of the state, and by the tired acquiescence of a large portion of the colored people, some of whom deserted Packard’s legislature and entered that of Governor Nichols. The delay and hesitation of General Grant had been fatal to Packard, and when Hayes became President the practical question was greatly changed. One thing was clear, that a legislature had been duly elected in November previous, and was then in existence, though separated into two parts. If the members lawfully elected could be convened, they alone could decide the question of who was governor, without the intervention of troops, and their decision could be supported, if necessary, by the general government.
“The most anxious consideration was given to this question. Days and weeks of anxious deliberation were given to it by the President and his cabinet. But one way seemed open for a peaceful solution, and that was to gather, if possible, a single legislature that could be recognized as the depositary of the representative will of the people of Louisiana. If this could be done it had the unquestioned right to decide who had been elected governor, and all other questions would settle themselves. To aid in this object, a commission of the most eminent men, high in position, from different states, and distinguished for judicial impartiality, was selected and the result is known to all. They went to Louisiana, and, with great difficulty, brought together these hostile legislatures which met, organized, promptly settled the question in dispute in favor of the government of Nichols, and thus ended this most dangerous controversy. No other change was made, no other act done except, when the solution was almost accomplished, the few troops which had then occupied that state house were withdrawn a few squares away, to their barracks. Thus, in this peaceful appeal to the legislature of Louisiana, this controversy, which not only endangered the peace and safety of this state, but the peace and safety of the whole people of the United States, was settled. This is the sum and substance of all that was done in the southern policy, as it is called, of the President.
“Perhaps I ought to state that his policy has a broader motive than a mere settlement of a local election contest. It seeks to bring the north and south again into conditions of harmony and fraternity, and, by a frank appeal to the generous impulses and patriotic feeling of all classes of people in the south, to secure, not only peace among themselves, but the equal protection of the laws to all, and security in the enjoyment of political and civil rights.
“No doubt the result in Louisiana caused some disappointment to many Republicans throughout the United States, who deeply sympathized with their Republican brethren in that state. In that feeling I did, and do, share, and yet I feel and know that every step taken by President Hayes was right, in strict accordance with his constitutional duty, and from the highest motives of patriotism. Some are foolish enough to talk of his abandoning the colored people and their constitutional rights. President Hayes, from his early manhood, has been an anti-slavery man; his life was imperiled on many battlefields in the great cause of liberty, he sympathizes more and will do more for the equal rights of the colored people than those who falsely accuse him, and I believe this day, that the policy he has adopted will do more to secure the full practical enforcement of those rights than the employment of an army tenfold greater than the army of the United States.”
In this speech I stated the action I proposed to take to secure the resumption of specie payments. The plan was executed in all its parts by me, and my remarks may, in one sense, be said to be a history of resumption. Continuing I said:
“And now, fellow-citizens, this brings me to the question upon which there is so much diversity of opinion, so many strange delusions, and that is the question of specie payments. What do we mean by this phrase? Is it, that we are to have no paper money in circulation? If so, I am as much opposed to it as any of you. Is it that we are to retire our greenback circulation? If so, I am opposed to it and have often so said. What I mean by specie payments is simply that paper money ought to be made equal to coin, so that when you receive it, it will buy as much beef, corn or clothing as coin.
“Now the importance of this cannot be overestimated. A depreciated paper money cheats and robs every man who receives it, of a portion of the reward of his labor or production, and, in all times, it has been treated by statesmen as one of the greatest evils that can befall a people. There are times when such money is unavoidable, as during war or great public calamity, but it has always been the anxious care of statesmen to return again to the solid standard of coin. Therefore it is that specie payments, or a specie standard, is pressed by the great body of intelligent men who study these questions, as an indispensable prerequisite for steady business and good times.
“Now, most of you will agree to all this, and will only differ as to the mode, or time, and manner; but there is a large class of people who believe that paper can be, and ought to be, made into money without any promise or hope of redemption; that a note should be printed: ‘This is a dollar,’ and be made a legal tender.
“I regard this as a mild form of lunacy, and have no disposition to debate with men who indulge in such delusions, which have prevailed to some extent, at different times, in all countries, but whose life has been brief, and which have ever shared the fate of other popular delusions. Congress will never entertain such a proposition, and, if it should, we know that the scheme would not stand a moment before the Supreme Court. That court only maintained the constitutionality of the legal tender promise to pay a dollar by a divided court, and on the ground that it was issued during the war, as in the nature of a forced loan, to be redeemed upon the payment of a real dollar; that is, so many grains of silver or gold.
“I therefore dismiss such wild theories, and speak only to those who are willing to assume, as an axiom, that gold and silver, or coined money, have been proven by all human experience to be the best possible standards of value, and that paper money is simply a promise to pay such coined money, and should be made and kept equal to coined money, by being convertible on demand.
“Now, the question is as to the time and mode by which this may be brought about, and on this subject no man should be dogmatic, or stand, without yielding, upon a plan of his own, but should be willing to give and take, securing the best expedient that public opinion will allow to be adopted. The purpose and obligation to bring our paper money to the standard of coin have been over and over again announced by acts of Congress, and by the platforms of the great political parties of the country. If resolutions and promises would bring about specie payments, we would have been there long ago; but the diversity of opinion as to the mode now— twelve years after the close of the war—still leaves our paper money at a discount of five per cent. Until this is removed, there will be no new enterprises involving great sums, no active industries, but money will lie idle, and watch and wait the changes that may be made before we reach the specie standard.
“In 1869, Congress pledged the public faith that the United States would pay coin for United States notes. Again, in January, 1875, after more than a year’s debate, Congress declared that on and after the 1st of January, 1879, the United States would pay its notes in coin.
“The Secretary of the Treasury is expressly required to prepare for, and maintain, the redemption of all United States notes presented at the treasury on and after that date, and for that purpose he is authorized to use all the surplus revenues, and to sell bonds of the United States bearing four, four and a half, and five per cent. interest, at par in coin. It is this law, called the resumption act, now so much discussed in the papers, that imposes upon the office I hold most difficult and important duties, and without replying to any attacks made upon me, I am anxious to convey to you personally, what I have done, and what I must do, in obedience to the provisions of this act. It is said that the law is defective, but, if the great object and policy of the law is right, the machinery of the law could easily be changed by Congress. That resumption can be secured, and ought to be secured, under this law, it will be my purpose to show you, and I shall not hesitate to point out such defects in the law as have occurred to me in its execution.
“There are two modes of resumption; one is to diminish the amount of notes to be redeemed, which mode is commonly called a contraction of the currency; the other is to accumulate coin in the treasury, to enable the secretary to maintain the notes at par.”
Objection had been made that under the first mode resumption would be a process of converting a non-interest bearing note into an interest bearing note, and that was true, but what right had we, as a nation, or had any bank, or individual, to force in to circulation, as money, its note upon which it paid no interest? Why ought not anyone who issued a promise to pay on demand be made to pay it when demanded, or pay interest thereafter? What right had he, in law or justice, to insist upon maintaining in circulation his note, which he refused to pay according to his promise, and which he refused to receive in payment of a note bearing interest? A certain amount of United States notes could be, and ought to be, maintained at par in coin, with the aid of a moderate coin reserve held in the treasury, and to the extent that this could be done they formed the best possible paper money, a debt of the people without interest, of equal value with coin, and more convenient to carry and handle. Beyond this the issue of paper money, either by the government or by banks, was a dangerous exercise of power, injurious to all citizens, and should not continue a single day beyond the necessities that gave it birth. I added:
“The one practical defect in the law is, that the secretary is not a liberty to sell bonds of the United States for United States notes, but must sell them for coin. As coin is not in circulation among the people, he is practically prohibited from selling bonds to the people, except by an evasion of the law, or through private parties. Bonds are in demand and can readily be sold at par in coin, and still easier at par, or at a premium, in United States notes. The process of selling for United States notes need not go far before the mere fact that they are receivable for bonds would bring them up to par in coin, and that is specie payments.
“But the reason of the refusal of Congress to grant this authority, often asked of it, was that it would contract the currency, and this fear of contraction has thus far prevented Congress from granting the easiest, plainest, and surest mode of resumption. To avoid contraction, it provided that national bank notes may be issued without limit as to amount and that, when issued, United States notes might be retired to the extent of four-fifths of the bank notes issued. This was the only provision for redeeming United States notes that Congress made or would make, and this, it was supposed, would reduce the United States notes to $300,000,000 before January 1, 1879. The actual experiment only proves the folly of the cry we had for more money, more money.”
The second mode of resuming was by accumulating coin gradually, so that when the time fixed for resumption should arrive, the treasury might be able to redeem such notes as should be presented. In this respect the resumption act was as full and liberal as human language could frame it. The secretary was authorized to prepare for resumption, and for that purpose to use the surplus revenue and sell either of the three classes of bonds, all of which in 1877 were at or above par in coin. I said: “The power can be, ought to be, and will be, executed if not repealed.”
This speech was printed in the leading papers in the United States and in England, and was regarded by the public at large as a declaration of the policy of the administration, to enforce the resumption law, whatever might be the current of opinion developed at the approaching elections, which, as they occurred, were generally against the Republican party. The Democratic party had taken position against the resumption act, in favor of the enlarged issue of United States notes and the free coinage of silver. The strikes led to the organization of labor unions, which, though independent of political parties, chiefly affected the Republican party then in power.
Among many letters received by me, after this speech, I insert one from Mr. Evarts:
“Windsor, Vt., Aug. 30, 1877.
“The Hon. John Sherman, Secretary of the Treasury.
“Dear Mr. Sherman:—I congratulate you upon the excellence and success of your speech in Ohio. The difficulty of the undertaking justly enhances the credit of its prosperous treatment.
“I inclose a remonstrance from an ‘Injustice’ on the subject of a new arrangement in the weighing at the customhouse. It was sent to me at Washington and forwarded from there here. I know nothing of its source and have no opinion on the subject of the supposed project.
“The President’s visit has pleased the people in New England amazingly. I hope to see you all in Washington early next week.
“I am very truly yours,
“Wm. M. Evarts.”
On the 14th of September, 1877, I sent to Hon. Stanley Matthews the following letter, giving my view of the position taken by General Ewing and Mr. Pendleton:
“At the request of General Robinson I have directed to you, in the care of Bickham, a number of documents for reference in your debate with Ewing, and as Robinson says you wish me to make suggestions, I venture to do so, but without any confidence that they can be of assistance, though they can do no harm.
“The most beneficial financial act of the administration is the reduction of the interest on the public debt. The amount already accomplished is stated in my printed speech. The rapidity of this process depends entirely upon the credit of the government. Ewing’s policy would destroy our credit and stop the process. The very doubts created by him and Pendleton have already damaged the government very largely. Confidence is so sensitive that when prominent men like Ewing and Pendleton talk as they do, the injury is immediate.
“The whole difference between the amount of silver and gold at this moment is eight per cent., so that the payment of the debt in silver would lessen the burden of the debt eight per cent., but under the funding operations, which would be entirely destroyed by anything that alarmed the market, we are enabled to save thirty-three per cent. Whatever may be our right to pay our bonds, either in greenbacks or in silver, this question of expediency, as you very properly said in one of your speeches, is to be considered apart from the question of legal power.
“Refunding would go on with greatly accelerated speed if we could sell bonds for greenbacks. We make discrimination against the greenbacks by refusing to take them in payment of bonds. If I had the power to sell bonds for greenbacks I could make greenbacks equal to coin with scarcely a perceptible change. That is the advice of the most sagacious men in the country. I know it. There is talk about the bondholder being a privileged person. He ought to be so no longer, and the moment that a bond could be bought with currency at par in gold, all discrimination in favor of the bondholder would disappear.
“The differences among Republicans about silver will be settled by the use of the silver dollar to the extent that it can be kept in circulation at par with greenbacks, and is a pure question of detail. The difference in the Democratic party about interconvertible currency is vital, and Ewing’s doctrine overthrows the whole Democratic theory of finance before the war.
“The existence of the national banks is a question simply of policy and not a question of principle. The right conferred upon banks to issue circulation is not conferred for their profit, but for the public convenience, and all Republicans can agree that that right should never be permitted to exist except when it is for the public convenience. The office of bank notes is simply to supply the ebb and flow of currency made necessary by the wants of business. The United States cannot lend United States notes, and therefore cannot meet this want. Ewing proposes to destroy the whole national bank system, interwoven with all the business of the country. I send you the last statement of the national banks. You can very easily show the effect upon the reviving industry of the country of the withdrawal of these loans and disturbing all this business. As at present organized the circulation is the vital thing, and if the bonds held by the banks to secure circulation were thrown upon the market, it would stop funding and compel also the withdrawal of loans, and create distress compared with which our present troubles are mere moonshine.
“I am afraid you will think I am going on to make a speech for you, so I will stop abruptly, with the promise that if I can furnish you any documents or information that may be of service to you I will do so with pleasure.
“I inclose the last statement of the national banks containing many points that may be of use.
“Upon the question of resumption I believe we are all agreed that it must come, and that the only standard of value is gold or silver coin. The time and manner are the points of disagreement. Ewing is opposed to all resumption, but believes in printing a dollar and saying it is a dollar, while all the world would know that the declaration is a lie. The fact that we have advanced the greenbacks six per cent. in one year, by the movements made under the resumption act, shows that it is working pretty well. I send you a statement showing the changed condition in a year of our finances.
“While the people differ about the resumption act there is time to change it if it needs change, but Ewing would go back and commence the process over again. I am disposed to be tolerant about differences on the resumption act, for I think it will demonstrate its success or failure before Congress is likely to tamper with it.”
On the 21st of September I wrote to General J. S. Robinson the following letter, evincing my anxiety as to the result of the canvass in Ohio, as it was then conducted:
“I am so deeply impressed with the importance of the campaign in Ohio that it makes me uneasy and restless that I cannot participate in it.
“What a magnificent chance the Republican party in Ohio now has, not only to place itself in the vanguard in the United States, but to do this country a service as great as any victory won by the Union army during the war. Here it is demonstrated by the cordial reception of the President in the south, by his hearty indorsement in Massachusetts, and by a public sentiment now growing and spreading with amazing rapidity, that in his southern policy he has opened the means of order, safety, peace and security in all the southern states.
“Now, when it is demonstrated that the difficulties in the way of resumption were myths conjured up by the fantasies of demagogues, when our notes are worth within three per cent. of gold, when Providence has favored us with boundless crops, and prosperity is again coming upon us after a dreary time of distress and trial caused by inflated paper money, why is it that we cannot see all these things and avail ourselves of the advantage they give us in our political contest? It seems to me that we ought to carry the state by an overwhelming majority, and if we do so we will establish the beneficial principles of our party beyond danger of overthrow by reaction, and we will secure the peaceful and orderly development of industry without a parallel in our previous history.
“I wish it were in my power to impress every Republican in Ohio with my earnest conviction about this matter, but here, constantly occupied by official duties, I can only remain watching and waiting in anxious suspense lest the great advantages we possess shall be frittered away or lost by inaction or mistakes.
“I know you will do your utmost for success, and only write you this to show you how earnestly I sympathize with you in your efforts.”
The election in Ohio, in October, resulted in the defeat of William H. West, Republican, for governor, mainly on account of his position as to labor unions, but no doubt also because of a feeling of opposition against the resumption of specie payments. Richard M. Bishop, Democrat, was elected governor, with a Democratic legislature in both branches, which subsequently elected George H. Pendleton as United States Senator.
The following letter expresses my view of the election, and the causes which led to our defeat:
“Washington, October 17, 1877.
“Dear Sir:—Your letter of the 13th inst. is received.
“Your statement of the causes of our defeat in Ohio seems to me reasonable, though probably I would not agree with you in many points stated.
“It is not worth while now to bother ourselves about what we cannot help. All we can do is to inquire how far we have been right, and to that extent pursue the right, whether victory or defeat is the result. No party can administer a government, that will not take the risk of temporary defeat when it is pursuing what, in the opinion of the great masses of it, is a beneficial policy for the country.
“So far as the southern question is concerned, I feel that the President did right. The wisdom of his executive order as to office holders depends upon the construction given to it, and he is not responsible for a perverted construction not authorized by its words or terms. As to the resumption policy, the law is plain and mandatory, and, more than all, the law is right, and the Republican party might as well understand first as last, that the question of resumption is one higher than any party obligations and will be pursued by our adversaries if we do not. We can gain the credit of success, but we can gain no credit by retreating on this vital question. While the law stands nothing is left but to execute it, and for one I never would aid to alter the law, except to make it more effective, and would be very willing to retire on this question rather than to surrender.
“The only way is for us to go steadily forward, with a certainty that public opinion in the end will sustain us if we do what is substantially right. The Republican party has been in this position many times and has never won success by retreat and cannot do so now.
“Very truly yours,
“John Sherman.
“A. P. Miller, Esq., Toledo, Ohio.”
It became necessary for the President to call an extra session of Congress, on account of the failure of the passage of the army bill at the previous session. Though the proclamation was issued on the 5th of May, 1877, Congress was not convened until the 15th of October following. Both Houses met on the day appointed. The Senate was organized by the election of Thomas W. Ferry, of Michigan, as president pro tempore, and Samuel J. Randall, a Democratic Member from Pennsylvania, was elected speaker of the House by a majority of seventeen over James A. Garfield, the Republican candidate.
The message of the President was confined mainly to the circumstances connected with the failure of the previous Congress to provide for the support of the army, and to certain deficiencies in appropriations required for the government, the President stating that as certain acts of Congress, providing for reports of the government officials, required their submission at the regular annual session, he deferred until that time any further reference to subjects of popular interest.
Congress, however, not being confined in its powers, and having full jurisdiction of all legislative questions, proceeded at once to discuss financial questions and especially the measures taken for the resumption of specie payments. No less than four bills were introduced in the Senate and fourteen in the House, providing for the repeal, in whole or in part, of the act for the resumption of specie payments. One of these bills was reported from the committee on banking and currency, by Mr. Ewing, on the 31st of October. It was the subject of debate during the remaining period of the session, and finally passed the House on the 23rd of November, by the vote of 133 yeas and 120 nays. It repealed all that part of the resumption act which authorized the Secretary of the Treasury to dispose of United States bonds, and to redeem and cancel the greenback currency, or practically all the resumption act except the clauses for the substitution of silver coin for fractional currency. It was sent to the Senate on the 26th of November, and referred to the committee on finance. No action was taken upon it during that session, which adjourned on the 3rd of December. The regular session convened on the same day, with this bill still pending in the committee on finance. On the 17th of April, 1878, Mr. Ferry, from that committee, reported back the bill with an amendment to strike out all after the enacting clause, and insert new matter. After a long debate ending on the 13th of June, the following amendment was adopted as a substitute for Mr. Ferry’s amendment, by a vote of yeas 30, nays 29:
“That from and after the passage of this act United States notes shall be receivable the same as coin in payment for the four per cent. bonds now authorized by law to be issued; and on and after October 1, 1878, said notes shall be receivable for duties on imports.”
The bill, as amended, passed the Senate by a large majority. In this form it had no proper relevancy to the bill as it passed the House, and the action of the Senate was regarded as a practical defeat of the bill. It was taken up in the House on the 14th of June, and the question being taken on concurring in the amendment of the Senate, the vote was yeas 112, nays 122, so the motion was disagreed to. On the 17th of June, a motion was made to suspend the rules and proceed to the consideration of the bill, but as two-thirds did not vote in favor of the motion it was not adopted, and the bill was not called up for action until the next session of Congress, when Mr. Ewing, on February 22, 1879, reported it from the committee on banking and currency, and moved to concur in the Senate amendments, with amendments changing the date on which the act should take effect, and also adding, “that the money hereafter received from any sale of bonds of the United States shall be applied only to the redemption of other bonds bearing a higher rate of interest, and subject to call.”
This motion came too late, as the whole subject-matter had been disposed of by the resumption of specie payments on the 1st of January previous. It led, however, to a considerable debate in which Mr. Garfield participated. He made a humorous allusion to the revival of controversies that were past and gone since the 1st of January, and moved to lay the bill and the amendments upon the table. That was adopted by a vote of yeas 141, nays 118.
I have given the official history of the efforts to repeal the resumption act, but it would be beyond the limits of this book to quote, or even state, the copious speeches for and against resumption. I felt secure, for if such a bill should pass, the executive veto would prevent any action by Congress that would interfere with the execution of the law. My principal effort was to convince Congress that it ought not to interfere with what the House called a destructive experiment, but what I regarded as an easy and beneficial execution of existing law. A large part of the opposition was purely political. The resumption act was a Republican measure, voted for only by Republicans. The Democratic party had, by the elections just previous to its taking effect, secured a majority in the House, and, with the aid of a few Republican Senators, with strong “greenback” proclivities, had the control of the Senate on the financial question.
This political condition in the fall of 1877 tended to prevent the sale of four per cent. bonds after the close of the popular loan. My official correspondence with members of the syndicate, and with Mr. Conant, published by order of the House of Representatives in the volume “Specie Resumption and Refunding of the National Debt,” shows fully the earnest effort made by me to sell the four per cent. bonds. This was successful to a slight degree in August and September, but sales were substantially suspended after that date, until it became manifest that the two Houses could not agree upon the repeal of the resumption act, or the remonetization of silver. The threatened measure for the free coinage of silver, and the fear that the bonds would be paid in silver coin less valuable than the gold coin paid for them, tended, more than the efforts to repeal the resumption, to prevent the sale of bonds.
“Mansfield, Ohio, August 18, 1877. “Dear Mr. Conant:—Your letter of the 4th was forwarded to me here. I notice what you say about the calls, but you must remember that out of the sales of four per cent. bonds we must provide five millions gold for each of the months of September and October, so that for ten millions of bonds there must be no calls. I should have informed you of this sooner, but neglected to do so before leaving. The parties in New York, and no doubt the Rothschilds, have been advised of it and agree to it. Until the popular subscription is paid for it will be difficult to press the sale of the four per cents., but I hope in September the sales will commence and be pushed rapidly. The movement of the crop has already commenced. The strike seems to be ended, with a better feeling among laborers, and some advance in freight. The necessity of the trunk lines combining on freight is so clear that it is likely to result in some agreement that will stand.
“I made a speech here yesterday, which no doubt will be received by you in the New York papers in due time, and which contains some matters affecting your operations. It is substantially in conformity with the general wish of the administration as to financial affairs, and it might be well for you to call the attention of the Rothschilds to that part of it relating to our loans and the basis of our credit.
“I return next week to Washington, where I will again be happy to hear from you.
“Very truly,
“John Sherman, Secretary.”
Mr. Conant answered as follows:
“New Court, St. Swithin’s Lane, } “London, E. C., England, August 23, 1877.} “Dear Mr. Secretary:—I was very glad indeed to receive your letter of the 6th instant. I at once informed the contracting parties of what you had written in reference to the strikes and riots at home. The sale of our bonds has not been directly interfered with on account of the riots. In fact, the occurrence of the riots has almost been forgotten. The London ‘Times,’ of this morning, has, however, revived the subject by printing a letter from its Philadelphia correspondent, in which he says that the strikers, it is evident, are to get into politics through the organization of a party, to be called the ‘Workingmen’s party;’ and he predicts that mischief will come out of it through the control of state governments which the mob element may gain; and the consequent enactment of bad laws, etc., especially against capital. Another letter is also printed (written by a Mr. Connolly), by which it is made to appear that American is in a terrible financial condition. These two letters are made the subject of an editorial which, on the whole, is not very complimentary to us, nor calculated to improve our credit. The ‘Times’ of last Monday’s date had an editorial on the speech which you made in Ohio on Friday last. I send you a copy, and think, if you can find time, you will rather enjoy reading the article. Nearly all of the English people, as you are aware, believe in the principle of ‘free trade,’ and it is but natural that they should, for the reason that England depends upon her great commerce and her markets in every part of the globe for the employment and maintenance of her people. People here think that our protectionist tariffs are not only detrimental to the commercial interest of our own country, but that they are of a suicidal character so far as our fiscal policy is concerned. They think, in other words, that it would be vastly better for the real interest of the people of the United States if they would trade more extensively with the people of England. What the ‘Times’ editor has to say about the balance of trade will amuse you, and yet people talk about the advantages of a balance of trade as being an exploded idea. English interests are laboring to effect a new treaty with France, under which large reductions in duties are proposed.
“I note what you are pleased to say in regard to sales of bonds during the present month. With the price of bonds at the present moment they cannot of course be sold. The parties will find it necessary to use great caution as well as care in managing the market, so as to get control of it. Any attempt to force the sale of the bonds during this, and, I think, next month will only operate to keep the price so low that they cannot be sold at all. I am firm in the belief that the premium on gold will go gradually lower, and that the balance of trade in our favor will keep forcing it down.
“I remain your obedient servant,
“Chas. F. Conant.
“Hon. John Sherman.”
He again wrote on the 30th of August:
“On Tuesday last a further amount of gold (£130,000) was withdrawn from the Bank of England for shipment to the United States, and for the purpose of protecting its stock of bullion the bank immediately advanced its rate to three per cent., and also increased the price of American eagles.
“Great Britain must obtain from us this season a large supply of breadstuffs and grain, larger than has been required in any one year during several years past, and at higher prices than those heretofore paid, and, in the present condition of trade between the two countries, gold, to quite an extent, will have to be sent over in payment for these articles. Therefore, advancing the rate of interest may check for a time, but will not stop altogether, the shipment of bullion, but it may attract here some of the gold held by the Bank of France. The bank rate does not govern the street rate, and a further advance by the bank, which it is very likely may be made, is not to be considered as indicating that we are to have a dearer money market. I inquired to-day of Mr. Morgan and the Messrs. Rothschild what they thought of the prospects of making any sales during next month, and their answer was: ‘Wait patiently for the market to recuperate.’ I am satisfied that good investment securities are scarce here; that they have been cleared from the market, and that as soon as the question of cheap or dear money is settled, sales of the four per cent. consols will be resumed. The amount of the sales will of course depend upon which way the question is settled. There were times during the placing of the five per cent. and four and a half per cent. bonds when, as you are aware, operations were suspended for quite a time, the condition of the market being such as to prevent anything being done. From semi-official accounts it appears that the famine in India is a very serious affair, and it is quite possible that large sums of money will be required from here with which to purchase supplies.”
My experience thus far convinced me that it was bad public policy to continue the sale of bonds for refunding purposes through a syndicate of bankers, the chief of whom resided in London. I could see no reason why this function could not be performed by national banks, better than by bankers at home or abroad. A question arose whether the Secretary of the Treasury had the power to designate national banks as public depositaries of the proceeds of bonds sold under the resumption and refunding acts. The object to be gained by this designation was to prevent the withdrawal of coin from circulation, and the undue accumulation of coin in the treasury of the United States. If the exchange of one bond by another could be directly effected through the banks without the payment of coin, it would facilitate the process of refunding. I submitted this inquiry to Attorney General Devens, and on the 30th of August he stated his opinion and closed as follows:
“In answer to your inquiry, I have, therefore, the honor to say that the Secretary of the Treasury, if he deems it expedient as a matter of administrative policy, may sell bonds under the act known as the ‘refunding’ and ’resumption’ acts, depositing the amounts received therefrom with such public depositaries as he may select under the national bank act, taking such security as is required by the statutes.”
The last of the popular subscriptions for the four per cent. bonds became due on the 16th of October, and all were paid for but three subscriptions aggregating $1,600, and these were assumed by the syndicate. The bonds had been paid for by the syndicate either by called six per cent. bonds, which were canceled, or in gold coin deposited in the treasury, without the loss of a dollar. The called session of Congress, which met on the 15th of October, and the agitation of the repeal of the resumption act and the remonetization of silver, prevented for the time any further sales of the four per cent. bonds by the government.