Recollections of Forty Years in the House, Senate and Cabinet An Autobiography. (part 4 of 7)

Recollections of Forty Years in the House, Senate and Cabinet An Autobiography. (part 4 of 7)

Our arrival at San Diego was an event of interest to the few people of that town. We inspected the remarkable harbor and the surrounding country. It was apparently a good site for a great city. Fresh water was the great want and rain-falls were rare, but it was claimed that an ample supply of water could be had from the hills. The real obstacle to that site, as a terminus for the railroad, was the mountains east of San Diego, which, upon a survey, were found to be extremely difficult, and this turned the route to Los Angeles, over natural passes and through the beautiful region of San Bernardino.

We returned, by boat, to San Francisco, and soon after turned our way eastward. We stopped at Reno, and went by rail to Carson City, the capital of Nevada. It was then an embryo town. From there we went to Lake Tahoe, one of the finest bodies of water on the earth. Its clear, cold waters filled a natural basin in the midst of the Nevada range of mountains, which was supplied by the melting snows. We then returned to Carson City, ascended, by rail, an inclined plane of high grade, to Virginia City. Most of the party descended into the mines, but I was prevented from doing so by an attack of neuralgia, a complaint from which I never suffered before or since, caused, as it was said, by the high altitude and thin air. Here I met several natives of Ohio, who had sought their fortunes in the far west. They were very kind to the party and to myself. It got to be a common remark, that Ohio has everything good in the west. I could answer that they all seemed to deserve what they had. I was disposed to be proud of them and of my native state, but soon after, on the way east, we heard of an atrocious murder committed by two Ohio men. This turned the tables on my native state, and I was compelled to confess that bad men came from Ohio as well as from other states; but, if so, Ohio people excelled in the atrocity of their crimes as well as in the excellence of their merits!

Our next stopping place was at Salt Lake City. Whatever opinion we may have of the religious creed and dogmas of the Mormons, we cannot deny the industry and courage of that sect in building up a city in a wilderness where natural conditions seemed to forbid all hope of success in such an enterprise. And yet there it was, a well-ordered city laid out with squares, avenues, streets, and reservations for schools, churches and other public uses, with water introduced in great abundance. All the needs of city life were provided, such as stores, markets and shops. We were invited by the delegate to Congress, from Utah, to call on Brigham Young, and did so. He was a large, well-built man, then about sixty years old. He took great interest in the enterprise of Colonel Scott and seemed familiar with all the railways built or projected in the western country. There was nothing in his conversation or manner that indicated the "crank," nor did he exhibit any of the signs of a zealot or fanatic. He made no allusions to his creed or the habits of his followers and betrayed no egotism or pride. He has died since but the organization he left behind him is still in existence, and the Mormon faith is still the creed and guide of the great body of those who followed Brigham Young into the wilderness, and of their numerous descendants. It is to be hoped that the government and people of the United States will let the Mormons severely alone, allowing them to believe what they will, and to do in the way of worship what they choose. In this way only can their confidence in alleged revelations be shaken, and Mormonism will disappear among the many vain attempts of humanity to explore the mysteries of life and death. Persecution never weakens delusions, nor disturbs faith, however ignorant and groundless.

From Salt Lake our party went to Cheyenne and thence to Denver. This city was growing rapidly and was plainly destined to be the principal center of the mineral development of several states. I had, on a previous trip, visited the interesting region of the "Garden of the Gods," Colorado Springs and Pike's Peak. Our party left Denver for home. On the long stretch via Kansas City, St. Louis and Indianapolis we saw nothing new, as we were traveling over familiar ground. It was early in September, when corn, the great western staple, was approaching maturity, and the earth was giving forth its increase. We were crossing the largest and perhaps most fertile valley of the world. All of it had been redeemed from nature and the Indians, within one hundred years. During our trip we had passed through great cities, prosperous towns and amidst wonderful scenery. All of the route except through the Yosemite valley was passed over in a palace car. The ocean voyage was in a steamboat even more luxurious then the palace car. All this rapid development did not satisfy the desire of Colonel Scott and Mr. Walters. Their minds were occupied with vast railroad projects, some of which were accomplished before their death. I also had my dreams but they related to public policies rather than internal improvements and some of these have been realized.

I was awakened one bright morning in September and told that the car was in Ohio. This was enough to drive sleep from my eyelids. I looked out upon the rich lands of the Miami valley, the comfortable homesteads on every farm, the fat cattle and herds of sheep, the broad fields of yellow corn, and every sign of fertility. All these, and perhaps a little admixture of state pride, led me to say that, after all, the people of Ohio need not go beyond the bounds of that state with any hope to improve their condition or to secure a better opportunity for a happy life. I soon parted with my friends with sincere regrets, for in our journeyings we were in truth a happy family.

The canvass in Ohio was then progressing for the election of a President and Members of Congress, in which I was expected, as usual, to take a part. The strange anomaly of Horace Greeley running on a Democratic ticket was enough in itself to excite opposition, especially in the southern states. The result was that General Grant, in November, 1872, was elected President by 31 states with 286 electoral votes. Greeley died after the election, and before the electors voted, so that no electoral vote was counted for him. If he had lived he would probably have received 60 electoral votes.

CHAPTER XXIV. THE PANIC OF 1873 AND ITS RESULTS. Failure of Jay Cooke and Co.--Wild Schemes "for the Relief of the People"--Congress Called Upon for Help--Finance Committee's Report for the Redemption of United States Notes in Coin--Extracts from My Speech in Favor of the Report--Bill to Fix the Amount of United States Notes--Finally Passed by the Senate and House--Vetoed by President Grant and Failure to Pass Over His Objection--General Effect Throughout the Country of the Struggle for Resumption-- Imperative Necessity for Providing Some Measure of Relief.

During the first four years of General Grant's administration the financial condition of the United States was eminently prosperous. The total reduction of the national debt, from the 1st of March, 1869, to the 1st of November, 1873, was $383,629,783, the annual saving of interest resulting therefrom being $27,432,932. During this period the value of United States notes compared with coin steadily increased. The funding of the six per cent. bonds into five per cent. bonds, under the refunding act, continued at the rate of about $85,000,000 a year. The credit of the United States steadily advanced during this period, so that the Secretary of the Treasury, in his report of 1873, stated that it had not stood higher since the close of the Rebellion than it did at that time. This improvement of the public credit was accompanied with a large reduction of internal taxes and duties on imported goods. The business of the country was prosperous, the increase and extension of railroads and the development of new industries was marked, indicating great prosperity.

All this was subsequently changed by the happening of a panic in September, 1873. The cause of this was attributed to over-trading, to the expansion of credits, and to rash investment made in advance of public needs. This panic commenced by the failure of Jay Cooke & Co., of Philadelphia, an enterprising firm of high standing, then engaged in selling the bonds of the Northern Pacific Railroad Company. I was engaged at that time, with a committee of the Senate, of which William Windom was chairman, in examining many plans of public improvements, especially in the increase of facilities for water transportation at the mouth of the Mississippi river, and at the great lakes on our northern boundary, improvements since then made with great benefit to the commerce of the United States. Roscoe Conkling, of New York, was a member of that committee. We were at Buffalo when the failure of Cooke & Co. was announced. We all felt that for the present, at least, our duties as a committee were at an end. The panic spread so that in a month all industries were in a measure suspended. The wildest schemes for relief were proposed, in and out of Congress. The panic spread to the banks, which were compelled in self-defense to call in their loans, to withhold their circulating notes, and contract their business. As usual on the happening of such a panic, an appeal was made to the treasury for relief, a demand was made for an increase in the volume of the United States notes, and that the Secretary of the Treasury should use the money of the government to buy exchange.

The New York Produce Exchange applied to the Secretary of the Treasury on the 29th of September, 1873, in resolutions, as follows:

"Whereas, The critical condition of the commercial interests of the country requires immediate relief by the removal of the block in negotiating foreign exchange; therefore be it

"Resolved, That we respectfully suggest to the Secretary of the Treasury the following plans for relief in this extraordinary emergency:

"First, That currency be immediately issued to banks or bankers, upon satisfactory evidence that gold has been placed upon special deposit in the Bank of England, by their correspondents in London, to the credit of the United States, to be used solely in purchasing commercial bills of exchange.

"Second, That the President of the United States and the Secretary of the Treasury are respectfully requested to order the immediate prepayment of the outstanding loan of the United States due January 1, 1874."

This request had, as a matter of course, to be denied. But the secretary did purchase $13,000,000 of bonds for the sinking fund, to the full extent the condition of the treasury allowed. It is difficult to realize or to convey by description the wild ideas developed by such a panic. The government for the time being is expected to provide a remedy for a condition it did not create, but, instead of aiding, the government is most likely to need aid. The revenues from importations fell off and the value of United States notes declined.

When Congress convened in December, 1873, the wildest schemes for relief to the people were proposed. A large increase of United States notes was demanded. More than sixty bills, resolutions and propositions were introduced in the Senate in respect to the currency, the public debt and national banks, all bearing upon the financial condition of the country, expressing every variety of opinion, from immediate coin payments to the wildest inflation of irredeemable paper money. All these were referred to the committee on finance, then composed as follows: Messrs. Sherman (chairman), Morrill, of Vermont, Scott, Wright, Ferry, of Michigan, Fenton and Bayard.

The several measures referred to the committee were taken up and considered, but the same wide divergence of opinion was developed in the committee as existed outside of Congress among the people.

The majority of the committee reported to the Senate the following resolution:

"Resolved, That it is the duty of Congress during its present session to adopt definite measures to redeem the pledge made in the act approved March 18, 1869, entitled 'An act to strengthen the public credit,' as follows: 'And the United States also pledges its faith to make provision, at the earliest practicable period, for the redemption of United States notes in coin;' and the committee on finance is directed to report to the Senate, at as early a day as practicable, such measures as will not only redeem the pledge of the public faith, but will also furnish a currency of uniform value, always redeemable in gold or its equivalent, and so adjusted as to meet the changing wants of trade and commerce."

Mr. Ferry, of Michigan, a member of the committee, offered the following substitute for the pending resolution:

"That the committee on finance is directed to report to the Senate, at as early a day as practicable, such measures as will restore commercial confidence and give stability and elasticity to the circulating medium through a moderate increase of currency."

Upon these adverse propositions a long debate followed without practical results. I made a long speech on the 16th day of January, 1874, in favor of the resolution of the committee. I then said:

"At the outset of my remarks I wish to state some general propositions established by experience, and the concurring opinions of all writers on political economy. They may not be disputed, but are constantly overlooked. They ought to be ever present in this discussion as axioms, the truth of which has been so often proven that proof is no longer requisite.

"The most obvious of these axioms, which lies at the foundation of the argument I wish to make to-day, is that a specie standard is the best and the only true standard of all values, recognized as such by all civilized nations of our generation, and established as such by the experience of all commercial nations that have existed from the earliest period of recorded time. While the United States, as well as all other nations, have for a time, under the pressure of war or other calamity, been driven to establish other standards of value, yet they have all been impelled to return to the true standard; and even while other standards of value have been legalized for the time, specie has measured their value as it now measures the value of our legal tender notes.

"This axiom is as immutable as the law of gravitation or the laws of the planetary system, and every device to evade it or avoid it has, by its failure, only demonstrated the universal law that specie measures all values as certainly as the surface of the ocean measures the level of the earth.

"It is idle for us to try to discuss with intelligence the currency question until we are impressed with the truth, the universality, and the immutability, of this axiom. Many of the crude ideas now advanced spring from ignoring it. The most ingenious sophistries are answered by it. It is the governing principle of finance. It is proved by experience, is stated clearly by every leading writer on political economy, and is now here, in our own country, proving its truth by measuring daily the value of our currency and of all we have or produce. I might, to establish this axiom, repeat the history of finance, from the shekels of silver, 'current money with the merchant,' paid by Abraham, to the last sale of stock in New York. I might quote Aristotle and Pliny, as well as all the writers on political economy of our own time, and trace the failure of the innumerable efforts to establish some other standard of value, from the oxen that measured the value of the armor of Homeric heroes to the beautifully engraved promise of our day; but this would only be the hundred-times-told tale which every student may find recorded, not only in schoolbooks, but in the writings of Humboldt, Chevalier, Adam Smith, and others of the most advanced scientific authorities. They all recognize the precious metals as the universal standard of value. Neither governments, nor parliaments, nor congresses can change this law. It defies every form of authority, but silently and surely asserts itself as a law of necessity, beyond the jurisdiction of municipal law.

* * * * *

"Of late years much difficulty has grown out of the slightly varying value of silver and gold, as compared with each other, and the tendency of opinion has been to adopt gold alone as the standard of value. The United States has twice changed the relative value of these metals, and other modern nations have been driven to similar expedients. At the Paris monetary conference, held in 1867, which I had the honor to attend, the delegates of twenty nations represented agreed to recommend gold alone as the standard of value. The United States, and nearly all the commercial nations, have adopted this standard, and reduced the use of silver to a mere token coinage of less intrinsic value than gold, but maintained at par with gold by the right to be converted into gold at the will of the holder. So that for all practical purposes we may regard gold as the only true standard, the true money of the world, by which the value of all property, of all productions, of all credits, and of every medium of exchange, and especially of all paper money, is tested.

"Specie, in former times, was not only the universal standard of value, but it was the general medium of all exchanges. In modern times this is greatly changed. Specie is still the universal standard of value, but it has ceased to be even the usual medium of exchange. The failure to distinguish between the standard of value and the medium of exchanges occasions many of the errors into which so many fall, and nearly every Senator who has spoken on one side of the question has fallen into this error. Specie has lost a portion of its sovereign power, for with the enormous increase of exchanges it was found that, valuable as it is, it is too heavy to transport from place to place as a medium of exchange. The perils of the sea, the dangers of theft and robbery, led to devices to substitute promises to pay gold in place of the actual gold.

* * * * *

"Mr. president, thus far my remarks are founded upon the experience of ages, applicable to all countries and to all commercial nations of our time. I present them now as axioms of universal recognition. And yet I have heard these axioms denounced in this debate as 'platitudes,' useless for this discussion in the Senate of the United States. The wisdom of ages, the experience of three thousand years, the writings of political economists, are whistled down the wind as if we in the Senate were wiser than all who have reasoned and thought and legislated upon financial problems--that all this accumulated wisdom consists of 'platitudes' unworthy to influence an American Senate in the consideration of the affairs of our day and generation.

"Sir, I do not think so. If we disregard these 'platitudes,' we only demonstrate our own ignorance and punish our constituents with evils that we ought to avoid. I purpose now to pursue the argument further, and to prove that we are bound, both by public faith and good policy, to bring our currency to the gold standard; that such a result was provided for by the financial policy adopted when the currency was authorized; that a departure from this policy was adopted after the war was over, and after the necessity for a depreciated currency ceased; and that we have only to restore the old policy to bring us safely, surely, and easily to a specie standard.

"First, I present to you the pledge of the United States to pay these notes in coin 'at the earliest practicable period.' In the 'act to strengthen the public credit,' passed on the 18th day of March, 1869, I find this obligation:

'And the United States also solemnly pledges its public faith to make provision, at the earliest practicable period, for the redemption of the United States notes in coin.'

* * * * *

"The Congress of the United States, in order to put into form its sense of this obligation, passed the act 'to strengthen the public credit,' and the last and most important clause of this act is the promise which I have just read, that these notes should be paid, 'at the earliest practicable period,' in coin.

* * * * *

"On the day we made that promise, the 18th of March, 1869, the greenbacks, the notes of the United States, were worth 75¾ cents in gold; or in other words, gold was at a premium of thirty-two per cent. . . . What was the result? After you enacted that law-- the faith of the people of the United States that you would redeem this pledge--the value of your greenbacks advanced, not rapidly, but gradually, and in one year, to within twelve per cent. of par in gold.

* * * * *

"Mr. president, we see, then, the effect of this promise. And I here come to what I regard as a painful feature to discuss--how have we redeemed our promise? It was Congress that made it, in obedience to the public voice; and no act of Congress ever met with a more hearty and generous approbation. But I say to you, with sorrow, that Congress has done no single act the tendency of which has been to advance the value of these notes to a gold standard; and I shall make that clearer before I get through. Congress made this promise five years ago. The people believed it and business men believed it. Four years have passed away since then, and your dollar in greenbacks is worth no more to-day than it was on the 18th of March, 1870; and no act of yours has even tended to advance the value of that greenback to par in gold, while every affirmative act of yours since that time has tended to depreciate its value and to violate your promise.

* * * * *

"Every bond that was issued was issued only upon the sacred pledge contained in this act, that the interest of that bond should be paid in coin; and the principal should be paid, when due, in coin. The fifth section of the act provides that all duties on imported goods shall be paid in coin; and that this money shall be set aside as a special fund to pay the interest on the bonded debt in coin. Then, in order to secure the greenbacks, it authorized any holder of greenbacks to pay any government debt with them; it authorized the holder of greenbacks to pay any debt, public or private, with them; and every citizen of the United States was bound to take them. Then it authorized them to be converted into six per cent. bonds of the United States--those bonds payable, principal and interest, in gold. If the policy provided for by this act had been maintained, we would long since have been at specie payments, without any serious disturbance of our monetary affairs.

* * * * *

"Now, Mr. president, I come to show the Senate how this provision, the convertible clause of the act of February 25, 1862, was repealed. On the 3rd of March, 1863, Congress passed 'An act to provide ways and means for the support of the government.' This act was passed during the dark hours of the war. The currency of the country did not flow into the treasury rapidly enough to pay our army. I remember that at about the time this act was passed there were very large unpaid requisitions. The Secretary of the Treasury, instead of issuing any more six per cent. bonds, desired to float a 10-40 five per cent. bond; in other words, to reduce the burden of interest upon the public debt. At this time there were three hundred millions of circulation outstanding, and with all the rights, and all the privileges, conferred upon the greenbacks, they did not flow into the treasury fast enough to furnish means to carry on the operations of the war.

* * * * *

"In other words, the suspension of this convertibility clause was passed with a view to promote conversion; to encourage conversion; to induce conversion; and, if possible, to induce a conversion into a five per cent. gold bond instead of into a six per cent. bond. When the Secretary of the Treasury presented this view to Congress he was at once met with the pledge of the public faith; with the promise printed upon the back of the greenbacks that they could be converted into six per cent. bonds at the pleasure of the holder; and that we could not take away that right. This difficulty was met by the ingenuity of the then Senator from Vermont (Mr. Collamer). He said that no man ever exercised a right which could not properly be barred by a statute of limitations; and if this right was injurious to the people of the United States, and prevented the conversion of these notes into bonds, we might require the holder of these notes to convert them within a given time; that we could give them a reasonable time within which they could convert them into six per cent. bonds, and after that take away the right.

"The act of March 3, 1863, was amended by inserting this clause:

'And the holders of United States notes, issued under or by virtue of said acts, shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the 1st day of July, 1863; and thereafter the right so to exchange the same shall cease and determine.'

* * * * *

"Now, Mr. president, I have shown you that the greenbacks were based upon coin bonds; that they had the right to be converted into coin bonds; that that right was taken away as to the 5-20 bonds; but that, in practice and in effect, the greenback was convertible into an interest-bearing bond of the United States up to 1866, and until the passage of the law to which I will now refer.

* * * * *

"If this act had contained a simple provision restoring to the holder of the greenback the right to convert his note into bonds there would have been no trouble. Why should it not have been done? Simply because the then Secretary of the Treasury believed that the only way to advance the greenbacks was by reducing the amount of them; that the only way to get back to specie payments was by the system of contraction. If the legal tender notes could have been wedded to any form of gold bond by being made convertible into it, they would have been lifted, by the gradual advance of our public credit, to par in gold, leaving the question of contraction to depend upon the amount of notes needed for currency. Sir, it was the separation of our greenbacks from the funding system that created the difficulty we have upon our hands to-day; and I say now that, in my judgment, the only true way to approach specie payments is to restore this principle, and give to the holder of the greenback, who is your creditor, the same right that you give to any other creditor. If he has a note which you promised to pay and cannot, and he desires interest on that note by surrendering it, why should you not give it to him? No man can answer that. It is just as much a debt as any other portion of the debt of the United States."

Finally, after more than three months study and debate, a majority of the committee agreed upon a measure and directed me to report it to the Senate. It fixed the maximum limit of the United States notes at $382,000,000. It provided for a gradual payment of these notes in coin or in five per cent. bonds, at the option of the Secretary of the Treasury, from the 1st of January, 1876. It was entitled "An act to provide for the redemption and reissue of United States notes and for free banking."

In obedience to the instructions of the committee, on the 23rd of March, 1874, I reported the bill as an original measure, and said:

"It is due to the members of the committee on finance that I should say that the bill which I have just reported, as it appears on its face, is in the nature of a compromise measure, which is more or less acceptable all around, but at the same time there are certain features of the bill which members of the committee on finance will feel at liberty to express their opposition to, and also to propose amendments to. It is due to them that I should make this statement. The bill itself, as appears on its face, is the result of great labor, long consideration, and the consequence of compromise. In many cases we were not able, however, to reconcile conflicting opinions; and on those points, of course, members of the committee will feel themselves at liberty to oppose certain features of the bill."

Mr. Thurman said:

"I should like to inquire of my colleague whether he proposes to- day or to-morrow, when he makes the motion that he indicated, to state what, in the opinion of the committee reporting this bill, will be its practical effect, so that we may have the views of the committee as to the workings of the bill should it become a law. I am sure I, for one, should like very much to know what the committee, who have devoted so much time to this subject, think will be the practical working of the measure, at any time that it suits the convenience of the chairman of the committee to make such statement."

I replied:

"When the subject is introduced, if it be convenient, to-morrow, I propose to make a very brief statement of the effect of each section, as we understand it; but I do not intend, by any long speeches or any remarks, to prolong this matter unnecessarily. I have expressed my own individual views, and each member of the committee, I suppose, stands to the opinion expressed by him in the speeches he has made in the Senate--speeches that were carefully considered, and by which the position of each Senator was stated; but undoubtedly I shall feel it my duty, when the bill is called up, to state what I regard as the actual practical effect of these different propositions; and some of them, I will now say, I assented to with great reluctance."

On the next day the bill was taken up in the Senate, and I then stated the general provisions of the bill. I insert extracts from my speech, which indicate the difficulties we encountered:

"Mr. president, some complaint has been made in the Senate and in the country at the delay in the presentation, by the committee on finance, of some bill covering the financial question; but a moment's reflection will, I am sure, convince every Senator that there has been no fault on the part of that committee. From the beginning of the session to this hour that committee, under the direction of the Senate, has been studying and discussing the various plans and propositions which were referred to the committee; and I may say that over sixty different propositions, either coming in the form of petitions or in the form of bills, have been sent to the committee, all of these suggesting different plans and ideas. It was impossible to consider all these and to agree upon any comprehensive measures until within a day or two.

"There was another consideration. The committee found itself divided in opinion, precisely as the country is, and precisely as the Senate is, into as many as three different classes of opinion. There were, first, those who desired to take a definite and positive step toward the resumption of specie payments. There were, second, those who desired an enlargement of the currency, or what we commonly call an inflation of the currency. There were, third, those who, while willing to see the amount of bank notes increased and the question of the legal tender settled in some form, were also desirous that some definite step should be taken toward a specie standard. There were these differences of opinion.

"For the purpose of ascertaining the views of the Senate, and not involving ourselves in reporting a bill that would be defeated as the bill of the last session was, we presented, early in the session, resolutions of a general character which stated these three ideas: First, the resolution of the majority of the committee that some definite step should be taken toward specie payments. Then there was the amendment offered by the gentleman who now occupies the chair [Mr. Ferry, of Michigan], that there ought to be an increase of the currency without reference to any plan of redemption. Third, there was the proposition made by the Senator from Delaware [Mr. Bayard], that measures should be taken at once looking to the resumption of specie payments.

"These propositions were discussed, and the committee were enlightened by that discussion; at least they obtained the opinions of Members of the Senate. Subsequently, in the course of our investigation, a question about the $25,000,000 section (section 6 of the act of July 12, 1870) came up, and the committee deemed it right, by a unanimous vote, to ascertain the sense of the Senate as to whether they wished this section carried into execution. As it stood upon the statute book it was a law without force. It was a law so expressed that the comptroller said he could not execute it. Therefore the committee reported a bill which would have provided the necessary details to carry into execution that section of the existing law. But in the present temper of the public mind, in the Senate and in the country, that bill was discussed, and has been discussed day after day, without approaching the question at all. During all this time the committee have been pursuing their inquiries, and finally they have reported the bill which is now before us.

"The measure that is reported is not a satisfactory one to any of us in all its details. Probably it is not such as the mind of any single Member of the Senate would propose. It is in the nature of a compromise bill, and therefore, while it has the strength of a compromise bill, it has also the weakness of a compromise bill. There are ideas in it which, while meeting the views of a majority, taken separately will be opposed by others. I am quite sure I say nothing new to the Senate when I say it does not in all respects meet my own views. But there is a necessity for us to yield some of our opinions. We cannot reconcile or pass any measure that will be satisfactory to the country unless we do so. Any positive victory by either extreme of this controversy will be an absolute injury to the business of the country. Therefore, any measure that is adopted ought to be so moderate, pursuing such a middle course, such a middle ground, that it will give satisfaction to the country. It must be taken as a whole; and therefore the effect of amending this proposition will be simply to destroy it. If an amendment in the direction of expansion is inserted, it will drive away some who would be willing to support it as is. If an amendment in the way of contraction is proposed and carried by a majority of the Senate, it will drive away those who might be willing to take this measure as a compromise. The only question before the Senate now is, whether this is a fair compromise between the ideas that have divided the people of this country and the Members of the Senate; whether it will surely improve our currency while giving the relief that is hoped for by a moderate increase of the currency. Now I ask the secretary to read the first section of the bill."

The chief clerk read section 1, as follows:

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the maximum limit of United States notes is hereby fixed at $382,000,000, at which amount it shall remain until reduced as hereinafter provided."

I then continued:

"It is manifest to every Senator that the initial step in this controversy is to fix the aggregate limit of United States notes. The United States notes, although they are very popular, and justly so, in this country, are at this moment inconvertible; they are irredeemable, and they are depreciated. These are facts admitted on all hands. In making that statement I do not intend at all to deny that the United States notes have served a great and useful purpose; and though I was here at the birth of them and advocated them in all stages of their history, yet I am compelled to say at this moment, twelve years after their issue, that they are inconvertible; they are irredeemable; and they are depreciated this day at the rate of twelve per cent. They have been legally inconvertible since July 1, 1863, and practically inconvertible since the close of the war; that is, the government refuses to receive them, either in payment of customs or in payment at par of any bond of the United States offered by it. They are irredeemable on their very face. They have depreciated almost from the date of their issue, at one time being worth only forty cents in gold, and to-day only worth ninety cents. That is the condition of the United States notes.

"Now, there is another thing admitted by all Senators. I do not trespass on any disputed ground when I say that every addition to the volume of these notes, while they thus stand depreciated, irredeemable, and inconvertible, is as certain to further depreciate them, as it is that to pour water into an overflowing bucket will cause it still more to overflow; as certain as the law of gravitation; as certain as anything human or divine. It is equally true that any contraction of this currency, any withdrawal of the amount of it, is undoubtedly an appreciation of its value, making it nearer and nearer to the standard of gold.

"This is so plain a proposition that it is not necessary to discuss it; and the whole people of the country understand it; the plainest and simplest people understand it as well as the wisest. Those who desire to increase prices, to start and put in operation new enterprises, desire an increase of the currency without any plan of redemption. Those, on the other hand, who want to get back to the specie standard, to appreciate the value of these notes, desire to withdraw them, get them out of the way, or give new uses and new values to them so as to advance them nearer and nearer the standard of gold. Therefore it is that I say the very first step at the outset of this controversy is to settle what is the legal limit of these notes; how many are there now authorized by law; how many are there outstanding. And here it is a strange thing that on this very point, a purely legal question, the most important one in our financial discussion, there is a great difference of opinion. There ought not to be uncertainty or room for a difference of opinion upon a question of this kind. It ought to be settled. On the one hand it is insisted by Senators who compose the majority of the committee on finance that the legal limit of United States notes is $356,000,000; that the amount which has been already issued, of what is known as the $44,000,000 reserve, was unlawfully issued, although under great press of circumstances and without any intention on the part of the secretary to do more than he thought he had a lawful right to do. On the other hand it is insisted by other Senators that the legal limit of United States notes is $400,000,000; and here is a margin of $44,000,000 upon which there is a dispute of law as to the power of the secretary to issue it. That dispute ought to be settled at once. It is a question that ought not to be in doubt a moment, because the power to issue that $44,000,000 places it in the discretion of the Secretary of the Treasury either to advance or to lower the value of all property in the United States, of all debts in the United States, of everything that is measured by United States notes.

"Should we undertake to say that the secretary did wrong in exceeding the limit at $356,000,000? A majority of the committee believe that that is now the legal limit, and believe it conscientiously. But should be undertake to fix that as the legal limit? Twenty- six million dollars of the $44,000,000 are outstanding. They are now issued; they are now a part of the currency of the country. They are just as much the currency as that which was issued before. You cannot distinguish between them. You cannot say which of the $382,000,000 now outstanding is legal and which is illegal. So far as the United States are concerned, they are all debts of the United States which we are bound to pay, whether they have been issued legally or illegally. I do not understand even my friend from Delaware to dispute the duty and obligation of the United States to pay these notes, even if they have been illegally issued. There can be no question about it. It is impossible to distinguish between them. The only question is whether our agent exceeded his authority or not. Therefore, without raising the question as to the legality of this issue, reserving to each Senator his own opinion on the subject, we have adopted as the status quo $382,000,000, the amount now outstanding; and we recognize that amount as the maximum legal obligation of the United States in the form of notes, and we propose upon that basis to erect our superstructure. We therefore say that we will raise no question as to the mode of retiring the $26,000,000; we will simply say that the amount now outstanding shall never be exceeded. That is a recognition, at least, that they are outstanding lawfully and properly; at any rate, so far as the obligation of the United States to pay them is concerned.

"Mr. president, a limit ought to be fixed. But there is a difference of opinion as to what should be the limit. If I had the power to fix this limit I should say that the limit which was fixed by the old law should remain at $356,000,000; and I would provide a mode and manner of issuing United States bonds to retire the $26,000,000 slowly and gradually, without disturbing the ordinary business of the country. I would thereby seek to recover the ground we have lost by what has occurred since the panic, and go back to the standard prior to that time. But I know that would be very difficult; that would involve an increase of the bonded debt. Our revenues are not sufficient to call in this $26,000,000. We have no surplus revenue now as we had a year or two ago. We could only do it by the issue of bonds, and the process itself would be a very hard one. Besides, it is probable that public opinion and the judgment of Congress would not sustain such a proposition; and therefore it is hardly worth while to recommend it. We assume, therefore, that the $382,000,000 is the present limit, and we say that shall be the maximum limit.

* * * * *

"I said it was a compromise by the committee. I speak of a majority of the committee. As a matter of course my friend is at liberty to dissent from any of its propositions. On question of this kind committees are very rarely unanimous; but I will say that on this point a very decided majority of the committee concurred in the section.

"To the second section I wish to invite the careful and earnest attention of the Senate. This section is an honest effort to deal with the great problem of redemption. Every Senator who has spoken contemplates that a time must come when all the United States notes must be redeemed in coin. The public faith of the United States is so pledged. The notes were issued with the understanding that they should be paid in coin. No man could survive politically in this country who would declare that it was his purpose never to pay these notes in coin. My friend who now presides [Mr. Ferry, of Michigan], speaks always of his measure of inflation as a means of bringing about at some time specie payments; and I will say that in the Senate I have not heard any Senator deny that it is the duty of the United States at some time to pay these notes in coin. In all this discussion there is at least that one point agreed upon. If I state this too strongly I hope I will be here corrected.

"Now, Mr. president, how shall it be done, and when shall it be done? I say that now, nine years after the close of our Civil War, twelve years after these notes have been authorized and issued, five years after the dominant party has declared its purpose to pay them at the earliest day practicable, there should be no longer delay. The United States ought to do something toward the fulfillment of that pledge and the performance of that duty. There must be something very peculiar in the condition of our country that will justify a longer delay; a longer procrastination in the performance of this solemn pledge, this public policy--our own political obligation.

"Mr. president, this section is the result of the patient consideration of the committee on finance as to how this result is to be brought about; and upon this very section there is most likely to be a contrariety and difference of opinion among Senators, because the mode and manner of redemption is the thing which has excited the public mind and upon which men all over the country differ. I wish, therefore, to deal with this question. We have got to pay these notes in coin. The time when is not defined by the law. Are we prepared now to fix a day when we will pay these notes in coin? If the condition of our country was such as to justify it, I would greatly prefer fixing the time when these notes should be paid in coin; but I am disposed to agree with what has been stated by the Senator from Indiana, and by other Senators, that in the present condition of our coinage, the present condition of our foreign trade, we are not prepared to fix a definite day when we will pay in coin. Why? I find, by reference to official documents, that we now have in gold and silver coin in this country about $140,000,000. This statement of Dr. Linderman does not include the bullion on hand. How much that is I am not prepared to state. The whole amount of gold and silver coin in the country, however, is about $140,000,000. Some of that is in circulation in the Pacific states, but the bulk of it is in the treasury of the United States, the property of individuals and the property of the United States. The total annual production of gold and silver in this country cannot be estimated at over $70,000,000; and heretofore, at least $50,000,000 of this has been exported over and above the amount that has been imported. The balance of trade has been against us; and although I do not regard that as entering much into the calculation, yet it is a fact that until recently, perhaps, the balance of trade has been against us. The annual coinage of the United States for the last year or two has been largely increasing, and last year the coinage of the United States was $38,689,183, besides stamping into fine bars, which operate as a kind of coinage, of $27,517,000. So that there has been in fact converted, of gold and silver, into coin, or bars stamped by the United States, $66,000,000 during the last year, showing a use and employment of gold in this country that is now rapidly increasing.

"But still this state of affairs would not justify us in saying that we are prepared to declare a resumption of specie payments absolutely upon the basis of $800,000,000 of paper money, including our fractional currency. I am, therefore, not prepared to say that the United States can, on a fixed day, within a reasonable time-- within such a time as would give confidence in our ability to perform it--say that we will absolutely redeem our notes in coin.

"I know that Senators here, for whose opinion I have the highest respect, who are probably more sanguine of our ability and capacity to do this than I am--many of those who have agreed with me and co- operated with me--think we are able and strong enough to fix the time for the absolute resumption of specie payments; but I have always doubted it. Indeed I have thought there was a better way to reach the great result. But if we cannot fix the time when we will redeem in coin, can we not give additional value to our United States noes, so as to gradually appreciate them to the coin standard, and thus advance toward specie payments if we cannot reach the goal? Because we cannot accomplish all that we have agreed to do in a given time, does that relieve us from the necessity of progressing in that direction? When we have before us a long journey that will take months to pass, perhaps years, shall we delay starting on that journey because we cannot reach the end of it in a year or two? Not at all. I therefore say that the time has arrived this moment when the United States ought to do something to advance its notes to the specie standard.

"Now what is that something? There are two propositions, and only two propositions, that have been made, aside from absolute coin redemption, that have had any strength whatever. One is to allow the United States notes to be received in payment of customs duties, the other is to allow United States notes to be converted into bonds. In regard to the first, I agree entirely that if the matter was open now to our choice and selection, one of the best methods we could adopt to advance our notes to par in gold would be by repealing that restriction which prevents the receiving of them for customs duties; but we are met there by the sacred pledge of the United States; we are met there by the fact that customs duties are, by the law of 1862, agreed to be collected in coin."

Mr. Bayard inquired:

"Does not the law provide that the customs duties shall be paid in coin or in notes of the United States? Is not the alternative given by the law?"

I replied:

"O, no. If the Senator will look at section 5 of the act of February 25, 1862--my friend from Vermont can turn to it in a moment--he will find that there is an express stipulation that the customs duties shall be collected in coin, and that this coin shall be set aside as a pledge--legal language is used--and shall only be applied, first, to the payment of the interest on the public debt, and, secondly, to the establishment of a sinking fund of one per cent. That was the basis of the obligation of the United States to pay in coin, and but for the fact that we collected our customs duties in coin during the war we could not have paid the interest on our public debt in coin, and therefore our bonds would have sunk out of sight. That pledge we cannot now violate; and I never have yet been able to bring my mind to the consideration of any proposition whatever which would ever shock or excite the fear of the public creditors in that respect. The safety of the public creditors consists in having a specific fund for the payment of their interest; the principal will take care of itself; and that fund has always been maintained in the darkest hours of the war. Except the propositions that have been made here and there to impair that fund by allowing a portion of the customs duties to be paid in currency, it has never been either invaded or threatened; but all such propositions have been voted down. I, therefore, while I see the policy and the expedience of allowing these notes to be used in payment of customs duties, simply say we are precluded from that remedy because we have mortgaged that fund, and we have no power to take them for any purpose except that which the mortgage stipulates.

* * * * *

"We then come to the redemption in bonds. There is the moral obligation, on the part of the United States, which has issued its notes payable in coin, but for reasons of public policy does not pay in coin, to give to its creditors its notes bearing interest in place of coin. The United States cannot plead inability to pay interest on its notes if it will not or cannot pay the principal. Why should not the United States give its obligation bearing interest just as any individual would have to do? There is a moral obligation which rests upon the United States every day of the year to every holder of these notes, because, although the United States has not said when it will redeem these notes in coin, yet it is bound to do what it can to give them additional value. Although it may not receive these notes for customs duties, why can it not receive these notes in payment of bonds? Why discriminate against these notes in the sale of bonds? The answer is, that during the war we were compelled to do it; and so we were. I very reluctantly yielded to that necessity. We were compelled to do it; but, sir, it was only expected that that would continue to the close of the war; and, practically, during the whole of the war these notes were received at par for bonds at par.

"If, therefore, we are to take any step toward specie payments, why not give to the holder of United States notes who demands it, a bond of the United States bearing a reasonable rate of interest in exchange for his notes? This should only be done after a reasonable time, so as to prevent any injury to the private contracts between debtor and creditor. When we cannot pay the coin, we are honorably and sacredly bound to pay in a bond of the United States, which in ordinary times would approximate to par in gold. In other words, this is a qualified redemption. The Senator from Indiana calls it a 'half-way measure.' It is a half-way measure in the right direction, and indeed it is practical specie payment."

The bill led to a long continuous debate which extended to the 6th of April, 1874. Several amendments were offered and adopted which enlarged the maximum of notes to $400,000,000, and greatly weakened the bill as a measure of resumption of specie payments. By reason of these amendments many of those who would have supported the bill as introduced voted against it on its passage, I among the number. The bill, however, passed the Senate by a vote of yeas 29 and nays 24. The title of the bill was changed to "A bill to fix the amount of United States notes and the circulation of national banks, and for other purposes." This change of title indicates the radical change in the provisions of the bill. Instead of a return to specie payments, it provided for an expansion of an irredeemable currency.

The bill, as it passed the Senate, was as follows:

"Be it enacted, etc.,, That the maximum amount of United States notes is hereby fixed at $400,000,000.

"Sec. 2. That forty-six millions in notes for circulation, in addition to such circulation now allowed by law, shall be issued to national banking associations now organized and which may be organized hereafter, and such increased circulation shall be distributed among the several states as provided in section 1 of the act entitled 'An act to provide for the redemption of the three per cent. temporary loan certificates and for an increase of national bank notes,' approved July 12, 1870. And each national banking association, now organized or hereafter to be organized, shall keep and maintain, as a part of its reserve required by law, one-fourth part of the coin received by it as interest on bonds of the United States deposited as security for circulating notes or government deposits; and that hereafter only one-fourth of the reserve now prescribed by law for national banking associations shall consist of balances due to an association available for the redemption of the circulating notes from associations in cities of redemption, and upon which balances no interest shall be paid."

The bill was taken up in the House of Representatives on the 14th of April, 1874, and, without any debate on its merits, was passed by the vote of 140 yeas and 102 nays.

On the 22nd of April, President Grant returned the bill to the Senate with his veto, and the Senate, upon the question, "Shall the bill pass notwithstanding the objections of the President of the United States," voted 34 yeas and 30 nays. I voted nay. The president of the Senate declared "that two-thirds of the Senators present not having voted in the affirmative the Senate refuses to pass the bill."

Thus, for that session, the struggle for resumption ended; but the debate in both Houses attracted popular discussion, and tended in the right direction. The evil effects of the stringency in monetary affairs, the want of confidence, the reduction of the national revenue, the decline of domestic productions, all these contributed to impress Congress with the imperative necessity of providing some measure of relief. Instead of inflation, of large issues of paper money by the United States and the national banks, there grew up a conviction that the better policy was to limit and reduce the volume of such money to an amount that could be maintained at par with coin.

During the canvass that followed I spoke in many parts of Ohio, confining myself chiefly to financial questions. The stringency of the money market which occurred the preceding year still continued, and great interest was manifested in the measures proposed during the preceding session, especially in the defeat of the bill to prevent the contraction of the currency. At the request of General Garfield I spoke in Warren in his Congressional district, where he met, for the first time, a decided opposition. I insert his autograph letter, the original being in his familiar hand writing:

"Hiram, Ohio, September 25, 1874. "Dear Senator:--In accordance with the arrangement which I made with you and with the central committee, we have posted you for a mass meeting at Warren, on Saturday afternoon, October 10. I hope I shall not embarrass you by suggesting that in your speech you take occasion to say a few words in reference to my standing and public service as a representative. It will do much to counteract the prejudice that a small knob of persistent assailants have created against me. I write also to inquire if you will be willing to speak at another place the same evening. If so, we are very anxious to have you do so. Please telegraph me to Garrettsville, Ohio, and oblige,

"Very truly yours, "J. A. Garfield."

CHAPTER XXV. BILL FOR THE RESUMPTION OF SPECIE PAYMENTS. Decline in Value of Paper Money--Meeting of Congress in December, 1874--Senate Committee of Eleven to Formulate a Bill to Advance United States Notes to Par in Coin--Widely Differing Views of the Members--Redemption of Fractional Currency Readily Agreed to--Other Sections Finally Adopted--Means to Prepare for and Maintain Resumption --Report of the Bill by the Committee on Finance--Its Passage by the Senate by a Vote of 32 to 14--Full Text of the Measure and an Explanation of What It Was Expected to Accomplish--Approval by the House and the President.

When Congress met in December, 1874, the amount of United States notes outstanding was $382,000,000. The fractional notes outstanding convertible into legal tenders amounted to $44,000,000, and the amount of national bank notes redeemable in lawful money was $354,000,000, in all $780,000,000. Each dollar was worth a fraction less than 89 cents in coin. While these notes were at a discount coin did not and could not circulate as money. The government exacted coin for customs duties and paid coin for interest on its bonds. If there was an excess of coin received from customs to pay interest then the excess was sold at a premium. If the receipts from customs were insufficient to pay the interest on bonds, the government had to buy the coin and pay the premium. The people who were demanding more money to relieve the stringency did not see that the best way to get more money into circulation was to adopt measures that would make United States notes and bank notes equal to coin, when all three forms of money would enter into circulation and thus give them more money and all kinds of equal value.

While our paper money was depreciated the gold and silver bullion from our mines went abroad and was converted into foreign coin, while a large portion and perhaps a majority of our people demanded more paper money, which declined in value in exact proportion to its increase. During the war vast expenditures compelled us to use paper money; the return of peace and the excess of revenue over expenditures should have been promptly followed by coin payments or notes payable in coin. We delayed this process so long that the popular mind rested content with depreciated money, but the panic of 1873, and the feverish speculation which preceded it, convinced the great body of our business men that there was no remedy for existing evils but a return to specie payments.

Another bill concerning currency and free banking was reported by Horace Maynard, of Tennessee, on the 29th of January, 1874, from the committee on banking and currency of the House of Representatives, which provided for free banking and a gradual reduction and cancellation of United States notes by the issue of notes payable in gold in two years from the passage of the bill. This was fully debated in the House of Representatives and amended and passed. In the Senate it was reported by me from the committee on finance, with a substitute which provided for free banking and that on and after the 1st of January, 1877, and holder of United States notes might present them for payment either in coin or five per cent. bonds of the United States, at the suggestion of the Secretary of the Treasury. This substitute was amended in the Senate by striking out all provisions for the redemption of United States notes, leaving the measure one for free banking alone. The House disagreed to the amendments and a committee of conference was appointed, which resulted in a measure fixing the amount of United States notes outstanding at $382,000,000, and making no provision for their redemption. It was a crude and imperfect measure. I voted for it because it provided for a redistribution of national banks among the states. I said: "Because I cannot get a majority of both Houses of Congress to agree to specie resumption I ought not therefore to refuse to vote for a bill on the subject of banking and currency." The bill was approved by the President on the 20th of June, 1874. This long struggle prepared the way for the result accomplished at the next session.

When Congress met in December, 1874, the feeling that the remedy for existing evils was the return to specie payments, was general among Republican Senators and Members. The abortive efforts of the previous session and the veto of President Grant of one of the bills referred to contributed to it. At the first Republican conference I called attention to the necessity of our uniting, if possible, on some measure that would advance United States notes to par in coin and moved that a committee of eleven Senators be created to formulate a bill for that purpose. It was agreed to, and, as the names of the Senators composing the committee have already been published, I feel justified in repeating them: The committee consisted of Senators John Sherman (chairman), William B. Allison, George S. Boutwell, Roscoe Conkling, George F. Edmunds, Thomas W. Ferry, F. T. Freylinghuysen, Timothy O. Howe, John A. Logan, Oliver P. Morton, and Aaron A. Sargent.

When the committee met it was agreed that each member should state how far he would go in the direction of specie resumption. When these statements were made it was manifest that the divergence of opinion was so great that an agreement was almost impossible. Yet, the necessity of an agreement was so absolute that a failure to agree was a disruption of the Republican party.

The first section of the act to provide for the resumption of specie payments, which related to the coinage and issue of fractional silver under the act of February 21, 1853, and the redemption of an equal amount of fractional currency outstanding should be redeemed, and was readily agreed to. This fractional currency was so worn and filthy, and it cost so much to reissue, that by general consent its destruction was agreed to, and its replacement by bright new silver coin, which followed, was heartily welcomed.

The second section was an unjust concession to the miners of gold. It repealed the coinage charge for converting standard gold bullion into coin. This charge had been maintained, not only to cover the cost of coining, but to prevent the exportation of American coins. If the coins were of less value than the bullion of which they were made, however small the difference, they would not be exported while bullion could be had for exportation. The concession was made and the charge for coinage of gold was prohibited.

The free banking provisions in the third section were not seriously contested. The contraction of the volume of United States notes as national bank notes increased, was one of the chief subjects of disagreement. It was finally agreed that this contraction should extend only to the retirement of United States notes in excess of $300,000,000.

The most serious dispute was upon the question whether United States notes presented for redemption and redeemed could be reissued. On the one side it was urged that, being redeemed, they could not be reissued without an express provision of law. The inflationists, as all those who favored United States notes as part of our permanent currency were called, refused to vote for the bill if any such provision was inserted, while those who favored coin payments were equally positive that they would vote for no bill that permitted notes once redeemed to be reissued. This appeared to be the rock upon which the party in power was to split. I had no doubt under existing law, without any further provision, but that United States notes could be reissued. It was finally agreed that no mention should be made by me for or against the reissue of notes, and that I must not commit either side in presenting the bill.

The date for general resumption of specie payments on all United States notes was fixed on the first of January, 1879, four years from the framing of this bill. The important and closing clause of the bill was referred to Mr. Edmunds and myself. It provided the means to prepare for and to maintain resumption. It placed under the control of the Secretary of the Treasury all the surplus revenue in the treasury, and gave him full power to issue, sell and dispose of, at not less than par in coin, any of the bonds described in the refunding act. We were careful to select phraseology so comprehensive that all the resources and credit of the government were pledged to redeem the notes of the United States, as fully and completely as our Revolutionary fathers pledged to each other their lives, their fortunes, and their sacred honor, in support of the declaration of American independence.

After every sentence and word of this bill had been carefully scrutinized, I was authorized by every member of the committee to submit it to the committee on finance, and to report it from that committee as the unanimous act of the Republican Senators. We naturally expected some support from Mr. Bayard and other Democratic Senators, who, no doubt, were in favor of specie payments, but they perhaps thought it best not to share the risk of the measure.

I reported the bill from the committee on finance on the 21st of December, 1874, and gave notice that on the next day I would call it up with a view to immediate action. On the 22nd, after the morning business, I moved to proceed to the consideration of the bill, and gave notice that I intended to press it to its passage, from that hour forward, at the earliest moment practicable. It was well understood that the bill was the result of a Republican conference. It was taken up by the decisive vote of 39 yeas to 18 nays.

It was not my purpose to do more than to present the provisions of the bill. My brief statement led to a desultory debate, participated in almost exclusively by Democratic Senators, the Republican Senators remaining silent. Several votes were taken, each showing a majority of more than two-thirds in favor of the bill and against all amendments. It passed the Senate without change by the vote of 32 yeas to 14 nays.

I here insert the bill as introduced and passed, with my statement in support of its provisions:

"AN ACT TO PROVIDE FOR THE RESUMPTION OF SPECIE PAYMENTS. "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized and required, as rapidly as practicable, to cause to be coined, at the mints of the United States, silver coins of the denominations of ten, twenty-five, and fifty cents, of standard value, and to issue them in redemption of an equal number and amount of fractional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the sub-treasuries, public depositaries, and post offices of the United States; and, upon such issue, he is hereby authorized and required to redeem an equal amount of such fractional currency, until the whole amount of such fractional currency outstanding shall be redeemed.

"Sec. 2. That so much of section three thousand five hundred and twenty-four of the Revised Statutes of the United States as provides for a charge of one-fifth of one per centum for converting standard gold bullion into coin is hereby repealed; and hereafter no charge shall be made for that service.

"Sec. 3. That section five thousand one hundred and seventy-seven of the Revised Statutes, limiting the aggregate amount of circulating notes of national banking associations, be, and hereby is, repealed; and each existing banking association may increase its circulating notes in accordance with existing law, without respect to said aggregate limit; and new banking associations may be organized in accordance with existing law, without respect to said aggregate limit; and the provisions of law for the withdrawal and redistribution of national bank currency among the several states and territories are hereby repealed. And whenever, and so often, as circulating notes shall be issued to any such banking association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal tender United States notes in excess only of three hundred millions of dollars, to the amount of eighty per centum of the sum of national bank notes so issued to any banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of three hundred million dollars of such legal tender United States notes, and no more. And on and after the first day of January, anno Domini eighteen hundred and seventy-nine, the Secretary of the Treasury shall redeem in coin the United States legal tender notes then outstanding, on their presentation for redemption at the office of the assistant treasurer of the United States in the city of New York, in sums of not less than fifty dollars. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues from time to time in the treasury not otherwise appropriated, and to issue, sell, and dispose of, at not less than par in coin, either of the descriptions of bonds of the United States described in the act of Congress approved July fourteenth, eighteen hundred and seventy, entitled 'An act to authorize the refunding of the national debt,' with like qualities, privileges, and exemptions, to the extent necessary to carry this act into full effect, and to use the proceeds thereof for the purposes aforesaid. And all provisions of law inconsistent with the provisions of this act are hereby repealed."

I said:

"Mr. president, I do not intend to reopen the debate on financial topics of last session. That debate was carried to such great length that it was not only exhaustive, but it was exhausting, not only mentally but physically. The Senate is composed of the same persons who shared in that debate, and it is utterly idle for us, in this short session, to reopen it and to invite the discussion of the various topics presented in that debate. The Senate is now within less than three months, a little more than two months, of its adjournment, and there is a general feeling throughout the country, shared by all classes of people, that this Congress ought to give some definite notice to the people of this country as to their purpose in the important topics embraced in this bill; and I say to Senators on all sides of the House that this bill contains enough to accomplish the important object declared by the title of the bill, and this without reviving all the troublesome and difficult questions which were discussed at the last session. It contains a few simple propositions which may be separated from the mass of financial topics discussed at the last session. Its purpose is declared upon the title of the bill, 'An act to provide for the resumption of specie payments.' Every word, every line, and every provision, of this bill is in harmony with that title. It will tend to promote the resumption of specie payments. It may fall short in many particulars of the desire of some Senators; and it does go further in that direction than some Senators were willing to support at the last session. It is a bill which demands reasonable concession from every Member of the Senate. If we undertake now to seek to carry out the individual views of any Senator, we cannot accomplish the passage of any bill to promote this object, and therefore this bill has demanded of everyone who has consented to it thus far a surrender of some portions of his opinions as to measures and means to accomplish the great purpose. I will consider my duty done, so far as this bill is concerned, by simply stating its provisions and calling attention to the character of those provisions, without entering into a single topic that gave rise to the long discussion at the last session.

"The bill is intended to provide for the resumption of specie payments. The first section of the bill provides for the resumption of specie payments on the fractional currency. It is confined to that subject alone. It so happens that at this particular period of time the state of the money market, the state of the demand for silver bullion, and more especially the recent action of the German Empire, which has demonetized silver and thus cheapened that product, enables us now, without any loss of revenue, without any sacrifice, to enter the market for the purchase of bullion and resume specie payments on our fractional currency. The market price of bullion to-day will justify the government of the United States, without any sacrifice, at a price about equivalent to, or perhaps a trifle above, our fractional currency--scarcely a shadow above our fractional currency--to purchase silver bullion in the money markets of the world, mostly of our own production, perhaps entirely of our own production. This bill simply directs that the Secretary of the Treasury shall purchase this bullion and shall coin silver coin and substitute that in the place of fractional currency. This section is recommended not only by the Secretary of the Treasury and the President of the United States, but I believe will meet the general concurrence of every Member of the Senate, and we fortunately are enabled to embrace the present time to commence this operations without any loss to the government, except perhaps the cost of the coinage of this silver may have to be paid out of the treasury of the United States. That coinage may be done in the ordinary course of business without any increase of expenditures. The mints of the United States are now prepared, immediately upon the passage of this bill, to resume the coinage of silver coins of all the legal denominations. Therefore the committee has provided that the Secretary of the Treasury shall proceed to coin the silver coins, and in one of several ways to issue them in place of fractional currency.

"I need not dwell further upon this section, because I believe it will meet with the general assent of the Senate. It provides for the immediate resumption of specie payments upon the fractional currency, or at least as immediate as possible; that is, as soon as the government of the United States can, in the mints of the United States, coin the silver coin. That process may continue one, two, or three years, how long we cannot tell, depending entirely upon the force that may be employed in that direction. It takes a much longer time to coin these small coins than gold coins, and the operation will probably take more time than it would to coin any considerable amount of gold coin."

Mr. Hamilton, of Maryland, inquired:

"I would ask the Senator if there is authority to reissue that fractional currency?"

I said:

"I will come to that in a moment. The second section of this bill simply removes an inducement that now exists to export our gold bullion from the United States to Great Britain, where, by the long established laws of that country, they coin money free of charge. This section involves the surrender of about $85,000 a year of revenue; that is, the government of the United States received last year for coining gold coins, $85,000, or one-fifth of one per cent. on forty-five millions of gold coined. The only sacrifice of revenue, therefore, by the second section of the bill, is the sacrifice or surrender of $85,000, which heretofore has been levied upon those who produce gold bullion in order to convert it into coin. In the opinion of many men, among them the Secretary of the Treasury, the director of the mint, and perhaps a large number of Senators heretofore, this will tend, in a slight degree at any rate, to prevent the exportation of the gold of our own country into foreign parts, because when the government of the United States undertakes to put gold bullion in the form of gold coin without additional charge the tendency will inevitably be for the gold bullion to flow into the mints for coinage, and being put into the form of American coin, it is thought by a great many people that this will tend to prevent its exportation. To the extent it does so it prepares us for specie payments. That is the whole of the second section.

"The third section of the bill contains only two or three affirmative propositions. The first is that after the passage of this act banking shall be free. Perhaps there is no idea stronger in the minds of the American people than a feeling of hostility against a monopoly--a privilege that one man or set of men can enjoy which is denied to another man or set of men. Under the law as it now stands banking is substantially free in the southern and some of the western states; but banking is not free in the great commercial states, in the older states, where wealth has accumulated for ages. This may be a mere sentimental point, but it is well enough to meet it; and by the operation of this bill banking is made free, so that there will be no difficulty hereafter for any corporation organized as a national bank either to increase its circulation or for banks, to be organized under the provisions of existing law, to issue circulating notes to any extent within the limits and upon the terms and provisions of the banking law. This section, therefore, by making banking free, provides for an enlargement of the currency in case the business of the community demands it, and in case any bank in the United States may think it advisable or profitable to issue circulating medium in the form of bank notes, under the conditions and limitations of the banking law. Coupled with that is a provision, an undertaking, on the part of the United States, that as banks are organized or as circulating notes are issued, either by old or new banks, the government of the United States undertakes to retire eighty per cent. of that amount of United States notes. In other words, it proposes to redeem the United States notes to the extent of eighty per cent. of the amount of bank notes that may be issued; and here is the first controversial question that arises on this bill and the first that is settled.

"It may be asked if we provide for the issue of circulating notes to banks, why not provide for the retirement of an equal amount of United States notes. The answer is that under the provisions of the banking act, by the law as it now stands, a bank cannot be organized and maintained in existence unless the reserve which is in that bank, or required for that bank in the ordinary course of business, either on its deposits or circulation, is at least equal to twenty per cent. of the amount of its circulating notes, so that it was believed, according to the judgment of the best business men of the country, and I may say with the comptroller of the currency, that the retirement of eighty per cent. of the amount of bank notes is fully equivalent to keeping the amount of circulating medium in actual circulation on the same footing, so that this provision of the bill neither provides for a contraction nor expansion of the currency, but leaves the amount to be regulated by the business wants of the community, so that when notes are issued to a bank eighty per cent. of the amount in United States notes is redeemed, and this process continued until United States notes are reduced to three hundred millions."

Mr. Schurz asked:

"Will the Senator permit me to ask him a question in reference to this section? When the eighty per cent. of greenbacks are retired will they be destroyed and never used again?"

I replied:

"I will speak of that in a moment in connection with other sections. Now, Mr. president, that is all there is in regard to banking in this bill and also in regard to the retirement of the United States notes until the time for the resumption of specie payments comes, when this bill provides for actual redemption in coin of all notes presented. It has always been a question in the minds of many people as to whether it is wise to fix a day for specie payments. That matter was discussed at the last session of Congress by many Senators, and the general opinion seemed to be that if we would provide the means by which specie payments would be resumed it might not be necessary to fix the day; but, on the other hand, it is important to have our laws in regard to the currency fix a probable time, or a certain time, when everybody may know that his contracts will be measured by the coin standard. We also know, by the example of other nations which have found themselves in the condition in which we are now placed, and by some of the states when specie payments were suspended, that they have adopted a specific day for the resumption of specie payments. In England, by the bank act of 1819, they provided for the resumption of specie payments in 1823, making four years. In our own states--in New York, in Ohio, in nearly all the states--when there has been a temporary suspension of specie payments a time has been fixed when the banks were compelled to resume, and this bill simply follows the example that has been set by the states, by England, and by other nations, when they have been involved in a like condition.

"This bill also provides ample means to prepare for and to maintain resumption. I may say the whole credit and money of the United States is placed by this bill under the direction of the proper executive officers, not only to prepare for but to maintain resumption, and no man can doubt that if this bill stands the law of the land from this time until the 1st day of January, 1879, specie payments will be resumed, and that our United States notes will be converted at the will of the holder into gold and silver coin.

"These are all the provisions contained in this bill. They are simple and easily understood, and every Senator can pass his judgment upon them readily.

"Now I desire to approach a class of questions that are not embraced in this bill. Many such, and I could name fifty, are not included in this bill, and I may say this: That if there should be a successful effort, by the Senate of the United States, to ingraft any of this multitude of doubtful or contested questions upon the face of this bill it would inevitably tend to its defeat. I am free to say that if I were called upon to frame a bill to accomplish the purpose declared in the title of this bill, I would have provided some means of gradual redemption between this and the time fixed for final specie payments. All these means are open to objection.

"There have been three different plans proposed to prepare for specie payments, and only three. They are all grouped in three classes. One is what is called the contraction plan. The simplest and most direct way to specie payments is, undoubtedly, the gradual withdrawal of United States notes or the contraction of the currency. Now, we know very well the feeling with which that idea is regarded, not only in this Senate, but all through the country. It is believed to operate as a disturbing element in all the business relations of life; to add to the burden of the debtor by making scare that article in which he is bound to pay his debts; and there has been an honest, sincere opposition to this theory of contraction. Therefore, although it may be the simplest and the best way to reach specie payments, it is entirely omitted from this bill.

"The second plan, that I have favored myself often, and would favor now, if I had my own way, and had no opinion to consult but my own, is the plan of converting United States notes into a bond that would gradually appreciate our notes to par in gold. That has always been a favorite idea of mine. There is nothing of that kind in this bill, except those provisions which authorize the Secretary of the Treasury to issue bonds to retire the greenbacks as bank notes are issued; and it also authorizes the Secretary of the Treasury to issue bonds to provide for and to maintain resumption. I therefore have been compelled to surrender my ideas on this bill in order to accomplish a good object without using these means that have been held objectionable by many Senators.

"The third plan of resumption has been favored very extensively in this country, which is the plan of a graduated scale for resumption in coin or bullion; what I call the English plan. That is, that we provide now for the redemption, at a fixed rate or scale or rates, of so much gold for a specific sum of United States notes. At present rates we would give about $90 of gold for $100 of greenbacks, and then provide for a graduated scale by which we would approach specie payments constantly, and reach it at a fixed day. This may be called a gradual redemption. This, also, is objectionable to many persons, from the idea that it compels us to enter the money markets of the world to discount our own paper. It is an ideal objection, but a very strong objection; an objection that has force with a great many people. We have undertaken to redeem these notes in coin, and it is at least a question of doubtful ethics whether we ought to enter into the markets of the world and buy our own notes at a discount. Although that plan has been adopted in England and successfully carried into execution, yet there is a strong objection to it in this country, and therefore that mode is abandoned.

"Either of these plans I could readily support; but they have met and will meet with such opposition that we cannot hope to carry them or ingraft them in this bill without defeating it. We have then fallen back on these gradual steps: First, to retire the fractional currency; second, to reduce United States notes as bank notes are increased; and then to rest our plan of redemption upon the declaration, made on the faith of the United States, that at the time fixed by the bill we will resume the payment of the United States notes in coin at par. That is the whole of this bill."

On the 7th of January, 1875, the bill was considered in the House of Representatives and, after a very brief conversational debate, passed by the vote of yeas 136, nays 98.

On the 14th day of January, 1875, the President sent a message to the Senate approving the bill but also containing recommendations of further legislation upon matters that had been carefully excluded from the bill. He added at the close of the message this paragraph:

"I have ventured upon this subject with great diffidence, because it is so unusual to approve a measure--as I most heartily do this, even if no further legislation is attainable at this time--and to announce the fact by message. But I do so, because I feel that it is a subject of such vital importance to the whole country, that it should receive the attention of, and be discussed by, Congress and the people, through the press and in every way, to the end that the best and most satisfactory course may be reached of executing what I deem most beneficial legislation on a most vital question to the interests and the prosperity of the nation."

Thus, after a memorable debate, extending through two sessions of Congress, a measure of vital importance became a law, and when executed completely accomplished the great object proposed by its authors. The narrative of the steps leading to resumption under this act will be more appropriate hereafter.

CHAPTER XXVI. RESUMPTION ACT RECEIVED WITH DISFAVOR. It Is Not Well Received by Those Who Wished Immediate Resumption of Specie Payments--Letter to "The Financier" in Reply to a Charge That It Was a "Political Trick," etc.--The Ohio Canvass of 1875-- Finance Resolutions in the Democratic and Republican Platforms--R. B. Hayes and Myself Talk in Favor of Resumption--My Recommendation of Him for President--A Democrat Elected as Speaker of the House-- The Senate Still Republican--My Speech in Support of Specie Payments Made March 6, 1876--What the Financial Policy of the Government Should Be.

The resumption act was generally received with disfavor by those who wished the immediate resumption of specie payments. It was the subject of much criticism in the financial journals, among others "The Financier," which described it as a political trick, an evasion of a public duty, and as totally inadequate for the purpose sought to be accomplished. I took occasion to reply to this article in the following letter:

"United States Senate Chamber,} "Washington, January 10, 1875.} "Dear Sir:--As I am a subscriber to 'The Financier,' you will probably allow me to express my surprise at the course you have pursued in respect to the finance bill recently passed by Congress. Claiming as you do to be a 'monetary and business' journal, you might be expected to treat fairly a measure affecting so greatly the interests you represent; but you have not done so. You have treated it as a political trick, an evasion, a disgrace to Congress. You complained that it was passed without debate and that its inception and passage were shameful. But as you say in your last number 'that it is well to examine it hopefully, to find what good may have been done, if any, although from a bad motive,' I take the liberty to correct errors even in your 'hopeful' view of the law, so that you may be more hopeful still. You assume that the Secretary of the Treasury is not authorized to issue five per cent. gold bonds to prepare for and to maintain resumption, because the amount of five per cent. bonds authorized in the act of 1870 is nearly exhausted. This is an error. The secretary can issue either four and a half or five per cent. gold bonds to an amount sufficient to execute the law. The act of 1870 is only referred to for the 'description' of the bonds to be issued, and the only limit to their amount is the sum necessary, and the only limit to their sale is that they must not be sold at less than par in coin.

"You say that one trick of the bill is 'that there is no provision for carrying on the withdrawal of legal tenders after their maximum reaches $300,000,000.' Now this 'trick' was advocated by you one year ago; it was voted for by every specie paying Member of Congress at the last session, and nearly every writer on the subject has contended that if the legal tenders were reduced to $300,000,000, and the treasury was supported by a reasonable reserve, specie payments could be resumed and maintained. Besides, no one believes that $100,000,000 of bank notes will be issued under this act, and this provision only relieves some people from an idle fear of an improbable event. You must have noticed that when banks retire their notes, as they have done and will do rapidly, this is a reduction of the currency, while every issue of notes to new or old banks involves a retirement of a ratable amount of United States notes. What you say about playing with a movable 'reserve' is equally wrong. Neither the fractional currency nor the 'eighty- two million' redeemed can be reissued, and I stated so when the bill was pending under debate, and no lawyer could put a different construction upon the bill. As to United States notes, a part of the $300,000,000 redeemed after resumption of specie payments, we did refuse to provide whether they could be reissued or not, and we acted wisely. When the question is hereafter determined by Congress, the controversy will be whether the notes when reissued shall have the legal tender quality, or be simple treasury notes receivable for public dues.

"Last session the public press scolded at our long and fruitless debate on finances, and I agreed with the press. This session the same Senators, enlightened by the long debate and heeding the call of the press, gave to the subject the most careful and deliberate consideration, and agreed upon this bill without much debate, and yet the press is not happy. The act does not go as far as I wished, but everything in it is right in itself, and is in the right direction. Its chief merit is that it establishes a public policy which no political party or faction will be strong enough to overthrow, and which if it had not been adopted now, the Democratic party in the next Congress would have defeated. The pretense that the Democratic party, as represented in the next House, would have favored any bill for specie payments is utterly false. Therefore the measure grants to the Secretary of the Treasury powers enough to execute it, but if we can secure the aid of a Democratic House we can make it certain and effective.

"Very truly yours, "John Sherman. "Editor of 'Financier.'"

In the Ohio canvass of 1875 the resumption act became the chief subject of controversy. R. B. Hayes, after having previously served for four years as governor of the state, was against nominated for that office. William Allen, then governor, was renominated upon the Democratic ticket, in opposition to the resumption act and in favor of fiat money, upon which issue the election mainly turned.

The eighth resolution of the Democratic platform was as follows;

"That the contraction of the currency heretofore made by the Republican party, and the further contraction proposed by it, with a view to the forced resumption of specie payment, have already brought disaster to the business of the country, and threaten it with general bankruptcy and ruin. We demand that this policy be abandoned, and that the volume of currency be made and kept equal to the wants of trade, leaving the restoration of legal tenders to par with gold, to be brought about by promoting the industries of the people and not by destroying them."

The Republican convention in their second resolution declared:

"That a policy of finance be steadily pursued, which, without unnecessary shock to business or trade, will ultimately equalize the purchasing capacity of the coin and paper dollar."

Ex-Governor Hayes and I opened the state canvass in the county of Lawrence on July 31, 1875, and took strong ground in favor of the resumption act. At the beginning it appeared that the people were not quite prepared for any measure looking to resumption, but as the contest progressed and the subject was fully and boldly presented by Mr. Hayes and myself, the tide of opinion ran in our favor and Hayes was elected by a small majority. The ex-governor did not evade the issue, but in every speech supported and urged the policy of resumption as a matter of the highest interest.

In the approaching nomination for President, Governor Hayes was frequently spoken of as a candidate to succeed General Grant, and I also was mentioned in the same connection, but, feeling confident that Mr. Hayes would be a stronger candidate than myself, and fully determined not to stand in his way, on the 21st of January, 1876, I wrote a letter to a personal friends, and the Member of the Senate from the district in which I live, in which I urged the nomination of Governor Hayes as the most available candidate in the approaching presidential canvass. This letter no doubt contributed to his strength and prevented any possibility of the division of the vote of Ohio in the convention. The letter I give in full:

"Washington, D. C., January 21, 1876. "Dear Sir:--Your letters of the 2nd and 10th inst. were duly received, and I delayed answering the first sooner partly from personal reasons, but mainly that I might fully consider the questions raised by you as to the approaching presidential contest, the importance of which cannot be overstated. The election of a Democratic President means a restoration to full power in the government of the worst elements of the rebel Confederacy.

"The southern states are to be organized, by violence and intimidation, into a compact political power only needing a small fragment of the northern states to give it absolute control where, by a majority rule of the party, it will govern the country as it did in the time of Pierce and Buchanan.

"If it should elect a President and both Houses of Congress, the constitutional amendments would be disregarded, the freedmen would be nominally citizens but really slaves; innumerable claims, swollen by perjury, would be saddled upon the treasury, the power of the general government would be crippled, and the honors won by our people in subduing rebellion would be a subject of reproach rather than of pride. The only safeguard from these evils is the election of a Republican President, and the adoption of a liberal Republican policy which should be fair and even generous in the south, but firm in the maintenance of all the rights won by the war. Our election in Ohio last fall shows that even under the most adverse circumstances we can win on this basis.

"Every movement made by this Democratic House of Representatives is an appeal to every man who ever voted with the Republican party to rally to its support again, and to every man who fought in the Union army to vote with us to preserve the results of his victory.

"All we need is such a presidential ticket as will give assurance that we mean to stand by our principles, and that will administer the government honestly and economically.

"As to candidates, the drift of public opinion is rapidly reducing the list and has already settled adversely the chances of many of them. Above all, it has positively closed the question of a third term. The conviction that it is not safe to continue in one man for too long a period the vast powers of a President, is based upon the strongest reasons, and this conviction is supported by so many precedents set by the voluntary retirement at the end of a second term of so many Presidents that it would be criminal folly to disregard it. I do not believe General Grant ever seriously entertained the thought of a third term, but even if he did, the established usage against it would make his nomination an act of suicide.

"It would disrupt our party in every Republican state.

"Happily for us we do not need to look for the contingency of his nomination.

"Among the candidates now generally named, I have no such preference that I could not heartily support either of them. They are men of marked ability, who have rendered important public services, but, considering all things, I believe the nomination of Governor Hayes would give us the more strength, taking the whole country at large, than any other man. He is better known in Ohio than elsewhere, and is stronger there than elsewhere, but the qualities that have made him strong in Ohio will, as the canvass progresses, make him stronger in every state. He was a good soldier, and, though not greatly distinguished as such, he performed his full duty, and I noticed, when traveling with him in Ohio, that the soldiers who served under him loved and respected him. As a Member of Congress he was not a leading debater, or manager in party tactics, but he was always sensible, industrious, and true to his convictions and the principles and tendencies of his party, and commanded the sincere respect of his colleagues. As a governor, thrice elected, he has shown good executive abilities and gained great popularity, not only with Republicans but with our adversaries. On the currency question, which is likely to enter largely into the canvass, he is thoroughly sound, but is not committed to any particular measure, so as to be disabled from co-operating with any plan that may promise success. On the main questions, protection for all in equal rights, and the observance of the public faith, he is as trustworthy as any one named. He is fortunately free from the personal enmities and antagonisms that would weaken some of his competitors, and he is unblemished in name, character or conduct, and a native citizen of our state.

"I have thus, as you requested, given you my view of the presidential question, taken as dispassionately as if I were examining a proposition in geometry, and the result drawn from these facts, not too strongly stated, is that the Republican party in Ohio ought, in their state convention, to give Governor Hayes a united delegation instructed to support him in the national convention, not that we have any special claim to have the candidate taken from Ohio, but that in General Hayes we honestly believe the Republican party of the United States will have a candidate for President who can combine greater popular strength and a greater assurance of success than other candidates, and with equal ability to discharge the duties of President of the United States in case of election. Let this nomination be thus presented, without any wire pulling or depreciation of others and as a conviction upon established facts, and I believe Governor Hayes can be and ought to be nominated. But if our state is divided or is not in earnest in this matter it is far better for Governor Hayes and the state that his name be not presented at all. We have never sufficiently cultivated our state pride, with every reason for indulging it, and thus our proper influence has been wasted and lost. Now we have a good opportunity to gratify it, and at the same time contribute to the common good. Remember me kindly to personal friends in the Senate.

"Very truly yours, "John Sherman. "Hon. A. M. Burns."

The election of Members of Congress in 1874 resulted in the choice of a large majority of Democrats in the House of Representatives of the 44th Congress, the term of which commenced on the 4th of March, 1875. A majority of the Senate being still largely Republican, it became difficult to pass any measure of a political character during that Congress. President Grant, on the 17th of February, 1875, issued his proclamation convening the Senate at 12 o'clock on the 5th of March following, to receive and act upon such communications as might be made to it on the part of the Executive. The session continued until the 24th of March. It was largely engaged in questions affecting the State of Louisiana, which had been the scene of violent tumult and almost civil war. As these events are a part of the public history of the country I do not deem it necessary to refer to them at length. These disturbances continued during the whole of that Congress, and, in 1876, approached the condition of civil war.

The regular meeting occurred on the 6th of December, 1875, when Thomas W. Ferry, of Michigan, was elected president pro tempore of the Senate, and Michael C. Kerr, a Democratic Representative from the State of Indiana, was elected by a large majority as speaker of the House.

This political revolution was no doubt caused largely by the financial panic of 1873, and by the severe stringency in monetary affairs that followed and continued for several years. Many financial measures of the highest importance in respect to the public credit were acted upon, but were generally lost by a disagreement between the two Houses. I do not deem it necessary to refer to the political questions that greatly excited the public mind during that session. Congress was largely occupied in political debate on questions in respect to the reconstruction of the states lately in rebellion, upon which the two Houses disagreed. Among other measures which failed was the act amendatory of the acts authorizing the refunding of the national debt, which passed the Senate but was not considered by the House.

During this session of Congress all sorts of financial plans were presented in each House, but all were aimed, directly or indirectly, at the resumption act, although that act itself was adopted as a remedy for existing financial evils, and especially to deal with and prevent the recurrence of such a panic as that of 1873. I took occasion, on the presentation of the resolution of the New York Chamber of Commerce in favor of the resumption of specie payments, at the time provided by the resumption act, to discuss the policy of that measure more fully than I thought it expedient to do so when, as a bill, it was pending in the previous Congress. This speech was made in the Senate on the 6th of March, 1876. It was the result of great labor and care, and was intended by me to be, and I believe it is now, the best presentation I have ever been able to offer in support of the financial policy of the government, and especially in support of the resumption of specie payments. I said:

"Mr. president, I have taken the unusual course of arresting the reference to the committee of finance of the memorial of the Chamber of Commerce of New York, in order to discuss, in an impersonal and nonpartisan way, one of the questions presented by that memorial, and one which now fills the public mind and must necessarily soon occupy our attention. That question is, 'Ought the resumption act of 1875 be repealed?' The memorial strongly opposes such repeal, while other memorials, and notably those from the boards of trade of New York and Toledo, advocate it. These opposing views are supported in each House of Congress, and will, when our time is more occupied than now, demand our vote.

"And, sir, we are forced to consider this question when the law it is proposed to repeal is only commencing to operate, now, three years before it can have full effect--during all which time its operation will be under your eye and within your power--and while the passions of men are heated by a presidential combat, when a grave questions, affecting the interests of every citizen of the United States, will be influenced by motives entirely foreign to the merits of the proposition. And the question presented is not as to the best means of securing the resumption of a specie standard, but solely whether the only measure that promises that result shall be repealed. We know there is a wide and honest diversity of opinion as to the agency and means to secure a specie standard.

"When any practicable scheme to that end is proposed I am ready to examine it on its merits; but we are not considering the best mode of doing the thing, but whether we will recede from the promise made by the law as it stands, as well as refuse all means to execute that promise. If the law is deficient in any respect it is open to amendment. If the powers vested in the secretary are not sufficient, or you wish to limit or enlarge them, he is your servant, and you have but to speak and he obeys. It is not whether we will accumulate gold or greenbacks or convert our notes into bonds, nor whether the time to resume is too early or too late. All these are subjects of legislation. But the question now is whether we will repudiate the legislative declaration, made in the act of 1875, to redeem the promise made and printed on the face of every United States note, a promise made in the midst of war, when our nation was struggling for existence, a promise renewed in March, 1869, in the most unequivocal language, and finally made specific as to time by the act of 1875.

"And let us not deceive ourselves by supposing that those who oppose this repeal are in favor of a purely metallic currency, to the exclusion of paper currency, for all intelligent men agree that every commercial nation must have both; the one as the standard of value by which all things are measured, which daily measures your bonds and notes as it measures wheat, cotton, and land; and also a paper or credit currency, which, from its convenience of handling or transfer, must be the medium of exchanges in the great body of the business of life. Statistics show that in commercial countries a very large proportion of all transfers is by book accounts and notes, and more than nine-tenths of all the residue of payments is by checks, drafts, and such paper tools of exchange.

"Of the vast business done in New York and London not five per cent. is done with either paper money or gold or silver, but by the mere balancing of accounts or the exchange of credits. And this will be so whether your paper money is worth forty per cent. or one hundred per cent. in gold. The only question is whether, in using paper money, we will have that which is as good as it promises, as good as that of Great Britain, France, or Germany; as good as the coin issued from your mints; or whether we will content ourselves with depreciated paper money, worth ten per cent. less than it promises, every dollar of which daily tells your constituents that the United States in not rich enough to pay more than ninety per cent. on the dollar for its three hundred and seventy millions of promises to pay, or that you have not courage enough to stand by your promise to do it.

"Nor are we to decide whether our paper money shall be issued directly by the government or by banks created by the government; nor whether at a future time the legal tender quality of United States notes shall continue. I am one of those who believe that a United States note issued directly by the government, and convertible on demand into gold coin, or a government bond equal in value to gold, is the best currency we can adopt; that it is to be the currency of the future, not only in the United States, but in Great Britain as well; and that such a currency might properly continue to be a legal tender, except when coin is specifically stipulated for it.

"But these are not the questions we are to deal with. It is whether the promise of the law shall be fulfilled, that the United States shall pay such of its notes as are presented on and after the 1st day of January, 1879, in coin; and whether the national banks will, at the same time, redeem their notes either in coin or United States notes made equal to coin; or whether the United States shall revoke its promise and continue, for an indefinite period, to still longer force upon the people a depreciated currency, always below the legal standard of gold, and fluctuating daily in its depreciation as Congress may threaten or promise, or speculators may hoard, or corner, or throw out your broken promises. It is the turning point in our financial history, which will greatly affect the life of individuals and the fate of parties, but, more than all, the honor and good faith of our country.

"At the beginning of our national existence, our ancestors boldly and hopefully assumed the burden of a great national debt, formed of the debts of the old confederation and of the states that composed it; and, with a scattered population and feeble resources, honestly met and paid, in good solid coin, every obligation. After the War of 1812, which exhausted our resources, destroyed our commerce, and greatly increased our debt, a Republican administration boldly funded our debt, placed its currency upon the coin basis, promptly paid its interest, and reduced the principal; and within twenty years after that war was over, under the first Democratic President, paid in coin the last dollar, both principal and interest, of the debt. And now, eleven years after a greater war, of grander proportions, in which, not merely foreign domination threatened us, but the very existence of our nation was at stake, and after our cause has been blessed with unexampled success, with a country teeming with wealth, with our credit equal to that of any nation, we are debating whether we will redeem our promises, according to their legal tenor and effect, or whether we will refuse to do so and repeal and cancel them.

"I would invoke, in the consideration of this question, the example of those who won our independence and preserved it to us, to inspire us so to decide this question that those who come after us may point to our example of standing by the public faith now solemnly pledged, even though to do so may not run current with the temporary pressure of the hour, or may entail some sacrifice and hardship.

"What then is the law it is proposed to repeal? I will state its provisions fully in detail, but the main proposition--the essential core of the whole--is the promise, to which the public faith is pledged, that the United States will redeem in gold coin any of its notes that may be presented to the treasury on and after the 1st day of January, 1879. This is the vital object of the law. It does not undertake to settle the nature of our paper money after than, whether it shall be reissued again, whether it shall thereafter be a legal tender, nor whether it shall or shall not supersede bank notes. All this is purposely left to the future. But it does say that on and after that day the United States note promising to pay one dollar shall be equal to the gold dollar of the mint.

"The questions then arise--

"First. Ought this promise be performed? "Second. Can we perform it? "Third. Are the agencies and measures prescribed in the law sufficient for the purpose? "Fourth. If not, what additional measures should be executed?

"Let us consider these questions in their order, with all the serious deliberation that their conceded importance demands.

"And first, ought this promise be fulfilled?

"To answer this we must fully understand the legal and moral obligations contained in the notes of the United States. The purport of the note is as follows:

'THE UNITED STATES PROMISES TO PAY THE BEARER ONE DOLLAR.'

"This note is a promise to pay one dollar. The legal effect of this note has been announced by the unanimous opinion of the Supreme Court of the United States, the highest and final judicial authority in our government.

"The legal tender attribute given to the note has been the subject of conflicting decisions in that court, but the nature and purport of it is not only plain on its face, but is concurred in by every judge of that court and by every judicial tribunal before which that question has been presented.

"In the case of Bank vs. Supervisors, 7 Wallace, 31, Chief Justice Chase says:

'But, on the other hand, it is equally clear that these notes are obligations of the United States. Their name imports obligation. Every one of them expresses upon its face an engagement of the nation to pay to the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coined dollar of the United States, a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the government. No other dollars had before been recognized by the legislation of the national government as lawful money.'

"Again, in the case of Bronson vs. Rhodes, 7 Wallace, 251, Chief Justice Chase says:

'The note dollar was the promise to pay a coined dollar.'

"In the Legal Tender Cases, 12 Wallace, 560, Justice Bradley says:

'It is not an attempt to coin money out of a valueless material, like the coinage of leather, or ivory, or cowrie shells. It is a pledge of the national credit. It is a promise by the government to pay dollars; it is not an attempt to make dollars. The standard of value is not changed. The government simply demands that its credit shall be accepted and received by public and private creditors during the pending exigency. . . .

'No one supposes that these government certificates are never to be paid, that the day of specie payments is never to return. And it matters not in what form they are issued. . . . Through whatever changes they pass, their ultimate destiny is to be paid.'

"In all these legal tender cases there is not a word in conflict with these opinions.

"Thus, then, it is settled that this note is not a dollar, but a debt due; a promise to pay a dollar in gold coin. Congress may define the weight and fineness of a dollar, and it has been done so by providing a gold coin weighing twenty-five and eight-tenths grains of standard gold nine-tenths fine. The promise is specific and exact, and its nature is fixed by the law and announced by the court. Here I might rest as to the nature of the United States note; but it is proper that I state the law under which it was issued and the subsequent laws relating to it.

"The act of February 25, 1862, gave birth to this note as well as the whole financial policy of the war. The first section of that act authorizes the Secretary of the Treasury to issue, upon the credit of the United States, United States notes to the amount of $150,000,000, payable to bearer at the treasury of the United States. The amount of these notes was subsequently increased during the war to the maximum sum of $450,000,000, but the nature and character of the notes was the same as the first ones. The enlargement of the issue did not in the least affect the obligation of the United States to pay them in coin. This obligation was recognized in every loan law passed during the war; and to secure the note from depreciation the amount was carefully limited, and every quality was given to it to maintain its value that was possible during the exigencies of the war. I might show you, from the contemporaneous debates in Congress, that at every step of the war the notes were regarded as a temporary loan, in the nature of a forced loan, but a loan cheerfully borne, and to be redeemed soon after the war was over.

"It was not until two years after the war, when the advancing value of the note created an interest to depreciate it in order to advance prices for the purpose of speculation, that there was any talk about putting off the payment of the note. The policy of a gradual contraction of the currency with a view to specie payments was, in December, 1865, concurred in by the almost unanimous vote of the House of Representatives, and the act of April 12, 1866, authorized $4,000,000 of notes a month to be retired and canceled. No one then questioned either the policy, the duty, or the obligation of the United States to redeem these notes in coin.

"Why has not this obligation been performed? How comes it that fourteen years after these notes were issued, and eleven years after the exigency was over, we are debating whether they shall be paid, and when they shall be paid? We may well pause to examine how this plain and positive obligation has so long been deferred by a nation always sensitive to the public honor.

"The fatal commencement of this long delay was in this provision of the act, approved March 3, 1863, as follows:

'And the holders of United States notes issued under, and by virtue of, said acts, shall present the same, for the purpose of exchanging the same for bonds as therein provided, on or before the 1st day of July, 1863, and thereafter the right so to exchange the same shall cease and determine.'

"Thus, under the pressure of war, and the plausible pretext of a statute of limitations, the most essential legal attribute of the note was taken away. This act, though convenient in its temporary results, was a most fatal step, and for my part in acquiescing in, and voting for it, I have felt more regret than for any act of my official life. But it must be remembered that the object of this provision was not to prevent the conversion of notes into bonds, but to induce their conversion. It was the policy and need of the government to induce its citizens to exchange the notes freely for the bonds, so that the notes might again be paid out to meet the pressing demands of the war. It was believed that if this right to convert them was limited, in time this would cause them to be more freely funded; and Mr. Chase, then Secretary of the Treasury, anxious to prevent a too large increase of the interest of the public debt, desired to place in the market a five per cent. bond instead of a six per cent. bond. The fatal error was in not changing the right to convert the note into a five per cent. bond instead of a six per cent. bond. This was, in fact, proposed in the committee on finance, but it was said that a right to convert a note into a bond at any time, was not so likely to be exercised as if it could only be exercised at the pleasure of the government. And this plausible theory to induce the conversion of notes into bonds was made the basis, after the war was over, for the refusal of the United States to allow the conversion of its notes into bonds, and has been the fruitful cause of the continued depreciation and dishonor of United States notes for the last five years, during which, our five per cent. bonds have been at par with gold, while our notes rise and fall in the gamut of depreciation from six to twenty per cent. below gold.

"Notwithstanding that the right to convert notes into bonds was taken away, yet, in fact, they were, during the war, received par for par for bonds; and after the war was over all the interest- bearing securities were converted into bonds; but the notes--the money of the people--the artificial measure of value, the most sacred obligation, because it was past due, was refused either payment or conversion, thus cutting it off from the full benefit of the advancing credit of the government, and leaving to it only the forced quality of legal tender in payment of debts.

"Shortly after the war was over, and notably during the presidential campaign of 1868, the question arose whether the bonds of the United States were payable in coin or United States notes. Both notes and bonds were then below par in coin, the notes ranging from sixty- seven to seventy-five cents in coin; and five per cent. bonds from seventy-two to eighty cents in coin. Here again the opportunity was lost to secure the easy and natural appreciation of our notes to the gold standard. Had Congress then authorized the conversion of notes into bonds, when both were depreciated, both would have advanced to par in gold; but, on the one hand, it was urged that this would cause a rapid contraction, and, on the other, that the right to convert the note into a bond was not specie payment; it was only the exchange of one promise for another. It was specie payment they very much favored, but did not have the wisdom then to secure. If the advocates for specie payment had then supported a restoration of the right to convert notes into bonds, they would have secured their object with but little opposition. But all measures to fund the notes at the pleasure of the holder were defeated, and, instead, there was ingrafted into the act to strengthen the public credit--

"First, a declaration 'that the faith of the United States is already pledged to the payment in coin, or its equivalent, of all the obligations of the United States not bearing interest, known as United States notes, and of all the interest-bearing obligations of the United States,' except such as by the law could be paid in other currency than gold and silver.

"Second, 'and the United States also solemnly pledges its faith to make provision, at the earliest practicable period, for the redemption of the United States notes in coin.'

"Here again, the obligation of the government to pay these notes in coin was recognized, its purpose declared, and the time fixed 'as early as practicable.' What was the effect of this important act of Congress? Without adding one dollar to the public debt, or the burden of the debt, both bonds and notes rose in value. Within one year, the bonds rose to par in gold, making it practicable to commence the refunding of six per cent. bonds into five per cent. bonds. The notes rose under the stimulus of this new promise, in one year, from seventy-six cents to eighty-nine cents in gold, but no steps whatever were made to redeem them.

"The amount of bank notes authorized was increased fifty-four millions. The executive department pursued the policy of redeeming debts not due, and did, from an overflowing treasury, reduce very largely the public debt, but no steps whatever were taken to advance the value of our notes. The effect of the act of 1869 was exhausted on the adjournment of Congress in March, 1870, when the United States notes were worth eighty-nine cents in gold; and thereabouts, up and down, with many fluctuations, they have remained to this day. The bondholder, secure in the promise to him, is happy in receiving his interest in gold, with his bond above par in gold. The note holder, the farmer, the artisan, the laborer, whose labor and production is measured in greenbacks, still receives your depreciated notes, worth ten per cent. less than gold you promised him 'at the earliest day practicable.' The one has a promise performed and the other a promise postponed.

"Thus we stood when the panic of 1873 came upon us; with more paper money afloat than ever circulated before in any country of the world. Even then, had we stood firmly, the hoarding tendency of the panic would have advanced our notes toward the gold standard, and, in fact, did so during the months of September and October, until the premium on gold had fallen to eight per cent. But, sir, at this critical moment, the Secretary of the Treasury, acting, no doubt, in good faith, but I think without authority of law, issued twenty-six millions more United States notes--part of the notes retired and canceled under previous acts. And now, notwithstanding all the talk about the contraction of the currency, we have not withdrawn one-half of this illegal issue. On the 1st of September, 1873, we had three hundred and fifty-six million notes outstanding. Three months afterward, we had three hundred and eighty-two million; and now we have three hundred and seventy-one million.

"Sir, it was under the light of these events, after the fullest discussion ever given in Congress, of any question--after debate before the people during the recess of Congress, and full deliberation last winter--this act was passed. There was and is now great difference of opinion as to the details, but the vital promise made to the note holder to make his note as good as gold in January, 1879, was concurred in by a large majority of both Houses, and by many who opposed the bill as too slow in its operation. This act of honor and public faith was applauded by the civilized world and concurred in by our constituents, the doubts only being as to the machinery to carry it into effect. The time was fixed by those who most feared resumption, and no one proposed a longer time. My honorable friend from Indiana [Mr. Morton] truly said (in the recent campaign in Ohio) that he participated in framing it; and he and those who agreed with him fixed the time so remote as to excite the unfounded charge that the bill was a sham, a mere contrivance to bridge an election.

"And now, sir, to recapitulate this branch of the question, it is shown that the holder of these notes has a promise of the United States, made in February, 1862, to pay him one dollar in gold coin; that the legal purport of this promise has been declared by the Supreme Court; that we have taken away from this note one of the legal attributes given it, which would long since have secured its payment in coin--that when the note was authorized and issued, it was understood as redeemable in coin when the war was over; that our promise to pay it was renewed in 1869--'at as early a day as practicable;' that by reason of our failure to provide for its payment, it is still depreciated below par more than one-tenth of its nominal value; that we renewed this promise, and made it definite as to time, by act of 1875; that it is a debt due from the United States, and in law and honor due now in coin. Yet it is proposed to recall our promise to redeem this note in coin three years hence. I say, sir, this would be national dishonor. It would destroy the confidence with which the public creditor rests upon the promises contained in your bonds. It would greatly tend to arrest the process by which the interest on your bonds is reduced. It would accustom our people to the substitution of a temporary wave of popular opinion for its written contract or promise. It would weaken in the public mind that keen sense of honor and pride which has always distinguished the English-speaking nations in dealing with public obligations.

"An old writer thus describes 'public credit:'

'Credit is a consequence, not a cause; the effect of a substance, not a substance; it is the sunshine, not the sun; the quickening something, call it what you will, that gives life to trade, gives being to the branches and moisture to the root; it is the oil of the wheel, the marrow in the bones, the blood in the veins, and the spirits in the heart of all the negoce, trade, cash, and commerce in the world.'

'It is produced, and grows insensibly from fair and upright dealing, punctual compliance, honorable performance of contracts and covenants; in short, it is the offspring of universal probity.

'It is apparent even by its nature; it is no way dependent upon persons, parliament, or any particular men or set of men, as such, in the world, but upon their conduct and just behavior. Credit never was chained to men's names, but to their actions; not to families, clans, or collections of men; no, not to nations. It is the honor, the justice, the fair dealing, and the equal conduct of men, bodies of men, nations, and people, that raise the thing called credit among them. Wheresoever this is found, credit will live and thrive, grow and increase; where this is wanting, let all the power and wit of man join together, they can neither give her being nor preserve her life.

'Arts have been tried on various occasions in the world to raise credit; art has been found able with more ease to destroy credit than to raise it. The force of art, assisted by the punctual, fair, and just dealing abovesaid, may have done much to form a credit upon the face of things, but we find still the honor would have done it without the art, but never the art without the honor. Nor will money itself, which, Solomon says, answers all things, purchase this thing called credit or restore it when lost. . . .

'Our credit in this case is a public thing. It is rightly called by some of our writers national credit. The word denominates its original. It is produced by the nation's probity, the honor and exact performing national engagements.'

"And, sir, passing from considerations of public honor, there are many reasons of public policy which forbid the repeal of the act of 1875. That act was generally regarded as the settlement of a financial policy by which at least the party in power is bound, and upon the faith of which business men have conducted their affairs and made their contracts. Debts have been contracted and paid with the expectation that at the time fixed the gold standard would measure all obligations, and a repeal of the act would now reopen all the wild and dangerous speculation schemes that feed and fatter upon depreciated paper money. The influence that secures this repeal will not stop here. If we can recall our promise to pay our notes outstanding why should we not issue more? If we can disregard our promise to pay them, why shall we regard our promise not to issue more than $400,000,000, as stipulated for by the act of 1864? If we can reopen the question of the payment of our notes, why may we not reopen the question as to the payment of our bonds? Is the act of 1869 any more sacred than the act of 1875? And if we can reopen these questions, why not reopen the laws requiring the payment of either interest or principal of the public debt? They rest upon acts of Congress which we have the power to repeal. If the public honor cannot protect our promise to the note holder, how shall it protect our promise to the bondholder? Already do we see advocated in high places, by numerous and formidable organizations, all forms of repudiation, which, if adopted, would reduce our nation to the credit of a robber chief--worse than the credit of an Algerine pirate, who at least would not plunder his own countrymen. And if the public creditor had no safety, what chance would the national banks--creations of our own and subject to our will--have in Congress? It has already been proposed to confiscate their bonds, premium and all, as a mode of paying their notes with greenbacks. What expedient so easy if we would make money cheap and abundant? Or, if so extreme a measure could be arrested, what is to prevent the permanent dethronement of gold as a measure of value, and the substitution of an interconvertible currency bond, bearing three and sixty-five hundredths per cent. interest, as a standard of value; and when it become too expensive to print the notes to pay the interest, reduce the rate. Why not? Why pay three and sixty- five hundredths per cent., when it is easier to print three? It is but an act of Congress. And when the process of repudiation goes so far that your notes will not buy bread, why then declare against all interest, and then, after passing through the valley of humiliation, return again to barter, and honor, and gold again.

"Sir, if you once commence this downward course of repudiation then there is but one ending. You may, like Mirabeau and the Girondists, seek to stem the torrent, but you will be swept away by the spirit you have evoked and the instrument you have created. You complain now of a want of confidence which makes men hoard their money. Will you, then, destroy all confidence? No, sir, no; the way to restore confidence is to inspire it by fulfilling your obligations. You cannot make men lend you; you cannot make men sell you anything --either bread, or meat, or wool, or iron, or anything that is or that can be created--except for that which they choose to take. You may depreciate the money which you offer, but it will only take more of it to buy what you want. It is true that the creditor may, by your laws, be compelled to take your money however much you depreciate it, but he cannot buy back that which he sold, or its equivalent in other necessaries of life, and thus he is cheated of part of what he sold. During the war, when money was depreciating, many a simple man gladly counted his gains as he sold his goods or crops at advancing prices, but he found out his mistake when, with his swollen pile, he tried to replace his stock in trade or laid in his supplies. Sir, this policy exhausts itself in cheating the man who buys or sells or loans on credit, who produces something to sell on credit; whether that something be food or clothing; whether it be a necessity or a luxury of life. Productive labor, honest toil, whether of the farmer or the artisan, is deeply interested in credit. It is credit that gives life and competition to trade; and credit is destroyed by every scheme that impairs, delays, or even clouds an obligation.

"Again, sir, an irredeemable and fluctuating currency always raises the rate of interest on money, while a stable currency or an improving currency always reduces the rate of interest. This is easily shown by statistics, but the reason is so obvious that proof is not needed. If a man lends his money he wants it back again with its increase; but if the money, when it is to be paid back, is like to be worth less than when he thinks of loaning it, he will not loan it except at such rates as will cover the risk of depreciation. He will prefer to buy land or something of stable value. If money is at the gold standard, or is advancing toward that standard, he will loan it readily at a moderate interest, for he knows he will receive back money of at least equal value to that he loaned. Again, sir, with a depreciated currency great domestic productions are cut off from the foreign market; for it is impossible that with such a currency we can compete on equal terms with rival nations, whose industry rests upon a specie standard. As we approach such a standard, we are now able, as to a few articles, to compete with foreign industry; but it is only as to articles in the manufacture of which we have peculiar advantages. Let us rest our industries on that standard, and soon we could compete in the markets of the world in all the articles produced from iron, wood, leather, and cotton, the raw basis of which are our national productions. And it must be remembered that all the countries with which we compete are specie-paying countries.

"A country that does not rest her industry upon specie is necessarily excluded from the great manufacturing industries of modern civilization, and is self-condemned to produce only the raw basis for advanced industry. Cheap food, climate, soil, or natural advantages, such as cheap land, vast plains for pasture, or rich mines, may give to a country wealth and prosperity in spite of the evils of depreciated paper money; but when we come in competition with the world in the advanced grades of production which give employment to the skilled mechanic, we must rest such industry upon the gold basis, or we enter the lists like a knight with his armor unbound.

"Again, sir, a depreciated and fluctuating currency is a premium and bounty to the broker and money changer. Under his manipulation our paper standard of value goes up and down, and he gambles and speculates, with all the advantages in his favor. Good people look on and think that it is gold that is going up and down; that their money is a dollar still, and trade and traffic in that belief. But the shrewd speculator calculates daily the depreciation of our note, the shortening of the yard stick, the shrinkage of the acre, the lessening of the ton, and thus it is that he daily adds to his gains from the indifference or delusion of our people.

"Sir, it is an old story, often repeated in our day, and most eloquently epitomized by Daniel Webster in the often-quoted passage of his speech, in which he said:

'A disordered currency is one of the greatest of political evils. It undermines the virtues necessary for the support of the social system and encourages propensities destructive of its happiness. It wars against industry, frugality, and economy; and it fosters the evil spirit of extravagance and speculation. Of all contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deluded them with paper money. Ordinary tyranny, oppression, excessive taxation, these bear lightly upon the happiness of the mass of the community, compared with the fraudulent currencies and the robberies committed by depreciated paper. Our own history has recorded for our instruction enough, and more than enough, of the demoralizing tendency, the injustice, and the intolerable oppression of the virtuous and well-disposed, of a degraded paper currency authorized by law or in any way countenanced by government.'

"Sir, we must meet this question of specie payments, not only because the public honor is pledged to do so, but also for the lesser reason that it is our interest to do so. The only questions we should permit ourselves to discuss are the means and measures of doing so.

"And now, sir, let us examine the reasons that have been given for the repeal of the resumption act by those who, though favoring resumption, yet think the act should be repealed for one or other of the following reasons:

"First. That it is not advisable to fix a day for resumption. "Second. Or at least until the balance of trade is in our favor. "Third. That it produces a contraction of the currency. "Fourth. That it injuriously adds to the burden of existing debts.

"Let us glance at these objections.

"First. As to fixing a day for resumption.

"If it was possible to agree upon measures that would secure resumption without fixing a time, I agree it would not be indispensable, though not unadvisable, to fix a time; but such agreement is utterly impossible. Of the multitude of schemes that have been presented to me by intelligent men trying to solve this problem, many could have been selected that in my opinion would be practicable; but of all of them not one ever has or is likely to secure the assent of a majority of a body so numerous as Congress. One difficulty we have encountered is that the Democratic party, though in the minority, has never presented in any form, through any leading member, a plan for resumption, but with widely differing opinions has joined in opposing any and every measure from the other side. I understand from the papers that our Democratic friends, through a caucus, and through a caucus committee of which my colleague is chairman, have been laboring to agree upon a plan for specie payments. After his frequent speeches to us about secret conclaves, about shams and deceptions, and such like polite and friendly comments upon the work of the Republican party, I might greet my colleague with such happy phrases about his caucus; but I will not, but, on the contrary, I commend his labors, and sincerely hope that he and his political friends may agree upon some plan to reach a specie standard, and not one to avoid to, to prevent it, to defer it. Under color of intending to prepare for it, I hope they will not make their measure the pretext for repealing the law as it stands, which fixes a day for resumption and will secure the end we both aim at.

"I frankly state for the Republican party that, while we could agree to fixing the time for specie payments and upon conferring the ample and sufficient powers upon the Secretary of the Treasury contained in the law, we could not agree in prescribing the precise mode in which the process should be executed. Nor, in my opinion, was it at all essential that we should. Much must be left to the discretion of the officer charged with the execution of such a law. The powers conferred, as I shall show hereafter, are ample; and the discretion given will be executed under the eye of Congress.

"And, sir, there is a strong force in the fact that in every example we have of the successful resumption of specie payments, in this and other countries, a fixed day has been named by legislative authority, and the details and power of execution have been left to executive authority. Thus, in Great Britain, the act of parliament of July 2, 1819, fixed the time for full resumption at the 1st day of May, 1823, and for a graduated resumption in gold at intermediate dates; and for fractional sums under forty shillings to be paid in silver coin; and the governor and directors of the Bank of England were charged with its execution, and authorized at their discretion to resume payment in full on the 1st day of May, 1822. France is now successfully passing through the same process of resumption, the time being fixed (two years ago) for January 1, 1878, and now practically attained.

"In our own country many of the states have presented similar laws in case of suspended bank payments, and in some cases the suspended banks have, by associated action, fixed a time for general resumption, and each bank adopted its own expedient for it. Sir, the light of experience is the lamp of wisdom. I can recall no case of successful resumption where a fixed future time has not been presented beforehand, either by law or agreement; while the historical examples of repudiation of currency have come by the drifting process, by a gradual decline of value, by increased issues, and a refusal to provide measures of redemption, until the whole mass disappeared, dishonored and repudiated.

"This concurrence in the mode of resumption by so many governments was the strongest possible instruction to Congress when fixing a plan of resumption for the United States, and should satisfy reasonable men of its wisdom.

"Besides, it would seem to be but fair that everyone should have plain notice of so important a fact. If the measures only were presented and no time fixed it would be a matter of speculation, and the discretionary powers of the Secretary of the Treasury could be exercised with a view to hasten or postpone the time to the injury of individuals.

"As to the date selected, I can only repeat it was placed as remote as any one suggested; far more so than is necessary to secure the object, and so that the fluctuations of value will scarcely exceed in four years what they have frequently been in a single year. It allows ample time to arrange all the relations of debtor and creditor, and to enable Congress to provide any additional measure in aid of redemption, or, if events make it expedient, to postpone the time."

CHAPTER XXVII. MY CONFIDENCE IN THE SUCCESS OF RESUMPTION. Tendency of Democratic Members of Both Houses to Exaggerate the Evil Times--Debate Over the Bill to Provide for Issuing Silver Coin in Place of Fractional Currency--The Coinage Laws of the United States and Other Countries--Joint Resolution for the Issue of Silver Coins--The "Trade Dollar" Declared Not to Be a Legal Tender--My Views on the Free Coinage of Silver--Bill to Provide for the Completion of the Washington Monument--Resolution Written by Me on the 100th Anniversary of the Declaration of Independence--Unanimously Passed in a Day by Both Houses--Completion of the Structure Under the Act.

It seemed to be the policy of a majority of the Democratic Members of both the Senate and the House to exaggerate the evils and discouragements of the times, while in fact the people were rapidly recovering from the results of the panic of 1873, and all branches of industry were, to a greater or less extent, starting into life anew, and to prevent the resumption of specie payments, and, if possible, to repeal the act providing for such resumption. This policy undoubtedly checked the process of refunding the public debt, which progressed slowly, and was confined to an exchange of bonds bearing five per cent. interest for those bearing six per cent.

I took a much more hopeful view of the situation, and in the many speeches I made in that Congress, I stated my confidence, not only in the process of resumption and refunding, but in the rapid improvement of all branches of industry as we progressed towards specie payments. In a speech I made in the Senate on the 6th of January, 1876, on a bill "to further provide for the redemption of legal tender United States notes in accordance with existing law," I said:

"Sir, we ought to take a hopeful view of things in this centennial year of our country. Look at the aggregate results. A century ago we were three million people; now forty million; then we had a little border on the Atlantic; we are now extended to the Pacific. See what has been accomplished in a hundred years. During that time there have been periods of darkness and doubt. Every seven or ten or twelve years, periodically, there have been times of financial distress. We have lived through them all. I believe, and I trust in God, that this very year is the beginning of another period of prosperity, and that all these dark clouds, which gentlemen are trying to raise up from the memory of the past two or three years and from their own clouded imaginations, will entirely disappear. I believe that even now we are in the sunshine of increasing prosperity, and that every day and every hour will add to our wealth and relieve us from our distress.

"Sir, things are not so unhopeful as Senators seem to think. We have made a promise to be executed three years hence, and every step of our legislation, if any is had, should look in that direction. We may not adopt any measure or may not deem that any is necessary; but, if any be adopted, it ought to look to the execution of that promise, and we ought to enter on the performance of this duty with hopeful trust in the continued prosperity of our country. All this gloom and doubt, all this arraignment of official statements, this doubt of our sufficient revenues, this doubt of our ability to meet and advance our destiny, always falls upon my ear with painful surprise. Senators, the task we have before us may be a difficult one, as it has always proved to be difficult to resume the specie standard whenever, for any reason, a nation has fallen from it, but it is a duty that must be executed, and it ought to be executed without the spirit of party warfare, without these appeals, directly or indirectly, to party tactics. The pledges made one year ago, although not voted for by the Democratic party, are pledges binding upon their honor and their faith as they are upon mine, and I trust in God that we shall join together in all the proper steps to carry out those pledges."

This bill was referred to the committee on finance, but no action was taken upon it, as the committee preferred to await the action of the House.

The resumption act provided for the payment and destruction of the fractional currency then in circulation, to the amount of $40,000,000, and the substitution of silver coins in all respects, such as were defined by the coinage act of 1853. This was to be the first step in preparation for the general resumption of coin payments in January, 1879. It became necessary to provide for the coinage of fractional silver coins, and a bill for this purpose, entitled "A bill to provide for a deficiency in the Printing and Engraving Bureau, and for the issue of the silver coin of the United States, in place of the fractional currency," was reported by Mr. Randall, on the 2nd of March, 1876, from the committee on appropriations of the House. It was subsequently considered, amended and passed by the House, after a long debate, participated in by many of the leading Members. Much to my surprise, Mr. Hewitt and Mr. Ward, prominent Members from New York, opposed the measure, denounced the resumption act, and prophesied its failure. Mr. Hewitt, in support of his position, quoted passages from the reports of Mr. Bristow, then Secretary of the Treasury, and predicted the utter failure of resumption, unless the United States notes were entirely withdrawn. He insisted that if silver coin was issued to replace fractional currency, the coin would disappear from circulation, leaving the people without any currency for the smaller necessities of life. In the progress of the debate, it became manifest that the larger portion of the Democratic Members would vote against every measure proposed to aid in the execution of the resumption act.

The bill passed the House on the 31st of March by the vote of 123 yeas and 100 nays. In the Senate it was referred to the committee on finance, and reported back with amendments. The third section of the bill, as it came from the House, provided for the coinage of the silver dollar, of the weight of 412.8 grains troy, standard silver, and made that dollar a legal tender at its nominal value, to an amount not exceeding twenty dollars in any one payment, except for customs duties and interest on the public debt, and that the "trade dollar" should not, thereafter, be a legal coin. This section was stricken out.

In the remarks made by me, upon this bill, on the 10th day of April, 1876 , I gave, in detail, the history of each of the coinage laws of Great Britain, France, Belgium, Germany, Switzerland and Italy. I had taken great pains to collect this information and to procure translations of the laws of the several countries named. The then recent changes, made by Germany, and their effect upon the coinage of other nations, were carefully stated. The general conclusion which I drew from a reference to these statutes of various countries, were:

"First. It is impossible, in the nature of things, to fix the precise value of silver and gold. We have tried it three times and failed.

"Second. Whenever either coin is worth more in the market than the rate fixed by the law, it flees from the country. That we have twice proved. That is the admitted economic law. It is the Gresham law; a law of currency named from the name of its discoverer. He wrote a book to show that always the poorer currency would drive out of circulation a superior currency; and his book gave name to the theory that is called the law of Gresham. It is the universal law of political economy that, whenever two metals or two moneys are in circulation, the least valuable will drive out the most valuable; the latter will be exported.

"The third proposition is that the example of several great European nations, as well as of the United States, proves that to prevent the depreciation of silver the tendency of modern nations is to issue it as a token coinage somewhat less in intrinsic value than gold, and maintain its value by issuing it only as needed, at par with the prevailing currency, and to make it a limited legal tender. I may say that has been acted upon by every great Christian nation. Russia and Austria have not yet gold coinage at all, but still they have their values based upon gold.

"Fourth. That the demonetization of silver tends to add to the value of gold, and that though the relative value ebbs and flows it is more stable compared to gold than any other metal, grain, or production. Its limit of variation for a century is between fifteen to seventeen for one in gold.

"Fifth. That both coins are indispensable, one for small and the other for large transactions.

"Sixth. That the causes of the decline of silver are temporary. It is still used by a great majority of mankind as the standard of value. Its use in France and the United States will, on resumption, more than counteract its decline in Germany.

"Seventh. The general monetizing of silver now, when it is unnaturally depreciated, would be to invite to our country, in exchange for gold or bonds, all the silver of Europe, and at last it would leave us with a depreciated currency.

"Eighth. The decline of silver enables us now to exchange silver coin of the old standard for fractional currency, leaving the exchange optional with the holder, until we have the courage, as we now have the ability, to redeem it in gold.

"Ninth. More silver can be maintained at par than we have now of fractional currency.

"Tenth. The redemption of a part of our currency would advance its purchasing power, while the silver in circulation will counteract the contraction of the currency."

This bill became a law on the 17th of April, 1876. The second section provided:

"That the Secretary of the Treasury is hereby directed to issue silver coins of the United States of the denomination of ten, twenty, twenty-five and fifty cents of standard value, in redemption of an equal amount of fractional currency, whether the same be now in the treasury awaiting redemption, or whenever it may be presented for redemption; and the Secretary of the Treasury may, under regulations of the treasury department, provide for such redemption and issue by substitution, at the regular sub-treasuries and public depositaries of the United States, until the whole amount of fractional currency outstanding shall be redeemed. And the fractional currency redeemed under this act shall be held to be a part of the sinking fund provided for by existing law, the interest to be computed thereon as in the case of bonds redeemed under the act relating to the sinking fund."

A joint resolution for the issue of silver coin was introduced in the House by Mr. Frost, of Massachusetts, on the 1st of May, 1876. The object of this resolution was to expedite the issue of minor coin and the retirement of fractional currency. It was referred to the committee on finance, reported favorably and passed with amendments June 21. The House disagreed to the amendments of the Senate, and a committee of conference was appointed composed of John Sherman, George S. Boutwell, and Louis V. Bogy, managers on the part of the Senate, and H. B. Payne, and Samuel J. Randall, managers on the part of the House. The report of the conferees was agreed to, and the bill having passed both Houses it was approved by the President on the 22nd of July. It provided:

"That the Secretary of the Treasury, under such limits and regulations as will best secure a just and fair distribution of the same through the country, may issue the silver coin at any time in the treasury to an amount not exceeding ten million dollars, in exchange for an equal amount of legal tender notes; and the notes so received in exchange shall be kept as a special fund, separate and apart from all other money in the treasury, and be reissued only upon the retirement and destruction of a like sum of fractional currency received at the treasury in payment of dues to the United States; and said fractional currency, when so substituted, shall be destroyed and held as part of the sinking fund, as provided in the act approved April seventeen, eighteen hundred and seventy-six."

It also provided: "That the trade dollar shall not hereafter be a legal tender, and the Secretary of the Treasury is hereby authorized to limit, from time to time, the coinage thereof to such an amount as he may deem sufficient to meet the export demand for the same."

It also provided that the amount of subsidiary silver coin authorized should not exceed $50,000,000. The silver bullion was to be purchased from time to time at market price by the Secretary of the Treasury from any money in the treasury not otherwise appropriated, and any gain or seigniorage arising from the coinage was to be paid into the treasury.

These provisions in respect to subsidiary coin were in a large measure executed prior to the 4th of March, 1877, and tended, in my opinion, to facilitate the progress of the resumption of specie payments on the 1st of January, 1879. The debate on these measures occupied a large portion of the time of both Houses of Congress, and presented in every possible aspect all the financial questions involved in coinage, resumption and refunding. Anyone desiring a full knowledge of the view then taken of the act revising the laws in respect to coins and coinage, approved February 12, 1873, will find in the debate a full history of that act, given at a time when it was fresh in the memory of the great body of Senators and Members.

I supported the coinage of the old silver dollar in a speech in the Senate made on the 8th of June, 1876, two years before the appearance of the "Bland bill," or the "Allison bill." Silver bullion was then declining in market value. The resumption act provided for the gradual replacement of fractional currency by silver coins of the character and form provided for by the coinage act of 1853. When that act passed the old silver dollar was not coined or in circulation. It was more valuable in the market than a dollar in gold, and, if coined, would have been exported as bullion. In the revision of the coinage laws of 1873, it was dropped from the list of coins, and its further coinage was prohibited by a clause providing that no coins should be made at the mint except those provided for in that act. The history of this act and the reasons for prohibiting the coinage of the old dollar have been fully stated in a previous chapter of this work. In place of the old dollar the trade dollar, containing 420 grains of silver, was provided for. This trade dollar, coined for, and at the expense of, the owner of the bullion deposited at the mint, was, in the revision of the laws of the United States, unintentionally made a legal tender for five dollars, the same as the minor coins issued by the mint on government account. As silver declined in value, the trade dollar became less valuable than a dollar in gold, and the owners of bullion deposited it in the mint, and received in exchange trade dollars costing less than a dollar in gold, but, being a legal tender for five dollars, it could be forced upon the people of California, then upon the gold standard, at a profit to the owner of the bullion. Mr. Sargent, a Senator from California, early in the session introduced a bill enlarging the limit of legal tender of minor coins, and repealing the legal tender quality of the trade dollar. This bill was referred to the committee on finance, and was reported with an amendment to strike out all after the enacting clause, and insert:

"That section 3586 of the Revised Statutes of the United States be, and hereby is, amended to read as follows:

"The silver coins of the United States, except the trade dollar, shall be a legal tender at their nominal value for any amount not exceeding five dollars in any one payment."

This simple bill was made the text of a long debate in the Senate that continued during the greater part of that session. The provision that "the trade dollar shall not hereafter be a legal tender" was transferred to the joint resolution already mentioned which became a law on the 22nd of July.

In my speech on Mr. Sargent's bill I said:

"This bill proposes to restore the old silver dollar, and with it and the subsidiary coins of the United States to redeem the United States notes and fractional currency. The dollar to be restored is the same dollar that had existed from 1792 to 1873; and the subsidiary coins to be issued are the same in form and value as have been issued since 1853. I have already stated in my remarks, made on the 11th of April last, the history of these silver coins and the relation of silver and gold to each other, not only in the United States, but in the countries with which we have the most extensive commercial relations.

"The two main questions are:

* * * * *

"First. Shall silver coin be exchanged for United States notes as well as for fractional currency? And,

"Second. Is it wise to recoin the old silver dollar with a view to exchange it for United States notes?"

In this speech I favored the restoration of the silver dollar of the precise character and description of the dollar that existed from 1792 to 1873, but, as the market value of the silver in this dollar had greatly fallen, I insisted that the dollar should be coined from bullion purchased by the government at market price, so that the people of the United States would receive the difference between the cost of the bullion and the face value of the coin, the same principle that was adopted in what is known as the Bland- Allison act of 1878. I did not, however, propose the full legal tender quality that was given to the dollar by the act when adopted, but that it should be placed among the other silver coins, and be a legal tender only for twenty dollars.

The plan proposed by me was to set aside a portion of the surplus revenue or sinking fund of each year applicable to the payment of the public debt, for the purchase of silver bullion to be coined into silver dollars of the old standard. I said:

"The bill reported by the committee on finance thus provides for an immediate resumption of specie payments in silver coin, and thus completes the first and most difficult step of the problem. It neither disturbs nor deranges business, nor stirs up the phantom of contraction. It is in exact accordance with existing law, and leaves the silver coin, as now, a subsidiary coin, a legal tender only for limited amounts.

"The next question presented by this bill is, shall we return to our silver coinage the old silver dollar. And here I am met by the objections of the Senator from Vermont, but his objections are rather to the amendments proposed by the Senator from Missouri, than to the report of the committee. The committee propose the silver dollar, not as a legal tender for gold contracts, but only as a tender for currency contracts not exceeding twenty dollars in any one payment. I would prefer to leave the silver dollar and stand upon its intrinsic value as a legal tender the same as the smaller coin; but there is no injustice in enlarging the limit to twenty dollars, and but for the reasons I will state hereafter there is no injustice in making it a legal tender for all currency contracts. The silver dollar has that intrinsic value which in all periods of our history has made it a favorite coin, not only for domestic uses but for exportation. It furnishes silver bullion in a shape and form more convenient for handling than any other form of coin.

* * * * *

"When the old silver dollars are issued at par with the United States notes, a large amount of them will be taken as a reserve by the people to meet future needs, with or without a legal tender quality. As their issue is not peremptory, and the aggregate cannot exceed the surplus revenue or sinking fund, there is no danger of an overissue, while their existence among the people will be the best reserve when gold alone becomes the full standard of value.

"Every argument already mentioned in favor of subsidiary silver coins is equally potent in favor of the silver dollar. It will be eagerly taken in payment of United States notes. It is purely a voluntary exchange. It is the cheapest mode in which we can redeem United States notes. It is specie resumption in the old time- honored standard of silver dollars of full weight and fineness. It will accustom our people to distinguish between the real dollar that pays where it goes and a paper dollar which only promises to pay. It will prepare the way for full resumption in gold. To the extent proposed by the committee, and to be used as a purely voluntary approach to a full specie standard, it is open to no objection or criticism, and should be assented to by gentlemen who have differed with each other on the present resumption law or on the merits and dangers of contraction and expansion."

The vital difference between the free coinage of silver, and the limited coinage of that metal on government account, is that with free coinage the standard of value would be the cheaper money. With silver at its present price in the market the dollar would be worth but a little over fifty cents. The coinage being free to the holders of silver bullion no other coins would be made except the cheaper coins of least purchasing power. On the other hand, the coinage of silver on government account enables us to maintain the silver coins at par with gold, without respect to the market value of the silver bullion. Any nominal profit from this coinage inures to the benefit of the whole people of the United States and not merely to the producers of silver bullion. This distinction has always appeared to me so marked and clear, and the argument so strong in favor of limiting the coinage of silver to the amount demanded as a convenience of the people for the smaller transactions of life, that I cannot sympathize with a policy that aims merely to secure the cheapest money for the discharge of obligations contracted upon more valuable money.

Among the measures that became a law at this session was a concurrent resolution, introduced by me in the Senate on the 5th of July, 1876, to provide for the completion of the Washington monument.

On the morning of the 4th of July, 1876, the 100th anniversary of American independence, I was making some preparation for the celebration of that day in the vicinity of Washington. Animated by the patriotic feeling inspired by the day, and sitting in view of the unfinished monument of George Washington, I felt that the time had come when this monument should no longer continue a standing reproach to a patriotic people. Shortly after the death of Washington, a resolution providing for the erection of a monument to his memory, was agreed to by both Houses of Congress. Subsequently, on January 1, 1801, a bill was passed by the House of Representatives appropriating $200,000 for this purpose, but, in the political excitements of that day, the Senate failed to concur. In the absorbing public questions that ensued, resulting in the War of 1812, the subject was dropped in Congress for the time.

In 1833 the "Washington Monument Society" was formed, with Chief Justice Marshall as its president. This society proposed to raise the necessary sum to erect such a monument by voluntary subscriptions of individuals, and in 1854 it had, by such means, constructed about one-third of the height of the monument and then suspended work. Thus it had remained for years for want of means to complete it, a glaring evidence of failure. The portion of the monument already reared to the height of 156 feet stood in rude outline, an abandoned failure in the midst of a reservation partly covered with water and broken stone. The society was incorporated by Congress in 1859, but no further progress was made. It was manifest that the work could not be completed by the existing organization, and doubts were expressed whether the foundation was sufficient to bear the superstructure. Under these conditions, on the 100th anniversary of the declaration of American independence, it occurred to me the time had arrived when a great country like ours should complete this unfinished monument to George Washington. Under the inspiration of this thought I wrote this resolution on the morning of the 4th of July, and on the next morning offered it for adoption in the Senate:

"Whereas, It has pleased Almighty God to guide the United States of America safely through one hundred years of national life, and to crown our nation with the highest blessing of civil and religious liberty, Therefore,

"The Senate and House of Representatives in Congress assembled, in the name of the people of the United States, in reverent thankfulness acknowledge the fountain and source, the author and giver of all these blessings, and our dependence upon His providence and will; and,

"Whereas, We recognize, as our fathers did, that George Washington, 'first in peace, first in war, and first in the hearts of his countrymen,' was one of the chief instruments of Divine Providence in securing American independence and in laying broad and deep the foundations of our liberties in the constitution of the United States:

"Therefore, as a mark of our sense of the honor due to his name and to his compatriots and associates, our revolutionary fathers,

"We, the Senate and House of Representatives in Congress assembled, in the name of the people of the United States at this, the beginning of the second century of national existence, do assume and direct the completion of the Washington monument in the city of Washington, and instruct the committees on appropriations of the respective Houses to propose suitable provisions of law to carry this resolution into effect."

In submitting this resolution I said:

"I desire to offer at this time a concurrent resolution I wish to say before it is read that I believe if it were passed to-day it would be a matter of profound satisfaction to the great body of the people of the United States. I ask that it be read."

After the resolution was read, there was a pause, when Mr. Edmunds said: "Let us consider this resolution. It will be agreed to unanimously, I am sure."

The resolution was therefore considered and agreed to unanimously. It was sent to the House of Representatives the next morning, when Mr. Hopkins, of Pennsylvania, pending a motion to adjourn, asked unanimous consent to take from the speaker's table the concurrent resolution in reference to the Washington monument. Upon the resolution being read, the House seemed to be impressed, as was the Senate, with the fitness of the time, and the propriety of the measure proposed, and it was unanimously adopted without debate.

Thus Congress undertook to execute the unfinished work of the Washington Monument Society. The requisite appropriations were subsequently made, and the monument, as completed, is now the most impressive token of the appreciation, by the American people, of the name and fame of George Washington. It is visited daily by nearly every American or stranger who enters the city of Washington. Its dedication will be hereafter mentioned.

CHAPTER XXVIII. THE HAYES-TILDEN PRESIDENTIAL CONTEST. Nomination of R. B. Hayes for President--His Fitness for the Responsible Office--Political Shrewdness of Samuel J. Tilden, His Opponent--I Enter Actively Into the Canvass in Ohio and Other States --Frauds in the South--Requested by General Grant to Go to New Orleans and Witness the Canvassing of the Vote of Louisiana-- Departure for the South--Personnel of the Republican and Democratic "Visitors"--Report of the Returning Board--My Letter to Governor Hayes from New Orleans--President Grant's Last Message to Congress --Letter from President Hayes--Request to Become his Secretary of the Treasury.

The Republican national convention of 1876 met at Cincinnati on the 14th of June of that year. After the usual organization the following eight nominations for President were made: Blaine, Morton, Conkling, Bristow, Hayes, Hartranft, Wheeler and Jewell. The total number of delegates was 754. Blaine was greatly in the lead, receiving on the first ballot 285 votes, some from nearly every state. Morton received 124, Bristow 113, Conkling 99, Hayes 61, Hartranft 58, Jewell 11, and Wheeler 3. There were 7 ballots, in which Blaine steadily held his vote and slightly gained, receiving on the final ballot 351 votes. The vote for Hayes increased at each ballot until on the seventh ballot he received 384 votes, a majority over all.

Undoubtedly Blaine was the favorite of the convention, but the antagonisms that existed between him and Conkling probably defeated his nomination. I still believe that the nomination of Hayes was not only the safest, but the strongest, that could be made. The long possession of power by the Republicans naturally produced rivalries that greatly affected the election of anyone who had been constantly prominent in public life, like Blaine, Conkling and Morton. Hayes had growing qualities, and in every respect was worthy of the high position of President. He had been a soldier, a Member of Congress, thrice elected as Governor of Ohio, an admirable executive officer, and his public and private record was beyond question. He was not an aggressive man, although firm in his opinions and faithful in his friendships. Among all the public men with whom I have been brought in contact, I have known none who was freer from personal objection, whose character was more stainless, who was better adapted for a high executive office, than Rutherford B. Hayes.

Governor Hayes wrote me the following letter in recognition of my aid in his nomination.

"Columbus, O., June 19, 1876. "My Dear Sir:--I trust you will never regret the important action you took in the inauguration and carrying out of the movement which resulted in my nomination. I write these few words to assure you that I appreciate, and am gratified for, what you did.

"My kindest regards to Mrs. Sherman.

"Sincerely, "R. B. Hayes. "Hon. John Sherman."

His opponent, Samuel J. Tilden, was a man of singular political sagacity, of great shrewdness, a money-making man, who professed to represent, and perhaps did represent, as fairly as anyone, the ideas of the New York politicians of the school of Van Buren and Marcy. I knew Mr. Tilden personally and very favorably, as we were members of a board of railroad directors which frequently met. He seemed to take pleasure in talking with me about political events, and especially of the famous New York politicians, of whom Silas Wright and Mr. Van Buren were his favorites. He had acquired great wealth as the attorney of corporations, and was undoubtedly a man of marked ability and sagacity. He had taken an active part in defeating the corruption of Tweed in New York politics. He had been elected governor of the State of New York, as the candidate of reform and honesty in politics.

The long and important session of Congress adjourned on the 15th of August. It had been the arena for long debates, mostly on political topics growing out of reconstruction, and financial measures heretofore referred to. The pending presidential contest also excited much debate in both Houses. The administration of General Grant had not been entirely satisfactory, and the long continuance of the Republican party in power was an element of weakness. The complaints, unavoidable in the most honest administration, and the disappointments of office-seekers, placed that party on the defensive. The south had, by reconstruction, been practically restored to political power, and the body of the negroes had been substantially disfranchised, though legally entitled to the suffrage. Riots and crimes of every degree were committed in the south, notably in Louisiana, South Carolina and Florida. Organized mobs and violence had deterred many from voting, and in some cases had prevented even the semblance of a free election.

I entered actively into this canvass, more so than in any previous one. Three days before the adjournment, I made my opening speech at Marietta, Ohio, in which I discussed fully the dangers of the restoration of the Democratic party to power, the probability of their failure to enforce the constitutional amendments, and the protection of the rights of the freedmen. I claimed that the election of Mr. Tilden would result in the virtual nullification of the constitutional amendments, and amount to a practical restoration to power of the old Democratic party. The revival of the rebel claims, the refunding of the cotton tax, and the damages done to rebels, were fully commented upon, as were the outrages committed upon freedmen during the second administration of General Grant, the organization of Ku-Klux Klans, and the White League, and the boldness with which the laws were disregarded in the south. It is difficult now to realize the condition of public affairs in all the states then lately in rebellion. The people of the south are certainly entitled to the highest credit for the great change that has recently been made in the government of their states, but it cannot be denied that during the ten years after the war their condition bordered on the despotism of mob rule and violence. Financial questions, no doubt, entered into the canvass, but in this respect Governor Tilden and Governor Hayes did not materially differ, while public opinion in the southern states was almost a unit in favor of the larger use of paper money. Their bankrupt condition made this policy almost universal there.

I continued until the day of election to make speeches, not only in Ohio, but in several of the states. I engaged in a joint debate with Senator Voorhees, of Indiana, at Columbia City, in that state, in September, which probably had more fun and humor in it than argument. It so happened that appointments were made for each of us at Columbia City, on the same day, and the managers of the two parties concluded that they would have a joint debate, and arranged for it, to which we both assented. There was a great crowd, and besides Mr. Voorhees and myself, "Blue Jeans" Williams, the candidate for governor, was to open the meeting in his peculiar way, to which, as it would not at all interfere with our debate, I did not object. The debate was fully reported in the Chicago "Inter-Ocean," and is a very graphic specimen of popular debates in which each side claims to be the victor. I think it would be safe to say that from the close of Congress until the day of election I spoke on nearly every week day in some one of the five or six states which I visited.

The result of the presidential election in November, 1876, was extremely doubtful. It was soon asserted that the majority either way would be very small, and that the probabilities were that Mr. Tilden was elected. Zachariah Chandler, chairman of the national Republican committee, however, confidently telegraphed, on the morning after the election, that Hayes was elected by a majority of one in the electoral college. Further reports developed that on account of intimidation, frauds and violence, committed in the election in Louisiana, South Carolina, and Florida, the vote of each of those states was doubtful, and could only be ascertained by the reports of the returning boards. All of their electoral votes were needed to give Hayes the majority of one. Both parties claimed in each of the states a majority of the popular vote. In the heated state of political feeling in those states, it was a matter of grave doubt whether the count of the vote might not result in violence, tumult or war. On the evening of November 11, I received from President Grant the following telegram:

"Philadelphia, Pa., November 11, 1876. "Received at Mansfield, O., 8:35 p. m. "Senator John Sherman.

"I would be much pleased if you would join other parties, who have already accepted same invitation, to go to New Orleans to witness the canvassing of the vote of Louisiana.

"U. S. Grant."

I replied that I would go as soon as practicable, and received the following answer:

"Washington, D. C., November 12, 1876. "Received at Mansfield, O., 4 p. m. "Hon. John Sherman.

"Unless you can reach there by Friday morning it will be too late.

"U. S. Grant."

I at once started for New Orleans, stopping on the way at Columbus to confer with Governor Hayes, who said he wished I would go to New Orleans, and witness the count, but expressed, in the strongest possible language, his opposition to any movement on the part of anyone to influence the action of the returning board in his favor. He said that if Mr. Tilden was elected he desired him by all means to have the office. I proceeded to Cincinnati, where I met some of the gentlemen whom General Grant had requested to witness the count. When we arrived in New Orleans I found far less excitement in respect to the count than in Ohio. I there met the other gentlemen who had been, like myself, invited by General Grant. They were Messrs. Stanley Matthews, Ohio; J. A. Garfield, Ohio; E. W. Stoughton, New York; J. H. Van Alen, New York; Wm. D. Kelley, Pennsylvania; Job E. Stevenson, Ohio; Eugene Hale, Maine; J. M. Tuttle, Iowa; J. W. Chapman, Iowa; W. R. Smith, Iowa; W. A. McGrew, Iowa; Sidney Clarke, Kansas; C. B. Farwell, Illinois; Abner Taylor, Illinois; S. R. Haven, Illinois; J. M. Beardsley, Illinois; John Coburn, Indiana; Will Cumback, Indiana; C. Irving Ditty, Maryland.

At New Orleans I was for the first time introduced to the members of the returning board, who, under the laws of Louisiana, were required to verify the count and whose return was final. We met also a large number of gentlemen who were there at the request of the national Democratic committee to perform the same duty that had been imposed upon us by General Grant. These gentlemen were John M. Palmer, Illinois; Lyman Trumbull, Illinois; William R. Morrison, Illinois; Samuel J. Randall, Pennsylvania; A. G. Curtin, Pennsylvania; William Bigler, Pennsylvania; J. R. Doolittle, Wisconsin; George R. Smith, Wisconsin; J. E. McDonald, Indiana; George W. Julian, Indiana; M. D. Manson, Indiana; John Love, Indiana; Henry Watterson, Kentucky; J. W. Stevenson, Kentucky; Henry D. McHenry, Kentucky; Oswald Ottendorfer, New York; J. B. Stallo, Ohio; Lewis V. Bogy, Missouri; James O. Brodhead, Missouri; C. Gibson, Missouri; John Lee Carroll, Maryland; William T. Hamilton, Maryland; W. G. Sumner, Connecticut; P. H. Watson, Ohio; F. R. Coudert, New York.

Before my arrival a correspondence had occurred between what was called the Democratic visitors and the Republican visitors in regard to our respective duties. This correspondence, all of which was reported to President Grant, resulted in the attendance of a certain number of each of the bodies of visitors at each session of the returning board, and thus a constant surveillance of the proceedings of the board was had. At the same time we received from the returning board the following letter:

"State of Louisiana, Office Board of Returning-Officers,} "New Orleans, November 18, 1876. } "Sir:--At a meeting of the board of returning-officers, held this day, the following preamble and resolution, introduced by General Thomas C. Anderson, was unanimously adopted, viz:

"Whereas, This board has learned with satisfaction that distinguished gentlemen of national reputation from other States, some at the request of the President of the United States, and some at the request of the national executive committee of the Democratic party are present in this city with a view to witness the proceedings of this board in canvassing and compiling the returns of the recent election in this state for presidential electors, in order that the public opinion of the country may be satisfied as to the truth of the result and the fairness of the means by which it may have been attained; and whereas, this board recognizes the importance which may attach to the result of their proceedings, and that the public mind should be convinced of its justice by a knowledge of the facts on which it may be based, therefore, be it

Resolved, That this board does hereby cordially invite and request five gentlemen from each of the two bodies named, to be selected by themselves respectively, to attend and be present at the meetings of the board while engaged in the discharge of its duties, under the law, in canvassing and compiling the returns, and ascertaining and declaring the result of said election for presidential electors, in their capacity as private citizens of eminent reputation and high character, and as spectators and witnesses of the proceedings in that behalf of this board.

"J. Madison Wells, "Chairman Board of Returning-Officers. "Hon. John Sherman, St. Charles Hotel, New Orleans."

On the same day I answered in behalf of my associates as follows:

"St. Charles Hotel, } "New Orleans, November 18, 1876.} "Sir:--I have received your note of to-day, with a copy of the resolution of the board of returning-officers of the State of Louisiana, and have communicated the invitation contained in it to the gentlemen who are here at the request of the President of the United States to witness the canvassing of the vote at the recent election in this state for presidential electors, and am instructed by them to inform you of their acceptance of the invitation, and that they will designate a committee of five of their number to attend the meetings of the board. And I take this occasion to express my thanks for the courteous terms of this invitation, my deep sense of the importance of your proceedings, and my confident hope that they will be so conducted as to convince the public mind of the justice of your finding.

"John Sherman. "Hon. J. Madison Wells."

A similar invitation was extended to the Democratic visitors, and substantially the same reply made. The returning board then proceeded to perform its duty under the law. At each session the Republican and Democratic visitors were present, and I neither know of nor have ever heard of any act being done or testimony taken by the board except in the presence of committees of the two bodies of visitors. The proceedings of the returning board were reported for each body of visitors and for the returning board, and all the evidence taken was not only delivered in the presence of the two visiting bodies, but was reported to the President and was published by Congress. Whatever opinions may be expressed as to the correctness of the findings of the returning board, there can be no doubt that its proceedings were open, fair and impartial. The board arrived at the conclusion that the Republican electors received a majority of the votes cast in Louisiana at that election, and were entitled to cast the vote of the state for President of the United States.

During the great excitement over this controversy, and also over that in South Carolina and Florida, exaggerated statements, without the slightest foundation, of frauds and improper conduct on the part of the returning officers were made and published. As to the action of the returning board of Louisiana, I feel bound now, after a long lapse of time, to repeat what was reported to General Grant by the Republican visitors, that it made a fair, honest and impartial return of the result of the election. In concluding our report we said:

"The proof of violence and intimidation and armed disturbance in many other parishes, is of the same general character, although more general and decisive, as to the five parishes particularly referred to. In the others, these causes prevailed at particular polling places, at many of which the Republican vote was, to a considerable extent, prevented.

"We hope to be able to furnish full copies of all testimony taken by the board, that the justice of its conclusions may be appreciated. It is a tribunal, from which there can be no appeal, and, in view of the possible consequences of its adjudication, we have closely observed its proceedings and have carefully weighed the force of a large mass of the testimony upon which that adjudication has been reached.

"The members of the board, acting under oath, were bound by law, if convinced by the testimony that riot, tumult, acts of violence, or armed disturbance did materially interfere with the purity and freedom of election at any poll or voting place, or did materially change the result of the election thereat, to reject the votes thus cast, and exclude them from their final return. Of the effect of such testimony, the board was sole and final judge, and if, in reaching a conclusion, it exercised good faith and was guided by an honest desire to do justice, its determination should be respected, even if, upon like proof, a different conclusion might have been reached by other tribunals or persons.

"To guard the purity of the ballot; to protect the citizen in the free and peaceful exercise of his right to vote; to secure him against violence, intimidation, outrage, and especially murder, when he attempts to perform his duty, should be the desire of all men, and the aim of every representative government. If political success shall be attained by such violent and terrible means as were resorted to in many parishes in Louisiana, complaint should not be made if the votes thus obtained are denounced by judicial tribunals and all honest men as illegal and void."

Pending the action of the board I wrote to Governor Hayes the following letter, giving a general view of the testimony:

"State of Louisiana, Executive Department,} "New Orleans, November 23, 1876. } "My Dear Sir:--I have not written you sooner, for the progress of our visitation will be known to you through the papers sooner than from my letters, and the telegraph office here is more public than a sheriff's sale. We sometimes hear of private telegrams before they are delivered. The action of the returning board has thus far been open and fair and only confirms the general result known before. We are now approaching the contested parishes. To five of them, viz: Baton Rouge, East and West Feliciana, Morehouse and Ouachita, the evidence of intimidation is so well made out on paper that no man can doubt as to the just exclusion of their vote. In these parishes alone we ought to have a majority of 7,000, but under the law the entire return must be excluded of all election districts where intimidation has affected or changed the result. If this is done the result will give the Hayes electors majorities aggregating 24,111, and the Tilden electors 22,633, but in almost every parish the official return varies somewhat from the stated majorities, and thus far slightly reduces the Republican majority.

"The vote of each disputed parish has thus far been laid aside, and among them two parishes where a most foolish blunder, or something worse, was made in omitting from the Republican tickets the names of all the electors but the two Senatorial and one district elector. The Democrats claim this will lose over 2,000 votes, but our friends, whose information we have generally found confirmed, say it will lose us at most 1,193 votes. The law seems conclusive that the defective ballots cannot be counted for any electors but those named on the ticket; though it is conclusively shown that the remaining electors were omitted by reason of the mistaken idea that the district could only vote for one elector. The whole trouble has grown out of the fact that in these two parishes a candidate for district judge was not named on the ticket printed by the state committee. We undertook to correct this by printing new tickets, which were voted in those parishes. The result of this blunder will leave the poll so close as to render it probable that one or more of the Tilden electors would have a majority.

"There are other parishes where the organized intimidation was not so general as in the parishes named, though in single election precincts it was effective. These parishes, where formal protests have been filed, are Bienville, Bossier, Caldwell, Franklin, Grant, Iberia, Lincoln, Richland and Sabine. How far the proof in these parishes will sustain the protests we cannot judge till the evidence is heard before the returning board.

"We are now collecting the testimony as to the bulldozed parishes. It seems more like the history of hell than of civilized and Christian communities. The means adopted are almost incredible, but were fearfully effective upon an ignorant and superstitious people. That you would have received at a fair election a large majority in Louisiana, no honest man can question; that you did not receive a majority is equally clear. But that intimidation of the very kind and nature provided against by the Louisiana law did enter into and control the election, in more election polls than would change the result and give you the vote, I believe as firmly as that I write this. The difficulty of gathering this testimony and putting it in the legal form has been very great, but I believe has been fully met.

"The whole case rests upon the action of the returning board. I have carefully observed them, and have formed a high opinion of Governor Wells and Colonel Anderson. They are firm, judicious, and, as far as I can judge, thoroughly honest and conscientious. They are personally familiar with the nature and degree of intimidation in Louisiana. They can see that the intimidation, as organized, was with a view of throwing out Republican parishes rather than endangering Democratic parishes. Our little party is now dividing out the disputed parishes, with the view of a careful examination of every paper and detail. Many are impatient of the delay, and some have gone home. We will probably be able to keep about ten here. We have incurred some liabilities for reporting, printing, etc., but hope the Republican national committee will make this good. If not, we must provide for it ourselves. We are in good hope and spirit. Not wishing the return in your favor, unless it is clear that it ought to be so, and not willing to be cheated out of it, or to be 'bulldozed' or intimidated, the truth is palpable that you ought to have the vote of Louisiana, and we believe that you will have ti, by an honest and fair return, according to the letter and spirit of the law of Louisiana.

"Very truly yours, "John Sherman."

To this General Hayes responded as follows:

"Columbus, O., November 27, 1876. "My Dear Sir:--I am greatly obliged to you for your letter of the 23rd. You feel, I am sure, as I do about this whole business. A fair election would have given us about forty electoral votes at the south--at least that many. But we are not to allow our friends to defeat one outrage and fraud by another. There must be nothing crooked on our part. Let Mr. Tilden have the place by violence, intimidation and fraud, rather than undertake to prevent it by means that will not bear the severest scrutiny.

"I appreciate the work doing by the Republicans who have gone south, and am especially proud of the acknowledged honorable conduct of those from Ohio. The Democrats make a mistake in sending so many ex-Republicans. New converts are proverbially bitter and unfair towards those they have recently left.

"I trust you will soon reach the end of the work, and be able to return in health and safety.

"Sincerely, "R. B. Hayes."

I met Governor Hayes on my return and his conversation was to the same effect, that he wished no doubtful votes and would greatly prefer to have Mr. Tilden serve as President if there was any doubt about his (Hayes') election. The Republican visitors did not return until after the meeting of Congress at its regular session on the 4th of December, 1876.

President Grant, in the beginning of his annual message of that date, said:

"In submitting my eighth and last message to Congress, it seems proper that I should refer to, and in some degree recapitulate, the events and official acts of the past eight years.

"It was my fortune, or misfortune, to be called to the office of Chief Executive without any previous political training. From the age of seventeen I had never even witnessed the excitement attending a presidential campaign but twice antecedent to my own candidacy, and at but one of them was I eligible as a voter. Under such circumstances it is but reasonable to suppose that errors of judgment must have occurred. Even had they not, differences of opinion between the Executive, bound by an oath to the strict performance of his duties, and writers and debaters must have arisen. It is not necessarily evidence of blunder on the part of the Executive because there are these differences of views. Mistakes have been made, as all can see and I admit, but, it seems to me, oftener in the selections made of the assistants appointed to aid in carrying out the various duties of administering the government, in nearly every case selected without a personal acquaintance with the appointee, but upon recommendations of the representatives chosen directly by the people. It is impossible, where so many trusts are to be allotted, that the right parties should be chosen in every instance. History shows that no administration, from the time of Washington to the present, has been free from these mistakes. But I leave comparison to history, claiming only that I have acted in every instance from a conscientious desire to do what was right, constitutional within the law, and for the very best interests of the whole people. Failures have been errors of judgment, not of intent."

This modest statement by General Grant was appreciated by Congress and by the country. No one doubted the sincerity and patriotism of the President. His modest confession of errors did not in the slightest degree impair the universal confidence in him.

On the 18th of January, 1877, Mr. Edmunds, of the select committee of the Senate on the counting of electoral votes, submitted a report in writing with an accompanying bill. It was, with one exception, signed by the members of the committees of the two Houses without distinction of party. The bill provided in full detail a prescribed manner for counting the electoral vote. It was adopted by both Houses and voted for by a great majority, but, believing that it was extra constitutional, I, with other Republicans, did not vote for it. The history of the electoral commission provided for in this bill is part of the history of the country, and it is not necessary to here enter into it in detail. It is sufficient to say that it resulted in the counting of the votes of Louisiana, South Carolina and Florida for Mr. Hayes, electing him President by a majority of one vote. I took an active part in the debates on the questions involved and gave in detail my view of the action of the returning board of Louisiana.

During this period I received a number of personal letters from Governor Hayes, some of which may be of interest:

"Columbus, O., December 25, 1876. "My Dear Sir:--I have your esteemed favor, and have also met Judge Taft and Governor Dennison. There will not be the slightest difficulty growing out of the matter you refer to. You know my general course of conduct. It has always seemed to me wisest, in case of decided antagonisms among friends, not to take sides--to heal by compromise, not to aggravate, etc., etc. I wish you to feel authorized to speak in pretty decided terms for me whenever it seems advisable--to do this not by reason of specific authority to do it, but from your knowledge of my general methods of action.

"Sincerely, "R. B. Hayes. "Hon. John Sherman, etc., etc."

"Columbus, O., January 5, 1877. "My Dear Sir:--I have your note of the 3rd. I do not wish to influence the action of our friends, and do not volunteer opinions. But you have a right to my opinion. I believe the Vice President alone has the constitutional power to count the votes and declare the result. Everything in the nature of a contest as to electoral votes is an affair of the states. The rest is a mere ministerial duty. Therefore it is not right, in my judgment, for Congress to interfere.

"Sincerely, "R. B. Hayes. "Hon. John Sherman, U. S. S."

"Columbus, O., February 15, 1877. "My Dear Sir:--I have two letters from you since I last wrote. It if becomes my duty to make a cabinet I want your views fully and specifically. If possible a personal interview would be extremely desirable. Boynton writes to Smith that an assurance of my views on the southern question, which are truly set forth in my letter, with such additions as I could properly make, would be useful. I prefer to make no new declarations. But you may say if you deem it advisable that you know that I will stand by the friendly and encouraging words of that letter and by all that they imply. You cannot express that too strongly.

"Sincerely, "R. B. Hayes. "Hon. John Sherman."

"Columbus, O., February 16, 1877. "My Dear Sir:--If the issue of the contest is in our favor I shall want to see you at once if it is at all practicable. Don't you want to visit Mansfield? I can meet you there or here--or possibly at a point east of there.

"Sincerely, "R. B. Hayes. "Hon. John Sherman."

"Columbus, O., February 19, 1877. "My Dear Sir:--The more I think of it the more difficult it seems for me to get ready to come to Washington before Wednesday or Thursday of next week. I must fix affairs at Fremont, and cannot begin it until I know the result. Why can't friends be sent or come here?

"It seems to me proper now to say that I am extremely desirous that you should take the treasury department. Aside from my own personal preference, there are many and controlling reasons why I should ask you to do this. It will satisfy friends here in Ohio. I understand Governor Morton and our friends in Washington like it. The country will approve it. You are by all odds the best fitted for it of any man in the nation. Your resignation from the Senate will be a great loss to that body, but it will cause no serious dissensions or difficulty in Ohio. Do not say no until I have had a full conference with you. There is no reason why you should not visit Ohio as soon as you can be spared from Washington. Of course the public will know of our meeting. But they will be gratified to know it. No possible harm can come of it. I should have said all this before, but I did not want to embarrass you in your action on the presidential question.

"Sincerely, "R. B. Hayes. "Hon. John Sherman."

(Telegram.) "Columbus, O., February 20, 1877. "Hon. John Sherman.

"I will be greatly obliged if you can come to Columbus, but will meet you at Zanesville if you think it important.

"R. B. Hayes."

"Columbus, O., February 28, 1877. "Hon. John Sherman, Washington, D. C.

"Dear Sir:--Governor Hayes will be obliged to you if you will be kind enough to speak to Mr. Evarts with respect to his acceptance of the place in the cabinet referred to in the interview with you last week. It was the governor's intention to make this request at that time, and he may have done so, but not being quite sure of the fact, desires me to write you with reference to it.

"Yours very respectfully, "W. K. Rogers, Secretary."

President Hayes frequently, in personal conversation and in writing, had expressed a strong desire that I should become the Secretary of the Treasury. I was disinclined to accept this position, as I was content to serve my constituents in the Senate. It was not until after his urgent request in his letter of February 19, 1877, that I seriously considered his desire that I should accept that office. I went to Columbus to ascertain the views of the legislature, and whether there would be any difficulty in selecting a Republican to my place in the Senate. Having found that there would not be, I, with reluctance, accepted his offer. Stanley Matthews was elected on the 21st of March to serve out my unexpired term, which ended on the 3rd of March, 1879.

President Hayes arrived at Washington a few days before the 4th of March and was my guest until he was inaugurated as President. The 4th day of March was on Sunday, and to avoid any questions about an interregnum, he was sworn into office on that day, but took the formal oath on the next day, the 5th of March, and made his inaugural address. He nominated the members of his cabinet to the Senate and they were promptly confirmed.

I received many letters of congratulation and encouragement in assuming the duties of Secretary of the Treasury, two of which I insert:

"New York, March 6, 1877. "My Dear Mr. Secretary:--Allow me to congratulate you on having been selected by President Hayes to administer the financial affairs of the nation.

"I deem it a happy augury that the President's choice of members of his cabinet has fallen upon men who have made their mark as statesmen, and whose advent to power will, I feel convinced, inaugurate an era of prosperity for our country.

"With yourself at the head of the treasury department, there is no fear of public credit being shaken and commercial interests imperiled by crude and experimental legislation.

"With great respect, I remain, my dear Mr. Sherman,

"Very truly your friend, "Cyrus W. Field. "Hon. John Sherman, Washington."

"Consulate General of the United States for Great Britain and Ireland,} "London, E. C., March 12, 1877.} "The Hon. John Sherman, Secretary of the Treasury.

"My Dear Sir:--When I begin to write to you, I am reminded of what General Sherman said, in my hearing, to General Grant, after the latter was made General in Chief: 'I cannot congratulate you; the responsibility is too great.' You have certainly succeeded to the most difficult post in the government, one in whose successful administration Americans abroad feel an especial interest, for no department is more important to foreigners or more discussed by them.

"It may not be unsatisfactory to you to know that Americans--both those long domiciled here and those in transit--applaud the appointment of the new Chief of the Treasury.

"I beg to offer my best wishes and belief that the reputation he has already achieved in the Senate will be increased in the cabinet; and to say how glad I was that the unanimity of his late compeers showed that they were of the same mind.

"With great respect, I am, my dear sir,

"Very faithfully yours, "Adam Badeau."

CHAPTER XXIX. I BEGIN MY DUTIES AS SECRETARY OF THE TREASURY. Legislative Training of Great Advantage to Me in My New Position-- Loan Contract in Force When I Took the Portfolio--Appointment of Charles F. Conant as Funding Agent of the Treasury Department in London--Redeeming Called Bonds--Sale of Four Per Cent. Bonds Instead of Four and a Half Per Cents.--Popularity of the New Loan--Great Saving in Interest--On a Tour of Inspection Along the Northern Atlantic Coast--Value of Information Received on This Trip--Effect of the Baltimore and Pittsburg Railroad Strikes in 1877 Upon Our Public Credit.

When I assumed the office of Secretary of the Treasury I had the advantage of some of my predecessors in that I was acquainted with the organization and duties of the treasury department. Ever since 1859 my connection with the committee of ways and means in the House and with the committee on Finance in the Senate had brought me into official relations with the head of that department. This legislative training gave me a full knowledge of the several laws that were to be executed in relation to public revenue, to all forms of taxation, to coinage and currency, and to the public debt. The entire system of national finance then existing grew out of the Civil War, and I had participated in the passage of all the laws relating to this subject. My intimate association with Secretaries Chase, Fessenden and McCulloch, and my friendly relations with Secretaries Boutwell and Richardson, led me, as chairman of the Senate committee on finance, to have free and confidential intercourse with them as to legislation affecting the treasury. Secretary Bristow had not had the benefit of experience either in Congress or the department. He was a good lawyer and an able man. He doubted whether resumption would be effective without a gradual retirement of United States notes, a measure that Congress would not agree to. Congress repealed even the limited retirement of such notes provided for by the resumption act. Secretary Morrill, of Maine, my immediate predecessor, was in hearty sympathy with the policy of Congress, of which he had been a useful Senator, and but for his failing health would have been an efficient secretary. Upon my assuming the duties of secretary, and for some time before, he had been confined by illness to his lodgings in Washington. The treasury department was then well organized. Most of the principal officers had been long in the service. But few changes were made by President Hayes or by myself, and only as vacancies occurred or as incompetency was demonstrated. The following loan contract was in force at the beginning of my administration of the treasury department:

"This agreement, entered into this 24th day of August, in the year of our Lord, 1876, between the Secretary of the Treasury of the United States of America, of the first part, and Messrs. August Belmont & Co., of New York, in behalf of Messrs. N. M. Rothschild & Sons, of London, England, and associates, and Messrs. J. & W. Seligman & Co., of New York, for themselves and associates, and Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., of London, England, and Messrs. Morton, Bliss & Co., of New York, representing the First National Bank of the city of New York, the American Exchange National Bank of New York, the Merchants' National Bank of New York, the Third National Bank of New York, Messrs. Kuhn, Loeb & Co., of New York, the Bank of New York National Banking Association, and Messrs. Morton, Rose & Co., of London, and themselves, of the second part:

"Witnesseth, That the said Messrs. August Belmont & Co. of New York, on behalf of Messrs. N. M. Rothschild & Sons and associates, hereby agrees to purchase from the Secretary of the Treasury sixteen million five hundred thousand dollars ($16,500,000) of the United States bonds known as the four and a half per cent. funded loan of 1891, issued under the acts of July 14, 1870, and January 20, 1871; and that Messrs. J. & W. Seligman & Co., for themselves and their associates, hereby agree to purchase from the Secretary of the Treasury six million seven hundred and fifty thousand dollars ($6,750,000) of the bonds hereinbefore described; and that Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., of London, England, hereby agree to purchase from the Secretary of the Treasury six million seven hundred and fifty thousand dollars ($6,750,000) of the bonds hereinbefore described; and that Messrs. Morton, Bliss & Co., of New York, representing the First National Bank of the city of New York, to the extent of four million dollars ($4,000,000); the American Exchange National Bank of New York, to the extent of one million and fifty thousand dollars ($1,050,000); the Merchants' National Bank of New York, to the extent of six hundred thousand dollars ($600,000); the Third National Bank of the city of New York, to the extent of seven hundred and fifty thousand dollars ($750,000); Messrs. Kuhn, Loeb & Co., of New York, to the extent of one million and fifty thousand dollars ($1,050,000); the Bank of New York National Banking Association, to the extent of three hundred thousand dollars ($300,000); Messrs. Morton, Rose & Co., of London, to the extent of one million one hundred and twenty-five thousand dollars ($1,125,000), and Messrs. Morton, Bliss & Co., of New York, to the extent of one million one hundred and twenty-five thousand dollars ($1,125,000), hereby agree, to the extent severally for each as above stated, to purchase from the Secretary of the Treasury ten million dollars ($10,000,000) in the aggregate of the bonds hereinbefore described, making a total aggregate of forty million dollars ($40,000,000), upon the terms and conditions following, to-wit:

"First. Of the said aggregate amount, not less than ten million dollars ($10,000,000) are hereby subscribed for, the subscription to take effect on the 1st day of September, 1876, and the remaining amount, namely, thirty million dollars ($30,000,000), may be divided at the pleasure of the parties of the second part into several successive subscriptions of not less than five million dollars ($5,000,000) each, to be made prior to the 4th day of March, 1877.

"Second. The parties of the second part shall have the exclusive right to subscribe, in the same proportion to each of the subscribers, for the remainder, namely, two hundred and sixty million dollars ($260,000,000), or any portion of said loan authorized to be issued by the acts of Congress aforesaid, by giving notice thereof to the Secretary of the Treasury on or before the 30th day of June, 1877; but the party of the first part reserves the right to terminate this contract at any time after March 4, 1877, by giving ten days' notice thereof to the parties of the second part.

"Third. That the Secretary of the Treasury shall, when subscriptions are made by the said parties of the second part, issue calls with even date with said subscriptions for the redemption of an equivalent amount of six per cent. 5-20 bonds of the United States, as provided by said act of July 14, 1870.

"Fourth. The parties of the second part agree to pay for said four and a half per cent. bonds par and interest accrued to the date of application for delivery of said bonds, in gold coin, matured United States gold coin coupons, or any of the six per cent. 5-20 bonds called for redemption, or in United States gold certificates of deposit issued under the act of March 3, 1863, with the understanding that payment to the extent of the amount of any call shall be made within the time during which such call shall mature: Provided, That, if the parties of the second part shall elect so to do, they may have the privilege of making any of said subscriptions payable specifically in uncalled six per cent 5-20 bonds of the United States, in which case the Secretary of the Treasury may, to the extent of such payments, omit the calls mentioned in condition No. 3.

"Fifth. The parties of the second part shall receive in coin a commission of one-half of one per cent. on all bonds taken by them, as allowed by the act of July 14, 1870, and shall assume and defray all expenses which may be incurred in sending bonds to London upon their request, or by transmitting bonds, coupons, or coin from there to the treasury department at Washington, including all cost of making exchange of bonds, and shall also be charged with the preparation and issuing of the bonds.

"Sixth. No bonds shall be delivered to the parties of the second part, or either of them, until payment shall have been made in full therefor in accordance with the terms of this contract.

"Seventh. During the continuance of this contract any sales of bonds ordered by the Secretary of the Treasury, by authority of law, except those that it may become necessary to sell to pay judgments of the Court of Commissioners of Alabama Claims, shall be made through the parties of the second part, who shall be allowed thereon a commission of one per cent. in gold coin. And it is provided that the amount of bonds so ordered shall not exceed in the aggregate $25,000,000, unless by mutual agreement of the parties.

"Lot M. Morrill, Secretary of the Treasury. "Aug. Belmont & Co., On behalf of N. M. Rothschild & Sons, London. "J. & W. Seligman & Co., On behalf of Seligman Brothers. "Drexel, Morgan & Co., On behalf of J. S. Morgan & Co., of London. "Morton, Bliss & Co., For themselves and associates, as named above."

By its terms the contract provided for the sale of $40,000,000, four and a half per cent. bonds of the United States at par in gold coin. The contractors had the exclusive right to subscribe for all or any portion of the remainder of the four and a half per cent. bonds, amounting to $260,000,000. The right to terminate this contract at any time after March 4, 1877, after ten days' notice, was reserved by the United States. The proceeds of the bonds sold were to be applied solely to the payment of the six per cent. 5-20 bonds of the United States. No provision was made in this contract for the accumulation of coin for the redemption of United States notes. The process of refunding under it progressed slowly.

I felt it to be important that I should have some personal representative in London, to protect the interests of the United States in the execution of this contract, and, therefore, on the 31st of March, 1877, I appointed Charles F. Conant, as the funding agent of the treasury department, and directed him to assume the general management and supervision of all business in London, arising from the funding of bonds. A letter of instructions prescribing his duties was given him. He was directed to pursue the same general plan under which former negotiations had been conducted, except as modified by these instructions, which were based upon the contract before mentioned. All bonds, money, or coupons received by him were to be securely kept in safes, furnished by the department for that purpose, to be deposited in the vaults of the Messrs. Rothschild. Combination locks were provided for each safe, and no safe could be unlocked except by three persons on distinct combinations, each person using a combination unknown to the others. He was to keep me fully advised as to the course of the market, of the price not only of American securities, but of foreign securities, and was to receive the new bonds and deliver them to the Rothschilds in exchange for the bonds redeemed. He proved to be a very competent and faithful agent, and furnished me important financial information, which aided me greatly in refunding operations. His compensation and allowances, as well as those of all persons sent to London in connection with the refunding of the public debt, were paid by the syndicate, so that no expense whatever was incurred by the treasury on this account.

I gave the following notice to the parties to this contract that I would, on the part of the United States, terminate it.

"Treasury Department, } "Washington, D. C., April 6, 1877.} "Gentlemen:--I received your friendly cable message of the 10th ultimo, and return my thanks and hearty good wishes.

"I am very solicitous to promote the funding of our six per cent. bonds as rapidly as practicable, and feel indebted to you for the aid you have given in placing the four and a half per cent. bonds.

"I propose no change at present; but it is my desire, if practicable, to withdraw the four and a half per cent. bonds from the market and substitute in their place the four per cent. bonds authorized by the funding act.

"These bonds, as you know, are a very desirable investment, running thirty years from the date of issue, with every guard and security that has been given to any bond of the United States, and we think as safe and desirable as the securities of any other nation. It is probably the bond into which all the debt of the United States will in time be converted. I hope you and your associates will be able to engage with me to place this bond on the market when $200,000,000 of the four and a half per cent. bonds have been sold.

"The public policy of the United States to resume specie payments on or before the 1st of January, 1879, is fully established by the law and by public opinion. It may be that the surplus revenue will be sufficient to enable me to carry out this policy without the sale of bonds. I am authorized by the resumption act to sell five, four and a half, or four per cent. bonds to prepare for resumption, and it may be desirable to sell through the syndicate, under that act, a limited amount of bonds, not exceeding, I hope, $30,000,000 a year. I do not wish in the execution of this duty to disturb the exchanges between Europe and this country. For this purpose I desire to sell only the four per cent. bonds and must sell at par in coin, but could receive in payment coin coupons maturing within a limited time. I invite from you and your associates such suggestions and offers as you may think proper to make for the purchase of such bonds.

"The operations of the syndicate have become so important that I have deemed it proper to ask Mr. Charles F. Conant, late Assistant Secretary of the Treasury, to take charge of the business in London in connection with the gentlemen already there. He is well informed as to our laws, and I trust his services may be of advantage to the government and agreeable to you.

"I will give my personal attention to this business, and will receive with pleasure any suggestions from you that will promote our common object.

"Very truly, "John Sherman, Secretary. "Messrs. N. M. Rothschild & Sons, London, England."

I received the following letter:

"New York, April 12, 1877. "Hon. John Sherman, Secretary of the Treasury, Washington.

"My Dear Sir:--I had an interview with Messrs. Drexel, Morgan & Co., and conveyed to them your wishes respecting limiting the sale of the four and a half and taking the four per cent. bond in hand with the co-operation of the Messrs. Rothschild.

"I told Mr. Drexel that you would be happy to see him and Mr. L. P. Morton in Washington, whenever convenient for them to go, and that on receipt by you of favorable advices from Mr. Conant after his arrival in London, you desired that Drexel, Morton and I should repair to Washington, in company with other leading members of the syndicate, with a view of entering into a contract with the government, in conformity with your views as expressed to me, or perhaps with some slight modifications, which, if suggested by the London people, through Mr. Conant, you may deem proper to adopt.

"I shall see Mr. Morton in the course of this day, and have no doubt but that he, as well as Drexel and myself, will be happy to aid you in raising the credit of our common country, and assist the President and you in this patriotic work. I remain, dear Mr. secretary, yours, very faithfully.

"Jos. Seligman."

A month later I wrote to Mr. Conant as follows:

"Treasury Department, } "Washington, May 14, 1877.} "Dear Mr. Conant:-- . . . On Friday last I concluded a modification of the present syndicate contract, which provides for the sale of five million four and a half per cent. bonds at par in coin for resumption purposes. A further negotiation is pending as to the renewal and modification of the contract, of which I will give you due notice when completed. In the meantime I wish to keep steadily in view the sale of the balance of two hundred million four and a half per cent. bonds, and, if possible, I wish to make the necessary calls during this month and next.

"You can assure Messrs. Rothschild of every disposition on the part of the government to meet their views, and to extend the contract with the necessary modifications. Their efforts in maintaining the credit of the bonds and securing this result will be highly appreciated.

"I would like to have you write me at least twice a week as fully as practicable.

"Very truly, "John Sherman. "Mr. C. F. Conant, London."

As the process of redeeming called bonds required a notice of ninety days, I postponed the termination of the existing contract until after that period. My purpose in terminating the contract was to substitute for sale the four per cent. bonds of the United States instead of the four and a half per cent. bonds. I believed that the advancing credit of the United States would justify this reduction of the rate of interest. Another reason for this step was that, in addition to refunding at a lower rate of interest, I wished to commence preparation for the resumption of specie payments on January 1, 1879, according to law. This could only be done by the sale of bonds for gold coin. I reserved the remainder of the four and a half bonds, amounting to $100,000,000, authorized by the refunding act, for resumption purposes in case the four per cent. bonds could not be sold at par in coin.

Another reason for a change in the existing contract was that it gave to the syndicate a monopoly in the sale of bonds while I wished to sell the bonds directly to the people. The new contract was as follows:

"This agreement, entered into this 9th day of June, 1877, between the Secretary of the Treasury of the United States, of the first part, and Messrs. August Belmont & Co., of New York, on behalf of Messrs. N. M. Rothschild & Sons, of London, England, and associates and themselves; Messrs. Drexel, Morgan & Co., of New York, on behalf of Messrs. J. S. Morgan & Co., of London, and themselves; Messrs. J. & W. Seligman & Co., of New York, on behalf of Messrs. Seligman Brothers, of London, and themselves; Messrs. Morton, Bliss & Co., of New York, on behalf of Messrs. Morton, Rose & Co., of London, and themselves; and the First National Bank of the city of New York--

"Witnesseth: That the said Messrs. August Belmont & Co., on behalf of Messrs. N. M. Rothschild & Sons, and associates and themselves, hereby agree to purchase from the Secretary of the Treasury $10,312,500 of the bonds known as the four per cent. consols of the United States, issued under the acts of July 14, 1870, January 20, 1871, and January 14, 1875, and that Messrs. Drexel, Morgan & Co., on behalf of Messrs. J. S. Morgan & Co., and themselves, agree to purchase $4,062,500 of said bonds, and that Messrs. J. & W. Seligman & Co., on behalf of Messrs. Seligman Brothers, and themselves, agree to purchase $4,062,500 of said bonds, and that the First National Bank of the city of New York agree to purchase $2,500,000 of said bonds, making a total aggregate of $25,000,000 of said bonds, on the terms and conditions following:

"First. Of the said aggregate amount not more than $5,000,000 shall be sold for resumption purposes, the remaining $20,000,000 to be sold for funding purposes, and subscribed for by the parties of the second part during the months of July and August, 1877.

"Second. The parties of the second part shall have the exclusive right to subscribe in the same proportion to each of the subscribers, for the remainder of the four per cent. consols of the United States, or any portion of said consols authorized to be issued by the acts of Congress aforesaid, by giving notice thereof to the Secretary of the Treasury on or before the 30th day of June, 1878; but the party of the first part reserves the right to terminate this contract at any time after the 31st day of December, 1877, by giving ten days' notice thereof to the parties of the second part.

"Third. That the Secretary of the Treasury shall not sell for resumption purposes exceeding five millions per month during the continuance of this contract, except by mutual agreement of the parties hereto. When subscriptions are made for other than resumption purposes by the parties of the second part, the party of the first part shall issue calls of even date with said subscriptions for the redemption of an equal amount of six per cent. 5-20 bonds of the United States, as provided for in said act of July 13, 1870.

"Fourth. The parties of the second part agree to pay for said four per cent. bonds par and interest accrued to the date of application for delivery of said bonds in gold coin, matured United States gold coin coupons, or any of the six per cent. 5-20 bonds called for redemption, or in United States gold certificates of deposit issued under the act of March 3, 1863, with the understanding that payment to the extent of the amount of any call shall be made within the time during which call shall mature: Provided, That if the parties of the second part shall elect so to do, they may have the privilege of making any of said subscriptions payable specifically in uncalled six per cent. 5-20 bonds of the United States, in which case the Secretary of the Treasury may, to the extent of such payments, omit the calls mentioned in condition No. 3.

"Fifth. The parties of the second part shall receive in coin a commission of one-half of one per cent. on all bonds taken by them, as allowed by the act of July 14, 1870, and shall assume and defray all expenses which may be incurred in sending bonds to London or elsewhere upon their request, or by transmitting bonds, coupons, or coin to the treasury department at Washington, including all cost of making the exchange of bonds, and shall also be charged with the cost of the preparation and issuing of the bonds.

"Sixth. No bonds shall be delivered to the parties of the second part, or either of them, until payment shall have been made in full therefor in accordance with the terms of this contract.

"Seventh. During the continuance of this contract any sales of bonds ordered by the Secretary of the Treasury, by authority of law, shall be made through the parties of the second part, who shall be allowed thereon a commission similar in amount and subject to the same deductions as prescribed in the fifth clause of this contract.

"Eighth. It is also agreed that the parties of the second part shall offer to the people of the United States, at par and accrued interest in coin, the four per cent. registered consols and four per cent. coupon consols of the denominations of fifty dollars and one hundred dollars, embraced in this contract, for a period of thirty days from the public notice of such subscriptions, and in such cities and upon such notice as the Secretary of the Treasury may prescribe prior to the opening of the lists, and further, to offer to the subscribers the option of paying in installments, extending through three months.

"John Sherman, Secretary of the Treasury. "August Belmont & Co., On behalf of N. M. Rothschild & Sons, of London, And associates and themselves. "Drexel, Morgan & Co., On behalf of J. S. Morgan & Co., of London, And themselves. "J. & W. Seligman & Co., On behalf of Seligman Brothers and themselves. "Morton, Bliss & Co., On behalf of Morton, Rose & Co., of London, And themselves. "The First National Bank of the city of New York, by H. C. Fahnestock. "Witnesses as to all:

"R. C. McCormick. "E. J. Babcock."

By this contract the syndicate was to take $25,000,000 of the four per cent. bonds at par, or in exchange of six per cent 5-20 bonds. Of this sum $5,000,000 in gold coin was to be paid to the treasury for resumption purposes. The eighth section was a new provision, and required the syndicate to offer to the people of the United States, at par and accrued interest in coin, the four per cent. bonds, for a period of thirty days, in such cities and upon such notice as the Secretary of the Treasury might prescribe.

The result of this contract was not only to save one-half of one per cent. on the annual interest of the bonds redeemed, but to so popularize the loan that within a brief period I was able to terminate the contract according to its terms, and to sell the four per cent. bonds directly to the people at par, without a commission, or the aid of a syndicate.

I wrote to Mr. Conant as follows:

"Treasury Department, } "Washington, May 31, 1877.} "Dear Mr. Conant:--Your letter of the 19th is received. Since its date matters here have changed greatly for the better, and I have made two calls for ten millions each.

"There is a strong, steady demand for our bonds, and I have now no fear but the two hundred millions four and a halfs will be exhausted before the 1st of July, when they will be withdrawn. The prospect of placing the four per cent. bonds, commencing July 1, is very good. I have submitted to the syndicate a proposition in substance requiring them to take twenty-five millions four per cents., during July and August, of which five millions will be for resumption purposes, with a stipulation that if they take fifty millions additional in September and October the contract will be extended to January 1, 1878, five millions a month to be applied for resumption purposes. I do not propose to vary essentially from the proposition. I have another offer almost as good from other parties, but I hope to combine these two offers into a modified syndicate, and, if possible, reserve the right to sell bonds at par, in coin or 5-20 bonds, to persons who apply directly to me for exchange, giving, however, the syndicate the half per cent. commission. We will considerably reduce the cost of the bonds, I think, to one-tenth of one per cent., so that the contracting parties will have a reasonably fair commission. I am already assured of many sales of the bonds whenever offered, without the aid of the syndicate, so that I consider myself strong enough to undertake the placing the bonds even without their aid, if they will not agree to reasonable terms. If I can secure the active, hearty co-operation of all the parties who wish to engage in selling the bonds, and they will be content with a reasonable profit, the operation of funding can go on so rapidly that they ought to be satisfied with the profit they will make.

"I have not overlooked the possibility that some movement of coin will be made to meet called bonds in Europe in excess of bonds sold there, but hope to perfect arrangements by which I will secure American bullion to meet this demand, without stopping accumulations of coin in the treasury.

"The prospects here are favorable for a good crop in all the states of the Mississippi valley, but there will probably be a bad crop in California.

"What we must do is push the loan so that it will be an established success before the meeting of Congress. If you can succeed in inspiring the Rothschilds to aid this purpose I am sure of success. My proposition has been sent to them, and I was advised would be answered by telegram about this time; but by the 15th I hope to have the arrangements completed.

"If upon receipt of this letter there is anything of striking interest affecting the loan you may cable me.

"All well in the department. Matters are going along quietly and steadily.

"Very truly yours, "John Sherman. "Hon. Chas. F. Conant, London."

This letter he received about the time the new contract was executed. I subsequently sent him the following cable telegram:

"Washington, June 9, 1877. "Conant, London:

"Contract of August 24, 1876, closed new four and a half per cent. bonds of $200,000,000. New contract twenty-five millions four per cent. bonds taken firm. Particulars by mail.

"Sherman."

Two days later I received a reply, as follows:

"London, June 11, 1877. "Sherman, Washington:

"Congratulations. Rothschilds request me to say that it is important for this market that the public subscriptions in America for four per cents. should be a success, and this will make the market for London. N. M. Rothschild & Sons hope Secretary of the Treasury will advise that banks subscribe immediately. J. S. Morgan & Co., N. M. Rothschild & Sons, think subscription should be opened soon, in view of preparing London market.

"Conant."

This new agreement gave at once a great impetus to the new loan in all parts of the United States, as well as in London. The following letters received indicate this:

"Merchants' National Bank, } "Cleveland, O., June 11, 1877.} "Hon. John Sherman, Secretary Treasury United States.

"Dear Sir:--We learn that you propose to offer the public a certain portion of the new four per cent. loan for a limited time, the amount subscribed to be paid in gold at the par value of the bonds.

"This bank, being a public depositary of the government of the United States, shall be glad to further your plans, and act as agent for the sale of such portion of the loan as you may suggest, and endeavor to give it such publicity as would secure the sale of a portion of these bonds in this part of Ohio.

"Wishing you success in the effort, I remain, very respectfully and truly,

"T. P. Handy, President.

"Treasury Department, June 12, 1877. "John P. Hunt, Esq., Philadelphia, Pa.

"Sir:--Your note is received. The department will be happy to receive your subscription in a short time. The bonds are not prepared, and the treasury regulations for the popular subscription cannot be issued for a few days, when a copy will be sent you.

"It is the purpose to give you, and all other citizens of the United States, an opportunity to subscribe at some convenient place in the city of your residence, to be designated in due time, requiring only a small deposit at the time of subscription, and allowing the privilege of paying at any time within ninety days thereafter.

"The bonds will bear date the 1st of July, and will be sold at par in coin and accruing interest to date of payment.

"Very respectfully, "John Sherman, Secretary."

Contemporaneous with this contract for selling the four per cent. bonds for gold coin, there appeared in the New York "Times" a suggestion that these bonds could be paid in silver. Henry F. French, Assistant Secretary of the Treasury, in a published letter of the date of June 11, asserted his opinion that the bonds issued under the act of July 14, 1870, for refunding, were redeemable in coin of the standard value at that date, and that "as it cannot be known what bonds have been transferred since the act of 1873, all bonds under the act of 1870 must be paid in gold coin of the standard value named in the act of 1873."

I received a letter from Messrs. Seligman & Co., inclosing an extract from the New York "Times," as follows:

"New York, June 12, 1877. "Hon. John Sherman, Secretary of the Treasury, Washington.

"Dear Mr. Secretary:--We beg to inclose a short editorial article which appeared in to-day's New York 'Times,' which, coming from a Republican paper, may frighten investors in our country and abroad. Intelligent people know that you, sir, as well as President Hayes, are sound on the silver question, and yet it may appear to you proper, and highly advantageous to the prompt marketing of the four per cent. bonds, to disabuse those who have been led to believe that the President and you favor the remonetizing of silver, with a view of paying our national debt in a metal so fluctuating as silver has become since the principal nations of Europe have demonetized it. We remain, dear Mr. secretary, your obedient servants,

"J. & W. Seligman & Co."

The article in the New York "Times," of June 12, 1877, said:

"In a dispatch received by the Secretary of the Treasury yesterday from Mr. Conant, the syndicate agent in London, it was stated that the contract touching the four per cent. bonds is well received in London, and the new bond bids fair to be the most popular of American securities. There is no doubt that the bond has many advantages both for home and foreign investors. It has only one point of weakness, and that is, if the silver ring should succeed in getting an unlimited issue of legal tender silver dollars, this bond would be payable, principal and interest, in that coin. Shrewd men, who know what silver has done and is liable to do in the way of ups and downs, will take this fact into consideration, and the government will ultimately be compelled to do the same. At present the strength of the silver movement is estimated to be small, but if this estimate should prove to be mistaken, the new four per cents. would suffer."

Mr. August Belmont wrote me a letter upon this subject of the date of June 14th, in which he said:

"Permit me to add a few words to the letter of my house of this day, in order to urge upon you the vital importance of an official expression of yours over you own signature, in the sense of the letter of Assistant Secretary French, published in this morning's papers.

* * * * *

"You are placed at this moment, by a large portion of your political friends, in a somewhat similar position as the late Mr. Chase was by the attempt of Thad. Stevens to have Congress pass a law to declare the principal of the 5-20 bonds payable in currency.

"Mr. Chase took the bull by the horns by declaring, over his own signature, that the principal as well as the interest of the 5-20 bonds were payable in gold, the faith of the United States being pledged to this by the tacit understanding of the government and its creditors.

"Nothing has reflected more credit and renown upon that great statesman--then as prominent and favored a son of the noble State of Ohio as you are to-day--and nothing more effectually paved the way to the great work of reducing the burden of our people by lowering our interest one-third than that expression, sanctioned and confirmed by subsequent enactment of Congress in 1869.

* * * * *

"You will, in my opinion, insure the success of your financial measures, and add greatly to your high and prominent political position, if you will unequivocally declare that the funded debt of the government can only be redeemed, principal and interest, in gold coin, and that until otherwise agreed upon by the mutual consent of the great commercial nations of the United States, England, France, and Germany, the silver dollar can only be accepted as an auxiliary standard for the payment of fractional indebtedness."

To this I replied as follows:

"Treasury Department, } "Washington, June 16, 1877.} "Dear Sir:--Your private note, the letter of your firm, and one from Messrs. Seligman & Co., asking me to make a public statement over my own signature, similar to that of Mr. French, are received. I have given to this important suggestion the most serious consideration, and have come to the firm conclusion that such an act on my part would be inexpedient, and defeat the very object you have in view. As a purely executive officer, I have no power to pass upon the question mooted. My attempt to do so would at once unite all those who are seized with this mania, and those who oppose executive encroachment upon legislative power. It would create excitement, personal and political animosities would mingle with it, and it would tend more than anything else to defeat the success of the law. I am quite sure this would be the result.

"As to whether Congress or the people would ever undertake to pay either principal or interest of the bonded debt, and especially the bonds sold since 1873, in silver, I have a firm conviction that the question will never seriously be raised. These bonds will be paid, principal and interest, in gold coin. The people of the United States have always been extremely sensitive as to the public credit. They never have, for the sake of an apparent profit, yielded any question involving the public honor.

"The great satisfaction that will arise from the funding of the loan at a low rate of interest, together with their strong sense of public honor and public faith, will always secure the payment of these bonds, principal and interest, in coin.

"Parties or factions may, for a time, raise and contest questions, but they are but bubbles, and will pass away, and, like all other questions involving the public credit, will be rightfully settled, in due time, by Congress and the people.

"Nothing would so tend to disturb this result as unauthorized 'theses,' or dogmas, by an executive officer, upon a question purely legislative or judicial. Indeed, it may be that too much has already been said about this matter by both the President and myself, and I assure you that you will have no occasion to be disturbed by anything truthfully reported of either of us hereafter. The better way is to move right along, making your own statements, and if, at any time, I see a proper occasion for a strong expression of my opinion, I will give it.

"Please show this to Mr. Seligman, and such of your associates as you deem proper, as an answer to all.

"Very truly yours, "John Sherman. "Hon. August Belmont, New York."

The new loan was promptly placed on the market on the 14th of June by the following circular letter signed by the members of the syndicate:

"Under the authority of a contract with the Secretary of the Treasury, the undersigned hereby give notice that from this date until July 16, at 3 p. m., they will receive subscriptions for the four per cent. funded loan of the United States in denominations as stated below, at par and accrued interest in gold coin.

"The bonds are redeemable after thirty years from July 1, 1877, and carry interest from that date, payable quarterly, and are exempt from the payment of taxes or duties to the United States, as well as from taxation in any form, by or under state, municipal, or local authority.

"The interest on the registered stock will be paid by check, issued by the treasurer of the United States to the order of the holder, and mailed to his address. The check is payable on presentation, properly indorsed, at the offices of the treasurer and assistant treasurers of the United States.

"The subscriptions will be for coupon bonds of $50 and $100, and registered stock in denominations of $50, $100, $500, $1,000, $5,000, and $10,000.

"The bonds, both coupon and registered, will be ready for delivery July 2, 1877.

"Forms of application will be furnished by the treasurer at Washington, the assistant treasurers at Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and San Francisco, and by the national banks and bankers generally. The applications must specify the amount and denominations required, and for registered stock the full name and post office address of the person to whom the bonds shall be made payable.

"Two per cent. of the purchase money must accompany the subscription. The remainder may be paid, at the pleasure of the purchaser, either at the time of the subscription or at any time prior to October 16, 1877, with interest added at four per cent. to date of payment.

"The payments may be made in gold coin to the treasurer of the United States at Washington, or assistant treasurers at Baltimore, Boston, Chicago, Cincinnati, New Orleans, and St. Louis, and to the assistant treasurer at San Francisco, with exchange on New York, or to either of the undersigned.

"To promote the convenience of subscribers, the undersigned will also receive, in lieu of coin, United States notes or drafts on New York, at their coin value on the day of receipt in the city of New York.

"August Belmont & Co., New York. "Drexel, Morgan & Co., New York. "J. & W. Seligman & Co., New York. "Morton, Bliss & Co., New York. "First National Bank, New York. "Drexel & Co., Philadelphia. "June 16, 1877."

A few days later I wrote the following letter:

"Treasury Department, } "Washington, D. C., June 19, 1877.} "Sir:--Your letter of the 18th instant, in which you inquire whether the four per cent. bonds now being sold by the government are payable, principal and interest, in gold coin, is received. The subject, from its great importance, has demanded and received careful consideration.

"Under laws now in force, there is no coin issued or issuable in which the principal of the four per cent. bonds is redeemable, or the interest payable, except the gold coins of the United States of the standard value fixed by laws in force on the 14th of July, 1870, when the bonds were authorized.

"The government exacts, in exchange for these bonds, payment at par in such gold coin, and it is not to be anticipated that any future legislation of Congress, or any action of any department of the government, would sanction or tolerate the redemption of the principal of these bonds, or the payment of the interest thereon, in coin, of less value than the coin authorized by law at the time of the issue of the bonds, being the coin exacted by the government in exchange for the same.

"The essential element of good faith, in preserving the equality in value between the coinage in which the government receives and that in which it pays these bonds, will be sacredly observed by the government and the people of the United States, whatever may be the system of coinage which the general policy of the nation may at any time adopt.

"This principle is impressed upon the text of the law of July 14, 1870, under which the four per cent. bonds are issued, and requires, in the opinion of the executive department of the government, the redemption of these bonds and the payment of their interest in coin of equal value with that which the government receives from its issue.

"Very respectfully, "John Sherman, Secretary. "Francis O. French, Esq., 94 Broadway, New York."

The subscriptions were taken in every part of the United States, and within thirty days $67,600,000 were taken in this country and $10,200,000 in Europe, making $77,800,000 sold. This sum, when applied to the payment of the six per cent. bonds, made an annual saving to the people of the United States of $1,556,000. Since the 1st of March, 1877, there had been sold under the refunding act $135,000,000 four and a half per cent. bonds and that amount of six per cent. bonds was paid off and canceled, thus saving to the people of the United States $2,025,000 in coin each year. The aggregate reduction of interest by both classes of bonds from the 1st of March to the close of the popular loan, was $3,581,000 a year in coin. This was regarded as a great success.

Early in July I set out on the revenue cutter "U. S. Grant" on a visit of inspection along the north Atlantic coast, accompanied by the chief of the coast survey, the secretary of the lighthouse board, the superintendent of the life-saving service, and the chief of the revenue marine service, and also by Webb Hayes, the son of the President. We visited the life-saving stations along the New Jersey coast. I was deeply interested in this service, which I regard as the most deserving humanitarian branch of the public service. We also visited some of the leading lighthouses along the coast and the principal customhouses between the Chesapeake Bay and Eastport, Maine. We were everywhere received with great kindness and many social courtesies were extended to us, especially in New York, Boston and Portland. This outing was a great relief from the close confinement I had undergone since the 4th of March. The information I gathered as to these branches of the service, with which I had not previously had much acquaintance, was of great value to me. Such trips are sometimes treated by the press as "junketing" at the public expense. This is a great error. Each of us paid his share of the expenses and the vessel only pursued its usual course of duty. I was brought into close association with these subordinate officers of the department and became informed of their duties, and their fitness for them, and was enabled to act with intelligence on their recommendations.

The only unpleasant incident that occurred on the trip was the running of the cutter upon a rock upon the coast of Maine. This happened in the afternoon of a beautiful day. All the gentlemen with me and the officers of the vessel were on deck. The various buoys were being pointed out and a map of the channel was lying before us. Some mention was made of a buoy that ought to be near the place where we were to mark the location of a rock, but none was found, and suddenly we heard the scraping of the vessel upon the rock. The cutter trembled and careened over. The captain was somewhat alarmed and turned the vessel toward the beach, where it was speedily examined and found to be somewhat injured. We ascertained afterwards that the buoy had been displaced by a storm and that a vessel was then on its way to replace it. The sinking of the revenue cutter "U. S. Grant" was reported in the morning dispatches and created some excitement; but the vessel did not sustain any substantial injury. We thought it best to leave it for a time to be thoroughly examined and repaired and took another vessel to complete our journey to Eastport, the northeastern port of the United States. From thence Webb Hayes and myself returned to Portland and crossed over the Burlington, Vermont, on Lake Champlain, and from thence went to Saratoga, where we remained a few days, and then returned to Washington on the 22nd of July. We passed through Baltimore on the day the riots occurred in that city, and soon after heard of the much more dangerous outbreak in Pittsburg.

On the 6th of August I wrote to Mr. Conant as follows:

"Your letter of the 26th ultimo is received. You can safely say to the Messrs. Rothschild that the strikes have been totally disconnected with the government, but grow purely out of a contract between the managers of the leading lines of railway and their employees as to rates of pay.

"The railroad companies have, for several years, competed with each other in a very improvident and reckless way, and are now, and have been for some time, carrying freight for less than cost. This has caused a large reduction of the net income of roads, has led to the loss of dividends, and now to the reduction of wages of employees to rates scarcely sufficient to support life. Hence the strikes.

"The government has been appealed to by both railroads and strikers, by states and by cities, for relief, and has promptly extended it in every proper case, and, without shedding blood, has, in every case, suppressed the riot, and maintained the peace, so that the government is really stronger by reason of these unfortunate events than before. I do not observe that any change has been made by them, either in the price of bonds or in the price of gold, nor in the payment of subscriptions to four per cent. bonds.

"No effort is made to sell the bonds now, nor do I care to press the home market, until enough bonds are sold abroad to provide for called bonds abroad.

"The month of August must necessarily be a languid one, and I do not advise any unusual efforts to force sales.

"Your supplemental cipher was received after your telegram, but was soon found and dispatch made out."

I no doubt was mistaken in the effect of the strikes upon our public credit. From that time forward for many months there was scarcely any sale of government bonds at any price. The contracting parties informed me that no bonds were then selling in the market and that in New York they were a trifle below par. Practically, for the remainder of the year, government securities were greatly affected in price and value.

CHAPTER XXX. POLICY OF THE HAYES ADMINISTRATION. Reception at my Home in Mansfield--Given by Friends Irrespective of Party--Introduced by My Old Friend and Partner, Henry C. Hedges --I Reply by Giving a Résumé of the Contests in South Carolina and Louisiana to Decide Who Was Governor--Positions Taken by Presidents Grant and Hayes in These Contests--My Plans to Secure the Resumption of Specie Payments--Effects of a Depreciated Currency--Duties of the Secretary of the Treasury--Two Modes of Resuming--My Mansfield Speech Printed Throughout the Country and in England--Letters to Stanley Matthews and General Robinson--Our Defeat in Ohio--An Extra Session of Congress--Bills Introduced to Repeal the Act Providing for the Resumption of Specie Payments--They All Fail of Passage-- Popular Subscription of Bonds All Paid For.

About the 10th of August I made my usual visit to my home at Mansfield. Soon after my arrival I received the following invitation, signed by a great number of my neighbors and friends, without respect to party, expressing a desire to tender me a reception:

"Hon. John Sherman.

"Dear Sir:--The undersigned, your townsmen, and fellow-citizens of Richland county, desire to give you some manifestation of the very high regard in which we hold your public services. We are glad to know that you are permitted to again be at your own home, and for a week or two mingle with us in all the unrestrained freedom of friends and townsmen.

"Financial and other public questions are, however, of importance to us always, and especially now. We recognize your great ability and long experience, and cannot but think that an expression of your views on these questions will be very highly prized by the people of Ohio, irrespective of party. We therefore desire, with your sanction, on some day during the next week, to give you a hearty welcome to your old home, and shall be glad to have you, on the occasion, give your views on the public questions, now of such vast importance to all. With our kindest regards, we are,

"Your friends, etc., etc."

I replied as follows:

"Mansfield, O., August 13, 1877. "Gentlemen:--I received with much pleasure your kindly letter of the 10th inst., signed by so many of my old friends and neighbors of Mansfield, and assure you of my high appreciation of your generous words of courtesy and regard.

"I always return with satisfaction to my home on the western slope of our little city, and always enjoy the fresh air and picturesque country around us, but, more than all, the cordial greetings of old friends, with whom I have been acquainted since boyhood. It will give me much pleasure, at any time or place, to meet you, and to speak to you on current public questions, and I venture to name next Friday evening.

"Very truly yours, "John Sherman."

The gathering was one of the largest that had come together in Mansfield for years. The evening was delightful, cool and balmy, a bright moonlight adding attraction to the scene. A stand decorated with flags had been erected near the center of the park, with seats in front, and lights gleamed on either hand. I was introduced to the audience by my old friend and partner, Henry C. Hedges, whose remarks were too flattering for me to insert. In closing he said:

"Regarding you as our friend, our neighbor, our townsman, we are glad and rejoice. We welcome you home, though your stay may be only a few days, and we sincerely trust that, rested by your stay, you may go back to your work reinvigorated, and that frequently we may have the pleasure of your temporary visits, and in the future, when your labors are finished, among us you may spend your old age, honored and happy."

As my speech expressed my views upon important questions of that time, I think it well to embody extracts from it as part of the history of the then recent events, and my anticipations for the future:

"The kindly words of welcome uttered by my friend and associate of many years move me beyond expression. They recall to me the scene of the early time when I came to Mansfield, then a scattered hamlet of about 1,100 inhabitants, without pavements and without any of the modern conveniences of cities and towns. As Mr. Hedges has told you, very many of those I then met here are dead and gone. I was a boy then. A generation has passed away, and the sons of those I met then as citizens of Richland county now fill places of trust and responsibility. I have every reason in the world for being strongly attached to this town of Mansfield. You have always been kind to me. Here I studied law, here I practiced my profession for several years, here I married my wife, a native of your town, here I have lived ever since, and when this mortal coil shall be shuffled off, here, probably, will my body rest with your fathers. But pardon me, fellow-citizens, if, under the kinds words of welcome of your spokesman, my old and honored friends, Mr. Hedges, I had forgotten that we are not here merely to exchange courtesies, but to discuss grave matters of far more importance than the life or memories of an individual.

"In doing so I wish it distinctly understood that I speak for myself alone, as a citizen of Ohio, to you my fellow-citizens and my neighbors, to whom I am under the highest obligations of gratitude and duty.

"The President authorized me to say one thing, and one thing only, for him, and in his name, and that is that all reports that impute to him any participation whatever in the nomination of candidates on your state ticket, or any desire or purpose to influence in any way the senatorial contest in Ohio, are utterly groundless.

"These are your matters, and I can assure you for him, that he does not and will not, interpose in any such contest between political friends.

"You all know that I am now, and have been, warmly attached to the Republican party. I believe in its principles and honor its work. With my strong convictions I could not conceal my partisan bias, or my earnest hope for the success of the Republican party, but the subjects of which I intend to speak to you to-night will not lead me to say much of former political struggles, or to fight our old battles over again, but chiefly to discuss the actual administrative questions of the day as they have arisen since the 4th of March last, and in all of which you are alike interested, whether you may call yourselves Republicans or Democrats. As to those questions I wish fairly to appeal to the candor and good judgment of honest men of both parties, only asking for the administration of President Hayes that considerate charity of judgment which must be extended to all human agents.

"When Mr. Hayes was inaugurated as President he found thirty-six states in the full and uncontested exercise of all the powers of states in the Union. In two states only there were contests as to who was governor. Both contests had existed from January to March, 1877, while General Grant was President.

"In South Carolina Governor Chamberlain claimed to have been elected on the Republican ticket, and General Hampton on the Democratic ticket. The President is not made the judge of who is elected governor of a state, and an attempt to exercise such a power would be a plain act of usurpation. The constitution of South Carolina is much like that of Ohio. The count of the vote was to be made by the general assembly of the state. Unfortunately for Chamberlain a controlling question in the contest had been decided against him by a Republican court, and he was only kept in possession of the state house by the actual presence of United States troops in the building. He had appealed again and again to President Grant to recognize him as governor and give him the aid of Federal troops in the enforcement of his claim, which General Grant had refused, seeking only to preserve the public peace.

"When President Hayes was inaugurated both contestants were called to Washington and both were patiently heard and the questions presented were patiently and carefully examined. The President held that a case was not presented in which, under the constitution and the laws, he was justified in using the army of the United States in deciding a purely local election contest. The soldiers and bayonets of the United States were then withdrawn from the state house--not from the state, nor the capital of the state--but from the building in which the legislature, that alone could lawfully decide this contest, must meet. This was all that was done by the President, and Governor Chamberlain, without further contesting his claim, abandoned it and left the state.

"I say to you now that, strongly as I desired the success of Governor Chamberlain and the Republican party in South Carolina, the President had not a shadow of right to interpose the power of the army in this contest, and his attempt to do so would have been rash and abortive as well as without legal right.

"The case of Louisiana was far more difficult. The local returning officers of that state had, after a full examination, certified to the election of the legislature, showing a Republican majority in both houses. This had been done by excluding from their return the votes of certain parishes and counties wherein intimidation, violence and fraud had prevailed to an extent sufficient to change the result of the election. I was present, at the request of General Grant, to witness the count, and I assure you, as I have said officially, that the proof of this intimidation, violence and fraud, extending to murder, cruelty, and outrage in every form, was absolutely conclusive, showing a degree of violence in some of those parishes that was more revolting and barbarous than anything I could conceive of. It was plain that the returning officers had the legal right to pass upon and certify, in the first instance, who were elected members of the legislature, and that they were justified by the evidence in excluding bulldozed parishes, but it was equally clear that their return was not conclusive upon the members elected, and that each house had the constitutional right to pass upon the returns and elections of its members, and to set aside the action of the returning board. The two houses, when organized, had also the power to pass upon the returns of the election of governor, and they alone and no one else. Neither the President of the United States nor the returning board has any power or right to pass upon the election of governor. And here the difficulty in the Louisiana case commences.

"Governor Packard contends that a majority of the two houses, as duly returned, did pass upon the election of the governor, and did return that he was duly elected, but this was stoutly denied by Governor Nichols. This vital point was strongly asserted and denied by the adverse parties, and the legislature of Louisiana divided into two hostile bodies, holding separate session, each asserting its legal power, and denouncing the other as rebels and traitors. Governor Packard and his legislature called upon President Grant for the aid of the army to put down insurrection and domestic violence; and here I confess that if I had been President, instead of General Grant, I would have recognized Packard and sustained him with the full power of the general government. My intense feeling, caused by the atrocities in Louisiana, may have unduly influenced me. But General Grant did not think this was his duty. I do not criticise his action, but only state the facts, He would only maintain the peace. He would not recognize Packard as governor, but I know, what is now an open secret, the strong bent of his mind, and at one time his decision was to withdraw the troops, to recognize Nichols and thus end this dangerous contest. He did not do this, but kept the peace.

"But during these two months the whole condition of affairs had slowly changed in Louisiana. The government of Packard had dwindled away until it had scarcely a shadow of strength or authority, except at the state house, where it was upheld by federal bayonets. The government of Nichols had extended its authority over the state and was in full existence as the de facto government of Louisiana, supported by the great body of the white men and nearly all the wealth and intelligence of the state, and by the tired acquiescence of a large portion of the colored people, some of whom deserted Packard's legislature and entered that of Governor Nichols. The delay and hesitation of General Grant had been fatal to Packard, and when Hayes became President the practical question was greatly changed. One thing was clear, that a legislature had been duly elected in November previous, and was then in existence, though separated into two parts. If the members lawfully elected could be convened, they alone could decide the question of who was governor, without the intervention of troops, and their decision could be supported, if necessary, by the general government.

"The most anxious consideration was given to this question. Days and weeks of anxious deliberation were given to it by the President and his cabinet. But one way seemed open for a peaceful solution, and that was to gather, if possible, a single legislature that could be recognized as the depositary of the representative will of the people of Louisiana. If this could be done it had the unquestioned right to decide who had been elected governor, and all other questions would settle themselves. To aid in this object, a commission of the most eminent men, high in position, from different states, and distinguished for judicial impartiality, was selected and the result is known to all. They went to Louisiana, and, with great difficulty, brought together these hostile legislatures which met, organized, promptly settled the question in dispute in favor of the government of Nichols, and thus ended this most dangerous controversy. No other change was made, no other act done except, when the solution was almost accomplished, the few troops which had then occupied that state house were withdrawn a few squares away, to their barracks. Thus, in this peaceful appeal to the legislature of Louisiana, this controversy, which not only endangered the peace and safety of this state, but the peace and safety of the whole people of the United States, was settled. This is the sum and substance of all that was done in the southern policy, as it is called, of the President.

"Perhaps I ought to state that his policy has a broader motive than a mere settlement of a local election contest. It seeks to bring the north and south again into conditions of harmony and fraternity, and, by a frank appeal to the generous impulses and patriotic feeling of all classes of people in the south, to secure, not only peace among themselves, but the equal protection of the laws to all, and security in the enjoyment of political and civil rights.

"No doubt the result in Louisiana caused some disappointment to many Republicans throughout the United States, who deeply sympathized with their Republican brethren in that state. In that feeling I did, and do, share, and yet I feel and know that every step taken by President Hayes was right, in strict accordance with his constitutional duty, and from the highest motives of patriotism. Some are foolish enough to talk of his abandoning the colored people and their constitutional rights. President Hayes, from his early manhood, has been an anti-slavery man; his life was imperiled on many battlefields in the great cause of liberty, he sympathizes more and will do more for the equal rights of the colored people than those who falsely accuse him, and I believe this day, that the policy he has adopted will do more to secure the full practical enforcement of those rights than the employment of an army tenfold greater than the army of the United States."

In this speech I stated the action I proposed to take to secure the resumption of specie payments. The plan was executed in all its parts by me, and my remarks may, in one sense, be said to be a history of resumption. Continuing I said:

"And now, fellow-citizens, this brings me to the question upon which there is so much diversity of opinion, so many strange delusions, and that is the question of specie payments. What do we mean by this phrase? Is it, that we are to have no paper money in circulation? If so, I am as much opposed to it as any of you. Is it that we are to retire our greenback circulation? If so, I am opposed to it and have often so said. What I mean by specie payments is simply that paper money ought to be made equal to coin, so that when you receive it, it will buy as much beef, corn or clothing as coin.

"Now the importance of this cannot be overestimated. A depreciated paper money cheats and robs every man who receives it, of a portion of the reward of his labor or production, and, in all times, it has been treated by statesmen as one of the greatest evils that can befall a people. There are times when such money is unavoidable, as during war or great public calamity, but it has always been the anxious care of statesmen to return again to the solid standard of coin. Therefore it is that specie payments, or a specie standard, is pressed by the great body of intelligent men who study these questions, as an indispensable prerequisite for steady business and good times.

"Now, most of you will agree to all this, and will only differ as to the mode, or time, and manner; but there is a large class of people who believe that paper can be, and ought to be, made into money without any promise or hope of redemption; that a note should be printed: 'This is a dollar,' and be made a legal tender.

"I regard this as a mild form of lunacy, and have no disposition to debate with men who indulge in such delusions, which have prevailed to some extent, at different times, in all countries, but whose life has been brief, and which have ever shared the fate of other popular delusions. Congress will never entertain such a proposition, and, if it should, we know that the scheme would not stand a moment before the Supreme Court. That court only maintained the constitutionality of the legal tender promise to pay a dollar by a divided court, and on the ground that it was issued during the war, as in the nature of a forced loan, to be redeemed upon the payment of a real dollar; that is, so many grains of silver or gold.

"I therefore dismiss such wild theories, and speak only to those who are willing to assume, as an axiom, that gold and silver, or coined money, have been proven by all human experience to be the best possible standards of value, and that paper money is simply a promise to pay such coined money, and should be made and kept equal to coined money, by being convertible on demand.

"Now, the question is as to the time and mode by which this may be brought about, and on this subject no man should be dogmatic, or stand, without yielding, upon a plan of his own, but should be willing to give and take, securing the best expedient that public opinion will allow to be adopted. The purpose and obligation to bring our paper money to the standard of coin have been over and over again announced by acts of Congress, and by the platforms of the great political parties of the country. If resolutions and promises would bring about specie payments, we would have been there long ago; but the diversity of opinion as to the mode now-- twelve years after the close of the war--still leaves our paper money at a discount of five per cent. Until this is removed, there will be no new enterprises involving great sums, no active industries, but money will lie idle, and watch and wait the changes that may be made before we reach the specie standard.

"In 1869, Congress pledged the public faith that the United States would pay coin for United States notes. Again, in January, 1875, after more than a year's debate, Congress declared that on and after the 1st of January, 1879, the United States would pay its notes in coin.

"The Secretary of the Treasury is expressly required to prepare for, and maintain, the redemption of all United States notes presented at the treasury on and after that date, and for that purpose he is authorized to use all the surplus revenues, and to sell bonds of the United States bearing four, four and a half, and five per cent. interest, at par in coin. It is this law, called the resumption act, now so much discussed in the papers, that imposes upon the office I hold most difficult and important duties, and without replying to any attacks made upon me, I am anxious to convey to you personally, what I have done, and what I must do, in obedience to the provisions of this act. It is said that the law is defective, but, if the great object and policy of the law is right, the machinery of the law could easily be changed by Congress. That resumption can be secured, and ought to be secured, under this law, it will be my purpose to show you, and I shall not hesitate to point out such defects in the law as have occurred to me in its execution.

"There are two modes of resumption; one is to diminish the amount of notes to be redeemed, which mode is commonly called a contraction of the currency; the other is to accumulate coin in the treasury, to enable the secretary to maintain the notes at par."

Objection had been made that under the first mode resumption would be a process of converting a non-interest bearing note into an interest bearing note, and that was true, but what right had we, as a nation, or had any bank, or individual, to force in to circulation, as money, its note upon which it paid no interest? Why ought not anyone who issued a promise to pay on demand be made to pay it when demanded, or pay interest thereafter? What right had he, in law or justice, to insist upon maintaining in circulation his note, which he refused to pay according to his promise, and which he refused to receive in payment of a note bearing interest? A certain amount of United States notes could be, and ought to be, maintained at par in coin, with the aid of a moderate coin reserve held in the treasury, and to the extent that this could be done they formed the best possible paper money, a debt of the people without interest, of equal value with coin, and more convenient to carry and handle. Beyond this the issue of paper money, either by the government or by banks, was a dangerous exercise of power, injurious to all citizens, and should not continue a single day beyond the necessities that gave it birth. I added:

"The one practical defect in the law is, that the secretary is not a liberty to sell bonds of the United States for United States notes, but must sell them for coin. As coin is not in circulation among the people, he is practically prohibited from selling bonds to the people, except by an evasion of the law, or through private parties. Bonds are in demand and can readily be sold at par in coin, and still easier at par, or at a premium, in United States notes. The process of selling for United States notes need not go far before the mere fact that they are receivable for bonds would bring them up to par in coin, and that is specie payments.

"But the reason of the refusal of Congress to grant this authority, often asked of it, was that it would contract the currency, and this fear of contraction has thus far prevented Congress from granting the easiest, plainest, and surest mode of resumption. To avoid contraction, it provided that national bank notes may be issued without limit as to amount and that, when issued, United States notes might be retired to the extent of four-fifths of the bank notes issued. This was the only provision for redeeming United States notes that Congress made or would make, and this, it was supposed, would reduce the United States notes to $300,000,000 before January 1, 1879. The actual experiment only proves the folly of the cry we had for more money, more money."

The second mode of resuming was by accumulating coin gradually, so that when the time fixed for resumption should arrive, the treasury might be able to redeem such notes as should be presented. In this respect the resumption act was as full and liberal as human language could frame it. The secretary was authorized to prepare for resumption, and for that purpose to use the surplus revenue and sell either of the three classes of bonds, all of which in 1877 were at or above par in coin. I said: "The power can be, ought to be, and will be, executed if not repealed."

This speech was printed in the leading papers in the United States and in England, and was regarded by the public at large as a declaration of the policy of the administration, to enforce the resumption law, whatever might be the current of opinion developed at the approaching elections, which, as they occurred, were generally against the Republican party. The Democratic party had taken position against the resumption act, in favor of the enlarged issue of United States notes and the free coinage of silver. The strikes led to the organization of labor unions, which, though independent of political parties, chiefly affected the Republican party then in power.

Among many letters received by me, after this speech, I insert one from Mr. Evarts:

"Windsor, Vt., Aug. 30, 1877. "The Hon. John Sherman, Secretary of the Treasury.

"Dear Mr. Sherman:--I congratulate you upon the excellence and success of your speech in Ohio. The difficulty of the undertaking justly enhances the credit of its prosperous treatment.

"I inclose a remonstrance from an 'Injustice' on the subject of a new arrangement in the weighing at the customhouse. It was sent to me at Washington and forwarded from there here. I know nothing of its source and have no opinion on the subject of the supposed project.

"The President's visit has pleased the people in New England amazingly. I hope to see you all in Washington early next week.

"I am very truly yours, "Wm. M. Evarts."

On the 14th of September, 1877, I sent to Hon. Stanley Matthews the following letter, giving my view of the position taken by General Ewing and Mr. Pendleton:

"At the request of General Robinson I have directed to you, in the care of Bickham, a number of documents for reference in your debate with Ewing, and as Robinson says you wish me to make suggestions, I venture to do so, but without any confidence that they can be of assistance, though they can do no harm.

"The most beneficial financial act of the administration is the reduction of the interest on the public debt. The amount already accomplished is stated in my printed speech. The rapidity of this process depends entirely upon the credit of the government. Ewing's policy would destroy our credit and stop the process. The very doubts created by him and Pendleton have already damaged the government very largely. Confidence is so sensitive that when prominent men like Ewing and Pendleton talk as they do, the injury is immediate.

"The whole difference between the amount of silver and gold at this moment is eight per cent., so that the payment of the debt in silver would lessen the burden of the debt eight per cent., but under the funding operations, which would be entirely destroyed by anything that alarmed the market, we are enabled to save thirty-three per cent. Whatever may be our right to pay our bonds, either in greenbacks or in silver, this question of expediency, as you very properly said in one of your speeches, is to be considered apart from the question of legal power.

"Refunding would go on with greatly accelerated speed if we could sell bonds for greenbacks. We make discrimination against the greenbacks by refusing to take them in payment of bonds. If I had the power to sell bonds for greenbacks I could make greenbacks equal to coin with scarcely a perceptible change. That is the advice of the most sagacious men in the country. I know it. There is talk about the bondholder being a privileged person. He ought to be so no longer, and the moment that a bond could be bought with currency at par in gold, all discrimination in favor of the bondholder would disappear.

"The differences among Republicans about silver will be settled by the use of the silver dollar to the extent that it can be kept in circulation at par with greenbacks, and is a pure question of detail. The difference in the Democratic party about interconvertible currency is vital, and Ewing's doctrine overthrows the whole Democratic theory of finance before the war.

"The existence of the national banks is a question simply of policy and not a question of principle. The right conferred upon banks to issue circulation is not conferred for their profit, but for the public convenience, and all Republicans can agree that that right should never be permitted to exist except when it is for the public convenience. The office of bank notes is simply to supply the ebb and flow of currency made necessary by the wants of business. The United States cannot lend United States notes, and therefore cannot meet this want. Ewing proposes to destroy the whole national bank system, interwoven with all the business of the country. I send you the last statement of the national banks. You can very easily show the effect upon the reviving industry of the country of the withdrawal of these loans and disturbing all this business. As at present organized the circulation is the vital thing, and if the bonds held by the banks to secure circulation were thrown upon the market, it would stop funding and compel also the withdrawal of loans, and create distress compared with which our present troubles are mere moonshine.

"I am afraid you will think I am going on to make a speech for you, so I will stop abruptly, with the promise that if I can furnish you any documents or information that may be of service to you I will do so with pleasure.

* * * * *

"I inclose the last statement of the national banks containing many points that may be of use.

"Upon the question of resumption I believe we are all agreed that it must come, and that the only standard of value is gold or silver coin. The time and manner are the points of disagreement. Ewing is opposed to all resumption, but believes in printing a dollar and saying it is a dollar, while all the world would know that the declaration is a lie. The fact that we have advanced the greenbacks six per cent. in one year, by the movements made under the resumption act, shows that it is working pretty well. I send you a statement showing the changed condition in a year of our finances.

"While the people differ about the resumption act there is time to change it if it needs change, but Ewing would go back and commence the process over again. I am disposed to be tolerant about differences on the resumption act, for I think it will demonstrate its success or failure before Congress is likely to tamper with it."

On the 21st of September I wrote to General J. S. Robinson the following letter, evincing my anxiety as to the result of the canvass in Ohio, as it was then conducted:

"I am so deeply impressed with the importance of the campaign in Ohio that it makes me uneasy and restless that I cannot participate in it.

"What a magnificent chance the Republican party in Ohio now has, not only to place itself in the vanguard in the United States, but to do this country a service as great as any victory won by the Union army during the war. Here it is demonstrated by the cordial reception of the President in the south, by his hearty indorsement in Massachusetts, and by a public sentiment now growing and spreading with amazing rapidity, that in his southern policy he has opened the means of order, safety, peace and security in all the southern states.

"Now, when it is demonstrated that the difficulties in the way of resumption were myths conjured up by the fantasies of demagogues, when our notes are worth within three per cent. of gold, when Providence has favored us with boundless crops, and prosperity is again coming upon us after a dreary time of distress and trial caused by inflated paper money, why is it that we cannot see all these things and avail ourselves of the advantage they give us in our political contest? It seems to me that we ought to carry the state by an overwhelming majority, and if we do so we will establish the beneficial principles of our party beyond danger of overthrow by reaction, and we will secure the peaceful and orderly development of industry without a parallel in our previous history.

"I wish it were in my power to impress every Republican in Ohio with my earnest conviction about this matter, but here, constantly occupied by official duties, I can only remain watching and waiting in anxious suspense lest the great advantages we possess shall be frittered away or lost by inaction or mistakes.

"I know you will do your utmost for success, and only write you this to show you how earnestly I sympathize with you in your efforts."

The election in Ohio, in October, resulted in the defeat of William H. West, Republican, for governor, mainly on account of his position as to labor unions, but no doubt also because of a feeling of opposition against the resumption of specie payments. Richard M. Bishop, Democrat, was elected governor, with a Democratic legislature in both branches, which subsequently elected George H. Pendleton as United States Senator.

The following letter expresses my view of the election, and the causes which led to our defeat:

"Washington, October 17, 1877. "Dear Sir:--Your letter of the 13th inst. is received.

"Your statement of the causes of our defeat in Ohio seems to me reasonable, though probably I would not agree with you in many points stated.

"It is not worth while now to bother ourselves about what we cannot help. All we can do is to inquire how far we have been right, and to that extent pursue the right, whether victory or defeat is the result. No party can administer a government, that will not take the risk of temporary defeat when it is pursuing what, in the opinion of the great masses of it, is a beneficial policy for the country.

"So far as the southern question is concerned, I feel that the President did right. The wisdom of his executive order as to office holders depends upon the construction given to it, and he is not responsible for a perverted construction not authorized by its words or terms. As to the resumption policy, the law is plain and mandatory, and, more than all, the law is right, and the Republican party might as well understand first as last, that the question of resumption is one higher than any party obligations and will be pursued by our adversaries if we do not. We can gain the credit of success, but we can gain no credit by retreating on this vital question. While the law stands nothing is left but to execute it, and for one I never would aid to alter the law, except to make it more effective, and would be very willing to retire on this question rather than to surrender.

"The only way is for us to go steadily forward, with a certainty that public opinion in the end will sustain us if we do what is substantially right. The Republican party has been in this position many times and has never won success by retreat and cannot do so now.

"Very truly yours, "John Sherman. "A. P. Miller, Esq., Toledo, Ohio."

It became necessary for the President to call an extra session of Congress, on account of the failure of the passage of the army bill at the previous session. Though the proclamation was issued on the 5th of May, 1877, Congress was not convened until the 15th of October following. Both Houses met on the day appointed. The Senate was organized by the election of Thomas W. Ferry, of Michigan, as president pro tempore, and Samuel J. Randall, a Democratic Member from Pennsylvania, was elected speaker of the House by a majority of seventeen over James A. Garfield, the Republican candidate.

The message of the President was confined mainly to the circumstances connected with the failure of the previous Congress to provide for the support of the army, and to certain deficiencies in appropriations required for the government, the President stating that as certain acts of Congress, providing for reports of the government officials, required their submission at the regular annual session, he deferred until that time any further reference to subjects of popular interest.

Congress, however, not being confined in its powers, and having full jurisdiction of all legislative questions, proceeded at once to discuss financial questions and especially the measures taken for the resumption of specie payments. No less than four bills were introduced in the Senate and fourteen in the House, providing for the repeal, in whole or in part, of the act for the resumption of specie payments. One of these bills was reported from the committee on banking and currency, by Mr. Ewing, on the 31st of October. It was the subject of debate during the remaining period of the session, and finally passed the House on the 23rd of November, by the vote of 133 yeas and 120 nays. It repealed all that part of the resumption act which authorized the Secretary of the Treasury to dispose of United States bonds, and to redeem and cancel the greenback currency, or practically all the resumption act except the clauses for the substitution of silver coin for fractional currency. It was sent to the Senate on the 26th of November, and referred to the committee on finance. No action was taken upon it during that session, which adjourned on the 3rd of December. The regular session convened on the same day, with this bill still pending in the committee on finance. On the 17th of April, 1878, Mr. Ferry, from that committee, reported back the bill with an amendment to strike out all after the enacting clause, and insert new matter. After a long debate ending on the 13th of June, the following amendment was adopted as a substitute for Mr. Ferry's amendment, by a vote of yeas 30, nays 29:

"That from and after the passage of this act United States notes shall be receivable the same as coin in payment for the four per cent. bonds now authorized by law to be issued; and on and after October 1, 1878, said notes shall be receivable for duties on imports."

The bill, as amended, passed the Senate by a large majority. In this form it had no proper relevancy to the bill as it passed the House, and the action of the Senate was regarded as a practical defeat of the bill. It was taken up in the House on the 14th of June, and the question being taken on concurring in the amendment of the Senate, the vote was yeas 112, nays 122, so the motion was disagreed to. On the 17th of June, a motion was made to suspend the rules and proceed to the consideration of the bill, but as two- thirds did not vote in favor of the motion it was not adopted, and the bill was not called up for action until the next session of Congress, when Mr. Ewing, on February 22, 1879, reported it from the committee on banking and currency, and moved to concur in the Senate amendments, with amendments changing the date on which the act should take effect, and also adding, "that the money hereafter received from any sale of bonds of the United States shall be applied only to the redemption of other bonds bearing a higher rate of interest, and subject to call."

This motion came too late, as the whole subject-matter had been disposed of by the resumption of specie payments on the 1st of January previous. It led, however, to a considerable debate in which Mr. Garfield participated. He made a humorous allusion to the revival of controversies that were past and gone since the 1st of January, and moved to lay the bill and the amendments upon the table. That was adopted by a vote of yeas 141, nays 118.

I have given the official history of the efforts to repeal the resumption act, but it would be beyond the limits of this book to quote, or even state, the copious speeches for and against resumption. I felt secure, for if such a bill should pass, the executive veto would prevent any action by Congress that would interfere with the execution of the law. My principal effort was to convince Congress that it ought not to interfere with what the House called a destructive experiment, but what I regarded as an easy and beneficial execution of existing law. A large part of the opposition was purely political. The resumption act was a Republican measure, voted for only by Republicans. The Democratic party had, by the elections just previous to its taking effect, secured a majority in the House, and, with the aid of a few Republican Senators, with strong "greenback" proclivities, had the control of the Senate on the financial question.

This political condition in the fall of 1877 tended to prevent the sale of four per cent. bonds after the close of the popular loan. My official correspondence with members of the syndicate, and with Mr. Conant, published by order of the House of Representatives in the volume "Specie Resumption and Refunding of the National Debt," shows fully the earnest effort made by me to sell the four per cent. bonds. This was successful to a slight degree in August and September, but sales were substantially suspended after that date, until it became manifest that the two Houses could not agree upon the repeal of the resumption act, or the remonetization of silver. The threatened measure for the free coinage of silver, and the fear that the bonds would be paid in silver coin less valuable than the gold coin paid for them, tended, more than the efforts to repeal the resumption, to prevent the sale of bonds.

"Mansfield, Ohio, August 18, 1877. "Dear Mr. Conant:--Your letter of the 4th was forwarded to me here. I notice what you say about the calls, but you must remember that out of the sales of four per cent. bonds we must provide five millions gold for each of the months of September and October, so that for ten millions of bonds there must be no calls. I should have informed you of this sooner, but neglected to do so before leaving. The parties in New York, and no doubt the Rothschilds, have been advised of it and agree to it. Until the popular subscription is paid for it will be difficult to press the sale of the four per cents., but I hope in September the sales will commence and be pushed rapidly. The movement of the crop has already commenced. The strike seems to be ended, with a better feeling among laborers, and some advance in freight. The necessity of the trunk lines combining on freight is so clear that it is likely to result in some agreement that will stand.

"I made a speech here yesterday, which no doubt will be received by you in the New York papers in due time, and which contains some matters affecting your operations. It is substantially in conformity with the general wish of the administration as to financial affairs, and it might be well for you to call the attention of the Rothschilds to that part of it relating to our loans and the basis of our credit.

"I return next week to Washington, where I will again be happy to hear from you.

"Very truly, "John Sherman, Secretary."

Mr. Conant answered as follows:

"New Court, St. Swithin's Lane, } "London, E. C., England, August 23, 1877.} "Dear Mr. Secretary:--I was very glad indeed to receive your letter of the 6th instant. I at once informed the contracting parties of what you had written in reference to the strikes and riots at home. The sale of our bonds has not been directly interfered with on account of the riots. In fact, the occurrence of the riots has almost been forgotten. The London 'Times,' of this morning, has, however, revived the subject by printing a letter from its Philadelphia correspondent, in which he says that the strikers, it is evident, are to get into politics through the organization of a party, to be called the 'Workingmen's party;' and he predicts that mischief will come out of it through the control of state governments which the mob element may gain; and the consequent enactment of bad laws, etc., especially against capital. Another letter is also printed (written by a Mr. Connolly), by which it is made to appear that American is in a terrible financial condition. These two letters are made the subject of an editorial which, on the whole, is not very complimentary to us, nor calculated to improve our credit. The 'Times' of last Monday's date had an editorial on the speech which you made in Ohio on Friday last. I send you a copy, and think, if you can find time, you will rather enjoy reading the article. Nearly all of the English people, as you are aware, believe in the principle of 'free trade,' and it is but natural that they should, for the reason that England depends upon her great commerce and her markets in every part of the globe for the employment and maintenance of her people. People here think that our protectionist tariffs are not only detrimental to the commercial interest of our own country, but that they are of a suicidal character so far as our fiscal policy is concerned. They think, in other words, that it would be vastly better for the real interest of the people of the United States if they would trade more extensively with the people of England. What the 'Times' editor has to say about the balance of trade will amuse you, and yet people talk about the advantages of a balance of trade as being an exploded idea. English interests are laboring to effect a new treaty with France, under which large reductions in duties are proposed.

"I note what you are pleased to say in regard to sales of bonds during the present month. With the price of bonds at the present moment they cannot of course be sold. The parties will find it necessary to use great caution as well as care in managing the market, so as to get control of it. Any attempt to force the sale of the bonds during this, and, I think, next month will only operate to keep the price so low that they cannot be sold at all. I am firm in the belief that the premium on gold will go gradually lower, and that the balance of trade in our favor will keep forcing it down.

"I remain your obedient servant, "Chas. F. Conant. "Hon. John Sherman."

He again wrote on the 30th of August:

"On Tuesday last a further amount of gold (£130,000) was withdrawn from the Bank of England for shipment to the United States, and for the purpose of protecting its stock of bullion the bank immediately advanced its rate to three per cent., and also increased the price of American eagles.

"Great Britain must obtain from us this season a large supply of breadstuffs and grain, larger than has been required in any one year during several years past, and at higher prices than those heretofore paid, and, in the present condition of trade between the two countries, gold, to quite an extent, will have to be sent over in payment for these articles. Therefore, advancing the rate of interest may check for a time, but will not stop altogether, the shipment of bullion, but it may attract here some of the gold held by the Bank of France. The bank rate does not govern the street rate, and a further advance by the bank, which it is very likely may be made, is not to be considered as indicating that we are to have a dearer money market. I inquired to-day of Mr. Morgan and the Messrs. Rothschild what they thought of the prospects of making any sales during next month, and their answer was: 'Wait patiently for the market to recuperate.' I am satisfied that good investment securities are scarce here; that they have been cleared from the market, and that as soon as the question of cheap or dear money is settled, sales of the four per cent. consols will be resumed. The amount of the sales will of course depend upon which way the question is settled. There were times during the placing of the five per cent. and four and a half per cent. bonds when, as you are aware, operations were suspended for quite a time, the condition of the market being such as to prevent anything being done. From semi-official accounts it appears that the famine in India is a very serious affair, and it is quite possible that large sums of money will be required from here with which to purchase supplies."

My experience thus far convinced me that it was bad public policy to continue the sale of bonds for refunding purposes through a syndicate of bankers, the chief of whom resided in London. I could see no reason why this function could not be performed by national banks, better than by bankers at home or abroad. A question arose whether the Secretary of the Treasury had the power to designate national banks as public depositaries of the proceeds of bonds sold under the resumption and refunding acts. The object to be gained by this designation was to prevent the withdrawal of coin from circulation, and the undue accumulation of coin in the treasury of the United States. If the exchange of one bond by another could be directly effected through the banks without the payment of coin, it would facilitate the process of refunding. I submitted this inquiry to Attorney General Devens, and on the 30th of August he stated his opinion and closed as follows:

"In answer to your inquiry, I have, therefore, the honor to say that the Secretary of the Treasury, if he deems it expedient as a matter of administrative policy, may sell bonds under the act known as the 'refunding' and 'resumption' acts, depositing the amounts received therefrom with such public depositaries as he may select under the national bank act, taking such security as is required by the statutes."

The last of the popular subscriptions for the four per cent. bonds became due on the 16th of October, and all were paid for but three subscriptions aggregating $1,600, and these were assumed by the syndicate. The bonds had been paid for by the syndicate either by called six per cent. bonds, which were canceled, or in gold coin deposited in the treasury, without the loss of a dollar. The called session of Congress, which met on the 15th of October, and the agitation of the repeal of the resumption act and the remonetization of silver, prevented for the time any further sales of the four per cent. bonds by the government.

JOHN SHERMAN'S RECOLLECTIONS OF FORTY YEARS IN THE HOUSE, SENATE AND CABINET AN AUTOBIOGRAPHY.

VOLUME II.

ILLUSTRATED WITH PORTRAITS, FAC-SIMILE LETTERS, SCENES, ETC.

GREENWOOD PRESS, PUBLISHERS NEW YORK 1968

Copyright, 1895, By John Sherman

First Greenwood reprinting, 1968

LIBRARY OF CONGRESS catalogue card number: 68-28647

Printed in the United States of America

ILLUSTRATIONS VOLUME II.

Mr. Sherman in His Library at Washington, D. C., 1895. Frontispiece Rutherford B. Hayes President Hayes and Cabinet John Sherman (Chamber of Commerce Portrait.) Inauguration of President Garfield Thurman, Sumner, Wade, Chase (Group.) James A. Garfield Chester A. Arthur Invitation to Blaine's Eulogy of Garfield United States Senate Chamber Invitation to Washington Monument Dedication Meeting of the Surviving Members of the Sherman Family John A. Logan James G. Blaine Surviving Members of the 34th Congress (Taken in 1888.) Representative Ohio Men--Schenck, Cox, Pendleton Court House at Mansfield, Ohio. 1895 Mr. Sherman's Washington Residence, "K" Street Hallway in Mr. Sherman's Washington Residence Dining Room in Mr. Sherman's Washington Residence

AUTOGRAPH LETTERS VOLUME II.

J. M. Rusk, April 14, 1878 Jay Gould, October 17, 1878 Whitelaw Reid, March 29, 1878 John Jay, February 3, 1879 John W. Foster, December 15, 1878 James G. Blaine, July 3, 1879 George Bancroft, February 22, 1881 John G. Whittier, February 8, 1885 U. S. Grant, January 27, 1885 S. S. Cox, January 23, 1886 W. T. Sherman, February 3, 1891

TABLE OF CONTENTS. VOLUME II.

CHAPTER XXXI. EFFECT OF THE BLAND BILL ON THE COUNTRY. An Act Passed by the House Providing for the Free Coinage of the Silver Dollar--Mr. Ewing Makes an Attack on Resumption--Fear of Capitalists Regarding Our National Credit--Four Per Cents. Sell Below Par--Suspense and Anxiety Continued Throughout the Year--My First Report as Secretary of the Treasury--Recommendations of a Policy to be Pursued "To Strengthen the Public Credit"--Substitution of $50,000,000 in Silver Coin for Fractional Currency--Silver as a Medium of Circulation--Its Fluctuation in Value--Importance of Gold as a Standard of Value--Changes in the Market Value of Silver Since 1873.

CHAPTER XXXII. ENACTMENT OF THE BLAND-ALLISON SILVER LAW. Amendments to the Act Reported by the Committee on Finance--Revival of a Letter Written by Me in 1868--Explained in Letter to Justin S. Morrill Ten Years Later--Text of the Bland Silver Bill as Amended by the Senate and Agreed to by the House--Vetoed by President Hayes --Becomes a Law Notwithstanding His Objections--I Decide to Terminate the Existing Contract with the Syndicate--Subscriptions Invited for Four per Cent. Bonds--Preparations for Resumption--Interviews with Committees of Both Houses--Condition of the Bank of England as Compared with the United States Treasury--Mr. Buckner Changes His Views Somewhat.

CHAPTER XXXIII. SALE OF BONDS FOR RESUMPTION PURPOSES. Arrangements Begun for the Disposal of $50,000,000 for Gold or Bullion--Interviews with Prominent Bankers in New York--Proposition in Behalf of the National Banks--Terms of the Contract Made with the Syndicate--Public Comment at the Close of the Negotiations-- "Gath's" Interview with Me at the Completion of the Sale--Eastern Press Approves the Contract, While the West Was Either Indifferent or Opposed to it--Senate Still Discussing the Expediency of Repealing the Resumption Act--Letter to Senator Ferry--Violent and Bitter Animosity Aroused Against Me--I Am Charged with Corruption--Interview with and Reply to Letter of Peter Cooper--Clarkson N. Potter's Charges.

CHAPTER XXXIV. A SHORT RESPITE FROM OFFICIAL DUTIES. Visit to Mansfield and Other Points in Ohio--Difficulty of Making a Speech at Toledo--An Attempt to Break up a Meeting that Did Not Succeed--Various Reports of the Gathering--Good Work of the Cincinnati "Enquirer"--Toledo People Wanted "More Money"--Remarks Addressed to the Cincinnati Chamber of Commerce--Visit to Lancaster, the Place of My Birth--My Return to Washington--I Begin to Exchange Silver Dollars for United States Notes--My Authority to Do So Before January 1 Questioned--The Order is Withdrawn and Some Criticism Follows--Instructions to the United States Treasurer and Others-- Arrangements with New York Clearing House.

CHAPTER XXXV. INVESTIGATION OF THE NEW YORK CUSTOMHOUSE. A General Examination of Several Ports Ordered--No Difficulty Except at New York--First Report of the Commission--President Hayes' Recommendations--Letter of Instructions to Collector C. A. Arthur --Second Report of the Commission--Losses to the Government by Reason of Inefficiency of Employees--Various Measures of Reform Recommended--Four Other Reports Made--The President Decides on the Removal of Arthur, Cornell and Sharpe--Two Letters to R. C. McCormick on the Subject--Arthur et al. Refuse to Resign--The Senate Twice Refuses to Confirm the Men Appointed by the President to Succeed Them--Conkling's Contest Against Civil Service Reform--My Letter to Senator Allison--Final Victory of the President.

CHAPTER XXXVI. PREPARATIONS FOR RESUMPTION OF SPECIE PAYMENTS. Annual Report to Congress on Dec. 2, 1878--Preparations for Resumption Accompanied with Increased Business and Confidence--Full Explanation of the Powers of the Treasurer Under the Act--How Resumption Was to Be Accomplished--Laws Effecting the Coinage of Gold and Silver --Recommendation to Congress That the Coinage of the Silver Dollar Be Discontinued When the Amount Outstanding Should Exceed $50,000,000 --Funding the Public Debt--United States Notes at Par with Gold-- Instructions to the Assistant Treasurer at New York--Political Situation in Ohio.

CHAPTER XXXVII. REFUNDING THE NATIONAL DEBT. Over $140,000,000 of Gold Coin and Bullion in the Treasury January 1, 1879--Diversity of Opinion as to the Meaning of Resumption-- Effect of the Act to Advance Public Credit--Funding Redeemable Bonds Into Four per Cents.--Letters to Levi P. Morton and Others-- Six per Cent. Bonds Aggregating $120,000,000 Called During January, 1879--The Sale in London--Charges of Favoritism--Further Enactments to Facilitate the Funding--Difficulty of Making Sales of Four per Cent. Bonds to English Bankers--Large Amounts Taken in the United States--One Subscription of $190,000,000--Rothschild's Odd Claim-- Complimentary Resolution of the New York Chamber of Commerce.

CHAPTER XXXVIII. GENERAL DESIRE TO NOMINATE ME FOR GOVERNOR OF OHIO. Death of My Brother Charles--The 46th Congress Convened in Special Session--"Mending Fences" at My Home in Mansfield--Efforts to Put Me Forward as a Candidate for the Governorship of Ohio--Letter to Murat Halstead on the Question of the Presidency, etc.--Result of My Letter to John B. Haskin--Reasons of My Refusal of the Nomination for Governor--Invitation from James G. Blaine to Speak in Maine-- My Speech at Portland--Victory of the Republican Party--My Speech at Steubenville, Ohio--Evidences of Prosperity on Every Hand--Visit to Cincinnati and Return to Washington--Results in Ohio.

CHAPTER XXXIX. LAST DAYS OF THE HAYES ADMINISTRATION. Invitation From General Arthur to Speak in New York--Letter to Hon. John Jay on the Subject--Mr. Evarts' Refined Specimen of Egotism-- An Anecdote of the Hayes Cabinet--Duty of the Government to Protect the Election of All Federal Officers--My Speech in Cooper Institute --Offers of Support to Elect Me as a Successor of Senator Thurman --My Replies--Republican Victory in New York--President Hayes' Message to Congress--My Report as Secretary of the Treasury-- Modification of My Financial Views Since that Time--Bank Notes as Currency--Necessity for Paper Money--Mr. Bayard's Resolution Concerning the Legal Tender Quality of United States Notes--Questions Asked Me by the Finance Committee of the Senate.

CHAPTER XL. THE PRESIDENTIAL NOMINATION IN 1880. Talk of Grant for President for a Third Term--His Triumphal Return from a Trip Around the World--The Candidacy of Mr. Blaine and Myself --Many of My Opponents Those Who Disagreed with Me on Financial Questions--Accused of Being a Catholic and of Using Patronage to Aid in My Nomination--My Replies--Delay in Holding the Ohio State Convention--My Interview with Garfield--Resolution of the State Convention in My Favor--National Convention at Chicago, on June 2, 1880--Fatal Move of Nine Ohio Delegates for Blaine--Final Nomination of Garfield--Congratulations--Letter to Governor Foster and to Garfield--Wade Hampton and the "Ku-Klux Klan."

CHAPTER XLI. MY LAST YEAR IN THE TREASURY DEPARTMENT. Opening of the 1880 Campaign in Cincinnati--My First Speech Arraigned as "Bitterly Partisan"--Letter from Garfield Regarding the Maine Election--Ohio Thought to Be in Doubt--Many Requests for Speeches --Republican Ticket Elected in Ohio and Indiana--A Strange Warning from Detroit Threatening Garfield with Assassination--The Latter's Reply--My Doubts About Remaining in the Treasury Department or Making an Effort for the Senate--Letter to Dalzell--Last Annual Report to Congress in December, 1880--Recommendations Regarding Surplus Revenue, Compulsory Coinage of the Silver Dollar, the Tariff, etc.--Bills Acted Upon by Congress.

CHAPTER XLII. ELECTED TO THE SENATE FOR THE FOURTH TIME. Blaine Appointed Secretary of State--Withdrawal of Governor Foster as a Senatorial Candidate--I Am Again Elected to My Old Position to Succeed Allen G. Thurman--My Visit to Columbus to Return Thanks to the Legislature--Address to Boston Merchants on Finances--Windom Recommended to Succeed Me as Secretary of the Treasury--Personal Characteristics of Garfield--How He Differed from President Hayes --The Latter's Successful Administration--My One Day out of Office in Over Forty Years--Long Animosity of Don Piatt and His Change of Opinion in 1881--Mahone's Power in the Senate--Windom's Success in the Treasury--The Conkling-Platt Controversy with the President Over New York Appointments.

CHAPTER XLIII. ASSASSINATION OF GARFIELD AND EVENTS FOLLOWING. I Return to Mansfield for a Brief Period of Rest--Selected as Presiding Officer of the Ohio State Convention--My Address to the Delegates Indorsing Garfield and Governor Foster--Kenyon College Confers on Me the Degree of Doctor of Laws--News of the Assassination of the President--How He Differed from Blaine--Visit of General Sherman--Reception by Old Soldiers--My Trip to Yellowstone Park-- Speechmaking at Salt Lake City--Visit to Virginia City--Placer Mining in Montana--The Western Hunter Who Was Lost in a "St. Louis Cañon"--Sunday in Yellowstone Park--Geysers in the Upper Basin-- Rolling Stones Down the Valley--Return Home--Opening of the Ohio Campaign--Death of Garfield.

CHAPTER XLIV. BEGINNING OF ARTHUR'S ADMINISTRATION. Special Session of the Senate Convened by the President--Abuse of Me by Newspapers and Discharged Employees--Charges Concerning Disbursement of the Contingent Fund--My Resolution in the Senate-- Secretary Windom's Letter Accompanying the Meline Report--Investigation and Complete Exoneration--Arthur's Message to Congress in December --Joint Resolutions on the Death of Garfield--Blaine's Tribute to His Former Chief--Credit of the United States at "High Water Mark" --Bill Introduced Providing for the Issuing of Three per Cent. Bonds--Corporate Existence of National Banks Extended--Bill to Reduce Internal Revenue Taxes--Tax on Playing Cards--Democratic Victory in Ohio.

CHAPTER XLV. STEPS TOWARDS MUCH NEEDED TARIFF LEGISLATION. Necessity of Relief from Unnecessary Taxation--Views of the President as Presented to Congress in December, 1882--Views of the Tariff Commission Appointed by the President--Great Changes Made by the Senate--Regret That I Did Not Defeat the Bill--Wherein Many Sections Were Defective or Unjust--Bill to Regulate and Improve the Civil Service--A Mandatory Provision That Should be Added to the Existing Law--Further Talk of Nominating Me for Governor of Ohio--Reasons Why I Could Not Accept--Selected as Chairman of the State Convention --Refusal to Be Nominated--J. B. Foraker Nominated by Acclamation --His Career--Issues of the Campaign--My Trip to Montana--Resuming the Canvass--Hoadley Elected Governor--Retirement of Gen. Sherman.

CHAPTER XLVI. EFFECT OF THE MARINE NATIONAL BANK AND OTHER FAILURES. Continued Prosperity of the Nation--Arthur's Report to Congress-- Resolution to Inquire into Election Outrages in Virginia and Mississippi--Reports of the Investigating Committee--Financial Questions Discussed During the Session--Duties and Privileges of Senators--Failure of the Marine National Bank and of Grant and Ward in New York--Followed By a Panic in Which Other Institutions Are Wrecked--Timely Assistance from the New York Clearing House--Debate in the Senate on the National Bank System--Dedication of the John Marshall Statue at Washington--Defeat of Ingalls' Arrears of Pensions Amendment to Bill to Grant Pensions to Soldiers and Sailors of the Mexican War--The Senate Listens to the Reading of the Declaration of Independence on July 4.

CHAPTER XLVII. MY PARTICIPATION IN THE CAMPAIGN OF 1884. Again Talked of as a Republican Candidate for the Presidency--I Have No Desire for the Nomination--Blaine the Natural Candidate of the Party--My Belief that Arthur Would be Defeated if Nominated-- Speech at Washington, D. C., for Blaine and Logan--Opening of the Ohio Campaign at Ashland--Success of the Republican State Ticket in October--Speeches in Boston, Springfield, Mass., New York and Brooklyn--Address to Business Men in Faneuil Hall--Success of the National Democratic Ticket--Arthur's Annual Message to Congress-- Secretary McCulloch's Recommendations Concerning the Further Coinage of Silver Dollars--Statement of My Views at This Time--Statue to the Memory of General Lafayette--Controversy Between General Sherman and Jefferson Davis.

CHAPTER XLVIII. DEDICATION OF THE WASHINGTON MONUMENT. Resolution of Senator Morrill Providing for Appropriate Dedicatory Ceremonies--I Am Made Chairman of the Commission--Robert C. Winthrop's Letter Stating His Inability to Attend the Exercises--Letters of Regret from General Grant and John G. Whittier--Unfavorable Weather for the Dedication--My Address as Presiding Officer--The President's Acceptance of the Monument for the Nation--Mr. Winthrop's Address Read in the House by John D. Long--Inauguration of the First Democratic President Since Buchanan's Time--Visit to Cincinnati and Address on the Election Frauds--Respects to the Ohio Legislature --A Trip to the West and Southwest--Address on American Independence.

CHAPTER XLIX. REUNION OF THE "SHERMAN BRIGADE." Patriotic Address Delivered at Woodstock, Conn., On My Return from the Pacific Coast--Meeting of the Surviving Members of the Sherman Family at Mansfield--We Attend the Reunion of the "Sherman Brigade" at Odell's Lake--Addresses of General Sherman and Myself to the Old Soldiers and Others Present--Apathy of the Republican Party During the Summer of 1885--Contest Between Foraker and Hoadley for the Governorship--My Speech at Mt. Gilead Denounced as "Bitterly Partisan"--Governor Hoadley Accuses Me of "Waving the Bloody Shirt" --My Reply at Lebanon--Election of Foraker--Frauds in Cincinnati and Columbus--Speeches Made in Virginia.

CHAPTER L. ELECTED PRESIDENT PRO TEMPORE OF THE SENATE. Death of Vice President Hendricks--I Am Chosen to Preside Over the United States Senate--Letter of Congratulation from S. S. Cox-- Cleveland's First Annual Message to Congress--His Views on the Tariff and Condition of Our Currency--Secretary Manning's Report-- Garfield's Statue Presented to the Nation by the State of Ohio--I Am Elected a Senator from Ohio for the Fifth Time--I Go to Columbus to Return Thanks to the Legislature for the Honor--Business of this Session of Congress--Attempt to Inquire Into the Methods of Electing Mr. Payne to the Senate from Ohio--My Address on "Grant and the New South"--Address Before the Ohio Society of New York.

CHAPTER LI. A PERIOD OF POLITICAL SPEECH MAKING. Organization of the "Sherman Club" at Mansfield, Ohio--My Experiences with Newspaper Reporters--Address at the State Fair in Columbus on Agricultural Implements--Other Speeches Made in the Campaign of that Year--Address at Louisville, Ky.--Courteous Treatment by Henry Watterson, of the "Courier Journal"--Hon. John Q. Smith's Change of Heart--Answering Questions Propounded by Him at a Gathering in Wilmington, Ohio--Success of the Republican Party--Second Session of the 49th Congress--But Little Legislation Accomplished--Death of Senator John A. Logan--Tributes to His Memory--His Strong Characteristics--My Reason for Resigning the Presidency of the Senate--Succeeded by John J. Ingalls.

CHAPTER LII. VISIT TO CUBA AND THE SOUTHERN STATES. Departure for Florida and Havana--A Walk Through Jacksonville-- Impressions of the Country--Visit to Cigar Factories and Other Places of Interest--Impressions of Cuba--Experience with Colored Men at a Birmingham Hotel--The Proprietor Refuses to Allow a Delegation to Visit Me in My Rooms--Sudden Change of Quarters-- Journey to Nashville and the Hearty Reception Which Followed--Visit to the Widow of President Polk--My Address to Nashville Citizens-- Comment from the Press That Followed It--An Audience of Workingmen at Cincinnati--Return Home--Trip to Woodbury, Conn., the Home of My Ancestors--Invitation to Speak in the Hall of the House of Representatives at Springfield, Ill.--Again Charged with "Waving the Bloody Shirt."

CHAPTER LIII. INDORSED FOR PRESIDENT BY THE OHIO STATE CONVENTION. I Am Talked of as a Presidential Possibility--Public Statement of My Position--Unanimous Resolution Adopted by the State Convention at Toledo on July 28, 1887--Text of the Indorsement--Trip Across the Country with a Party of Friends--Visit to the Copper and Nickel Mining Regions--Stop at Winnipeg--A Day at Banff--Vast Snowsheds Along the Canadian Pacific Railroad--Meeting with Carter H. Harrison on Puget Sound--Rivalry Between Seattle and Tacoma--Trying to Locate "Mount Tacoma"--Return Home After a Month's Absence--Letter to General Sherman--Visit to the State Fair--I Attend a Soldiers' Meeting at Bellville--Opening Campaign Speech at Wilmington--Talk to Farmers in New York State--Success of the Republican Ticket in Ohio--Blaine Declines to Be a Candidate.

CHAPTER LIV. CLEVELAND'S EXTRAORDINARY MESSAGE TO CONGRESS. First Session of the 50th Congress--The President's "Cry of Alarm" --Troubled by the Excess of Revenues over Expenditures--My Answer to His Doctrines--His Refusal to Apply the Surplus to the Reduction of the Public Debt--The Object in Doing So--My Views Concerning Protection and the Tariff--In Favor of a Tariff Commission--"Mills Bill" the Outcome of the President's Message--Failure of the Bill During the Second Session--My Debates with Senator Beck on the Coinage Act of 1873, etc.--Omission of the Old Silver Dollar--Death of Chief Justice Waite--Immigration of Chinese Laborers--Controversy with Senator Vest--Speech on the Fisheries Question--Difficulties of Annexation with Canada.

CHAPTER LV. REPUBLICAN NATIONAL CONVENTION OF 1888. Majority of the Ohio Delegates Agree to Support Me for President-- Cleveland and Thurman Nominated by the Democrats--I Am Indorsed by the State Convention Held at Dayton, April 18-19--My Response to a Toast at the Americus Club, Pittsburg, on Grant--Meeting with Prominent Men in New York--Foraker's Reply to Judge West's Declaration Concerning Blaine--Blaine's Florence Letter to Chairman Jones--His Opinion of My Qualifications for the Honorable Position--Meeting of the Convention in Chicago in June--I Am Nominated by General D. H. Hastings and Seconded by Governor Foraker--Jealousy Between the Ohio Delegates--Predictions of My Nomination on Monday, June 25-- Defeated by a Corrupt New York Bargain--General Harrison is Nominated --Letters from the President Elect--My Replies--First Speeches of the Campaign--Harrison's Victory--Second Session of the 50th Congress --The President's Cabinet.

CHAPTER LVI. FOUR AND A HALF MONTHS IN EUROPE. Our Party Takes Its Departure on the "City of New York" on May 1-- Personnel of the Party--Short Stop in London--Various Cities in Italy Visited--Sight-Seeing in Rome--Journey to Pompeii and Naples --Impressions of the Inhabitants of Southern Italy--An Amusing Incident Growing Out of the Ignorance of Our Courier--Meeting with Mr. Porter, Minister to Rome--Four Days in Florence--Venice Wholly Unlike Any Other City in the World--Favorable Impression of Vienna --Arrival at Paris--Reception by the President of the Republic of France--Return Home--My Opinion Concerning England and Englishmen --Reception at Washington--Campaigning Again for Foraker--Ohio Ballot Box Forgery and Its Outcome--Address at Cleveland on "The Congress of American States"--Defeat of Foraker for Governor.

CHAPTER LVII. HISTORY OF THE "SHERMAN SILVER LAW." President Harrison's First Annual Message--His Recommendations Regarding the Coinage of Silver and Tariff Revisions--Bill Authorizing the Purchase of $4,500,000 Worth of Silver Bullion Each Month-- Senator Plumb's "Free Silver" Amendment to the House Bill--Substitute Finally Agreed Upon in Conference--Since Known as the "Sherman Silver Law"--How It Came to Be so Called--Chief Merit of the Law-- Steady Decline of Silver After the Passage of the Act--Bill Against Trusts and Combinations--Amendments in Committee--The Bill as Passed --Evils of Unlawful Combinations--Death of Representative Wm. D. Kelley and Ex-Member S. S. Cox--Sketch of the Latter--My Views Regarding Immigration and Alien Contract Labor--McKinley Tariff Law--What a Tariff Is--Death of George H. Pendleton--Republican Success in Ohio--Second Session of the 51st Congress--Failure of Senator Stewart's "Free Coinage Bill."

CHAPTER LVIII. EFFORTS TO CONSTRUCT THE NICARAGUAN CANAL. Early Recognition of the Need of a Canal Across the Isthmus Connecting North and South America--M. de Lesseps Attempts to Build a Water Way at Panama--Feasability of a Route by Lake Nicaragua-- First Attempts in 1825 to Secure Aid from Congress--The Clayton- Bulwer Convention of 1850--Hindrance to the Work Caused by This Treaty--Report of the Committee on Foreign Relations in 1891-- Failure to Secure a Treaty Between the United States and Nicaragua in 1884--Cleveland's Reasons for Withdrawing This Treaty--Incorporation of the Maritime Canal Company of Nicaragua--Inevitable Failure of Their Attempts Unless Aided by the Government--Why We Should Purchase Outright the Concessions of the Maritime Company--Brief Description of the Proposed Canal--My Last Letter from General Sherman--His Death from Pneumonia After a Few Days' Illness--Messages of President Harrison--Resolution--My Commemorative Address Delivered Before the Loyal Legion.

CHAPTER LIX. THE CAMPAIGN OF 1890-91 IN OHIO. Public Discussion of My Probable Re-election to the Senate--My Visit to the Ohio Legislature in April, 1891--Reception at the Lincoln League Club--Address to the Members--Appointed by the Republicans as a Delegate to the State Convention at Columbus--Why My Prepared Speech Was Not Delivered--Attack on Me by the Cincinnati "Enquirer"--Text of the Address Printed in the "State Journal"-- Beginning of a Canvass with Governor Foraker as a Competitor for the Senatorship--Attitude of George Cox, a Cincinnati Politician, Towards Me--Attempt to Form a "Farmers' Alliance" or People's Party in Ohio--"Seven Financial Conspiracies"--Mrs. Emery's Pamphlet and My Reply to It.

CHAPTER LX. FREE SILVER AND PROTECTION TO AMERICAN INDUSTRIES. My Views in 1891 on the Free Coinage of Silver--Letter to an Ohio Newspaper on the Subject--A Problem for the Next Congress to Solve --Views Regarding Protection to American Industries by Tariff Laws --My Deep Interest in This Campaign--Its Importance to the Country at Large--Ohio the Battle Ground of These Financial Questions-- Opening the Campaign in Paulding Late in August--Extracts from My Speech There--Appeal to the Conservative Men of Ohio of Both Parties --Address at the State Fair at Columbus--Review of the History of Tariff Legislation in the United States--Five Republican Principles Pertaining to the Reduction of Taxes--Speeches at Cleveland, Toledo, Cincinnati and Elsewhere--McKinley's Election by Over 21,000 Plurality.

CHAPTER LXI. ELECTED TO THE UNITED STATES SENATE FOR THE SIXTH TIME. I Secure the Caucus Nomination for Senator on the First Ballot-- Foraker and Myself Introduced to the Legislature--My Address of Thanks to the Members--Speech of Governor Foraker--My Colleague Given His Seat in the Senate Without Opposition--Message of President Harrison to the 52nd Congress--Morgan's Resolutions and Speech for the Free Coinage of Silver--Opening of the Silver Debate by Mr. Teller--My Speech on the Question--Defeat of the Bill in the House --Discussion of the Chinese Question--My Opposition to the Conference Report on Mr. Geary's Amended Bill--Adopted by the Senate After a Lengthy Debate--Effect of the Tariff Laws Upon Wages and Prices-- Senator Hale's Resolution--Carlisle's Speech in Opposition to High Prices--My Reply--Résumé of My Opinions on the Policy of Protection --Reception by the Ohio Republican Association--Refutation of a Newspaper Slander Upon H. M. Daugherty--Newspaper Writers and Correspondents--"Bossism" in Hamilton County.

CHAPTER LXII. SECOND ELECTION OF GROVER CLEVELAND. Opposition to General Harrison for the Presidential Nomination--My Belief That He Could Not Be Elected--Preference for McKinley-- Meeting of the National Republican Convention at Minneapolis-- Meeting of Republicans at Washington to Ratify the Ticket--Newspaper Comment on My Two Days' Speech in the Senate on the Silver Question --A Claim That I Was Not in Harmony with My Party on the Tariff-- My Reply--Opening Speeches for Harrison and Reid--Publication of My "History of the Republican Party"--First Encounter with a "Kodak" --Political Addresses in Philadelphia, New York, Cincinnati, Chicago and Milwaukee--Return to Ohio--Defeat of Harrison.

CHAPTER LXIII. ATTEMPTS TO STOP THE PURCHASE OF SILVER BULLION. My Determination to Press the Repeal of the Silver Purchasing Clause of the "Sherman Act"--Reply to Criticisms of the Philadelphia "Ledger"--Announcement of the Death of Ex-President Hayes--Tribute to His Memory--Efforts to Secure Authority to the Secretary of the Treasury to Sell Bonds to Maintain the Resumption of United States Notes--The Senate Finally Recedes from the Amendment in Order to Save the Appropriation Bill--Loss of Millions of Dollars to the Government--Cleveland Again Inducted Into Office--His Inaugural Address--Efforts to Secure an Appropriation for the "World's Fair" --Chicago Raises $1,000,000--Congress Finally Decides to Pay the Exposition $2,500,000 in Silver Coin--I Attend the Dedication of the Ohio Building at the Fair--Address to the Officers and Crew of the Spanish Caravels.

CHAPTER LXIV. REPEAL OF PART OF THE "SHERMAN ACT" OF 1890. Congress Convened in Extraordinary Session on August 7, 1893--The President's Apprehension Concerning the Financial Situation--Message from the Executive Shows an Alarming Condition of the National Finances--Attributed to the Purchase and Coinage of Silver--Letter to Joseph H. Walker, a Member of the Conference Committee on the "Sherman Act"--A Bill I Have Never Regretted--Brief History of the Passage of the Law of 1893--My Speech in the Senate Well Received --Attacked by the "Silver Senators"--General Debate on the Financial Legislation of the United States--Views of the "Washington Post" on My Speech of October 17--Repeal Accomplished by the Republicans Supporting a Democratic Administration--The Law as Enacted--Those Who Uphold the Free Coinage of Silver--Awkward Position of the Democratic Members--My Efforts in Behalf of McKinley in Ohio--His Election by 81,000 Plurality--Causes of Republican Victories Throughout the Country.

CHAPTER LXV. PASSAGE OF THE WILSON TARIFF BILL. Second Session of the 53rd Congress--Recommendations of the President Concerning a Revision of the Tariff Laws--Bill Reported to the House by the Committee of Ways and Means--Supported by Chairman Wilson and Passed--Received in the Senate--Report of the Senate Committee on Finance--Passes the Senate with Radical Amendments-- These are Finally Agreed to by the House--The President Refuses to Approve the Bill--Becomes a Law After Ten Days--Defects in the Bill --Not Satisfactory to Either House, the President or the People-- Mistakes of the Secretary of the Treasury--No Power to Sell Bonds or to Borrow Money to Meet Current Deficiencies--Insufficient Revenue to Support the Government--A Remedy That Was Not Adopted-- Gross Injustice of Putting Wool on the Free List--McKinley Law Compared with the Wilson Bill--Sufficient Revenue Furnished by the Former--I Am Criticized for Supporting the President and Secretary.

CHAPTER LXVI. SENIORITY OF SERVICE IN THE SENATE. Notified That My Years of Service Exceed Those of Thomas Benton-- Celebration of the Sons of the American Revolution at the Washington Monument--My Address to Those Present--Departure for the West with General Miles--Our Arrival at Woodlake, Nebraska--Neither "Wood" nor "Lake"--Enjoying the Pleasures of Camp Life--Bound for Big Spring, South Dakota--Return via Sioux City, St. Paul and Minneapolis --Marvelous Growth of the "Twin Cities"--Publication of the "Sherman Letters" by General Sherman's Daughter Rachel--First Political Speech of the Campaign at Akron--Republican Victory in the State of Ohio--Return to Washington for the Winter of 1894-95--Marriage of Our Adopted Daughter Mary with James Iver McCallum--A Short Session of Congress Devoted Mainly to Appropriations--Conclusion.

CHAPTER XXXI. EFFECT OF THE BLAND BILL ON THE COUNTRY. An Act Passed by the House Providing for the Free Coinage of the Silver Dollar--Mr. Ewing Makes an Attack on Resumption--Fear of Capitalists Regarding Our National Credit--Four Per Cents. Sell Below Par--Suspense and Anxiety Continued Throughout the Year--My First Report as Secretary of the Treasury--Recommendations of a Policy to be Pursued "To Strengthen the Public Credit"--Substitution of $50,000,000 in Silver Coin for Fractional Currency--Silver as a Medium of Circulation--Its Fluctuation in Value--Importance of Gold as a Standard of Value--Changes in the Market Value of Silver Since 1873.

The silver question was suddenly thrust upon the House of Representatives on the 5th of November, 1877, by a motion, submitted by Mr. Bland, of Missouri, that the rules be suspended so as to enable him to introduce, and the House to pass, a bill to authorize the free coinage of the standard silver dollar of 412½ grains, and to restore its legal tender character. The motion to suspend the rules cut off all amendments and all debate. Several members demanded a hearing. Efforts were made to adjourn, but this was refused. The previous question being ordered and the rules suspended, a single vote would introduce the bill without a reference to a committee, and would pass it without any power of amendment, without the usual reading at three separate times. The motion was agreed to by a vote of yeas 163, nays 34. So, two-thirds voting in favor thereof, the rules were suspended and the bill was passed.

The first section of this bill provided that there shall be coined, at the several mints of the United States, the silver dollar of the weight of 412½ grains, troy, of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and superscriptions provided by said act; which coins, together with all silver dollars heretofore coined by the United States, of like weight and fineness, shall be a legal tender at their nominal value for all debts and dues, public and private, except where otherwise provided by contract; and any owner of silver bullion may deposit the same in any United States coinage mint or assay office, to be coined into such dollars for his benefit, upon the same terms and conditions as gold bullion is deposited for coinage under existing law. Section 2 provided for repealing all acts and parts of acts inconsistent with provisions of the act.

Thus this bill, of wide-reaching importance, was introduced and passed by the House under the previous question, and a suspension of the rules without debate on the same day of its introduction by a vote of yeas 163, nays 34. It was sent to the Senate and referred to the committee on finance.

On the same day Mr. Ewing moved in the House of Representatives to suspend the rules and adopt the following resolution:

"Resolved, That the bill to repeal the third section of the resumption law be made the special order, not to interfere with any appropriation bills, for to-morrow at the expiration of the morning hour, and from day to day thereafter until the following Tuesday at three o'clock, when the previous question shall be ordered on it and on any amendments then pending, all amendments meanwhile to be in order, provided the time shall be extended, if necessary, so as to allow five days after the morning hour for the consideration of said bill and amendments."

This resolution passed by a vote of yeas 143, nays 47.

In consequence of this action of the House, the syndicate declined to offer the bonds, and no further calls for six per cent. bonds were therefore made.

On the 7th of November August Belmont wrote me from New York as follows;

"I fear that the threatening position of the silver question will check completely any demand for the four per cent. bonds here and in Europe. The damage which the passage of this measure will do to our public credit abroad cannot be over estimated. To remonetize silver upon the old standard, and make it a legal tender for all private and public debts, will be considered by the whole civilized world as an act of repudiation on the part of the federal government, and cast a stain upon our national credit, which has hitherto stood as high and bright as that of any government in the world.

"It is just as much repudiation for the federal government to compel its bondholders to accept the payment of their interest in silver, which is at a discount of ten per cent., against the gold which the government received for the bonds, as it would be if Congress decreed that all the bonds of the United States should not bear a higher interest than two per cent. per annum. To do such a thing now as is contemplated by the Bland silver bill, when the federal finances are in a flourishing condition, when the premium of gold has been reduced two and a half to three per cent., and when our funded debt sells equal to that of any other public security in the world, is actually as if a man of wealth and position, who had by a life-long course of strict honesty acquired the well-earned confidence and respect of his fellow-citizens and of the outer world, should in the midst of his affluence, and without the palliating excuse of any temptation of want or necessity, commit open theft.

"I am sure I do not over estimate the damaging effect which the passage of the bill must have upon American credit. All my letters from abroad, and conversations with people familiar with the English and continental money markets, confirm my convictions on that point. When you look back and find in the archives of your department the proud records of a nation's faith kept inviolate with a most punctilious and chivalrous spirit during a century, amidst all the trials of foreign and civil war which strained the resources of our country to the very verge of ruin, the task before you is certainly a difficult and harassing one; but while the path of duty is often narrow and difficult, it is always straight and so well defined that it can never be mistaken.

"Sound financial policy and love of our country's fair name alike demand from those to whom the administration of its affairs have been intrusted the most uncompromising hostility to the blind and dishonest frenzy which has taken hold of Congress, and I sincerely hope that you will be seconded in the task before you by the hearty support of the President and your colleagues."

On the 9th of November I was advised that the four per cent. bonds were selling at 99 and interest, in a small way only. The syndicate had bought in the market about $750,000 of these bonds at less than par in order to prevent a further depreciation. On the same day I was informed by August Belmont & Co., as follows:

"After conference and careful consideration of the whole subject, it is the conclusion of all the associates, in Europe and here, that it is injudicious to undertake further negotiations of the fours, during the pendency of the legislation proposing to make silver a full legal tender, as the discussion has checked dealings in the bonds by the public. To make a call in the face of a market quotation (to-day 98¾ and interest) below the price fixed by law would not convince the public that new business had been undertaken at a loss, but that the call was connected with business previously done.

* * * * *

"Further than this, we are satisfied that, holding the views expressed in your letters mentioned, the President and all his cabinet will agree with us that it would be wrong for us to ask for another call at this juncture, as such action would be held by those advocating the legislation in favor of silver as proving that such legislation in our opinion was not prejudicial to the national credit and the refunding of our national debt."

On the 10th of November Mr. Conant wrote me that our bonds had been depressed by the rumors which had been circulated respecting probable legislation which would depreciate their value, and that four and a half per cent. bonds had fallen off three-fourths per cent. He said: "If, in any legislation which may be enacted regarding silver, provision could be made not only exempting the debt and interest thereon from payment in silver, but declaring that payment of the same shall be made in gold coin, it would aid us immeasurably in placing our bonds."

Two days later I received a letter from F. O. French, of New York, as follows:

"Our business people are very much alarmed at the rumored strength of the silver people, and, as they apprehend the gravest disasters from the success of the Bland bill, a committee of gentlemen connected with insurance and trust companies, as well as with the banks, go to Washington to-morrow to present their views to the finance committee.

"Once dispatch this silver business--and I have faith that it cannot live in the light of full discussion by the Senate--and we shall renew funding, and by attaining resumption put an end to financial discussions as we did to slavery."

And on the following day I wrote to August Belmont & Co.:

"Your letter of the 9th instant was received, and also a personal letter from Mr. Belmont.

"I am watchful of the course of legislation in Congress and of the current of public sentiment, both in our own and foreign countries, on the silver question. I am not prepared at present to give any assurance as to what will be done in Congress, nor of the action of the executive department. It is better to let the matter stand as it is, awaiting events without any committals whatever. I have faith to believe that all will come our right so far as the public credit is affected, and will write you again when anything definite can be said."

On the 29th of November Belmont wrote me a long letter containing the following statements:

"I need hardly assure you, at this late day, of my earnest solicitude for the success of the funding and resumption operations, and of my personal deep regret, apart from all pecuniary considerations, as a member of the syndicate, to see this unfortunate situation of the silver question put a complete stop to all further sales of the four per cent. bonds at present, here and in England. The capitalists and banks on both sides of the Atlantic will not buy a bond at par in gold, when it is almost certain, from the overwhelming vote in the House, and the known attitude of the Senate, that a silver bill, making the old silver dollar a legal tender for all private and public obligations, will pass both Houses this winter. . . .

"The bonds are selling at ninety-nine and one-fourth in gold in open market, and it seems to me very doubtful policy to offer bonds, by us, to the public at this moment, and thus assist the advocates of the old silver dollar by our apparent indifference to the injustice and dishonesty of the Bland bill."

This condition of suspense and anxiety continued during the remainder of the year.

My first annual report, as Secretary of the Treasury, was made to Congress on the 3rd of December, 1877. The statement made of our financial condition was a very favorable one, showing a surplus revenue of $30,340,577.69. The receipts from different sources of revenue were largely diminished, but the expenditures for the year were reduced by an equal amount. The surplus revenue was applied to the redemption of United States notes and of fractional currency, and to the payment of six per cent. bonds for the sinking fund. The report dealt with the usual topics of such reports, embracing a great variety of subjects. What attracted the most attention was, naturally, what was said about refunding the public debt and the resumption of specie payments. The results of refunding during the previous year have already been sufficiently stated. The plans for the resumption of specie payments were fully explained. The mode and manner of bringing this about was not specified in the law, but the time for resumption was fixed and the means provided for accumulating coin for that purpose were ample.

By the resumption act the Secretary of the Treasury was required to redeem legal tender notes to the amount of eighty per centum of the sum of national bank notes issued, and to continue such redemption, as circulating notes were issued, until there was outstanding the sum of $300,000,000 of such legal tender United States notes, and no more.

By the same act it was provided that, on and after the 1st day of January, 1879, the Secretary of the Treasury should redeem, in coin, the United States legal tender notes then outstanding, on their presentation for redemption at the office of the assistant treasurer of the United States, in the city of New York, in sums of not less than fifty dollars. "And," it continued, "to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues, from time to time, in the treasury, not otherwise appropriated, and to issue, sell, and dispose of, at not less than par, in coin, either of the descriptions of bonds, of the United States, described in the act of Congress approved July 14, 1870, entitled 'An act to authorize the refunding of the national debt,' with like qualities, privileges, and exemptions, to the extent necessary to carry this act into full effect, and to use the proceeds thereof for the purposes aforesaid."

In obedience to this provision I had sold at par, for coin, $15,000,000 four and a half per cent. bonds, or $5,000,000 during each of the months of May, June and July, and $25,000,000 at par, in coin, of four per cent. bonds, or $5,000,000 for each of the months of August, September, October, November and December. Of the coin thus received $4,000,000 had been sold for the redemption of United States notes, and the residue was in the treasury. The surplus revenue had also, under the same authority, been applied to the redemption of the residue of United States notes, not redeemed by the sale of coin, and the balance was held in the treasury in preparation for resumption.

These operations, aided greatly, no doubt, by the favorable condition of our foreign commerce, had advanced the market value of United States notes to ninety-seven and three-eighths per cent., or within nearly two and a half per cent. of coin. They had also conclusively demonstrated the practicability of restoring United States notes to par, in coin, by the time fixed by law, and that without disturbing either domestic or foreign trade or commerce. Every step had been accompanied with growing business, with the advance of public credit, and the steady appreciation of United States notes. The export of bullion had been arrested, and our domestic supply had accumulated in the treasury. The exportation of other domestic products had been largely increased, with great advantage to all industries. I said the course adopted under the resumption act, if pursued, would probably be followed with like favorable results, and a sufficient fund for the maintenance of resumption would doubtless accumulate in the treasury at or before the date fixed by law.

I strongly urged the firm maintenance of a policy that would make good the promise contained in the United States note when issued-- a promise repeated in the act "To strengthen the public credit," approved March 18, 1869, and made definite and effective by the resumption act, and asserted that dishonored notes, less valuable than the coin they promise, though justified by the necessity which led to their issue, should be made good as soon as practicable; that the public credit was injured by failure to redeem them; that every holder who was compelled by law to receive them was deprived of a part of his just due; that our national resources being ample, the process of appreciation being almost complete, and the wisdom of the law having been demonstrated, it was the dictate of good policy and good faith to continue the process of preparation, so that, at or before the time fixed by law, every United States note would have equal purchasing power with coin; that to reverse this policy in the face of assured success would greatly impair the public credit, arrest the process of reducing the interest on the public debt, and cause anew the financial distress our country had recently suffered.

The first section of the resumption act plainly provided for the permanent substitution of silver coin for the whole amount of fractional currency outstanding. Section 3 directed the permanent reduction of United States notes to an amount not exceeding $300,000,000. No distinct legislative declaration was made in the resumption act that notes redeemed after that limit was reached should not be reissued; but section 3579 of the Revised Statutes of the United States provided that "when any United States notes are returned to the treasury they may be reissued, from time to time, as the exigencies of the public interest may require."

I expressed in my report the opinion that, under this section, notes, when redeemed after the 1st of January, 1879, if the amount outstanding was not in excess of $300,000,000, might be reissued as the exigencies of the public service required. A note redeemed with coin was in the treasury and subject to the same law as if received for taxes, or as a bank note, when redeemed by the corporation issuing it. The authority to reissue it did not depend upon the mode in which it was returned to the treasury. But this construction was controverted, and I thought should be settled by distinct provisions of law. It should not be open to doubt or dispute. The decision of this question by Congress would involve not merely the construction of existing law, but the public policy of maintaining in circulation United States notes, either with or without the legal tender clause. These notes were of great public convenience--they circulated readily; were of universal credit; were a debt of the people without interest; were protected by every possible safeguard against counterfeiting; and, when redeemable in coin at the demand of the holder, formed a paper currency as good as had yet been devised.

It was conceded, I said, that a certain amount could, with the aid of an ample reserve in coin, be always maintained in circulation. Should not the benefit of this circulation inure to the people, rather than to corporations, either state or national? The government had ample facility for the collection, custody, and care of the coin reserves of the country. It was a safer custodian of such reserves than a multitude of scattered banks would be. The authority to issue circulating notes by banks was not given to the banks for their benefit, but for the public convenience, and to enable them to meet the ebb and flow of currency caused by varying crops, productions, and seasons. It was indispensable that a power should exist somewhere to issue and loan credit money at certain times, and to redeem it at others. This function could be performed better by corporations than by the government. The government could not loan money, deal in bills of exchange, or make advances on property.

I expressed the opinion, that the best currency for the people of the United States would be a carefully-limited amount of United States notes, promptly redeemable on presentation in coin, supported by ample reserves of coin, and supplemented by a system of national banks, organized under general laws, free and open to all, with power to issue circulating notes secured by United States bonds, deposited with the government and redeemable on demand in United States notes or coin. Such a system would secure to the people a safe currency of equal value in all parts of the country, receivable for all dues, and easily convertible into coin. Interest could thus be saved on so much of the public debt as could be conveniently maintained in permanent circulation, leaving to national banks the proper business of such corporations, of providing currency for the varying changes, the ebb and flow of trade.

I said that the legal tender quality given to United States notes was intended to maintain them in forced circulation at a time when their depreciation was inevitable. When they were redeemable in coin this quality might either be withdrawn or retained, without affecting their use as currency in ordinary times. But all experience had shown that there were periods when, under any system of paper money, however carefully guarded, it was impracticable to maintain actual coin redemption. Usually contracts would be based upon current paper money, and it was just that, during a sudden panic, or an unreasonable demand for coin, the creditor should not be allowed to demand payment in other than the currency upon which the debt was contracted. To meet this contingency, it would seem to be right to maintain the legal tender quality of the United States notes. If they were not at par with coin it was the fault of the government and not of the debtor, or, rather, it was the result of unforseen stringency not contemplated by the contracting parties.

In establishing a system of paper money, designed to be permanent, I said it should be remembered that theretofore no expedient had been devised, either in this or other countries, that in times of panic or adverse trade had prevented the drain and exhaustion of coin reserves, however large or carefully guarded. Every such system must provide for a suspension of specie payment. Laws might forbid or ignore such a contingency, but it would come; and when it came it could not be resisted, but had to be acknowledged and declared, to prevent unnecessary sacrifice and ruin. In our free government the power to make this declaration would not be willingly intrusted to individuals, but should be determined by events and conditions known to all. It would be far better to fix the maximum of legal tender notes at $300,000,000, supported by a minimum reserve of $100,000,000, of coin, only to be used for the redemption of notes, not to be reissued until the reserve was restored. A demand of coin to exhaust such a reserve might not occur, but, if events should force it, the fact would be known and could be declared, and would justify a temporary suspension of specie payments. Some such expedient could, no doubt, be provided by Congress for an exceptional emergency. In other times the general confidence in these notes would maintain them at par in coin, and justify their use as reserves of banks and for the redemption of bank notes.

As to the fractional currency I said the resumption act provided for the exchange and substitution of silver coins for such currency. To facilitate this exchange, the joint resolution, approved July 22, 1876, provided that such coin should be issued to an amount not exceeding $10,000,000, for an equal amount of legal tender notes. It also provided that the aggregate amount of such coin and fractional currency outstanding should not exceed, at any time, $50,000,000. That limit would have been reached if the whole amount of fractional currency issued and not redeemed, had been held to be "outstanding." It was well known, however, that a very large amount of fractional currency issued had been destroyed, and could not be presented for redemption, and could hardly be held to be "outstanding." The Treasurer of the United States, the Comptroller of the Currency, and the Director of the Mint concurred in estimating the amount, so lost and destroyed, to be not less than $8,083,513.

As it was evident that Congress intended to provide an aggregate issue of $50,000,000 of such coin and currency in circulation, I directed the further issue of silver coin, equal in amount to the currency estimated to have been lost and destroyed.

I recommended that the limitation upon the amount of such fractional coin, to be issued in exchange for United States notes, be repealed. The coin was readily taken, was in great favor with the people, its issue was profitable to the government, and experience had shown that there was no difficulty in maintaining it at par with United States notes. The estimated amount of such coin in circulation in the United States in 1860, at par with gold, was $43,000,000. Great Britain, with a population of 32,000,000, maintained an inferior fractional coin to the amount of $92,463,500, at par with gold, and other nations maintained a much larger per capita amount. The true limit of such coin was the demand that might be made for its issue, and if only issued in exchange for United States notes there was no danger of an excess being issued.

By the coinage act of 1873, any person might deposit silver bullion at the mint to be coined into trade dollars of the weight of 420 grains, troy, upon the payment of the cost of coinage. This provision had been made at a time when such a dollar, worth in the market $1.02-13/100 in gold, was designed for the use of trade in China, where silver was the only standard. By the joint resolution of July 22, 1876, passed when the trade dollar in market value, had fallen greatly below one dollar in gold, it was provided that it should not be thereafter a legal tender, and the Secretary of the Treasury was authorized "to limit the coinage thereof to such an amount as he may deem sufficient to meet the export demand for the same." Under these laws the amount of trade dollars issued, mainly for exportation, was $30,710,400.

In October, 1877, it became apparent that there was no further export demand for trade dollars, but deposits of silver bullion were made, and such dollars were demanded of the mint for circulation in the United States, that the owner might secure the difference between the value of such bullion in the market and United States notes. At the time the mints were fully occupied by the issue of fractional, and other coins, on account of the government. Therefore, under the authority of the law of 1876 referred to, I directed that no further issues of trade dollars be made until necessary again to meet an export demand. In case another silver dollar was authorized, I recommended that the trade dollar be discontinued.

The question of the issue of a silver dollar for circulation as money had, previous to my report, been discussed and carefully examined by a commission organized by Congress, which had recommended the coinage of the old silver dollar. With such legislative provisions as would maintain its current value at par with gold, its issue was recommended by me. I thought a gold coin of the denomination of one dollar was too small for convenient circulation, while such a coin in silver would be convenient for a multitude of daily transactions, and in a form to satisfy the natural instinct of hoarding.

I discussed the silver question to some length and said that of the metals, silver was of the most general use for coinage. It was a part of every system of coinage, even in countries where gold was the sole legal standard. It best measured the common wants of life, but, from its weight and bulk, was not a convenient medium in the larger exchanges of commerce. Its production was reasonably steady in amount. The relative market value of silver and gold was far more stable than that of any other two commodities--still, it did vary. It was not in the power of human law to prevent the variation. This inherent difficulty had compelled all nations to adopt one or the other as the sole standard of value, or to authorize an alternative standard of the cheaper coin, or to coin both metals at an arbitrary standard, and to maintain one a par with the other by limiting the amount and legal tender quality of the cheaper coin, and receiving or redeeming it at par with the other.

It had been the careful study of statesmen for many years to secure a bimetallic currency not subject to the changes of market value, and so adjusted that both kinds could be kept in circulation together, not alternating with each other. The growing tendency had been to adopt, for coins, the principle of "redeemability" applied to different forms of paper money. By limiting tokens, silver, and paper money, to the amount needed for business, and promptly receiving or redeeming all that might at any time be in excess, all these forms of money could be kept in circulation, in large amounts, at par with gold. In this way, tokens of inferior intrinsic value were readily circulated, and did not depreciate below the paper money into which they were convertible. The fractional coin then in circulation, though the silver of which it was composed was of less market value than the paper money, passed readily among all classes of people and answered all the purposes for which it was designed. And so the silver dollar, if restored to our coinage, would greatly add to the convenience of the people. But this coin should be subject to the same rule, as to issue and convertibility, as other forms of money. If the market value of the silver in it was less than that of gold coin of the same denomination, and it was issued in unlimited qualities, and made a legal tender for all debts, it would demonetize gold and depreciate our paper money.

The importance of gold as the standard of value was conceded by all. Since 1834, it had been practically the sole coin standard of the United States, and, since 1815, been the sole standard of Great Britain. Germany had recently adopted the same standard. France, and other Latin nations, had suspended the coinage of silver, and, it was supposed, would gradually either adopt the sole standard of gold, or provide for the convertibility of silver coin, on the demand of the holder, into gold coin.

In the United States, several experiments had been made with the view of retaining both gold and silver in circulation. The 2nd Congress undertook to establish the ratio of fifteen of silver to one of gold, with free coinage of both metals. By this ratio gold was under-valued, as one ounce of gold was worth more in the markets of the world than fifteen ounces of silver, and gold, therefore, was exported. To correct this, in 1837, the ratio was fixed at sixteen to one, but sixteen ounces of silver were worth, in the market, more than one ounce of gold, so that silver was demonetized.

These difficulties in the adjustment of gold and silver coinage had been fully considered by Congress, prior to the passage of the act approved February 21, 1853. By that act a new, and it was believed a permanent, policy was adopted to secure the simultaneous circulation of both silver and gold coins in the United States. Silver fractional coins were provided for at a ratio of 14.88 in silver to one in gold, and were only issued in exchange for gold coin. The right of private parties to deposit silver bullion for such coinage was repealed, and these coins were issued from bullion purchased by the Treasurer of the Mint, and only upon the account, and for the profit, of the United States. The coin was a legal tender only in payment of debts for all sums not exceeding five dollars. Though the silver in this coin was then worth in the market 3.13 cents on the dollar less than gold coin, yet its convenience for use in change, its issue by the government only in exchange for, and its practical convertibility into, gold coin, maintained it in circulation at par with gold coin. If the slight error in the ratio of 1792 prevented gold from entering into circulation for forty-five years, and the slight error in 1837 brought gold into circulation and banished silver until 1853, how much more certainly would an error then of nine per cent. cause gold to be exported and silver to become the sole standard of value? Was it worth while to travel again the round of errors, when experience had demonstrated that both metals could only be maintained in circulation together by adhering to the policy of 1853?

The silver dollar was not mentioned in the act of 1853, but from 1792 until 1874 it was worth more in the market than the gold dollar provided for in the act of 1837. It was not a current coin contemplated as being in circulation at the passage of the act of February 12, 1873. The whole amount of such dollars, issued prior to 1853, was $2,553,000. Subsequent to 1853, and until it was dropped from our coinage in 1873, the total amount issued was $5,492,838, and this was almost exclusively for exportation.

By the coinage act approved February 12, 1873, fractional silver coins were authorized, similar in general character to the coins of 1853, but with a slight increase in silver in them, to make them conform exactly to the French coinage, and the old dollar was replaced by the trade dollar of 420 grains of standard silver.

Much complaint had been made that this was done with the design of depriving the people of the privilege of paying their debts in a cheaper money than gold, but it was manifest that this was an error. No one then did or could foresee the subsequent fall in the market value of silver. The silver dollar was an unknown coin to the people, and was not in circulation even on the Pacific slope, where coin was in common use. The trade dollar of 420 grains was substituted for the silver dollar of 412½ grains because it was believed that it was better adapted to supersede the Mexican dollar in the Chinese trade, and experiment proved this to be true. Since the trade dollar was authorized $30,710,400 had been issued, or nearly four times the entire issue of old silver dollars since the foundation of the government. Had not the coinage act of 1873 passed, the United States would have been compelled to suspend the free coinage of silver dollars, as the Latin nations were, or to accept silver as the sole coin standard of value.

Since February, 1873, great changes had occurred in the market value of silver. Prior to that time the silver in the old dollar was worth more than a gold dollar, while it was worth then, in 1877, about 92 cents. If by law any holder of silver bullion might deposit in the mint and demand a full legal tender dollar for every 412½ grains of standard silver deposited, the result would be inevitable that as soon as the mints could supply the demand the silver dollar would, by a financial law as fixed and invariable as the law of gravitation, become the only standard of value. All forms of paper money would fall to that standard or below it, and gold would be demonetized and quoted at a premium equal to its value in the markets of the world. For a time the run to deposit bullion at the mint would give to silver an artificial value, of which the holders and producers of silver bullion would have the sole benefit. The utmost capacity of the mints would be employed for years to supply this demand at the cost of, and without profit to, the people. The silver dollar would take the place of gold as rapidly as coined, and be used in the payment of customs duties, causing an accumulation of such coins in the treasury. If used in paying the interest on the public debt, the grave questions then presented would arise with public creditors, seriously affecting the public credit.

It had been urged that the free coinage of silver in the United States would restore its market value to that of gold. Market value was fixed by the world, and not by the United States alone, and was affected by the whole mass of silver in the world. As the enormous and continuous demand for silver in Asia had not prevented the fall of silver, it was not likely that the limited demand for silver coin in this country, where paper money then was, and would be, the chief medium of exchange, would cause any considerable advance in its value. This advance, if any, would be secured by the demand for silver bullion for coin, to be issued by and for the United States, as well as if it were issued for the benefit of the holder of the bullion. If the financial condition of our country was so grievous that we must at every hazard have a cheaper dollar, in order to lessen the burden of debts already contracted, it would be far better, rather than to adopt the single standard of silver, to boldly reduce the number of grains in the gold dollar, or to abandon and retrace all efforts to make United States notes equal to coin. Either expedient would do greater harm to the public at large than any possible benefit to debtors.

The free coinage of silver would also impair the pledge made of the customs duties, by the act of February, 1862, for payment of the interest of the public debt. The policy adhered to of collecting these duties in gold coin, had been the chief cause of upholding and advancing the public credit, and making it possible to lessen the burden of interest by the process of refunding.

In view of these considerations, I felt it to be my duty to earnestly urge upon Congress the serious objections to the free coinage of silver on such conditions as would demonetize gold, greatly disturb all the financial operations of the government, suddenly revolutionize the basis of our currency, throw upon the government the increased cost of coinage, arrest the refunding of the public debt, and impair the public credit, with no apparent advantage to the people at large.

I believed that all the beneficial results hoped for from a liberal issue of silver coin could be secured by issuing this coin, in pursuance of the general policy of the act of 1853, in exchange for United States notes, coined from bullion purchased in the open market, by the United States, and by maintaining it by redemption, or otherwise, at par with gold coin. It could be made a legal tender for such sums and on such contracts as would secure to it the most general circulation. It could be easily redeemed in United States notes and gold coin, and only reissued when demanded for public convenience. If the essential quality of redeemability given to the United States notes, bank bills, tokens, fractional coins and currency, maintained them at par, how much easier it would be to maintain the silver dollar, of intrinsic market value nearly equal to gold, at par with gold coin, by giving to it the like quality of redeemability. To still further secure a fixed relative value of silver and gold, the United States might invite an international convention of commercial nations. Even such a convention, while it might check the fall of silver, could not prevent the operation of that higher law which places the market value of silver above human control. Issued upon the conditions stated, I was of opinion that the silver dollar would be a great public advantage, but that if issued without limit, upon the demand of the owners of silver bullion, it would be a great public injury.

CHAPTER XXXII. ENACTMENT OF THE BLAND-ALLISON SILVER LAW. Amendments to the Act Reported by the Committee on Finance--Revival of a Letter Written by Me in 1868--Explained in Letter to Justin S. Morrill Ten Years Later--Text of the Bland Silver Bill as Amended by the Senate and Agreed to by the House--Vetoed by President Hayes --Becomes a Law Notwithstanding His Objections--I Decide to Terminate the Existing Contract with the Syndicate--Subscriptions Invited for Four per Cent. Bonds--Preparations for Resumption--Interviews with Committees of Both Houses--Condition of the Bank of England as Compared with the United States Treasury--Mr. Buckner Changes His Views Somewhat.

The President's message supported and strengthened the position taken by me both in favor of the policy of resumption and against the free coinage of silver provided for in the Bland bill. The comments in the public press, both in the United States and in Europe, generally sustained the position taken by the President and myself. I soon had assurances that the Bland bill would not pass the Senate without radical changes. Even the House of Representatives, so recently eager to repeal the resumption act, and so hasty and united for the free coinage of silver, had become more conservative and would not have favored either measure without material changes. I conversed with Mr. Allison and wrote him the following letter:

"Washington, D. C., December 10, 1877. "Hon. W. B. Allison, U. S. Senate.

"Dear Sir:--Permit me to make an earnest appeal to you to so amend the silver bill that it will not arrest the refunding of our debt or prevent the sale of our four per cent. bonds. I know that upon you must mainly rest the responsibility of this measure, and I believe that you would not do anything that you did not think would advance the public service, whatever pressure might be brought to bear upon you.

"It is now perfectly certain that unless the customs duties and the public debt--as least so much of it as was issued since February, 1873--are excepted, we cannot sell the bonds. The shock to our credit will bring back from abroad United States bonds, and our people will then have a chance to buy the existing bonds and we cannot sell the four per cent. bonds. This will be a grievous loss and damage to the administration and to our party, for which we must be held responsible. You know I have been as much in favor of the silver dollar as anyone, but if it is to be used to raise these difficult questions with public creditors, it will be an unmixed evil.

"I wish I could impress you as I feel about this matter, and I know you would then share in the responsibility, if there is any, in so amending this bill that we can have all that is good out of it without the sure evil that may come from it if it arrests our funding and resumption operations.

"With much respect, yours, etc. "John Sherman.

The amendments to the Bland bill proposed by Mr. Allison from the committee on finance, completely revolutionized the measure. The Senate committee proposed to strike out these words in the House bill:

"And any owner of silver bullion may deposit the same at any coinage mint or assay office, to be coined into such dollars, for his benefit, upon the same terms and conditions as gold bullion is deposited for coinage under existing laws."

And to insert the following:

"And the Secretary of the Treasury is authorized and directed, out of any money in the treasury not otherwise appropriated, to purchase, from time to time, at the market price thereof, not less than $2,000,000 per month, nor more than $4,000,000 per month, and cause the same to be coined into such dollars. And any gain or seigniorage arising from this coinage shall be accounted for and paid into the treasury, as provided under existing laws relative to the subsidiary coinage: Provided, that the amount of money at any one time invested in such silver bullion, exclusive of such resulting coin, shall not exceed $5,000,000."

These amendments were agreed to.

Sections two and three of the bill were added by the Senate. The bill, as amended, was sent to the House of Representatives, and the Senate amendments were agreed to. The bill as amended was as follows;

"AN ACT TO AUTHORIZE THE COINAGE OF THE STANDARD SILVER DOLLAR, AND TO RESTORE ITS LEGAL TENDER CHARACTER.

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there shall be coined, at the several mints of the United States, silver dollars of the weight of four hundred and twelve and a half grains troy of standard silver, as provided in the act of January eighteenth, eighteen hundred thirty-seven, on which shall be the devices and superscriptions provided by said act; which coins, together with all silver dollars heretofore coined by the United States, of like weight and fineness, shall be a legal tender, at their nominal value, for all debts and dues, public and private, except where otherwise expressly stipulated in the contract. And the Secretary of the Treasury is authorized and directed to purchase, from time to time, silver bullion, at the market price thereof, not less than two million dollars worth per month, nor more than four million dollars worth per month, and cause the same to be coined monthly, as fast as so purchased, into such dollars; and a sum sufficient to carry out the foregoing provision of this act is hereby appropriated out of any money in the treasury not otherwise appropriated. And any gain or seigniorage arising from this coinage shall be accounted for and paid into the treasury, as provided under existing laws relative to the subsidiary coinage: Provided, That the amount of money at any one time invested in such silver bullion, exclusive of such resulting coin, shall not exceed five million dollars: And provided further, That nothing in this act shall be construed to authorize the payment in silver of certificates of deposit issued under the provisions of section two hundred and fifty-four of the Revised Statutes.

"Sec. 2. That immediately after the passage of this act, the President shall invite the governments of the countries composing the Latin union, so-called, and of such other European nations as he may deem advisable, to join the United States in a conference to adopt a common ratio between gold and silver, for the purpose of establishing, internationally, the use of bimetallic money, and securing fixity of relative value between those metals; such conference to be held at such place, in Europe or in the United States, at such time within six months, as may be mutually agreed upon by the executives of the governments joining in the same, whenever the governments so invited, or any three of them, shall have signified their willingness to unite in the same.

"The President shall, by and with the advice and consent of the Senate, appoint three commissioners, who shall attend such conference on behalf of the United States, and shall report the doings thereof to the President, who shall transmit the same to Congress.

"Said commissioners shall each receive the sum of two thousand five hundred dollars and their reasonable expenses, to be approved by the Secretary of State; and the amount necessary to pay such compensation and expenses is hereby appropriated out of any money in the treasury not otherwise appropriated.

"Sec. 3. That any holder of the coin authorized by this act may deposit the same with the treasurer or any assistant treasurer of the United States in sums not less than ten dollars, and receive therefor certificates of not less than ten dollars each, corresponding with the denominations of the United States notes. The coin deposited for or representing the certificates shall be retained in the treasury for the payment of same upon demand. Said certificates shall be receivable for customs, taxes, and all public dues, and, when so received, may be reissued.

"Sec. 4. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed."

It was sent to the President, and was disapproved by him. His veto message was read in the House on the 28th of February, and upon the question whether the bill should pass, the objections of the President notwithstanding, it was adopted by a vote of yeas 196, nays 73. It passed the Senate on the same day, by a vote of yeas 46, nays 19, and thus became a law.

I did not agree with the President in his veto of the bill, for the radical changes made in its terms in the Senate had greatly changed its effect and tenor. The provisions authorizing the Secretary of the Treasury to purchase not less than $2,000,000 worth of silver bullion per month, at market price, and to coin it into dollars, placed the silver dollars upon the same basis as the subsidiary coins, except that the dollar contained a greater number of grains of silver than a dollar of subsidiary coins, and was a legal tender for all debts without limit as to amount. The provision that the gain or seigniorage arising from the coinage should be accounted for and paid into the treasury, as under the existing laws relative to subsidiary coinage, seemed to remove all serious objections to the measure. In view of the strong public sentiment in favor of the free coinage of the silver dollar, I thought it better to make no objections to the passage of the bill, but I did not care to antagonize the wishes of the President. He honestly believed that it would greatly disturb the public credit to make a legal tender for all amounts, of a dollar, the bullion of which was not of equal commercial value to the gold dollar.

The provision made directing the President to invite the governments of the countries composing the Latin Union, and of such other European countries as he deemed advisable, to unite with the United States in adopting a common ratio between gold and silver, has been made the basis of several conferences which have ended without any practical result, and the question of a single or double standard still stands open as the great disturbing question of public policy, affecting alike all commercial countries.

While this measure was pending in the Senate, a casual letter written by me ten years previously was frequently quoted, as evidence that I was then in favor of paying the bonds of the United States with United States notes, at that date at a large discount in coin. The letter is as follows:

"United States Senate Chamber,} "Washington, March 20, 1868. } "Dear Sir:--I was pleased to receive your letter. My personal interests are the same as yours, but, like you, I do not intend to be influenced by them. My construction of the law is the result of a careful examination, and I feel quite sure an impartial court would confirm it, if the case could be tried before a court. I send you my views, as fully stated in a speech. Your idea is that we propose to repudiate or violate a promise when we offer to redeem the 'principal' in 'legal tender.' I think the bondholder violates his promise when he refuses to take the same kind of money he paid for the bonds. If the coin is to be tested by the law, I am right; if it is to be tested by Jay Cooke's advertisements, I am wrong. I hate repudiation, or anything like it, but we ought not to be deterred from doing what is right by fear of undeserved epithets. If, under the law as it now stands, the holder of the 5-20's can only be paid in gold, then we are repudiators if we propose to pay otherwise. If, on the other hand, the bondholder can legally demand only the kind of money he paid, he is a repudiator and an extortioner to demand money more valuable than he gave.

"Your truly, "John Sherman. "Hon. A. Mann, Jr., Brooklyn Heights."

On the 26th of March, 1878, I wrote the following letter to Senator Justin S. Morrill, which was read by him in the debate, and, I think, was a conclusive answer to the erroneous construction put upon my letter to Mann:

"My Dear Sir:--Your letter of the 24th inst. is received. I have noticed that my casual letter to Dr. Mann, of the date of March 20, 1868, inclosing a speech made by me, has been frequently used to prove that I have changed my opinion since that time as to the right of the United States to pay the principal of the 5-20 bonds in legal tenders. This would not be very important, if true, but it is not true, as I never have changed my opinion as to the technical legal right to redeem the principal of the 5-20 bonds in legal tenders, but, as you know and correctly state, have always insisted that we could not avail ourselves of this legal right until we complied, in all respects, with the legal and moral obligations imposed by the legal tender note, to redeem it in coin on demand or to restore the right to convert it into an interest- bearing government bond. The grounds of this opinion are very fully stated in the speech made February 27, 1868, referred to in the letter to Dr. Mann, and in a report on the funding bill made by me from the committee on finance, December 7, 1867.

"If my letter is taken in connection with the speech which it inclosed and to which it expressly referred, it will be perceived that my position there is entirely consistent with what it is now, and time has proven that, if the report of the committee on finance had been adopted, we would long since have reached the coin standard, with an enormous saving of interest, and without impairing the public credit. My position was, that while the legal tender act made United States notes a legal tender for all debts, private and public, except for customs duties and interest of the public debt, yet we could not honestly compel the public creditors to receive United States notes in the payment of bonds until we made good the pledge of the public faith to pay the notes in coin. That promise was printed on the face of the notes when issued, was repeated in several acts of Congress, and was declared valid and obligatory by the Supreme Court.

"From the first issue of the legal tender note, which I heartily supported and voted for, I have sought to make it good, to support, maintain and advance its value. It was in the earnest effort to restore to the greenback the right to be converted, on the demand of the holder, into a five per cent. bond and, as soon as practicable, into coin, that I made the speech referred to, resisting alike the demand of those who wished to exclude United States notes from the operation of funding and the large class of persons who wished to cheapen, degrade and ultimately repudiate them. In all my official connection with legislation as to legal tender notes, I have but one act to regret and to apologize for, and that is my acquiescence in the act of March 3, 1863, which, under the pressure of war and to promote the sale of bonds, took away from the holders of these notes the right to convert them into interest-bearing securities. This right might properly have been suspended during the war, but its repeal was a fatal act, the source and cause of all the financial evils we have suffered and from which we cannot recover until we restore that right or redeem on demand our notes in coin.

"The speech referred to, and which I have recently read by reasons of the reference to it in the letter to Dr. Mann, will clearly show that I have not been guilty of inconsistency or a change of opinion --the most pardonable of all offenses--but then insisted, as I now insist, that no discrimination should be made against the note holder, but that until we are ready to pay him in coin he should be allowed, at his option, to convert his money into a bond at par. Until then our notes are depreciated by our wrongful act, and we have no right to take advantage of our own wrong by forcing upon the bondholders the notes we refuse to receive. This is the precise principle involved in the act to strengthen the public credit, approved March 18, 1869. That act did not in any respect change the legal and moral obligations of the United States, but expressly provides that none of the interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such time as the United States notes shall be convertible into coin, at the option of the holder. And the act further 'solemnly pledges the public faith to make provisions, at the earliest practicable period, for the redemption of United States notes in coin.'

"This is in exact harmony with the position I held when I wrote the letter to Dr. Mann and that I now maintain, the primary principle being that the United States notes shall first be brought to par in coin before they shall be forced upon the public creditor in payment of his bonds. This act is the settled law, and whatever any man's opinions were before it passed, he would assume a grave responsibility who would seek to evade its terms, weaken its authority or change its provisions. It has entered into every contract made since that time. It has passed the ordeal of four Congresses and two elections for Presidents. It cannot be revoked without public dishonor. So far as the bondholder is concerned, it is an executed law. Over $700,000,000 of bonds have been redeemed in coin under it, and the civilized world regards all the remainder as covered by its sanction, and in their faith in it our securities have become the second only in the markets of the world. This law is not yet quite executed so far as the note holder is concerned. His note is not yet quite as good as coin. Congress has debated ever since its passage the best mode to make it good. The Senate in 1870 provided, in the third section of the refunding act, as it passed that body, that these notes might be converted into four per cent. bonds, but the House would not concur. Everybody can now see that if this had been done these notes would now be at par in coin. Other expedients were proposed, and finally the resumption act was passed, and, if undisturbed, is now on the eve of execution.

"The promise made in 1862, and so often repeated, is about to be fulfilled. Agitation on collateral questions may delay it, but the obligation of public faith, written on the face of every United States note and sacredly pledged by the act to strengthen the public credit, will give us neither peace nor assured prosperity until it is fulfilled. Public opinion may vibrate, and men and parties may array themselves against the fulfillment of these public promises, but in time they will be fulfilled, and I think the sooner the better. Pardon me for this long answer to your note, but I have no time to condense it.

"Very respectfully, "John Sherman."

Relief from the fear of the enactment of the Bland bill, and the limitation of the amount of silver dollars to be coined, removed the great impediment to the sale of four per cent. bonds, for refunding purposes, and the progress toward specie payments.

As already indicated, I had concluded to terminate the existing contract with the syndicate, and to make the sales directly through national bank depositaries, and the treasury and sub-treasuries of the United States. I therefore gave August Belmont & Co. the following notice:

"Treasury Department, January 14, 1878. "Messrs. August Belmont & Co., New York.

"Gentlemen:--In compliance with the second clause of the contract between the Secretary of the Treasury and yourselves and associates, of the date of June 9, 1877, for the sale of four per cent. bonds, I give you notice that from and after the 26th day of January instant that contract is terminated. It is the desire of the President, in which I concur, to open subscriptions in the United States to the four per cent. bonds in a different way from that provided in our contract, and therefore this notice is given. I sincerely hope to have your active co-operation in the new plan, and am disposed, if you are willing, to continue in substance, by a new contract with you, the sale of these bonds in European markets, and invite your suggestions to that end.

"Very respectfully, "John Sherman, Secretary."

I received from them the following answer:

"New York, January 15, 1878. "Hon. John Sherman, Secretary of the Treasury, Washington.

"Dear Sir:--We beg to acknowledge receipt of your favor of the 14th instant, notifying us of the termination of the contract of June 9, 1877, for the sale of four per cent. bonds, on the 29th of this month, which we have communicated to the associates here and in London.

"We have also communicated to our friends in London your willingness to continue the contract for the sale of the four per cent. bonds in Europe, with such modifications as may become necessary, and as soon as we have received their views we shall take pleasure in writing to you again for the purpose of appointing a conference on the subject.

"In the meantime, we remain, very respectfully,

"Aug. Belmont & Co."

Notice was given to Mr. Conant of the termination of the contract, but he was advised by me that we would probably agree to the continuance of the syndicate in the European markets. He had expressed to me a fear that a panic would occur about our bonds in Europe, on account of the anticipated passage of the Bland bill, but I was able to assure him that it would not become a law in the form originally proposed.

Being thus free from all existing contracts, I published the following notice inviting subscriptions to the four per cent. bonds:

"Treasury Department, } "Washington, D. C., January 16, 1878.} "The Secretary of the Treasury hereby gives notice that, from the 26th instant, and until further notice, he will receive subscriptions for the four per cent. funded loan of the United States, in denominations as stated below, at par and accrued interest, in coin.

"The bonds are redeemable July, 1907, and bear interest, payable quarterly, on the first day of January, April, July, and October, of each year, and are exempt from the payment of taxes or duties to the United States, as well as from taxation in any form by or under state, municipal, or local authority.

"The subscriptions may be made for coupon bonds of $50, $100, $500, and $1,000, and for registered bonds of $50, $100, $500, $1,000, $5,000, and $10,000.

"Two per cent. of the purchase money must accompany the subscription; the remainder may be paid at the pleasure of the purchaser, either at the time of subscription or within thirty days thereafter, with interest on the amount of the subscription, at the rate of four per cent. per annum, to date of payment.

"Upon the receipt of full payment, the bonds will be transmitted, free of charge, to the subscribers, and a commission of one-fourth of one per cent. will be allowed upon the amount of subscriptions, but no commission will be paid upon any single subscription less than $1,000.

"Forms of application will be furnished by the treasurer at Washington, the assistant treasurers at Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and San Francisco, and by the national banks and bankers generally. The applications must specify the amount and denominations required, and, for registered bonds, the full name and post office address of the person to whom the bonds shall be made payable.

"The interest on the registered bonds will be paid by check, issued by the treasurer of the United States, to the order of the holder, and mailed to his address. The check is payable on presentation, properly indorsed, at the offices of the treasurer and assistant treasurers of the United States.

"Payments for the bonds may be made in coin to the treasurer of the United States at Washington, or the assistant treasurers at Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York, Philadelphia, St. Louis, and San Francisco.

"To promote the convenience of subscribers, the department will also receive, in lieu of coin, called bonds of the United States, coupons past due or maturing within thirty days, or gold certificates issued under the act of March 3, 1863, and national banks will be designated as depositaries under the provisions of section 5153, Revised Statutes of the United States, to receive deposits on account of this loan, under regulations to be hereafter prescribed.

"John Sherman, Secretary of the Treasury."

After the publication of this notice inviting subscriptions to the four per cent. bonds, I found that the chief impediment in my way was the apparent disposition of both Houses of Congress to require the called bonds to be paid in United States notes. This was not confined to any party, for, while the majority of the Democrats of each House were in favor of such payment, many of the prominent Republicans were fully committed to the same policy. I was requested by committees of the two Houses, from time to time, to appear before them, which, in compliance with the law, I cheerfully did, and found that a free and unrestricted statement of what I proposed to do was not only beneficial to the public service, but soon induced Congress not to interfere with my plans for resumption. My first interview was on the 11th of March, 1878, with the committee on coinage of the House, of which Alexander H. Stephens, of Georgia, was chairman. I was accompanied by H. R. Linderman, Director of the Mint. The notes of the conference were ordered by the House of Representatives to be printed, and the committee was convinced of the correctness of the statements in regard to the amount of actual coin and bullion on hand, and where it was situated, which had been previously doubted.

On the 19th of March, I had an interview with the Senate committee on finance, of which Mr. Morrill, of Vermont, was chairman. I was examined at great length and detail as to the preparations for resumption, and the actual state of the treasury at that time. The principal topic discussed was whether the four per cent. bonds could be sold, Mr. Bayard being evidently in favor of the substitution of the four and a half per cents. for the four per cent. bonds I had placed on the market. The question of how to obtain gold coin and bullion was fully considered in this interview, and here I was able to convince the committee that a purchase of domestic gold coin and bullion would meet all the requirements of the treasury, and that no necessity existed for the purchase of gold abroad. This interview, which covers over twenty printed pages, I believe entirely satisfied the committee of the expediency of the steps taken by me and their probable success. After this interview I had the assistance of the committee of finance, without regard to party, in the measures adopted by me. Mr. Bayard and Mr. Kernan gave me their hearty support, and Mr. Voorhees made no unfriendly opposition. The report of this interview was subsequently published, and had a good effect upon the popular mind.

By far the most important interview was one with the committee on banking and currency, of the House of Representatives, of which A. H. Buckner, of Missouri, was chairman. A large majority of this committee had reported a bill to repeal the resumption act, and the members of the committee of each party were among the most pronounced greenbackers in the House of Representatives. Perhaps the most aggressive was Thomas Ewing, a friend, and by marriage a relative of mine, a Member of ability and influence, and thoroughly sincere in his convictions against the policy of resumption. I was summoned before this committee to answer a series of interrogatories furnished me a few days previously, calling for statements as to the actual amount of gold and silver belonging to, and in the custody of, the treasury department on the 28th of March, where located and what deductions were to be made from it, on account of actual existing demands against it. This interview, extending through several days, and covering seventy-three printed pages, embraced every phase of the financial condition of the United States, and the policy of the treasury department in the past and in the future. At the end of the first day the principal question seemed to be whether it was possible that the United States could resume specie payments and maintain them. This led to a careful scrutiny of the amount of gold in the treasury, Mr. Ewing assuming that a portion of the amount stated was "phantom" gold, and was really not available for the purposes of resumption. I said that the United States would be, on the 1st of January, in a better condition to resume specie payments than the Bank of England was to maintain them, and gave my reasons for that opinion. I saw that Mr. Ewing regarded this statement as an exaggeration.

After the adjournment I understood that Mr. Ewing said that I was grossly in error, and that he would be able to show it by authentic documents as to the condition of the Bank of England. He said that I was laboring under delusions, which he would be able to expose at the next meeting. When we again met with the full committee present, Mr. Ewing said:

"I ask your attention to a comparison of the condition of the treasury for resumption with the condition of the Bank of England in 1819 and now, with the Bank of France this year, and with the banks of the United States in 1857 and 1861."

To this I replied:

"When I said the other day that I thought the condition of the treasury, on the 1st of January next, would be as good as the Bank of England, I had not then before the actual figures or tables, but only spoke from a general knowledge of the facts. Since then I have given the matter a good deal of attention, and now have some carefully prepared tables, founded upon late information, giving the exact comparison of the condition of the Bank of England, the Bank of France, the Bank of Germany, the Bank of Belgium, the national banks, and the treasury. These tables will show that pretty accurately."

I handed the tables to the committee, and they are printed with the report. I then proceeded to show in detail that while the Bank of England had notes outstanding to the amount of £38,698,020, it had on hand as assets: Government debt, £11,015,100; other securities, £3,984,900; gold coin and bullion, £23,698,020; that upon this it was apparent that in the issue department the Bank of England was stronger than the United States; but in the banking department, the bank was liable for deposits, the most dangerous form of liability, and various other forms of liability, to the amount of £46,277,277. To pay these it had government securities, notes and other securities and £1,032,773 gold and silver coin, in all amounting to £46,277,277. Combining these accounts it was shown that the demand liabilities on the bank were £54,639,171, while the gold and bullion on hand was only £24,730,793. Then I said:

"Now, in regard to the United States, I have a statement here showing the apparent and probable condition of the United States treasury on April 1, 1878, and on the 1st of January next. The only difference in these statements is that I add to the present condition of the treasury the proposed accumulation of fifty millions of coin and a substantial payment before that of the fractional currency. I think it will be practically redeemed before that time. The actual results show the amount of demand liabilities on April 1, 1878, against the United States, as $460,527,374, and they show the demand resources, including coin and currency, at $174,324,459, making the percentage of resources to liabilities thirty-seven. To show the probable condition of the treasury on the 1st of January, 1879, I add the fifty millions of coin and I take off the fractional currency, and deducted estimated United States notes lost and destroyed, leaving the other items about the same. That would show an aggregate of probable liabilities of $35,098,400 and probable cash resources of $224,324,459, making fifty-one per cent. of the demand liabilities. The ratio of the Bank of England, at this time, is forty-five per cent.; the ratio of the Bank of France, is sixty-five per cent.; the ratio of the Bank of Germany, is fifty-eight per cent.; and the ratio of the Bank of Belgium, is twenty-five per cent., all based upon the same figures."

I gave the statistics as to the condition of the national banks, showing their assets and liabilities, that they were not bound to redeem their notes in gold or silver, but could redeem them in United States notes, of which they had on hand $97,083,248, and besides they had deposited in the treasury, as security for their notes, an amount of United States bonds ten per cent. greater than the entire amount of their circulating notes, and that these bonds were worth in the market a large premium in currency. In addition to the legal tenders on hand, they had five per cent. of their circulation in legal tender notes deposited in the treasury as a redemption fund, amounting to $15,028,340. They had also on hand gold and silver coin and gold certificates amounting to $32,907,750, making a total cash reserve of $145,019,338. The ratio of their legal tender funds to circulation was 48.4; ratio of legal tenders to circulation and deposits, 15.1.

In this interview I explicitly stated to the committee my purpose to sell bonds, under the resumption act, at the rate of $5,000,000 a month, to the aggregate amount of $50,000,000; that I was satisfied I could make this sale upon favorable terms, and could add to the coin then in the treasury the sum of $50,000,000 gold coin, which I thought sufficient to secure and maintain the parity of our notes with coin. Mr. Ewing inquired:

"Where do you expect to get the additional fifty millions of gold by January 1, 1879?"

My answer was as follows:

"You must see that for me to state too closely what I propose to do might prevent me from doing what I expect to do, and therefore I will answer your question just as far as I think you will say I ought to go. I answer, mainly from the sale of bonds. Indeed, in the present condition of the revenue, we cannot expect much help from surplus revenue, except so far as that surplus revenue may be applied to the payment of greenbacks and to the redemption of fractional currency in aid of the sinking fund. To that extent I think we can rely upon revenue enough to retire the United States notes redeemed under the resumption act; so that I would say that we can get the $50,000,000 of gold additional by the sale of bonds. As to the kind of bonds that I would sell, and as to how I would sell them, etc., I ought not to say anything on that subject at present, because you ought to allow me, as an executive officer, in the exercise of a very delicate discretion, free power to act as I think right at the moment, holding me responsible for my action afterward. As to what bonds I will sell, or where I will sell them, or how I will sell them, as that is a discretionary power left with the secretary, I ought not to decide that now, but to decide it as the case arises."

Some question was made by Mr. Ewing as to the ability to sell bonds, and he asked:

"I understood you to say in your interview with the Senate committee that you would have to rely upon the natural currents of trade to bring gold from aborad; that is, that there cannot be a large sale of bonds for coin abroad. Is it on a foreign sale that you are relying?"

I replied:

"Not at all, but on a sale at home. Perhaps I might as well say that if I can get two-thirds of this year's supply of gold and silver from our own mines, it will amount to a good deal more that $50,000,000, so that I do not have to go abroad for gold. If we can keep our own gold and silver from going abroad, it is more than I want."

Mr. Buckner inquired:

"For this $50,000,000 additional I suppose you rely, to some extent, on the coinage of silver?"

I said:

"To some extent; silver and gold we consider the same under the law."

Mr. Ewing asked:

"Do you expect to pay out the silver dollar coined by you for current expenses, or only for coin liabilities, or to hoard it for resumption?"

I said:

"I expect to pay it out now only in exchange for gold coin or for silver bullion. I am perfectly free and answer the question fully, because on that point, after consulting with many Members of both Houses, I have made up my mind what the law requires me to do. I propose to issue all the silver dollars that are demanded in exchange for gold coin. That has been going on to some extent; how far I cannot tell. Then I propose to use the silver in payment for silver bullion, which I can do at par in gold. I then propose to buy all the rest of the silver bullion which I need, under the law, with silver coin. As a matter of course, in the current course of business, some of that silver coin will go into circulation; how much, I do not know. The more, the better for us. But most of it, I take it, will be transferred to the treasury for silver certificates (that seems to be the idea of the bill), and those silver certificates will come into the treasury in payment of duties, and in that way, practically, the silver will belong to the government again."

Some question arose as to the reissue of treasury notes under the resumption act. I expressed my opinion that all notes not in excess of $300,000,000 could be reissued under existing laws, but as to whether notes in excess of $300,000,000 could be reissued was a question which I hoped Congress would settle, that I considered the law as doubtful. Congress did subsequently suspend the retirement of United States notes at $346,000,000.

The sinking fund and many other subjects were embraced in this interview, the importance of which would justify a fuller statement than I have given, but, as the interview has been published as a public document, I do not give further details. I stated frankly and explicitly what I intended to do if not interrupted by Congress. I felt assured, not only from the Senate, but from what I could learn from Members of the House, that no material change of existing law would be made to prevent the proposed operations of the treasury department. From that time forward I had not the least doubt of success in preparing for and maintaining resumption, and refunding, at a lower rate of interest, all the public debt then subject to redemption.

I think I entirely satisfied the committee that the government was not dealing with shadows, but had undertaken a task which it could easily accomplish, if not prevented by our common masters, the Congress of the United States. It was said of Mr. Buckner that before I appeared before the committee, he regarded me as a visionary enthusiast, who had undertaken to do what was impossible to be done, that after the first day of the examination he came to the conclusion that I was honest in my belief that resumption was possible, but he did not believe in my ability to do what was proposed; at the end of the second day he expressed some doubts of the ability to resume, but said that the object aimed at was a good one, and he was not disposed to interfere with the experiment; and on the third day he said he believed I had faith in the success of resumption, and would not interfere with it, but if I failed I would be the "deadest man politically" that ever lived.

CHAPTER XXXIII. SALE OF BONDS FOR RESUMPTION PURPOSES. Arrangements Begun for the Disposal of $50,000,000 for Gold or Bullion--Interviews with Prominent Bankers in New York--Proposition in Behalf of the National Banks--Terms of the Contract Made with the Syndicate--Public Comment at the Close of the Negotiations-- "Gath's" Interview with Me at the Completion of the Sale--Eastern Press Approves the Contract, While the West Was Either Indifferent or Opposed to it--Senate Still Discussing the Expediency of Repealing the Resumption Act--Letter to Senator Ferry--Violent and Bitter Animosity Aroused Against Me--I Am Charged with Corruption--Interview with and Reply to Letter of Peter Cooper--Clarkson N. Potter's Charges.

The general results of these interviews, which had a wide circulation at the time, I believe were beneficial, and at least assured the public that a hopeful and determined effort was being made to advance United States notes and national bank notes to par with coin.

Before I had these interviews I had determined to sell $50,000,000 bonds at the rate of $5,000,000 a month for gold coin or bullion for resumption purposes, and also to press the refunding operations as rapidly as possible. I had at my disposal an unlimited amount of five, four and a half and four per cent. bonds, with authority to sell either kind to accumulate coin for the maintenance of resumption, or for the payment of bonds that were at the time redeemable, bearing a higher rate of interest. My printed correspondence with banks and bankers shows the advancing value of the four and four and a half per cent. bonds. The most active agent for the sale of these bonds was the First National Bank of New York, which had been the agent of the syndicate, and, though having no privilege or facility that was not extended to all banks and bankers alike, it evinced the utmost activity, intelligence and success, and took the lead in the sale of bonds. The advancing quotations furnished by it and other banks and bankers satisfied me that the policy of an open loan, such as was provided for by the notice of January 18, 1878, would be successful, if only we could have the certainty of coin payments by the 1st of January, 1879. I knew of the sensitive jealousy between the banks and bankers and between the old syndicate and prominent and wealthy firms who wished to participate in any new syndicate, and were jealous and suspicious of each other.

Offers were made to me by banks and bankers for special arrangements for the purchase of bonds, but I put them all aside until after I had written to all the parties a notice substantially similar to the following, sent to Belmont & Co.:

"Treasury Department, April 5, 1878. "Gentlemen:--It is my purpose to be in New York at four o'clock on Monday afternoon, and I would like, if practicable, to meet the members of the old syndicate at the Fifth Avenue Hotel that evening at any hour convenient to them, to confer as to the best mode of obtaining $50,000,000 gold coin or bullion prior to January 1, 1879, for resumption purposes, and to receive from the associates, or any of them, or from new parties, offers for any of the description of bonds I am authorized to sell for that purpose.

"I propose to accumulate this coin in either the treasury, the assay offices, or the public depositaries throughout the United States that will comply with the conditions of section 5153 Revised Statutes.

"I will send a similar letter to this to the First National Bank, and have to request that you will give notice to the other members of the old syndicate, and, with their consent, to any others you desire to participate in the interview.

"Very respectfully, "John Sherman, Secretary. "Messrs. August Belmont & Co., New York."

I sent General Hillhouse the following notice:

"Treasury Department, April 5, 1878. "Sir:--You will please inform Messrs. H. F. Vail, president National Bank of Commerce; J. D. Vermilye, president Merchants' National Bank; George S. Coe, president American Exchange National Bank; B. B. Sherman, Mechanics' National Bank, and James Buell, president Importers and Traders' National Bank, that I desire an interview with them at any hour on Tuesday next, at your office, or at such other places as they may prefer, in respect to the purchase for the Treasury for resumption of, say, $50,000,000 gold coin or bullion, to be delivered monthly and before the 1st of January next, either at your office or at the designated depositaries of the United States, under section 5153 Revised Statutes, and also, if practicable, to secure from them a bid for either of three classes of bonds described in the refunding act to an amount sufficient to purchase the coin stated. These gentlemen are respectfully requested to select such others connected with national banks as they may agree upon to join in the interview.

"Very respectfully, "John Sherman, Secretary. "General Thomas Hillhouse, "Assistant Treasurer United States, New York."

Regarding the negotiation as one of great importance, I was accompanied to New York by Hon. Charles Devens, Attorney General; John Jay Knox, Comptroller of the Currency; Charles F. Conant, Assistant Secretary; Daniel Baker, Chief of the Loan Division, and E. J. Babcock, my Secretary.

On the 8th of April I, with the gentlemen named, had an interview with the members of the old syndicate, Messrs. Belmont, Seligman, Bliss, Fabri and Fahnestock.

I stated that the object of my visit to New York, and of my request for an interview with the associates, was to obtain $50,000,000 coin for resumption purposes, and I would like to sell four per cent. bonds to that amount.

Mr. Belmont did not think the four per cent. bonds could be sold then, and the associates all concurred in the opinion that they would prefer making a proposition for the four and a halfs, although they were not prepared to make any definite offer. I said I would like to get 103 for the four and a halfs, but the associates said they would not consider that at all; they would communicate with the Rothschilds and others, and might possibly be able to offer 101; they would come to some conclusion by next day.

On the following day, at the National Bank of Commerce, I met the presidents of the national banks: Mr. Vail, Commerce; Mr. Vermilye, Merchants'; Mr. Coe, Merchants' Exchange; Mr. Sherman, Mechanics'; Mr. Buell, Importers and Traders'; Mr. Moses Taylor, City; Mr. F. D. Tappan, Gallatin; Mr. G. G. Williams, Chemical; Mr. F. A. Palmer, Broadway; Mr. George I. Seney, Metropolitan; Mr. P. C. Calhoun, Fourth National.

Mr. Vail said that this meeting was called at my request, that the gentlemen present had no information as to the object of the meeting, and had had no opportunity for consultation; that I would explain more fully what I desired.

I said that I proposed to resume specie payments on the 1st of January, in accordance with law, and that for this purpose I wished to get $50,000,000 of gold, and, to accumulate this amount, would if possible, sell four per cent. bonds.

Mr. Vermilye and Mr. Coe spoke at some length to the effect that they were in full accord with me on the subject of resuming specie payments, and they were willing to co-operate in any way to bring it about. They said that although they had not consulted with the other gentlemen present, they had no doubt they were all agreed upon this subject. They thought, however, it would be utterly useless to attempt to sell four per cent. bonds, and that as far as such bonds were concerned there need be no more said.

I said this being so, I would like to have some propositions for four and a halfs.

Mr. Coe said that no definite proposition could be made without further consultation among themselves; that they were willing to assist to the extent of their power to obtain resumption; that they would place themselves at my service in any way I might wish without compensation. He said that he thought an arrangement could be made by which the national banks could be made my agents in the sale of bonds. He thought the banks might take the $50,000,000 of four and a half per cent. bonds, to be paid for by the 1st of January, the government to receive whatever the banks could get for the bonds.

I invited the gentlemen to confer among themselves, and, if practicable, make me some definite proposition in the morning.

In the afternoon of the same day we met the members of the old syndicate. Mr. Belmont read a cable from the Rothschilds offering 101 for $100,000,000 four and a half per cent. bonds, $50,000,000 for resumption and $50,000,000 for refunding purposes.

I said I was not prepared to accept, but would give a definite answer next day.

On the following morning I met Mr. Vail, of the National Bank of Commerce, and Mr. Vermilye, of the Merchants' National Bank, at the sub-treasury.

Mr. Vail and Mr. Vermilye submitted a memorandum that if I would indicate my willingness to receive a proposition for the negotiation of $50,000,000 four and a half per cent. bonds at par in gold they would recommend the national banks to unite in making it.

I then asked Mr. Vail and Mr. Vermilye whether, if a proposition was made to me by bankers of acknowledged credit and responsibility of 101 for four and a half per cent. bonds, payable in installments and with the usual option, in their opinion, it was my duty to accept it.

They both said decidedly, yes; that such an arrangement would be far more advantageous than the acceptance of their proposition, and besides, if they took the bonds, it might impair to some extent their power to render the usual facilities to their commercial customers.

The proposition submitted by Messrs. Vail and Vermilye, in behalf of the national banks, was as follows:

"If the secretary will intimate his willingness to receive a proposition from the national banks in New York, Boston, Philadelphia and Baltimore for the negotiation of fifty millions four and a half per cent. bonds at par in gold, for resumption purposes, we will recommend our associates to unite in making it, with the belief on our part that it can be accomplished as suggested. This special loan to be the only bonds of this character offered, unless the same parties have the option on any further sums required."

Afterwards, on the same day, I again met the members of the syndicate at the sub-treasury, and said that I would sell only $50,000,000 four and a half per cent. bonds; that these must be paid for in gold coin, for resumption purposes; that I would sell them for 101½, allowing one-half of one per cent. commission, the syndicate to pay all expenses; but before signing the contract wished to communicate with the President.

These terms were accepted by the syndicate upon condition that their associates in London would consent, they reserving the right to cable to London for such consent; and the meeting adjourned until 1:30 o'clock, when, I having received a telegram from the President, the details of the contract were then discussed, and signature was delayed for an answer to the cable of the syndicate.

On the following day we again met at the sub-treasury, and Mr. Lucke, of Belmont & Co., informed me that the English parties had authorized them to close the contract, and it was therefore signed. It was as follows:

"This agreement, entered into the 11th day of April, 1878, between the Secretary of the Treasury of the United States, of the first part, and August Belmont & Co., of New York, on behalf of N. M. Rothschild & Sons, of London, England, and their associates and themselves; Drexel, Morgan & Co., of New York, on behalf of J. S. Morgan & Co., of London, and themselves; J. & W. Seligman & Co., of New York, on behalf of Seligman Bros. of London, and themselves; Morton, Bliss & Co., of New York, on behalf of Morton, Rose & Co. of London, and themselves; and the First National Bank of the city of New York, witnesseth: That said August Belmont & Co., on behalf of N. M. Rothschild & Sons, and their associates and themselves, hereby agree to purchase from the Secretary of the Treasury $4,125,000 of the four and one half per cent. bonds of the United States, issued under the acts of July 14, 1870, January 20, 1871, and January 14, 1875, and that Drexel, Morgan & Co., on behalf of J. S. Morgan & Co., and themselves, agree to purchase $1,625,000 of said bonds, and that J. & W. Seligman & Co., on behalf of Seligman Bros., and themselves, agree to purchase $1,625,000 of said bonds, and that Morton, Bliss & Co., on behalf of Morton, Rose & Co., and themselves, agree to purchase $1,625,000 of said bonds, and that the First National Bank of the city of New York agrees to purchase $1,000,000 of said bonds; making a total aggregate of $10,000,000 of said bonds on the terms and conditions following:

"First. The bonds covered by this contract shall be sold for resumption purposes.

"Second. The parties of the second part shall have the exclusive right to subscribe in the same proportion of each of the subscribers for the remainder of the $50,000,000 of the four and a half per cent. bonds of the United States authorized to be issued by the acts of Congress aforesaid; but the amount to be so subscribed shall not be less than $5,000,000 for each and every month after the present month of April.

"Third. That the Secretary of the Treasury shall not sell, during the continuance of this contract, any bonds other than such as by act of Congress may be provided to be sold for the payment of the Halifax or Geneva award, and the four per cent. consols of the United States, and those only for refunding purposes, except by mutual agreement of the parties hereto.

"Fourth. The parties of the second part agree to pay for the said four and a half per cent. bonds par and one and a half per cent. premium and interest accrued to the date of the application for the delivery of said bonds, in gold coin or matured United States gold coin coupons, or any of the six per centum 5-20 bonds heretofore called for redemption, or in United States gold certificates of deposit issued under the act of March 3, 1873, or in gold coin certificates of deposit of authorized designated deposit, and that have complied with the law.

"Fifth. The parties of the second part shall receive in gold coin a commission of half of one per centum on all bonds taken by them under this contract, as allowed by the act of July 14, 1870, and shall assume and defray all expenses which may be incurred in sending the bonds to London or elsewhere, upon their request, or by transmitting the bonds, coupons, or coin to the treasury department at Washington, including all cost of making the exchange. The bonds shall also be charged with the cost of preparation and issuing of the bonds.

"Sixth. No bonds shall be delivered to the parties of the second part, or either of them, until payment shall have been made in full therefor, in accordance with the terms of this contract.

"Signed by John Sherman, Secretary of the Treasury, J. & W. Seligman & Co., Morton, Bliss & Co., August Belmont & Co., the First National Bank of New York, Drexel, Morgan & Co.; and by Assistant United States Treasurer Thomas Hillhouse and E. J. Babcock, as witnesses."

The importance of this contract and the open publicity of the negotiation, created quite a sensation in the newspaper press, which presented a medley of praise and censure. All varieties of opinion from extravagant flattery to extreme denunciation were visited upon me by the editors of papers according to their preconceived opinions. I made no effort at secrecy, and no answer to either praise or blame, but freely contributed any information in respect to the matter to anyone, whether friendly or otherwise, who applied to me. Perhaps as accurate a statement as any, of my opinions, was made by George Alfred Townsend, over his nom de plume of "Gath," in the New York "Graphic" of April 12, 1878. He said:

"At four o'clock yesterday afternoon John Sherman, the Secretary of the Treasury, was sitting in Parlor No. 1, the ante-room of the late Republican national committee, when I followed my card into his presence. 'Ah!' he said, rising from an easy chair where he was resting, like one recently wearied but now relieved. 'Come in; it's all over now, and I don't mind telling you about it.'

'Yes, it's all over Wall street, and I think opinion was more favorable to the syndicate getting the bonds than the bank presidents.'

'The representatives of the banks were very polite and well-meaning,' said the secretary. 'I sent word that I was coming to the city and asked the national banks, as intimately related to the treasury department, to select persons to meet me. I also notified the members of the old syndicate that I had some propositions to suggest to them.'

'This is your third visit on the general object of resumption? A very eventful visit, isn't it, in the story of our finances?'

'Well, both my previous visits were important--in May, 1877, when $200,000,000 of four and a half per cent. bonds were disposed of, and again last June, when $75,000,000 of the four per cent. bonds were subscribed for. The present visit is probably the last with such an object. I feel glad and relieved.'

'You failed to get the bank philosophers to get you the $50,000,000 of gold?'

'I thought I could see that they did not mean to enter into the subscription. They all said they wanted to see resumption achieved, and would like to aid it, but spoke of their obligations to their commercial customers. They said too, that they would have to rely on brokers to get the gold and pay commissions for it, and were afraid it might be run up on them. One or two, perhaps, expected a more advantageous offer as to rates--indeed, wanted me to pay them a commission for selling our bonds at par. I can excuse them, because they will have to be looking after the redemption of their own circulation.'

"I suggested to the secretary that some of the bank presidents had discouraged resumption or treated it as a figment.

'When the congressional committee was over here,' he answered, 'there was something said about the advantage of getting priority in the line on resumption day; but that is nothing. They were very civil, but didn't see the proposition favorably.'

'Is there any disadvantage in negotiating through the syndicate?'

'No, there is an advantage in this respect; they sold the higher bonds abroad, and taking these will also place a part of them there, facilitating exchange in commercial settlements and interestedly maintaining prices. A portion of these low bonds ought to locate in Europe.'

'Speaking of exchange, Mr. secretary, the idea has been put forward here, in the fiscal form, I believe, that a large, round balance of trade in our favor indicates poverty and collapse. Is that good political economy?'

'There are nations,' said the secretary, 'like England, which have steady apparent balances of trade against them, yet show a great prosperity. But that is only the product of English money invested in foreign places and colonies; it is an apparent purchase, but really their own harvest. No nation that is greatly in debt, as we are, can observe real balances of trade overwhelmingly against us and not feel alarmed.'

'Do you expect any opposition from Congress as the reply to this negotiation and the near probability of specie payments?'

'No, I do not think Congress will interfere. The conservative element of the inflation party was appeased by the reissue of $300,000,000, and the candid way in which their silver legislation was carried out. I do not anticipate that Congress can affect this action.'

'May not the surprise of the news that you so readily negotiated these bonds and secured your gold, enrage those who have cast their political hopes upon preventing resumption?'

'I do not see why. General Ewing and the finance committee were clearly apprised by me two weeks ago of the exact plan I have followed out. They questioned me directly, and I told them. As no attack has been made upon that programme, I look for no successful resistance to its performance.'

'Do you consider the price paid by the syndicate for these bonds as good?'

'It was the best that could at present be had. I wanted them, first, to take $50,000,00 to $100,000,000 of the four per cent. bonds at 103--bonds that I think preferable in some respects, particularly for durable investment. These gentlemen, however, thought those bonds not convenient for them for ready sale, and they urged that I ought to let them have the four and a half per cents. at par, as some had been put to the people at that. I desired a premium of three per cent. They finally met me half way, and gave one and a half premium. In short, we get a very little scant of 103 currency for those bonds, for the syndicate pays over to us the accrued interest.'

'You do not anticipate that they will take the $10,000,000 and decline the other $40,000,000?'

'No; I think our economy, industry, exports, production, ready resources and general physical and political superiority will expand right onward, and protect everybody who puts faith in our national securities.'

'How much gold have you absolutely got for resumption to-day?'

'Seventy-two millions clear net of our own. I have nearly $140,000,000 present due, or coming, not counting any liabilities on it. The $50,000,000 I have secured to-day will give me, clear of everything, $120,000,000 of gold, and that is plenty.'

'Have you read the views of Mr. Musgrave and other bankers, in "The Graphic," on the theory that you have enough gold now and would not have to redeem much with your gold? I heard a merchant say this afternoon that you might not have $5,000,000 put at you!'

'That is more likely to be the case now,' said Mr. Sherman 'when I am so well protected. There might be a dash made at my $72,000,000 --not at my $120,000,000.'"

As a flattering background to his interview Mr. Townsend gave the following description of myself, which I hope it will not be egotism to publish. There were so many descriptions of me of a different character that I feel at liberty to quote one that was quite friendly:

"John Sherman, as he sat before me, young looking, his air and beard in perfect color, his manners gracious and indicating an easy spirit not above enjoyment, and manners not abraded by application, seemed to be a very excellent example to young public men. His nature had not been worn out in personal contests, nor his courage abated by the exercise of discretion and civility. He was the earliest and best champion of the Republican party--its first candidate for speaker of Congress, its last Secretary of the Treasury. For twenty years he has been in the national center of observation. He owes to temperance and study, exercise and natural sense, his present proud position as the principal exponent of the Republican party. Not in the Senate is that party seen at its best, but in the executive, where the President's original discrimination is approved by time and events; he chose John Sherman first of the cabinet, and within thirteen months he has concluded the last great treaty of the war--peace with the public creditor. In our arising commerce and huge balances of trade, we observe again 'Sherman's march to the sea.'"

The following statement in regard to the new loan and the national banks appeared in the "Financial Chronicle" of April 13:

"Mr. Sherman has shown, in his interviews with the committees of the House and Senate, not only his faith in the possibility of executing the resumption act, but also his determination to do it; and the disclosures of the past few days are the signs of the progress he is making. In fact, the events of the week, culminating in the successful negotiation with the syndicate bankers of a sale of four and a half per cent. bonds, practically put at rest all doubts with regard to the fact that on or before the 1st day of January, 1879, anyone can, on application to the office of the assistant treasurer in New York, obtain gold or silver for greenbacks, in sums of not less than fifty dollars. The terms of the loan are substantially set out in the following, which was posted, shortly after one o'clock on Thursday, on the bulletin boards of the sub- treasury, the parties composing the syndicate being Drexel, Morgan & Co., and J. S. Morgan & Co., of London; August Belmont & Co., and through them the Rothschilds, of London; Morton, Bliss & Co.; J. & W. Seligman, and Seligman Brothers, of London; and the First National Bank:

'The Secretary of the Treasury and the members of the last syndicate have entered into an agreement for the sale, for resumption purposes, of $50,000,000 United States four and a half per centum 15-year bonds at par and accrued interest, and one and a half per centum premium in gold coin, $10,000,000 to be subscribed immediately, and $5,000,000 per month during the balance of the year. The sale of four per centum bonds will be continued by the treasury department as heretofore, upon the terms and conditions of the last circular, and the proceeds will be applied to the redemption of six per centum 5-20 bonds.'

"This certainly will be considered a very favorable negotiation for the government."

Among the numerous letters received at this time, I insert the following:

"Viroqua, Wis.,, April 14, 1878. "Hon. John Sherman, Secretary of the Treasury.

"Dear Sir:--We have a Honest Money League started in Chicago, of which you are probably aware. The secretary is the Hon. Thos. M. Nichol, who aided us so materially in carrying the state last fall. He is one of the ablest defenders of honest money that we have in the northwest. Any information you can furnish him will reach the people of the northwest. I see by the dispatches you have completed arrangements whereby you will be able to resume by January 1, 1879. I hope Congress will have the good sense not to throw any obstacles in your way. I used to, when in the army, tell the boys to trust in General Sherman and keep their powder dry, and now I feel like trusting in Secretary Sherman to keep our money honest. I have no fears of the result if Congress will let you alone.

"Yours truly, "J. M. Rush."

The eastern press, almost without exception, gave its hearty approval of the contract made, and the mode and manner of the negotiation. The leading papers in New York, including the "Herald," "Tribune," and "Times," gave full accounts. In the west, however, where the greenback craze or "heresy," as it was commonly called, prevailed, the press was either indifferent or opposed to the contract and to the object sought. It is singular how strong the feeling in favor of an irredeemable paper currency was in many of the western towns and among the farming people. United States notes, universally called greenbacks, were so much better as money than the bank notes were before the war, that the people were entirely content with them, even if they were quoted at a discount in coin. They were good enough for them. Any movement tending to reduce their number was eagerly denounced.

At the very time when the negotiation was being made, the Senate finance committee was discussing the expediency of agreeing to the bill repealing the resumption act which had passed the House. The indications were that the committee had agreed upon a time when a final vote should be taken upon this bill and that it would be favorably reported by a majority of one. It depended upon the vote of Mr. Ferry, who was strongly in sympathy with the sentiment in the House. It appeared quite certain that with a favorable report the bill would pass. If passed it would no doubt have been vetoed, but the moral effect of its passage would have been to greatly weaken all measures for redemption. I had frequent conversations with Mr. Ferry and appealed to him as strongly as I could to stand by his political friends, and for the success of the negotiation. He voted against reporting the bill. I wrote him the following letter while the matter was still pending:

"Washington, D. C., May 1, 1878. "Dear Sir:--The deep interest I feel in the pending legislation in Congress, endangering as it does my hope of success in the great object of resumption, will be my excuse for appealing to you again, in the strongest manner, against the mandatory provision that, under all circumstances, United States notes shall be receivable in payment of customs duties.

"This provision may defeat the whole of our policy for which we have been struggling so long and to which our party is so firmly committed. Resumption on United States notes can be easily maintained with a reasonable reserve and with a certainty that any considerable run will be stopped by increased demand for United States notes, but there is one essential prerequisite to our ability to resume, and that is that we must have coin income enough to pay the interest of the public debt and other current coin demands. To throw upon the treasury the possibility of the necessity of buying coin to pay the interest of the public debt, in addition to buying that which is necessary to maintain resumption on United States notes, is simply to overload the wagon and break it down at the very start. Ordinarily the secretary would receive greenbacks for duties (and, therefore, I have no objection to the discretionary authority being conferred upon him), if he can use them also in payment of interest, but as we must pay the interest in coin, and the slightest difference in favor of coin making it certain that demand would be made for it for interest, we cannot undertake to buy sufficient coin to pay the interest in addition to what we would naturally, under like circumstances, be required to pay such notes as are presented.

"I have thought so much about this, and am so much troubled about it, that I would feel almost like giving up the ship rather than to undertake the additional task which the bill as now reported would impose upon me. Surely we are so near the end of our long struggle that we ought not to assume a fresh load, and I assure you that a mandatory provision requiring the secretary to receive United States notes in payment of customs duties, without regard to the time and circumstances, is simply a repeal of the resumption act, and it had better be done openly and directly. Because we have been so fortunate this far in the progress towards resumption is no reason why we should assume an additional burden.

"Please state this to any others who you think would have any respect for my opinions, as I do not wish to thrust them upon those who would like to thwart them; and, if overruled in this, I trust you will make this letter public, for I will not be responsible for so serious a change in the whole plan of resumption. I said to the committee on finance that if the discretion was conferred upon me to receive United States notes for duties, I had no doubt that I could do so on the 1st of October, but it was not then supposed by anyone that such a provision would be mandatory.

"Very truly yours, "John Sherman. "Hon. T. W. Ferry, U. S. Senate."

While I was congratulating myself upon accomplishing an important work for the people, I had aroused an animosity more bitter and violent than any I ever encountered before or since. I was charged, directly, by a correspondent of the "National Republican," published in Washington, with corruption, and that I was interested in and would make money through the syndicate. It was said that I "came to the United States Senate several years ago a poor and perhaps a honest man. To-day he pays taxes on a computed property of over half a million, all made during his senatorial term, on a salary of $6,000 a year and perquisites." My property at home and in Washington was discussed by this letter, and the inference was drawn that in some way, by corrupt methods, I had made what I possessed. It is true that I found many ready defenders, but I took no notice of these imputations, knowing that they were entirely unfounded, for I never, directly or indirectly, derived any advantage or profit from my public life, except the salary.

At one time it was alleged that a sub-committee, consisting of Messrs. Ewing, Hartzell and Crittenden, had been in correspondence with leading bankers, financiers and capitalists, and that information had been obtained which led to the conclusion that I had derived profit from the negotiation. It was said that the committee proposed to interview me upon the subject of my recent syndicate operations, that the syndicate would get about a $750,000 commission, which could have been saved had outsiders been permitted to buy the bonds, that the committee had summoned members of the syndicate and bankers who were not admitted into the syndicate, but who wanted to be allowed to buy bonds without any commission, that the allegation was so well supported that a resolution was prepared authorizing the committee to investigate, but that this was unnecessary, as the resolution authorizing the banking and currency committee to make inquiries concerning resumption conferred authority to inquire into this matter. The only sign of the alleged investigation was an inquiry from Mr. Ewing, which was answered by me as follows:

"Treasury Department, April 19, 1878. "Hon. Thomas Ewing, Acting Chairman Committee on Banking and Currency, House of Representatives.

"Sir:--In compliance with your request of the 18th instant, I inclose herewith a copy of the contract recently made with a syndicate of New York bankers for the sale of four and a half per cent. bonds. The only previous correspondence on this subject was a letter sent to said bankers and one to the presidents of certain national banks, copies of which are inclosed.

"In response to your question as to the amount of accrued interest that will be allowed to the syndicate at each payment on account of such sales, I have to reply that no accrued interest is paid to them, but, as you will see by the fourth paragraph of said contract, they are to pay the United States the amount of interest accrued on the bond up to the time of payment for it, in addition to the premium of one and a half per cent. The interest on the four and a half per cent. bonds accrued on the 1st of March, and therefore, the interest is added from that date to the date of payment for the bonds.

"The amount of commission to be paid is fixed by law at one-half of one per cent., but out of this the associates are to pay all expenses incurred by them in the sale, and reimburse the United States all expenses incurred by it as stated by said contract in paragraph 5.

"Very respectfully, "John Sherman, Secretary."

No further action was taken by the committee on banking and currency. Subsequently I wrote Mr. Ewing the following letter:

"May 21, 1878. "Dear Sir:--I notice the crazy barkings of Buell in the 'Post' about the syndicate, and favors granted to it by me.

"I wish to say to you that nothing would please me better than to have the banking and currency committee examine into this matter, and I am quite sure you will be gratified that the result will be to my credit.

"I have no desire to dignify this by asking an investigation, but only to say to you privately, as a personal friend, that I court, rather than fear, such an inquiry.

"Very truly yours, "John Sherman. "Hon. Thomas Ewing, House of Representatives."

It was at this time that it was alleged that Mr. Tappan, a New York bank president, said that he would pay $50,000 to stand at the head of the line when the government began to pay out gold; that he could put in $29,000,000 United States notes held by the New York banks and break the government and take out all the gold. It was said that Mr. Coe, a prominent banker in New York, was asked his opinion whether I could resume, and that he said: "Well, yes, I would let the government resume, but it must sell a certain number of bonds to the banks at such a figure." Sensational reports were sent out from Washington to discredit the contract lately made with the syndicate. It was reported that the terms were concealed, that only ten millions were contracted for, part of which it might be necessary to take back, and that the banking and currency committee had summoned me to explain the contract. So far from being true the contract itself was printed in all the papers and the utmost publicity was given to every step taken.

I had a very friendly acquaintance with Peter Cooper, for whom I had the highest respect, but he had fallen into the general ideas of the greenbackers. When in New York, early in April, I called upon him and had a pleasant interview. Soon after I received from him the following letter:

"New York, April 18, 1878. "Hon. John Sherman, Secretary of the Treasury.

"Dear Sir:--In the brief interview which you did me the honor to give me at my house a few days ago, I was impressed with your desire to give all the information that would throw light upon the financial policy of the government, and on the department of which you are the executive head.

"But we had not the time to discuss fully some of those practical questions that involve this financial policy, and I therefore now take the liberty, in a more deliberate manner, to ask of you an answer to questions, which might throw light upon the public mind on these great interests, and allay the anxiety which pervades the hearts of our people in reference to their future prospects of business and employment, and show more clearly how the present policy of the government in enforcing 'specie payments' by law and carrying out the 'resumption act,' could be attended with any wholesome results to the financial interests of this country both in the present and in the future.

"First. Can you resume in the presence of $645,000,000 of legal tender and bank notes with what gold and silver you may have at your command, without an actual shrinkage of this currency, either on the part of the government or of the banks?

"Second. Can 'resumption' be maintained after the law has placed a premium on coin, and virtually demonetized the paper, by rendering its convertibility compulsory? In other words, can the present 'par value' of paper and coin be taken as an index that after the law has thrown its whole weight in favor of coin, by making the paper 'convertible,' the present equilibrium between the two can still be maintained?

"Third. In connection with the fact that by purely commercial laws, we have already arrived at specie payments, or the par between coin and paper money, what good will it do to thrust the further power of the law on the side of coin? How can we avoid placing the paper at the mercy of those who will have control of the coin --especially the paper of the national banks, whose chief credit will consist in maintaining 'specie payments?'

"Fourth. After 'resumption,' how much money will the people have with which to transact business, employ labor, enter into new enterprises, and use 'cash payments' instead of 'inflating credit' to a ruinous degree, as in times past, under the system of specie payments, and convertibility by law?

"Fifth. It being the duty of Congress to make the necessary and proper laws for carrying into execution a system of money, weights and measures as the only means to regulate commerce with foreign nations and among the several states, to provide as far as possible an 'unfluctuating currency,' a steady measure of prices, how can you prevent great and disastrous fluctuations in our 'convertible money' and coin, arising out of the great demands for gold and silver that may, at any time, be made upon us from the commercial relations of this country with Europe over which the government can have no direct control? With great respect I remain,

"Your obedient servant, "Peter Cooper."

I made the following reply:

"Dear Sir:--Your letter of the 18th inst. is received. The questions you ask me have been, in the main, answered to the committees of the two Houses, and I might, perhaps, best reply to your letter by sending these documents, printed by the order of the respective Houses; but my sincere respect for you, and desire to allay any doubts you may entertain of the success of the present plan of resumption, induce me to answer your letter as fully as my time will allow.

"As to your first question:

'Can you resume in the presence of $645,000,000 of legal tender and bank notes, with what gold and silver you may have at your command, without an actual shrinkage of this currency, either on the part of the government or of the banks?'

"You must bear in mind that the aggregate amount of legal tender notes and bank notes stated by you, may be gradually diminished, so far as the legal tenders are concerned, to $300,000,000, and by the banks to such sum as they find can be maintained at par with United States notes. But, assuming that the aggregate should be about the present amount, and remembering always that the bank notes can be redeemed in legal tender notes, and are not required to be redeemed in coin, I do express the opinion that resumption in a country like ours can be maintained in the presence of the existing volume of circulation; but if this should prove to be too great, the reduction will be gradually of the bank notes, or, if Congress so direct, of the legal tender notes.

"As to your second question:

'Can resumption be maintained after the law has placed a premium on coin and virtually demonetized the paper, by rendering its convertibility compulsory? In other words, can the par value of paper and coin be taken as an index that after the law has thrown its whole weight in favor of coin, by making paper convertible, the present equilibrium between the two can still be maintained?'

"I respectfully deny that the law places a premium on coin. One- half of this circulation is not redeemable in coin at all, but in legal tenders; nor does the law fix a premium on coin as against legal tenders, but simply requires an equality. Its convertibility is not compulsory. It is upon the demand of the holder. The holder is as likely to deposit the coin, if he has it, as to deposit the notes for coin. The currency would rest upon the presumption that all paper money rests upon, that its use and convenience and convertibility will always keep it at par with coin.

"To your third question:

'In connection with the fact that, by purely commercial laws, we have already arrived at specie payments, or the par between coin and paper money, what good will it do the thrust the further power of the law on the side of coin? How can we avoid placing the paper at the mercy of those who will have control of the coin--especially the paper of the national banks, whose chief credit will consist in maintaining specie payments?'

"I have simply to say that we have only arrived at our present position approaching specie payments by the accumulation of coin in the treasury and by the gradual and slow reduction of the volume of notes; and the very measures which have enabled us to reach so near the specie standard, are necessary to be continued to enable us to maintain resumption. If resumption is desirable, it cannot be maintained by a repeal of the law, which requires resumption and grants the necessary powers to prepare for it and to maintain it.

"As to your fourth question:

'After resumption, how much money will the people have with which to transact business, employ labor, enter into new enterprises, and use cash payments instead of inflating credit to a ruinous degree, as in times past under the system of specie payments, and convertibility by law?'

"It is answered, I think, by what I have said in reply to your first question. We will have the United States notes, the bank notes, and coin certificates, both gold and silver, together with the gold and silver itself, all in circulation. The actual amount of currency in circulation, I think, will be as large in specie times as now, and its equality and convertibility will rather increase than prevent the circulation of either. The depreciation of paper money is not necessarily caused solely by its excess, but by the uncertainty of its value and confidence in its redemption.

"In reply to your fifth question:

'It being the duty of Congress to make the necessary and proper laws for carrying into execution a system of money, weights and measures, as the only means to regulate commerce with foreign nations and among the several states, to provide as far as possible an unfluctuating currency, a steady measure of prices, how can you prevent great and disastrous fluctuations in our convertible money and coin, arising out of the great demands for gold and silver that may at any time be made upon us from the commercial relations of the country with Europe, over which the government can have no direct control?'

"I have only to say that it is undoubtedly the duty of Congress to provide for the possible contingencies that would make it necessary to suspend specie payments, though, as the circumstances which would compel suspension are necessarily unforeseen, unknown, difficult to be defined or to be provided for, I am not sure but it is better to leave the question of suspension to the necessities of the case rather than to legislation which must be founded upon uncertainty. When the treasury is actually unable to redeem its notes in coin, suspension comes necessarily, but resumption would come again from the absolute necessity of currency for our daily wants, and Congress could provide better in view of the actual facts than anticipated facts.

"I think the real difficulty that has stood in the way of resumption is the nightmare of things that have existence only in the brain, and not in fact. We can only deal with the current course of events based upon probabilities, and cannot provide for unforeseen contingencies.

"It is my earnest hope that you and gentlemen like you, who I know are sincere in your convictions, may see your way to trust to the policy that is now entered upon, which seeks to provide as much paper currency as can be maintained at par in coin, and to secure its active circulation in aid of industry and enterprise.

"I am, with great respect, "John Sherman."

On the 13th of May, 1878, the charges against me assumed a different form, by the adoption, in the House of Representatives, of a preamble and resolutions offered by Clarkson N. Potter, of New York. Among the recitals of this resolution was a charge that James E. Anderson and D. A. Weber, supervisors of registration of the parishes of East and West Feliciana, falsely protested that the election in such precincts had not been fair and free, and that the returning board thereupon falsely and fraudulently excluded the vote of said precincts, and the choice of the people was annulled and reversed, and that such action of said Weber and Anderson was induced or encouraged by assurances from me. The charge was based upon the following letter, alleged to have been written by me:

"New Orleans, November 20, 1876. "Messrs. D. A. Weber and James E. Anderson.

"Gentlemen:--Your note of even date has just been received. Neither Mr. Hayes, myself, the gentlemen who accompany me, or the country at large, can ever forget the obligations under which you will have placed us should you stand firm in the position you have taken. From a long and intimate acquaintance with Governor Hayes, I am justified in assuming the responsibility for promises made, and will guarantee that you will be provided for as soon after the 4th of March as may be practicable, and in such manner as will enable you both to leave Louisiana, should you deem it necessary.

"Very truly yours, "John Sherman."

The charge was without any foundation whatever, and excited my resentment. On the 20th of May I wrote Mr. Potter the following letter:

"May 20, 1878. "Hon. Clarkson N. Potter, House of Representatives.

"Sir:--I observe that the resolution of the House, under which your committee is organized, singles me out personally by name from among twenty or more gentlemen who were present, at the request of President Grant, or the chairman of the Democratic national committee, to attend and witness the action of the returning board upon the presidential election returns in the State of Louisiana in 1876, and, in substance, charges that at that election in East Feliciana parish the Republican vote was withheld and not cast, in pursuance and execution of a conspiracy by such voters, that in furtherance of such conspiracy, James E. Anderson, supervisor of registration in that parish, and D. A. Weber, supervisor of registration in West Feliciana parish, falsely protested that such election in such parishes had not been free and fair, and that, therefore, the returning board of said state falsely and fraudulently excluded votes of such precincts, and 'by means thereof, and of other false and fraudulent action of said returning board, the choice of the people of the state was annulled and reversed, and that such action by the said Weber and Anderson was induced or encouraged by the assurances of Hon. John Sherman, now Secretary of the Treasury.'

"This resolution requires you to investigate these allegations, and upon the result of these depends the accusations against me.

"First. That there was a conspiracy among the voters to withhold and not cast the votes, with a view to make a false charge on the election.

"Second. That in point of fact there was a free and fair election in East and West Feliciana, which was falsely protested and returned by said Anderson and Weber, by which the votes of those parishes were falsely and fraudulently excluded by the returning board.

"Third. That the offense of Anderson and Weber was encouraged by assurances by me.

"With the view, therefore, to meet this accusation, which, so far as it affects me, I declare and know to be absolutely destitute of even the shadow of truth, I respectfully ask, and now make formal application, for leave to be represented before your committee in the investigations of all charges affecting me personally. I tender and offer to prove that, in point of fact, the election in East and West Feliciana parishes was governed and controlled by force, violence and intimidation so revolting as to excite the common indignation of all who became conversant with it, and proof was submitted to that effect, not only before the returning board in evidence contained in ex. doc. No. 2, second session 44th Congress, but also in the testimony taken by the committee of the Senate on privileges and elections, report No. 701, second session 44th Congress.

"I will, if allowed, furnish the names of witnesses whom I desire to examine before you to prove the truth of this statement as to said parishes, and that the protests referred to were true, supported by the testimony and properly acted upon and sustained by the returning board. To my personal conduct during this examination I invite your fair and candid scrutiny, with entire confidence that not only myself, but my associates of both political parties, acted honestly and properly, from a sense of public duty. I have requested Hon. Samuel Shellabarger to deliver this to you, and I respectfully designate him as the gentleman I would desire, on my part, to be present to cross-examine witnesses testifying in relation to charges against me, and who will, as my counsel, tender evidence in proof of this statement. The favor of an early answer is requested.

"Very respectfully, "John Sherman."

It is not necessary to detail the history of this investigation, of which so much was said or printed at the time. It was a partisan committee organized to stir up the controversy that had been settled by the decision of the electoral commission. The committee conducted a long and expensive investigation. The result was that the pretended letter was proven to be a forgery, and that my conduct during the sittings of the returning board was shown to have been that of a spectator, precisely like that of a score of other so- called visitors, of both political parties. The investigation proved to be a radical failure. The report was not made until March 3, 1879, the last day of the 45th Congress. No action was taken upon it.

During the investigation I specifically denied, under oath, that I had ever written or signed such a letter. There was not the slightest proof, direct or indirect, that I did so. The majority, with great unfairness, instead of frankly stating that they were deceived by a forgery, treated it as a matter in doubt. In their report they do not allege or pretend that I wrote or signed such a letter. The evidence of their own witnesses was conclusive that it was written by a Mrs. Jenks.

The report of the minority of the committee commented with severity upon the unfairness of the majority, in the following language:

"The majority seem to us to have come short of what we had a right to expect from their candor, when they fail to report explicitly whether the testimony on this subject sustains the charge that such a letter as Anderson and Weber testified to was ever written by the Hon. John Sherman. For our part, we report distinctly and emphatically that it does not, and that the palpable perjuries of both the witnesses named justify a feeling of deep disgust that they should be treated as capable of creating a serious attack upon the character of a man who has borne a high character in the most responsible service of the country for five-and-twenty years.

"The charge, if it meant anything, was that of corruptly bribing Anderson and D. A. Weber to perpetrate a fraud in the election returns of the Feliciana parishes.

"We find nothing in the testimony to show that Mr. Sherman either knew or believed that any such fraud was committed. We find abundant evidence that he believed that the protests against the fairness of the election were honestly and rightly made.

"We cannot follow the majority in their yielding to what we must believe to be a prejudice of party spirit, which has carried then even to the extent of intimating that the Secretary of the Treasury was party to the pranks of an eccentric woman who dropped a parcel of letters to set the local politicians of New Orleans agog--a woman who was called before the committee a long time as a witness, but who was neither called, examined, nor cross-examined by the minority, who, however they might share the public amusement at the performance, entirely declined to take part in it.

"A considerable number of gentlemen who visited New Orleans, either at the request of President Grant or of the national or local campaign committee, were called, and testified as to the purpose of their visit and their procedure during it.

"Adhering to our purpose of leaving the majority to frame issues on which they were willing to proceed in investigating, we did not seek to examine into the particulars of the conduct of the Democratic visitors in Louisiana. To let the testimony show the original resolutions of inquiry to be both useless and mischievous, serving no purpose but the spread of unjust scandal, seemed to us, in view of all former inquiries in the same direction, the proper course to pursue.

"Messrs. Sherman, Garfield, Hale, Kelley, and others were examined, and their testimony was compared with that by which it was attempted to impeach their motives and their conduct. Their account of their action is consistent and frank. They believed that their party had rightfully a good claim to the fruits of the election in that state. They also believed that the notorious violence and intimidation which had in former years disgraced that state had been again practiced in the campaign of 1876. They approved the action of the returning board in deciding, under the powers given them by law, to declare null the pretended elections at precincts and polls where evidence of such interference with the freedom of election had occurred. We do not find that they attempted to control the board or to dictate their action. We do not find that they attempted to dictate to witnesses or to procure false testimony to place before the board. We do not find that they were in any way more partisan or less scrupulous than the similar party of gentlemen who then represented the Democratic party. The attempt to single out Mr. Sherman for special attack seems to us to have had no original foundation but the testimony of James E. Anderson, and the terms in which the majority, in their report, have characterized that person, warrant us in declaring our opinion that when the character of that witness and his testimony were discovered, it was the duty of the majority of the committee frankly to abandon their effort to discriminate between Mr. Sherman and the other gentlemen who were associated with him."

Shortly afterward I wrote the following letter to E. F. Noyes, then United States minister at Paris, whose name was mentioned in the resolution of investigation:

"Washington, D. C., April 1, 1879. "My Dear Sir:--Your letter of the 18th ult. is received.

"The report of the Potter committee, which you correctly pronounce to be infamous, was received in silence and was scarcely printed or noticed in the newspapers of the United States two days after its presentation to the House. It was then severely handled by the Republican press and treated with silence by the Democratic press, and now it is not mentioned. I think that neither of us should complain of any injurious result from the Potter investigation; although it was annoying, it was fair and creditable both to the committee and many of the witnesses. But for the expense and trouble of the investigation, I am rather gratified that it occurred, for the feeling of the Democratic party, over what they supposed was a fraudulent return, would have deepened into conviction, while the investigation tended on the while to repel this suspicion.

* * * * *

"Very truly yours, "John Sherman. "Hon. E. F. Noyes."

Another investigation into the conduct of the department was inaugurated by J. M. Glover, of Missouri, who, on November 6, 1877, introduced into the House of Representatives a resolution directing the several committees of the House to inquire into the conduct of the different branches of the public service coming under their charge, and the committees on expenditures in the several departments to examine into the state of the accounts and expenditures of the respective departments submitted to them. This resolution in substance was adopted January 11, 1878, and Mr. Glover was chairman of the sub-committee to examine into the conduct of the treasury department. He came to the department and every facility was given him for examination. He was allowed experts to aid him in the work, and continued the investigation for two years until the close of the Congress. His committee incurred much expense, but was unable to find that any of the public money had been wasted or lost. His report, submitted in the closing days of Congress, was not ordered to be printed. Subsequently, on the 15th of April, 1879, after Mr. Glover had ceased to be a Member of the House, a petition from him was presented asking that his report be printed, which was referred to a committee, but they did not seem to think the report of much consequence, as they did not recommend it be printed.

The only financial bill that became a law during that session was the following, approved May 31, 1878:

"AN ACT TO FORBID THE FURTHER RETIREMENT OF UNITED STATES LEGAL TENDER NOTES.

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That from and after the passage of this act it shall not be lawful for the Secretary of the Treasury, or other officer under him, to cancel or retire any more of the United States legal tender notes. And when any of said notes may be redeemed or be received into the treasury under any law, from any source whatever, and shall belong to the United States, they shall not be retired, canceled, or destroyed, but they shall be reissued and paid out again and kept in circulation: Provided, That nothing herein shall prohibit the cancellation and destruction of mutilated notes and the issue of other notes of like denomination in their stead, as now provided by law.

"All acts and parts of acts in conflict herewith are hereby repealed."

I recommended the passage of this law, as I believed that the retirement of the greenbacks pending the preparation for resumption, by reducing the volume of the currency, really increased the difficulties of resumption.

The session of Congress closed on the 26th of June, 1878. During the recess the business of the department proceeded in the ordinary way, without any event to attract attention, but all that happened tended in the right direction. The crops were good, confidence became assurance, and all business was substantially based upon coin.

In consequence of the sale of four and a half per cent. bonds for resumption purposes the return of Mr. Conant to London became necessary. His numerous letters advised the department of the current of financial operations in Europe. There was some fluctuation in the relative price of United States notes and coin, chiefly caused by our demand for gold and the appearance in the market of bonds of other countries. At one period the sale of four and a half per cent. bonds became more rapid than the contract provided for, and this rapid accumulation of coin tended to advance its price, which I desired to avoid, and, therefore, strictly limited the sale of the four and a half per cent. bonds to $5,000,000 a month, thus preventing an unusual demand for coin. During this period there was a constant effort of banks and bankers, chiefly in New York, to have some exceptional privilege in the purchase of four per cent. bonds. This was in every case denied. The published offer of the sale of these bonds was repeated during every month, and the terms prescribed were enforced in every instance without favor or partiality.

On the 12th of July W. S. Groesbeck, one of the members of the monetary commission about to assemble in Europe, applied to the department for information that would enable the American conferees to assure the conference that the United States would resume by the time fixed, and should therefore be regarded by the conference as not in a state of suspicion. I responded to his letter as follows:

"Treasury Department, } "Washington, D. C., July 15, 1878.} "William S. Groesbeck, Esq., Cincinnati, Ohio.

"Dear Sir:--Your letter of the 12th instant was received during my temporary absence, and I comply with your request with pleasure.

"Accompanying this I send you sundry documents, duly scheduled, which contain in detail the law and my views on the resumption question.

"Among these papers is a letter from the treasurer of the United States, of date July 6, showing the exact coin on hand for all purposes, a careful examination of which will prove to you our ability to resume at the time fixed by law.

"It will be perceived that we have on hand in the treasury coin enough to cover all our coin liabilities of every name and nature, and also thirty five per cent. of the aggregate amount of United States notes outstanding, with an excess of $2,474,822. We have also $7,139,529 of fractional silver coin, which will be used for current expenses.

"Of the United States notes outstanding, at least sixty millions are held in the treasury, either as the property of the United States or as special funds for purposes prescribed by law, which cannot readily be diminished.

"In addition, the secretary is authorized to sell bonds for the purchase of coin or bullion, and he may use United States notes for the same purpose. Our revenue, both in coin and currency, is more than sufficient to pay all current expenses covered by the appropriations of Congress.

"Considering that the United States notes are scattered over a vast country, are in great favor and demand, and extremely popular, I feel entire confidence in the ability of the treasury to resume on the 1st of January next, and the leading bankers and brokers of New York are of the same opinion.

"I know of nothing that can prevent the United States from taking its place among the specie-paying nations at this time, except the possible repeal by Congress of the resumption act, and this I do not anticipate.

"Very respectfully, "John Sherman, Secretary."

CHAPTER XXXIV. A SHORT RESPITE FROM OFFICIAL DUTIES. Visit to Mansfield and Other Points in Ohio--Difficulty of Making a Speech at Toledo--An Attempt to Break up a Meeting that Did Not Succeed--Various Reports of the Gathering--Good Work of the Cincinnati "Enquirer"--Toledo People Wanted "More Money"--Remarks Addressed to the Cincinnati Chamber of Commerce--Visit to Lancaster, the Place of My Birth--My Return to Washington--I Begin to Exchange Silver Dollars for United States Notes--My Authority to Do So Before January 1 Questioned--The Order is Withdrawn and Some Criticism Follows--Instructions to the United States Treasurer and Others-- Arrangements with New York Clearing House.

In the latter part of August, 1878, I made a visit to Ohio, first going to Mansfield where I was cordially received. In the evening I was serenaded, and after the band had played several times I went to the steps of the hotel and made a few impromptu remarks, reported as follows by the local paper:

"Fellow Citizens:--I thank you heartily for the courtesy of this serenade, and especially the members of the band who have favored us with their excellent music. I will be here with you but for a few days, and welcome with joy the sight of home, and the familiar faces and scenes around me. I do not desire to say anything of politics, or of matters upon which we do not agree, but prefer to meet you all as old acquaintances and townsmen, having common interests and sympathies as to many things as to which we do agree. And I especially congratulate you upon the bountiful harvests, fruitful orchards and reviving prosperity with which you are blessed. I will be glad to shake hands with any of you, and to talk with you free from all artificial restraints."

I went from Mansfield to Toledo, where I had agreed with the state central committee to make a speech, and where the opposition to resumption was stronger than in any other city in the state. Here the so-called National party had its origin. I knew a great many of the citizens of Toledo and the prevailing feeling on financial topics. I, therefore, carefully prepared a speech, covering all the leading questions involved in the campaign, especially all that related to our currency. The meeting was held August 26, in a large opera house, which would seat 2,500 people. I found it full to overflowing. Every particle of space in the aisles was occupied and it was estimated that 3,000 people were gathered within its walls. I will give the narrative of a correspondent of the St. Paul "Pioneer Press," who was an eyewitness of the scenes that followed:

"Secretary Sherman was not received with that hearty greeting common to a man of such prominence at first, while the organization that had been picketed in different parts of the hall at once commenced hissing at the first sight of the tall, slender form of the speaker. Until his introduction the emotion was the same, and as soon as he commenced to speak he was interrupted with jeers and insults from what Nasby, in his paper, called the 'hoodlums of the city,' who came organized and determined to break up the meeting without giving the speaker a chance to be heard, by shouting at the top of their voices such insults as 'You are responsible for all the failures in the country;' 'You work to the interest of the capitalist;' 'Capitalists own you, John Sherman, and you rob the poor widows and orphans to make them rich;' 'How about stealing a President;' 'Why don't you redeem the trade dollar?'

"These, with many other like flaunting sneers, were constantly indulged in by the disorderly element, which had been distributed with care throughout the hall. So boisterous and moblike was their behavior that it was apparent several times that it would be impossible to maintain order, and notwithstanding the speaker stated that if any gentlemen wished to ask any question, upon any point that he might discuss, in their order, he would be glad to answer them, and invited criticisms, but one such question was asked by Mr. F. J. Scott, one of the leading lights of the Nationals, who wished to know the difference between 'fiat' money and greenbacks; the speaker replied: 'Fiat money is redeemable nowhere, payable nowhere, for no amount without security, at no time, and without a fixed value; while greenbacks are redeemable in specie at par, at a fixed time, and secured by the pledge of the government.'

"By this ready, pointed and satisfactory answer the speaker turned the tide, and the applause was hearty in his favor. When answering Judge Thurman the speaker alluded to the charge made by him that the 'Republican party was the enemy of the country.' Then, after calling attention to the war record of the Democratic party, the speaker said: 'Who is the enemy of the country?' [A voice from a 'hoodlum,' 'John Sherman.'] 'Why,' says the speaker; 'because he has brought greenbacks up to par value, and is in favor of honest money?' This was another cause for an outburst of applause and approval to the speaker, although it was very doubtful, in the beginning of the speech, whether he could carry enough of the vast audience, with the large disturbing element opposing intermingled among them, with him. But long before the closing of his discourse it became apparent that John Sherman is able to defend his position, even in the camp of the enemy, while the ungentlemanly acts of the disorganizing element were disgusting to the better element of their party. It also effectively revived the lukewarm Republicans in this community, and it may be well said that John Sherman did what no other man could have done, that is, to go to a place like Toledo, stand before an organized party which was determined to prevent his speaking, while his own party was lukewarm toward him --it was frequently asserted here 'John Sherman had not a single friend in the city'--and during his speech of two hours turn the popular tide in his favor, as was evident he did from the hearty applause he received as he proceeded in his remarks; and it is safe to say that no man in these United States could have done the Republican cause, in this place, the good that Secretary Sherman did by his speech, and the 'Toledo National hoodlums,' in their efforts to break up the meeting, 'gave the old man a reception,' as was remarked on the streets; but throughout his speech he kept his temper, kept cool and considerate, made remarks of cheer by saying, 'This is only a love feast,' and 'We will feel better natured after a while, as we become better acquainted,' etc., etc."

The narrative given by the correspondent is perhaps a little exaggerated, but the general outlines are correct, as I very distinctly remember. The result was that my carefully prepared speech was knocked into "pi," and I had to depend upon the resources of the moment to make a speech suitable to the occasion and the crowd. The Cincinnati "Enquirer," to which, as to other papers, a copy of the prepared address had been sent, had two stenographers in Toledo to report the speech as made and telegraph it to the paper. They did so and the speech as reported and published in the "Enquirer" was so much more sensational and better than the prepared speech that it was selected by the Republican state committee for publication as a campaign document. This enterprise of an unfriendly newspaper resulted to my advantage rather than my detriment, for on account of the interruptions the speech reported was much more readable than the other.

No doubt the feeling in Toledo grew out of the long depression that followed the panic of 1873, that for a time arrested the growth and progress of that thriving and prosperous city. The people wanted more money, and I was doing all I could, not only to increase the volume of money by adding coin to our circulation, but to give it value and stability. I have spoken in Toledo nearly every year since, and have always been treated with courtesy and kindness, and many of my best friends now in Toledo are among those who joined in interrupting me, and especially their leader, Mr. Scott.

From Toledo I went to Cincinnati. I have been for many years an honorary member of the Chamber of Commerce of Cincinnati, a body of business men as intelligent and enterprising as can be found anywhere. It has been my habit to meet them once a year and to make a short speech. This I did on August 28. The "Gazette" reported my visit as follows:

"Secretary Sherman was on 'change yesterday, and, at the close of the business hour, he was introduced by President Hartwell, and was greeted with applause, after which he spoke as follows:

'Gentlemen:--It gives me pleasure to meet so many of the active business men of Cincinnati, even for a brief period. In the office which I hold I have a great deal to do with merchants, like these engaged in the exchange of the products of our industries, and I congratulate you, first of all, that this fall, by the bounty of Divine Providence, you will have to market the largest crop we have ever gathered in this country since the world was born.

'In every part of our country, with but few exceptions, and only as to certain crops, are crops greater than ever before, and you will have to buy and sell them.

'The only point of an unpleasant nature, that occurs to me, affecting the industrial interests which you so largely represent, is the misfortune which has befallen large portions of the south, where yellow fever, one of the worst enemies of human life, now has spread a pall of distress among our southern brethren. I am glad, fellow- citizens, that you are doing something to contribute to the relief of their sufferings, because business men, above all others, are to be humane and generous to those who are in distress.

'That this will, to some extent, affect the business of gathering cotton, I have no doubt will occur to you all, but you can only hope that it will be but a brief season until the frost will dissipate the distress of the south and the cotton crop may be safely gathered.

'There is another thing I can congratulate you upon as business men, that is--our currency is soon to be based upon the solid money of the world. I do not want to talk politics to you, and I do not intend to do so, but I suppose it is the common desire of all men engaged in business to have a stable, certain standard of value, and although you and I may differ as to the best means of obtaining it, and as to whether the means that have been adopted have been the proper means, yet I believe the merchants of Cincinnati desire that their money shall be as good as the money of any country with which we trade. And that, I think, will soon be accomplished.

'Now, gentlemen, I do not know that there is any other topic on which you desire to hear from me. I take a hopeful view of our business affairs. I think all the signs of the times are hopeful. I think it a hopeful fact that, after this week, there will be an end of bankruptcies, that all men who believe that they are not in a condition to pay their debts will have taken the benefit of the law provided for their relief, and, after Saturday next, we will all stand upon a better basis--on the basis of our property and our deserved credit.

'It has been the habit, you know, of one of your able and influential journals to charge me with all the bankruptcies of the country. If a grocer could not sell goods enough to pay expenses, and a saloon keeper could not sell beer enough to get rich, and took the short way of paying his debts, this paper would announce the fact that he had "Shermanized." [Laughter.] And if a bank was robbed, or the cashier gobbled the money in the safe and left for parts unknown, this able editor announced that the bank had "Shermanized." And thus this paper contributed largely to the very result it denounced. You understand how this thing works.

'But we have passed through this severe crisis. It has been common in all countries and all states that carry on extensive commercial transactions with each other. I believe that we are through with this one; a ray of hope has dawned on us, and we are certainly entering upon a career of prosperity. Every sign of business is hopeful. We have paid off immense amount of our debts. We do not owe Europe anything of consequence. We have gone through the debt paying process. A few years ago we were running in debt at the rate of $100,000,000 a year, but lately we have been paying off our debt at the rate of $100,000,000 a year. From this time on we will be more prosperous. Take heart, you men of Cincinnati; you men who represent the great interests in this great city; you who live in the heart of the great west, take heart in the transaction of your business, because I believe you have reached a solid basis upon which to conduct your business profitably, the basis of solid coin.'"

From Cincinnati I went to Lancaster, the place of my birth, and where my eldest sister, Mrs. Reese, resides. I need not say that the visit was a pleasant one, for it was necessarily so. A great many among those whom I saw had been my associates in boyhood, and, as a matter of course, the topics of conversation were mainly of the past. A dispatch to the Cincinnati "Gazette" of the date of August 30, briefly describes my visit and gives the substance of a few remarks I was called upon to make by an impromptu gathering in the evening at the residence of my sister:

"The Lancaster band serenaded Secretary John Sherman this evening, at the residence of his sister, Mrs. General Reese. A very large crowd assembled on the occasion, and, in response, Senator Sherman made one of the neatest, pleasantest, and most satisfactory little talks heard here for many a day. Of course he began by touching upon his early boyhood, and some of the incidents of the same spent here in old Lancaster, the place of his nativity; told of his incipient struggles in life with the rod and chain on an engineer corps in the Muskingum valley; how he was ushered into the sterner vicissitudes of life, and how he drifted into politics; and then, without using the occasion for party purposes, without making a political speech, he explained in well selected language his position as an officer of the government; what was the course prescribed for him to do, how he was doing it, and concluding with a most clear and intelligible exegesis of the resumption act; what it was, its intent, purpose and meaning; and with convincing nicety and clearness, and evident satisfactoriness, was his explanation given, that he was frequently interrupted by spontaneous applause from the crowd. He told how the credit of the country was advancing as we near the solid foundation of hard money; how the American people were the most favored, the greatest blest, the freest and most prosperous people on the earth; how the signs of the times in busy shops and abounding field told of the disappearing hard times, and the dawning of an era of greater peace and prosperity."

I returned to Washington, and at once proceeded to arrange with the treasurer and assistant treasurers of the United States to make the change from currency to coin easy. I conferred with General Hillhouse, assistant treasurer at New York, upon the subject and had his opinions verbally and in writing. I conferred freely with James Gilfillan, treasurer of the United States, and, as a result of these conferences, on the 3rd of September, I directed the treasurer of the United States, upon the receipt by him, from any person, of a certificate, issued by any assistant treasurer, designed depositary, or national bank designated as a public depositary of the United States, stating that a deposit of currency had been made to his credit in general account of the sum of one thousand dollars, and any multiple thereof, not exceeding ten thousand dollars, to cause a shipment to be made, from some mint of the United States to the person in whose name the certificate was issued, of a like amount of standard silver dollars, the expense of transportation to be paid by the mint.

The sole purpose of this order was to facilitate the circulation of standard silver dollars for all purposes as currency, but not to issue them so as to be used directly in making those payments to the government which were required to be made in coin. I wished to avoid their deposit for silver certificates. Officers receiving deposits of currency were expected, as far as practicable, to see that the silver dollars were put in circulation. Shipments, however, were to be made only to points in the United States reached through the established express lines by continuous railway or steamboat communication.

I regarded this as practically the resumption of specie payments in silver dollars, but the chief object aimed at was to secure a general distribution of these dollars throughout the United States, to the extent of the demand for them, without forcing them into circulation.

General Hillhouse recommended the payment of silver for all purposes, not only for circulation, but for the payment of bonds and customs duties. This I fully considered, but thought it best for the present to get into ordinary circulation among the people, in points remote from the ports of entry, as much silver coin as practicable, before offering it freely in cities where it would be immediately used for customs duties. I said: "If, within a month or so, we are able to reduce our stock of silver to five or six millions, I should not hesitate a moment to offer it then freely in New York and elsewhere, and run the risk of doing without gold revenue for awhile."

On September 7 I issued the following order:

"Treasury Department, September 7, 1878. "Hon. James Gilfillan, Treasurer of the United States.

"Sir:--On and after the 16th day of this month you are authorized, at the treasury in Washington, and at the several sub-treasuries in the United States, to exchange standard silver dollars for United States notes.

"Very respectfully, "John Sherman, Secretary."

The question was raised in the public prints, and in the department, whether I had legal authority, under the existing laws, to pay silver dollars in exchange for United States notes before the 1st of January. It was plausibly urged that the payment of this coin in advance of the time fixed for resumption was the exercise of authority not authorized by law. I, therefore, on the 13th day of September, three days before the previous order would take effect, directed the treasurer of the United States as follows:

"Treasury Department, September 13, 1878. "Hon. James Gilfillan, Treasurer United States.

"Sir:--Some question has been made whether the issue of silver dollars in exchange for United States notes, before January 1, next, is in entire accordance with the legislation of Congress bearing on the subject, and, therefore, you will please postpone the execution of department order of the 3rd instant until further instructions, and withhold from transmission to assistant treasurers the order of the 7th.

"Silver dollars will be issued as heretofore, in the purchase of silver bullion, in payment of coin liabilities, and in the mode pointed out in your order of July 19, as modified.

"With a view to their payment on current liabilities, you will request that each disbursing officer estimate the amount he can conveniently disburse.

"Very respectfully, "John Sherman, Secretary."

This change of my opinion was the subject of much criticism in the public prints. Some complained that I was unfriendly to the silver dollar and sought to prevent its use, and others complained that its use before the 1st of January as a substitute for gold coin was a violation of the law. My only purpose was to accustom the people to the use of the silver dollar in the interior of the country at places where it could not be used in the payment of customs duties. These could only be paid in coin, and, in view of resumption, I desired to strengthen the treasury as much as possible by the receipt of gold coin. The charge that I was guilty of changing my mind did not disturb me when I was convinced that I had exceeded my authority in the issue of the first order.

At that time there was an evident reluctance to pay coin into the treasury for four per cent. bonds sold, when, within a brief period, United States notes could be paid for such bonds. I therefore directed the treasurer of the United States: "Where deposits with national banks on account of subscriptions to the four per cent. loan have not been paid into the treasury within ninety days after the deposit was made, you will at once draw for the amount of such deposits, to be forthwith paid into the treasury, and as such deposits accrue under this rule, you will make such withdrawals until the whole is paid."

I also directed the chief of the loan division as follows:

"No doubt most of the depositaries will place coin to their credit within the period of the call outstanding after subscriptions are made, according to the circular of the 1st ultimo, but if this is not done, the deposit must be withdrawn at the expiration of ninety days from the date of subscription."

I also advised August Belmont & Co., that the department expected that by the 1st of October the remainder of the coin then due upon the four and a half per cent. bonds, both from the American sales and those made in London, would be paid into the treasury; that it was deemed best that this should be done, so that the account of this loan might be closed as soon thereafter as the books could be made up. This request was promptly complied with.

Early in October there were many rumors in circulation charging that prominent capitalists and speculators were combining to defeat resumption. Among them Jay Gould was mentioned as being actively engaged in "bearing" the market. About this period I received from him the following letter:

"578 Fifth Avenue, Oct. 17, 1878. "Hon. John Sherman.

"Dear Sir:--Referring to recent newspaper statements that I have been interested in movements either to tighten money or create a scarcity of gold and thus interfere with natural and early resumption, I beg to say that they are without the slightest foundation. On the contrary I feel a very deep interest in your efforts, so far eminently successful in carrying the country to a successful resumption.

"If resumption is made a real success it will be accompanied with substantial business prosperity and do more to strengthen and retain the ascendency of the Republican party than any and all other reasons.

"The real causes of the recent disturbances in the money market are the following:

"First. Government bonds have come back from Europe faster than investment orders would absorb them--the surplus are carried on call loans and have absorbed several millions of dollars.

"Second. The financial troubles in England are retarding the rapid movement of western produce. The elevators at Chicago and Milwaukee are full of grain; at Chicago alone about 7,000,000 bushels. The currency sent west to pay for this grain will not be released until the grain is marketed.

"Third. A large amount of foreign capital usually lent on call in Wall street has been transferred to London and Liverpool as money commands (or has until recently) better rates there than in New York.

"I remain, yours very truly, "Jay Gould."

The purchase of four per cent. bonds sensibly increased in October. As the six per cent. bonds could not be paid within ninety days after the call, the purchasers of the four per cent. bonds claimed the right to pay for such bonds in United States notes, which on the 1st of January would be redeemable in coin. To this I replied that as the sale of four per cent. bonds was solely for the purpose of refunding the six per cent. bonds, the proceeds of the sale must be such as could be lawfully paid for called bonds. "Under existing law the treasury is required to and will redeem in coin, on and after January 1, 1879, United States legal tender notes, on presentation at the sub-treasury in New York, and will then receive such notes in payment for four per cent. bonds. The department does not anticipate any change in the law that would operate to prevent this, but cannot stipulate against any act which Congress in its judgment may pass."

Every facility which the law allowed to promote the easy change in the basis of our currency was carefully considered and adopted. The chief measure adopted was to promote exchanges in the clearing house in New York, so that only the balance of debits or credits would actually be paid. I requested Assistant Secretary French to examine whether, under existing law, such an arrangement was in the power of the department, and called his attention to previous correspondence in 1875 in the department on this subject. He came to the conclusion that the existing law would not justify such an arrangement. John Jay Knox, comptroller of the currency, however, favored the admission of the assistant treasurer of the United States at New York as a member of the clearing house. He said:

"The proposition is favored by the banks generally, and it is believed that the representation of the treasury department in the clearing house will facilitate the transaction of business between the department and the banks, and I therefore respectfully suggest that application be made for the admission of the assistant treasurer in New York to the Clearing House Association, provided it shall be found that there is no legal objection thereto."

General Hillhouse also was strongly in favor of the plan proposed. He said:

"The plan of going into the clearing house was proposed in correspondence with the department several years ago, as a remedy for the risk incurred in the collection of checks, and if there are no legal impediments in the way, it would very much simplify the business of the office if it could be adopted. The effect in connection with resumption would also, I think, be good, as it would place the banks and the treasury on the same footing with respect to the use of United States notes in settlements, and thus aid in maintaining them at par with gold in all the vast transactions connected with our internal trade and commerce. I have not given the question sufficient thought to speak with confidence, but it seems to me a very important one, and well worthy of careful consideration."

A committee of the clearing house called upon me and the subject was thoroughly considered. Mr. Gilfillan wrote to General Hillhouse as follows:

"Treasury of the United States.} "Washington, November 9, 1878. } "Sir:--By direction of the secretary, I have the honor to request that you will submit to the Clearing House Association of the banks of your city the following propositions, and, upon obtaining the assent of the association to them and communicating that fact to the department, you are expected to act in conformity with them.

"First. Hereafter, drafts drawn upon any bank represented in the Clearing House Association in the city of New York, received by the assistant treasurer in that city, may be presented to such bank at the clearing house for payment.

"Second. Hereafter, drafts drawn on the assistant treasurer at New York may be adjusted by him at the clearing house, and the balances due from the United States may be paid at his office in United States notes or clearing house certificates.

"Third. After the 1st of January next, payment of checks presented to the assistant treasurer by any bank connected with the clearing house may be made by him in United States notes.

"Very respectfully, "James Gilfillan, Treasurer United States. "Hon. Thomas Hillhouse, Assistant Treasurer United States, New York."

General Hillhouse, on the 12th of November, advised me of the receipt of this letter, and that the propositions of the treasurer were referred to the Clearing House Association, that a meeting would be held and there was little doubt but that they would be accepted.

On the same day the Clearing House Association, fifty out of fifty- eight banks, members of the associations, being present, unanimously adopted the following resolutions:

"Resolved, That in order to facilitate the payment of drafts and checks, between the treasurer of the United States and the associated banks, the manager of the New York clearing house is authorized to make such an arrangement with the assistant treasurer as will accomplish that purpose through the medium of the clearing house.

"Resolved, That the reported interview between the members of the clearing house committee and the Secretary of the Treasury, with the views expressed by them to him in the paper presented to this meeting upon the subject of the restoration of specie payments, meets the cordial approbation of this association, and that the practical measures recommended for the adoption of the banks in respect to their treatment of coin in their business in the public, and with each other, be accepted and carried into practical operation; and, in pursuance thereof, it is hereby further

"Resolved, That the associated banks of this city, after the 1st of January, 1879, will, first, decline receiving gold coins as 'special deposits,' but accept and treat them as lawful money; second, abolish special exchanges of gold checks at the clearing house; third, pay and receive balances between banks at the clearing house, either in gold or United States legal tender notes; fourth, receive silver dollars upon deposit only, under special contract to withdraw the same in kind; fifth, prohibit payments of balances at the clearing house in silver certificates, or in silver dollars, excepting as subsidiary coin, in small sums (say under $10); sixth, discontinue gold special accounts, by notice to dealers, on 1st of January next, to terminate them.

"Resolved, That the manager of the clearing house be requested to send copies of the proceedings of this meeting to clearing houses in other cities, with an expression of the hope that they will unite in similar measures for promoting the resumption of coin payments."

I accepted in the following note:

"Treasury Department, } "Washington, D. C., November 13, 1878.} "George S. Cox, President American Exchange National Bank, New York.

"Sir:--Your letter of yesterday, advising me of the adoption by the Clearing House Association of the result of our recent interview, is received with much pleasure.

"The end we all aim at, a specie standard and a redeemable currency, is greatly promoted by the judicious action of the banks, and I will, with greater confidence, do my part officially in securing the maintenance of resumption.

"John Sherman, Secretary."

This arrangement, entered into with care, proved to be a measure of very great advantage to the government as well as to all business men engaged in the great commercial operations of New York. The necessary details to carry this agreement into effect were arranged between General Hillhouse, for the United States, and W. A. Camp, manager of the New York clearing house.

CHAPTER XXV. INVESTIGATION OF THE NEW YORK CUSTOMHOUSE. A General Examination of Several Ports Ordered--No Difficulty Except at New York--First Report of the Commission--President Hayes' Recommendations--Letter of Instructions to Collector C. A. Arthur --Second Report of the Commission--Losses to the Government by Reason of Inefficiency of Employees--Various Measures of Reform Recommended--Four Other Reports Made--The President Decides on the Removal of Arthur, Cornell and Sharpe--Two Letters to R. C. McCormick on the Subject--Arthur et al. Refuse to Resign--The Senate Twice Refuses to Confirm the Men Appointed by the President to Succeed Them--Conkling's Contest Against Civil Service Reform--My Letter to Senator Allison--Final Victory of the President.

At the beginning of the administration of President Hayes, and for months previous, there had been complaints as to the conduct of business in the principal customhouses of the United States. This was especially called to my attention, and at my suggestion the President directed an examination into the conduct of the customhouses at New York, Philadelphia, New Orleans, San Francisco and perhaps other ports. Examinations were made by intelligent business men selected in the various ports, and full reports were made by them, and printed as public documents. Many changes were made, and reforms adopted, founded upon these reports, and there was no difficulty except only at the port of New York, where more than two-thirds of all the customs revenue was collected. Chester A. Arthur was then collector of the port, A. B. Cornell was naval officer, and George H. Sharpe was appraiser.

On the 23rd of April, 1877, I designated John Jay, Lawrence Turnure, of New York, and J. H. Robinson, Assistant Solicitor of the Treasury, as a commission on the New York customhouse. They were requested to make a thorough examination into the conduct of business in that customhouse. Full instructions were given and many specifications were made in detail of all the points embraced in their examination.

On the 24th of May they made their first report, preferring to treat the general subject-matter separately. This report related chiefly to appointments upon political influence without due regard to efficiency. I promptly referred it to the President, and received the following letter:

"Executive Mansion, } "Washington, May 26, 1877.} "My Dear Sir:--I have read the partial report of the commission appointed to examine the New York customhouse. I concur with the commission in their recommendations. It is my wish that the collection of the revenues should be free from partisan control, and organized on a strictly business basis, with the same guarantees for efficiency and fidelity in the selection of the chief and subordinate officers that would be required by a prudent merchant. Party leaders should have no more influence in appointments than any other equally respectable citizens. No assessments for political purposes, on officers or subordinates, should be allowed. No useless officer or employee should be retained. No officer should be required or permitted to take part in the management of political organizations, caucuses, conventions, or election campaigns. Their right to vote, and to express their views on public questions, either orally or through the press, is not denied, provided it does not interfere with the discharge of their official duties.

"Respectfully, "R. B. Hayes. "Hon. John Sherman, etc."

My answer to the commission was as follows:

"Treasury Department, May 26, 1877. "Gentlemen:--Your first report on the customhouse in New York, of date the 24th instant, has been received, and the reduction proposed by you of twenty per cent. of the number of persons employed therein is approved.

"So far as these offices are created by law, vacancies will be made and left for the action of Congress. The reduction of the other employees, the number of whom and whose compensation are not fixed by law, will be made as soon as practicable.

"I am much gratified that the collector, the naval officer, and the surveyor of the port, concur with you in the proposed reduction.

"The hours of employment, after the 31st of this month, will be from 9 o'clock a. m. till 4 o'clock p. m., excepting where a longer time is prescribed by law. This corresponds to the hours of clerical service in this department. This rule will be strictly enforced, and absence will be the cause of reduction of pay or removal. Strict attention to duty will be required, and other business will not be allowed to interfere with the full discharge of the duty attached to the office.

"I notice that you do not suggest a mode of carrying into effect the reduction of the force recommended, and I cannot, with due regard to the remaining subjects of your inquiry, ask you to extend your investigation into the personnel of each employee, his character, efficiency, and merits. This must be mainly left to the collector, who, by law, is authorized to employ, with the approval of the Secretary of the Treasury, proper persons as deputy collectors, weighers, gaugers, and measurers, in the several ports within his district. Thus, nearly all the officers of the customhouse are appointed by the collector, and, with the approval of the Secretary of the Treasury, may be removed at pleasure. He will be promptly called upon, under special orders, to perform this delicate and onerous duty. It is very important that it should be executed with due regard to the efficiency and merit of the employees, and so as best to promote the public service.

"In order that a rule might be furnished him, I called upon the President for instructions to govern alike the collector and myself in the execution of this duty. A copy of his answer is hereto annexed. You will see from it that he approves your recommendations, and that he wishes the customhouse conducted free from partisan control, on a strictly business basis, with the same guarantees for efficiency and fidelity in the selection of the chief and subordinate officers that would be required by a prudent merchant; that the public business should not be affected injuriously by the interests or influence of party leaders or party struggles; and that, while an officer should freely exercise his political rights as a citizen, he should not use his power as an officer to influence the conduct of others.

"I believe the opinions expressed by the President will meet with your hearty approval, and they are in harmony with your report.

"Permit me to add the thanks of this department for your care, ability and industry in conducting this inquiry.

"Very respectfully, "John Sherman, Secretary. "Messrs. John Jay, L. Turnure, and J. H. Robinson, "Commission on Custom House, New York."

I inclosed a copy of the report of the commission to Collector Arthur, with the following letter of instruction:

"Treasury Department, May 28, 1877. "Sir:--Inclosed I send you a copy of the first report of the commission on the New York customhouse, recommending a large reduction of the employees in the various offices in your collection district, and the approval and adoption of that report.

"It only remains now to execute this order, upon the principles and in the spirit stated by the President. This task, always an unpleasant one, when it requires the removal of employees, falls mainly upon you, subject to my approval. It may not be amiss now for me to state, in advance, somewhat in more detail, my views as to the mode of reduction. The extent of the reduction is fully stated in the report, and we are thus relieved from that portion of the task.

"I notice by the report that you have an exceptionally large proportion of experienced officers still in the service. You will have no difficulty in selecting, from these, the more efficient and trustworthy to fill the more important positions, and when these are carefully selected, you will have secured for the duties of greatest trust, active, efficient, and experienced officers. It must happen that among those longest in service some are disabled by age and infirmity. It is often the most painful, but necessary, duty, to dismiss there, or reduce them to positions which they are still able to fill. The government is fairly entitled to the services of those who are fully able to discharge personally the duties of their office, and who are willing to give their entire attention to their official duty. If they cannot, or do not, do this, it is no injustice to remove them.

"In the selection of inferior officers, the only rule should be the one daily acted upon by merchants--to employ only those who are competent for the special work assigned them, whose industry, integrity, and good habits give guarantees for faithful services, honestly rendered. This reduction will enable you to transfer those now employed on work for which they are not fitted, to other work for which they are competent, and to reward exceptional merit and ability by promotion.

"It is impossible, in a force so large as yours, that you should know the peculiar qualities and merits of each employee, and it is important, in making selections, that you secure this information through committees of trusted officers, and in proper cases to test the intelligence, ability, and qualifications of an officer or applicant for office by written questions or an oral examination. In many cases the partiality and influence of relations secure several persons of the same family in office, thus causing complaints and favoritism. As a rule, it is best in all cases to have but one of the same family under your jurisdiction, and no just complaint can be made if this rule is impartially enforced.

"The President properly lays great stress on excluding from a purely business office active participation in party politics. Naturally, in a government like ours, other things being equal, those will be preferred who sympathize with the party in power; but persons in office ought not to be expected to serve their party to the neglect of official duty, or to promote the interests of particular candidates, or to interfere with the free course of popular opinion, or to run caucuses or conventions. Such activity of office-holders is offensive to the great mass of the people who hold no office, and gives rise to complaints and irritation. If any have been appointed for purely political reasons, without regard to their efficiency, now is a good time to get rid of them.

"Where actual misconduct is proven, such as receiving gratuities or bribes, or oppression or insolence in office, or even the want of common courtesy, or drunkenness or other bad habits tending to degrade the officer, or absence from or neglect of duty--in all such cases I know it will be your pleasure to dismiss the employee.

"The payment of taxes is not pleasant at best, but if rudely enforced by oppression or discreditable officers, it renders the tax as well as the tax-collector odious.

"I do not fix any time within which this reduction must be made, but shall expect it to be completed by the 30th day of June proximo. So far as the reduction is specifically made by the adoption of the report, it should be made by the 1st day of June, and it should be made as to each particular division or department of the customhouse as early as practicable.

"After all, the success of this movement for reform of old abuses, which existed for many years before you became collector, will depend mainly upon your good sense and discretion. I assure you I will heartily sustain and approve any recommendation you may make that appears to me to tend to make the New York customhouse--not only what it now is, the most important, but what it ought to be-- the best managed business agency of the government.

"Very respectfully, "John Sherman, Secretary. "C. A. Arthur, Esq., Collector of Customs, New York."

When the inquiry commenced there was no purpose or desire on the part of the President or anyone to make a change in the officers of the New York customhouse. This is apparent from my letter to Collector Arthur. The commission proceeded with their examination, and on the 2nd of July made their second report. This contained specific charges, but of a general character, against persons employed in the customhouse. They found that for many years past, the view had obtained with some political leaders that the friends of the administration in power had a right to control the customs appointments; and this view, which seemed to have been acquiesced in by successive administrations, had of late been recognized to what the commission deemed an undue extent by the chief officers of the service. These gentlemen, on the ground that they were compelled to surrender to personal and partisan dictation, appeared to have assumed that they were relieved, in part, at least, from the responsibilities that belonged to the appointing power.

The collector of the port, in speaking of the "ten thousand applications," and remarking that the urgency for appointments came from men all over the country, added, "the persons for whom it is made bear their proportion of the responsibility for the character of the whole force."

The surveyor had said:

"I had, within the last two weeks, a letter, from a gentleman holding a high official position, in regard to the appointment of an officer whom he knows had been dropped three times from the service for cause. He has also been to see me about him, and the last time he came he admitted to me that he had been engaged in defrauding the revenue; and yet he writes me calling my attention to the case, and requesting his appointment."

The collector, in his testimony before the commission, said that "the larger number of complaints probably come from the surveyor of the port," and, on being asked their character, said:

"Some are for inefficiency, some are for neglect of duty, some for inebriety, and some for improper conduct in various ways; some for want of integrity, and some for accepting bribes."

The commission further stated:

"The investigation showed that ignorance and incapacity on the part of the employees were not confined to the surveyor's department, but were found in other branches of the service--creating delays and mistakes, imperiling the safety of the revenues and the interests of importers, and bringing the service into reproach. It was intimated by chiefs of departments that men were sent to them without brains enough to do the work, and that some of those appointed to perform the delicate duties of the appraiser's office, requiring the special qualities of an expert, were better fitted to hoe and to plow. Some employees were incapacitated by age, some by ignorance, some by carelessness and indifference; and parties thus unfitted have been appointed, not to perform routine duties distinctly marked, but to exercise a discretion in questions demanding intelligence and integrity, and involving a large amount of revenue.

"The evidence shows a degree and extent of carelessness which we think should not be permitted to continue. This point was illustrated to some degree by the testimony of the chiefs of the appraiser's department, the important duties of which would certainly justify a reasonable exactness. The invoices, which are recorded in that office, and which are sent out to the different divisions to be passed upon and then returned to the chief clerk, are found to exhibit, on their return, errors on the part of the several divisions --according to one witness, nearly eight hundred errors a month-- although the number by the appraiser was estimated at a lesser figure. A part of these errors may be assigned to a difference of opinion as to the classification of the goods; but fully one-half are attributed to carelessness. At the naval office it was stated that the balance in favor of the government, of the many and large errors which they discover in the customhouse accounts of the liquidation of vessels and statements of refund, amounts to about a million and a half of dollars per annum."

The commission entered into a full statement and details as to irregularities, inefficiency and neglect of duties in different departments of the customhouse, and recommended various measures of reform, both in the laws regulating the customs service and its actual administration. A copy of this report was immediately sent to Collector Arthur and Naval Officer Cornell, with instructions to recommend to me the number of each grade for each branch of his office, with various details designated by me, and to carry into execution the general recommendations of the commission. I added:

"You will please take your own way, by committee of your officers or otherwise, to fix the number of each grade requisite to conduct the business of your office, and make report as early as practicable."

The third report was made on the 21st of July, and related to the management of the department of weighers and gaugers.

The fourth report, made on the 31st of August, related to the appraiser's office. In acknowledging the receipt of this report on the 12th of September, I stated:

"The recommendations made by you will be fully examined in detail, and be acted upon cotemporaneously with the proposed change in the leading officers of that customhouse."

Two other reports were made, dated October 31 and November 1, 1877, the latter containing suggestions as to the recommendations of legislative amendments to various existing laws and usages.

After the receipt of the report of August 31 the President, who had carefully read the several reports, announced his desire to make a change in the three leading officers of the New York customhouse. He wished to place it upon the ground that he thought the public service would be best promoted by a general change, that new officers would be more likely to make the radical reforms required that those then in the customhouse. The matter was submitted to the cabinet, and I was requested to communicate with these officers, in the hope that they would resign and relive the President from the unpleasant embarrassment of removing them. On the 6th of September I wrote to Richard C. McCormick, Assistant Secretary of the Treasury, who was then at his home near New York on account of illness, the following letter. I knew that Mr. McCormick was on friendly terms with Collector Arthur, and that he might better than I inform him of the wish of the President to receive the resignations of himself, and Messrs. Cornell and Sharpe:

"Treasury Department, } "Washington, D. C., September 6, 1877.} "Dear Governor:--After a very full consideration, and a very kindly one, the President, with the cordial assent of his cabinet, came to the conclusion that the public interests demanded a change in the three leading offices in New York, and a public announcement of that character was authorized. I am quite sure that this will, on the whole, be considered to be a wise result. The manner of making the changes and the persons to be appointed will be a subject of careful and full consideration, but it is better to know that it is determined upon and ended. This made it unnecessary to consider the telegrams in regard to Mr. Cornell. It is probable that no special point would have been made upon his holding his position as chairman of the state committee for a limited time, but even that was not the thing, the real question being that, whether he resigned or not, it was better that he and Arthur and Sharpe should all give way to new men, to try definitely a new policy in the conduct of the New York customhouse.

"I have no doubt, unless these gentlemen should make it impossible by their conduct hereafter, that they will be treated with the utmost consideration, and, for one, I have no hesitation in saying that I hope General Arthur will be recognized in a most complimentary way.

"Things are going on quietly here, but we miss you very much. Hope you will have a pleasant time and return to us in fresh health and vigor.

"Very truly yours, "John Sherman. "Hon. R. C. McCormick."

On the next day I wrote him a supplementary letter:

"Treasury Department, } "Washington, D. C., September 7, 1877.} "Dear Governor:--Your note of yesterday is received.

"The action of the President on the New York customhouse cases turned upon the general question of change there, and not upon Cornell's case. It happened in this way: General Sharpe, in a very manly letter, withdrew his application for reappointment as surveyor of the port. In considering the question of successor the main point, as to whether the changes in the New York customhouse rendered necessary a general change of the heads of the departments, was very fully and very kindly considered, and, without any reference to Cornell's matter, until it was thought, as a matter of public policy, it was best to make change in these heads, with some details about it which I will communicate to you when you return. When that was seen to be the unanimous opinion, it was thought hardly worth while to single out Mr. Cornell's case, and act upon it on the question that affected him alone. If he was allowed to resign from the committee, it would undoubtedly be upon an implied supposition that he would be continued as naval officer. I think even yet he ought to do as he proposed to Orton, but we could not afford to have him do it with any such implied assent, and, therefore, it was deemed better to make the formal announcement agreed upon. You know how carefully such things are considered, and, after a night's reflection, I am satisfied of the wisdom of the conclusion.

"I want to see Arthur, and have requested him to come here. You can say to him that, with the kindest feelings, and, as he will understand when he sees me, with a proper appreciation of his conduct during the examination by the commission, there should be no feeling about this in New York. At all events, what has been done is beyond recall.

"Very truly yours, "John Sherman. "Hon. R. C. McCormick."

Mr. McCormick complied with my request, and orally reported his interview on his return to Washington. We were given to understand that these officers did not wish to be removed pending the investigation, as it would seem that they were charged with the acknowledged defects and irregularities which they themselves had pointed out. The President was quite willing to base his request for their resignation, not upon the ground that they were guilty of the offenses charged, but that new officers could probably deal with the reorganization of the customhouse with more freedom and success than the incumbents. I also saw General Arthur, and explained to him the view taken by the President and his desire not in any way to reflect upon the collector and his associates, Cornell and Sharpe. I believed that at the close of the investigation by the commission these gentlemen would resign, and that their character and merits would be recognized possibly by appointments to other offices.

Acting on this idea, on the 15th of October, I wrote the following letter to Arthur:

"Washington, D. C., October 15, 1877. "Dear Sir:--I regret to hear from Mr. Evarts that you decline the consulship at Paris which I supposed would be very agreeable to you.

"As the time has arrived when your successor must be appointed, I submit to you whether, though your resignation might be inferred from your letters on file, it would not be better for you to tender it formally before your successor is appointed.

"The President desires to make this change in a way most agreeable to you, and it would be most convenient to have it announced to- morrow.

"An early answer is requested.

"Very truly, etc., "John Sherman. "General C. A. Arthur, Collector Customs, New York."

It soon became manifest that these gentlemen had no purpose to resign, and that Senator Conkling intended to make a political contest against the policy of civil service reform inaugurated by President Hayes. On the 24th of October, 1877, the President sent to the Senate the nominations of Theodore Roosevelt to succeed Arthur as collector, Edwin A. Merritt to succeed George H. Sharpe as surveyor, and L. B. Prince to succeed A. B. Cornell as naval officer. All of them were rejected by the Senate on the 29th of October. On the 6th day of December, during the following session, Roosevelt, Prince and Merritt were again nominated, and the two former were again rejected. Merritt was confirmed as surveyor on the 16th of December.

This action of the Senate was indefensible. There was not the slightest objection to Roosevelt or Prince, and none was made. The reasons for a change were given in the report of the Jay commission. Even without this report the right of the President to appoint these officers was given by the constitution. To compel the President to retain anyone in such an office, charged with the collection of the great body of the revenue from customs, in the face of such reasons as were given for removal, was a gross breach of public duty. No doubt the Democratic majority in the Senate might defend themselves with political reasons, but the motive of Mr. Conkling was hostility to President Hayes and his inborn desire to domineer. The chief embarrassment fell upon me. I wished to execute the reforms needed in the collector's office, but could only do it with his consent. The co-operation required was not given, and the office was held in profound contempt of the President. If the rejection of these nominations had been placed upon the ground of unfitness, other names could have been sent to the Senate, but there was no charge of that kind, while specific and definite charges were made against the incumbents. Other names were mentioned to the President, and suggestions were made, among others by Whitelaw Reid, whose letter I insert:

"New York, March 29, 1878. "My Dear Mr. Sherman:--Leaving Washington unexpectedly this morning, I was unable to call again at the treasury department in accordance with your polite invitation of last night. I have, however, been thinking over the customhouse problem of which you asked my opinion. It seems to me, more and more clear, that, if a new appointment is to be made, it should be controlled by two considerations: First, the appointee should be a man who can be confirmed; and, second, he should be a man equal to all the practical duties of the place, which are necessarily and essentially political as well as mercantile.

"To nominate another man only to have him rejected would do great harm, and the confirmation cannot, by any means, be taken for granted. I believe it is possible to select some well-known man, who has carefully studied the subject of revenue collection, and could bring to the task executive skill, experience, and sound business and political sagacity, and that such a nomination could be confirmed. I assume, of course, that any movement of this sort would be based upon the previous removal of the present incumbent, for good cause--of which I have been hearing rumors for some time.

"Pray let me renew more formally the invitation to dine with me, on the evening of the 10th of April, at seven o'clock, at the Union League Club, to meet Mr. Bayard Taylor just before his departure for Berlin. I sincerely hope you can arrange your movements after the Chester visit so as to make it possible.

"Very truly yours, "Whitelaw Reid. "Hon. John Sherman, Secretary of the Treasury, Washington, D. C."

The President would not make other appointments during the session of the Senate, as the implication would arise that the rejections were based upon opposition to the persons named, and he, therefore, postponed any action until the close of the session.

After the close of the session, on the 11th of July, 1878, the President gave temporary commissions to Edwin A. Merritt as collector to succeed C. A. Arthur, and Silas W. Burt to succeed Cornell as naval officer, and these gentlemen entered upon the duties of their respective offices.

On the following December it became necessary to send their nominations to the Senate. I had definitely made up my mind that if the Senate again rejected them I would resign. I would not hold an office when my political friends forced me to act through unfriendly subordinates. I wrote a letter to Senator Allison as follows:

"Washington, D. C., January 31, 1879. "My Dear Sir:--I would not bother you with this personal matter, but that I feel the deepest interest in the confirmation of General Merritt, which I know will be beneficial to us as a party, and still more so to the public service. Personally I have the deepest interest in it because I have been unjustly assailed in regard to it in the most offensive manner. I feel free to appeal to you and Windom, representing as you do western states, and being old friends and acquaintances, to take into consideration this personal aspect of the case. If the restoration of Arthur is insisted upon, the whole liberal element will be against us and it will lose us tens of thousands of votes without doing a particle of good. No man could be a more earnest Republican than I, and I feel this political loss as much as anyone can. It will be a personal reproach to me, and merely to gratify the insane hate of Conkling, who in this respect disregards the express wishes of the Republican Members from New York, of the great body of Republicans, and, as I personally know, runs in antagonism to his nearest and best friends in the Senate.

"Surely men like you and Windom, who have the courage of your convictions, should put a stop to this foolish and unnecessary warfare. Three or four men who will tell Conkling squarely that, while you are his friends, you will not injure our party and our cause, would put a stop to this business. Arthur will not go back into the office. This contest will be continued, and the only result of all this foolish madness will be to compel a Republican administration to appeal to a Democratic Senate for confirmation of a collector at New York. It is a most fatal mistake.

"I intended to call upon some of the Senators this morning, but I am very much pressed, and will ask you to show this in confidence to Senator Windom, as I have not time to write him.

"Very truly yours, "John Sherman. "Hon. W. B. Allison, U. S. Senate."

I wrote to Senator Justin S. Morrill a much longer letter, giving reasons in detail in favor of confirmation and containing specific charges of neglect of duty on the part of Arthur and Cornell, but I do not care to revive them.

Conkling was confident of defeating the confirmations, and thus restoring Arthur and Cornell. The matter was decided, after a struggle of seven hours in the Senate, by the decisive vote in favor of confirmation of Merritt 33, and against him 24, in favor of Burt 31, against 19. From this time forward there was but slight opposition to the confirmation of Hayes' appointments. The reforms proposed in the customhouse at New York were carried out.

This termination of the controversy with Arthur and Cornell was supported by public opinion generally throughout the United States. I insert a letter from John Jay upon the subject.

"N. Y. C. H., 24 Washington Square,} "New York, February 3, 1879. } "The Honorable John Sherman.

"My Dear Sir:--Allow me to thank you for the two papers you have kindly sent me, in reference to the customhouse, the last of which, the firm message of the President with your second conclusive letter, reached me to-day.

"Whatever may be the result in the Senate, and I can scarcely believe that, after so full an exposure, the nomination will be rejected, the plain-thinking people of this country will appreciate the attitude taken by the government as the only one consistent with the duty of the executive and the general welfare.

"It will give new hope and confidence to the great body of Republicans, and to many who can hardly be called Republicans, who look to the administration for an unflinching adherence--no matter what the opposition--to the pledge of reform on which the party was successful in the last election, and on fidelity to which depends its safety in the next.

"The country is infinitely indebted to you for redeeming its faith by a return to honest money. A new debt will be incurred of yet wider scope if you succeed in liberating the custom service from the vicious grip of the immoral factions of office holders and their retainers, who have made it a scandal to the nation with such gigantic loss to the treasury and immeasurable damage to our commerce, industry and morals.

"I hope that the President will feel that all good citizens who are not blinded by prejudice or interest are thoroughly with him in the policy and resolve of his message that the customhouse shall no longer be 'a center of partisan political management.'

"With great regard I have the honor to be, dear Mr. Sherman,

"Faithfully yours, "John Jay."

CHAPTER XXXVI. PREPARATIONS FOR RESUMPTION OF SPECIE PAYMENTS. Annual Report to Congress on Dec. 2, 1878--Preparations for Resumption Accompanied with Increased Business and Confidence--Full Explanation of the Powers of the Treasurer Under the Act--How Resumption Was to Be Accomplished--Laws Effecting the Coinage of Gold and Silver --Recommendation to Congress That the Coinage of the Silver Dollar Be Discontinued When the Amount Outstanding Should Exceed $50,000,000 --Funding the Public Debt--United States Notes at Par with Gold-- Instructions to the Assistant Treasurer at New York--Political Situation in Ohio.

The annual report made by me to Congress on the 2nd of December, 1878, contained the usual formal information as to the condition of the treasury, and the various bureaus and divisions of that department. It was regarded as a fair statement of public affairs at a time of unusual prosperity. The revenue in excess of expenditures during the year amounted to $20,799,551.90.

The statement made by me in this report, in respect to the resumption of specie payments on the 1st day of January, 1879, is so closely a narrative of what did happen before and after that date that I deem it best to quote the language of the report. I then said:

"The important duty imposed on this department by the resumption act, approved January 14, 1875, has been steadily pursued during the past year. The plain purpose of the act is to secure to all interests and all classes the benefits of a sound currency, redeemable in coin, with the least possible disturbance of existing rights and contracts. Three of its provisions have been substantially carried into execution by the gradual substitution of fractional coin for fractional currency, by the free coinage of gold, and by free banking. There remains only the completion of preparations for resumption in coin on the 1st day of January, 1879, and its maintenance thereafter upon the basis of existing law.

"At the date of my annual report to Congress in December, 1877, it was deemed necessary, as a preparation for resumption, to accumulate in the treasury a coin reserve of at least forty per cent. of the amount of United States notes then outstanding. At that time it was anticipated that under the provisions of the resumption act the volume of United States notes would be reduced to $300,000,000 by the 1st day of January, 1879, or soon thereafter, and that a reserve in coin of $120,000,000 would then be sufficient. Congress, however, in view of the strong popular feeling against a contraction of the currency, by the act approved May 31, 1878, forbade the retirement of any United States notes after that date, leaving the amount in circulation $346,681,016. Upon the principle of safety upon which the department was acting, that forty per cent. of coin was the smallest reserve upon which resumption could prudently be commenced, it became necessary to increase the coin reserve to $138,000,000.

"At the close of the year 1877 this coin reserve, in excess of coin liability, amounted to $63,016,050.96, of which $15,000,000 were obtained by the sale of four and a half per cent., and $25,000,000 by the sale of four per cent. bonds, the residue being surplus revenue. Subsequently, on the 11th day of April, 1878, the secretary entered into a contract with certain bankers in New York and London --the parties to the previous contract of June 9, 1877, already communicated to Congress--for the sale of $50,000,000 four and a half per cent. bonds for resumption purposes. The bonds were sold at a premium of one and a half per cent. and accrued interest, less a commission of one-half of one per cent. The contract has been fulfilled, and the net proceeds, $50,500,000, have been paid into the treasury in gold coin. The $5,500,000 coin paid on the Halifax award have been replaced by the sale of that amount of four per cent. bonds sold for resumption purposes, making the aggregate amount of bonds sold for these purposes, $95,500,000, of which $65,000,000 were four and a half per cent. bonds, and $30,500,000 four per cent. bonds. To this has been added the surplus revenue from time to time. The amount of coin held in the treasury on the 23rd day of November last, in excess of coin sufficient to pay all accrued coin liabilities, was $141,888,100, and constitutes the coin reserve prepared for resumption purposes. This sum will be diminished somewhat on the 1st of January next, by reason of the large amount of interest accruing on that day in excess of the coin revenue received meanwhile.

"In anticipation of resumption, and in view of the fact that the redemption of United States notes is mandatory only at the office of the assistant treasurer in the city of New York, it was deemed important to secure the co-operation of the associated banks of that city in the ready collection of drafts on those banks and in the payment of treasury drafts held by them. A satisfactory arrangement has been made by which all drafts on the banks held by the treasury are to be paid at the clearing house, and all drafts on the treasury held by them are to be paid to the clearing house at the office of the assistant treasurer, in United States notes; and, after the 1st of January, United States notes are to be received by them as coin. This will greatly lessen the risk and labor of collections both to the treasury and the banks.

"Every step in these preparations for resumption has been accompanied with increased business and confidence. The accumulation of coin, instead of increasing its price, as was feared by many, has steadily reduced its premium on the market. The depressing and ruinous losses that followed the panic of 1873 had not diminished in 1875, when the resumption act passed; but every measure taken in the execution or enforcement of this act has tended to lighten these losses and to reduce the premium on coin, so that now it is merely nominal. The present condition of our trade, industry, and commerce, hereafter more fully stated, our ample reserves, and the general confidence inspired in our financial condition, seem to justify the opinion that we are prepared to commence and maintain resumption from and after the 1st day of January, A. D. 1879.

"The means and manner of doing this are left largely to the discretion of the secretary, but, from the nature of the duty imposed, he must restore coin and bullion, when withdrawn in the process of redemption, either by the sale of bonds, or the use of the surplus revenue, or of the notes redeemed from time to time.

"The power to sell any of the bonds described in the refunding act continues after as well as before resumption. Thought it may not be often used, it is essential to enable this department to meet emergencies. By its exercise it is anticipated that the treasury at any time can readily obtain coin to reinforce the reserve already accumulated. United States notes must, however, be the chief means under existing law with which the department must restore coin and bullion when withdrawn in process of redemption. The notes, when redeemed, must necessarily accumulate in the treasury until their superior use and convenience for circulation enables the department to exchange them at par for coin or bullion.

"The act of May 31, 1878, already referred to, provides that when United States notes are redeemed or received in the treasury under any law, from any source whatever, and shall belong to the United States, they shall not be retired, canceled, or destroyed, but shall be reissued and paid out again and kept in circulation.

"The power to reissue United States notes was conferred by section 3579, Revised Statutes, and was not limited by the resumption act. As this, however, was questioned, Congress wisely removed the doubt.

"Notes redeemed are like other notes received into the treasury. Payments of them can be made only in consequence of appropriations made by law, or for the purchase of bullion, or for the refunding of the public debt.

"The current receipts from revenue are sufficient to meet the current expenditures as well as the accruing interest on the public debt. Authority is conferred by the refunding act to redeem six per cent. bonds as they become redeemable, by the proceeds of the sale of bonds bearing a lower rate of interest. The United States notes redeemed under the resumption act are, therefore, the principal means provided for the purchase of bullion or coin with which to maintain resumption, but should only be paid out when they can be used to replace an equal amount of coin withdrawn from the resumption fund. They may, it is true, be used for current purposes like other money, but when so used their place is filled by money received from taxes or other sources of income.

"In daily business no distinction need be made between moneys, from whatever source received, but they may properly be applied to any of the purposes authorized by law. No doubt coin liabilities, such as interest or principal of the public debt, will be ordinarily paid and willingly received in United States notes, but, when demanded, such payments will be made in coin; and United States notes and coin will be used in the purchase of bullion. This method has already been adopted in Colorado and North Carolina, and arrangements are being perfected to purchase bullion in this way in all the mining regions of the United States.

"By the act approved June 8, 1878, the Secretary of the Treasury is authorized to constitute any superintendent of a mint, or assayer of any assay office, an assistant treasurer of the United States, to receive gold coin or bullion on deposit. By the legislative appropriation bill, approved June 19, 1878, the Secretary of the Treasury is authorized to issue coin certificates in payment to depositors of bullion at the several mints and assay offices of the United States. These provisions, intended to secure to the producers of bullion more speedy payment, will necessarily bring into the mints and treasury the great body of the precious metals mined in the United States, and will tend greatly to the easy and steady supply of bullion for coinage. United States notes, at par with coin, will be readily received for bullion instead of coin certificates, and with great advantage and convenience to the producers.

"Deposits of coin in the treasury will, no doubt, continue to be made after the 1st of January, as heretofore. Both gold and silver coin, from its weight and bulk, will naturally seek a safe deposit, while notes redeemable in coin, from their superior convenience, will be circulated instead. After resumption the distinction between coin and United States notes should be, as far as practicable, abandoned in the current affairs of the government; and therefore no coin certificates should be issued except where expressly required by the provisions of law, as in the case of silver certificates. The gold certificates hitherto issued by virtue of the discretion conferred upon the secretary will not be issued after the 1st of January next. The necessity for them during a suspension of specie payments is obvious, but no longer exists when by law every United States note is, in effect, a coin certificate. The only purpose that could be subserved by their issue hereafter would be to enable persons to convert their notes into coin certificates, and thus contract the currency and hoard gold in the vaults of the treasury without the inconvenience or risk of its custody. For convenience, United States notes of the same denomination as the larger coin certificates will be issued.

"By existing law, customs duties and the interest of the public debt are payable in coin, and a portion of the duties was specifically pledged as a special fund for the payment of the interest, thus making one provision dependent upon the other. As we cannot, with due regard to the public honor, repeal the obligation to pay in coin, we ought not to impair or repeal the means provided to procure coin. When, happily, our notes are equal to coin, they will be accepted as coin, both by the public creditor and by the government; but this acceptance should be left to the option of the respective parties, and the legal right on both sides to demand coin should be preserved inviolate.

"The secretary is of the opinion that a change of the law is not necessary to authorize this department to receive United States notes for customs duties on and after the 1st day of January, 1879, while they are redeemable and are redeemed on demand in coin. After resumption it would seem a useless inconvenience to require payment of such duties in coin rather than in United States notes. The resumption act, by clear implication, so far modifies previous laws as to permit payments in United States notes as well as in coin. The provision for coin payments was made in the midst of war, when the notes were depreciated and the public necessities required an assured revenue in coin to support the public credit. This alone justified the refusal by the government to take its own notes for the taxes levied by it. It has now definitely assumed to pay these notes in coin, and this necessarily implies the receipt of these notes as coin. To refuse them is only to invite their presentation for coin. Any other construction would require the notes to be presented to the assistant treasurer in New York for coin, and, if used in the purchase of bonds, to be returned to the same officer, or, if used for the payment of customs duties, to be carried to the collector of customs, who must daily deposit in the treasury all money received by him. It is not to be assumed that the law requires this indirect and inconvenient process after the notes are redeemable in coin on demand of the holder. They are then at a parity with coin, and both should be received indiscriminately.

"If United States notes are received for duties at the port of New York, they should be received for the same purpose in all other ports of the United States, or an unconstitutional preference would be given to that port over other ports. If this privilege is denied to the citizens of other ports, they could make such use of these notes only by transporting them to New York and transporting the coin to their homes for payment; and all this not only without benefit to the government, but with a loss in returning the coin again to New York, where it is required for redemption purposes.

"The provision in the law for redemption in New York was believed to be practical redemption in all parts of the United States. Actual redemption was confined to a single place from the necessity of maintaining only one coin reserve and where the coin could be easily accumulated and kept.

"With this view of the resumption act, the secretary will feel it to be his duty, unless Congress otherwise provides, to direct that after the 1st day of January next, and while United States notes are redeemed at the treasury, they be received the same as coin by the officers of this department, in all payments in all parts of the United States.

"If any further provision of law is deemed necessary by Congress to authorize the receipt of United States notes for customs dues or for bonds, the secretary respectfully submits that this authority should continue only while the notes are redeemed in coin. However desirable continuous resumption may be, and however confident we may feel in its maintenance, yet the experience of many nations has proven that it may be impossible in periods of great emergency. In such events the public faith demands that the customs duties shall be collected in coin and paid to the public creditors, and this pledge should never be violated or our ability to perform it endangered.

"Heretofore, the treasury, in the disbursement of currency, has paid out bills of any denomination desired. In this way the number of bills of a less denomination than five dollars is determined by the demand for them. Such would appear to be the true policy after the 1st of January. It has been urged that, with a view to place in circulation silver coins, no bills of less than five dollars should be issued. It would seem to be more just and expedient not to force any form of money upon a public creditor, but to give him the option of the kind and denomination. The convenience of the public, in this respect, should be consulted. The only way by which moneys of different kinds and intrinsic values can be maintained in circulation at par with each other is by the ability, when one kind is in excess, to readily exchange it for the other. This principle is applicable to coin as well as to paper money. In this way the largest amount of money of different kinds can be maintained at par, the different purposes for which each is issued making a demand for it. The refusal or neglect to maintain this species of redemption inevitably effects the exclusion from circulation of the most valuable, which, thereafter, becomes a commodity, bought and sold at a premium. . . .

"When the resumption act passed, gold was the only coin which by law was a legal tender in payment of all debts. That act contemplated resumption in gold coin only. No silver coin of full legal tender could then be lawfully issued. The only silver coin provided was fractional coin, which was a legal tender for five dollars only. The act approved February 28, 1878, made a very important change in our coinage system. The silver dollar provided for was made a legal tender for all debts, public and private, except where otherwise expressly stipulated in the contract.

"The law itself clearly shows that the silver dollar was not to supersede the gold dollar; nor did Congress propose to adopt the single standard of silver, but only to create a bimetallic standard of silver and gold, of equal value and equal purchasing power. Congress, therefore, limited the amount of silver dollars to be coined to not less than two millions nor more than four millions per month, but did not limit the aggregate amount nor the period of time during which this coinage should continue. The market value of the silver in the dollar, at the date of the passage of the act, was 93¼ cents in gold coin. Now it is about 86 cents in gold coin. If it was intended by Congress to adopt the silver instead of the gold standard, the amount provided for is totally inadequate for the purpose. Experience not only in this country, but in European countries, has established that a certain amount of silver coin may be maintained in circulation at par with gold, though of less intrinsic bullion value. It was, no doubt, the intention of Congress to provide a coin in silver which would answer a multitude of the purposes of business life, without banishing from circulation the established gold coin of the country. To accomplish this it is indispensable either that the silver coin be limited in amount, or that its bullion value be equal to that of the gold dollar. If not, it use will be limited to domestic purposes. It cannot be exported except at its commercial value as bullion. If issued in excess of demands for domestic purposes, it will necessarily fall in market value, and, by a well-known principle of finance, will become the sole coin standard of value. Gold will be either hoarded or exported. When two currencies, both legal, are authorized without limit, the cheaper alone will circulate. If, however, the issue of the silver dollars is limited to an amount demanded for circulation, there will be no depreciation, and their convenient use will keep them at par with gold, as fractional silver coin, issued under the act approved February 21, 1853, was kept at par with gold.

"The amount of such coin that can thus be maintained at par with gold cannot be fairly tested until resumption is accomplished. As yet paper money has been depreciated, and silver dollars, being receivable for customs dues, have naturally not entered into general circulation, but have returned to the treasury in payment of such dues, and thus the only effect of the attempt of the department to circulate them has been to diminish the gold revenue. After resumption these coins will circulate in considerable sums for small payments. To the extent that such demand will give employment to silver dollars their use will be an aid to resumption rather than a hindrance, but, if issued in excess of such demand, they will at once tend to displace gold and become the sole standard, and gradually, as they increase in number, will fall to their value as bullion. Even the fear or suspicion of such an excess tends to banish gold, and, if well established, will cause a continuous drain of gold until imperative necessity will compel resumption in silver alone. The serious effect of such a radical change in our standards of value cannot be exaggerated; and its possibility will greatly disturb confidence in resumption, and may make necessary large reserves and further sales of bonds.

"The secretary, therefore, earnestly invokes the attention of Congress to this subject, with a view that either during the present or the next session the amount of silver dollars to be issued be limited, or their ratio to gold for coining purposes be changed.

"Gold and silver have varied in value from time to time in the history of nations, and laws have been passed to meet this changing value. In our country, by the act of April 2, 1792, the ratio between them was fixed at one of gold to fifteen of silver. By the act of June 28, 1834, the ratio was changed to one of gold to sixteen of silver. For more than a century the market value of the two metals had varied between these two ratios, mainly resting at that fixed by the Latin nations of one to fifteen and a half.

"But we cannot overlook the fact that within a few years, from causes frequently discussed in Congress, a great change has occurred in the relative value of the two metals. It would seem to be expedient to recognize this controlling fact--one that no nation alone can change--by a careful readjustment of the legal ratio for coinage of one to sixteen, so as to conform to the relative market values of the two metals. The ratios heretofore fixed were always made with that view, and, when made, did conform as near as might be. Now, that the production and use of the two metals have greatly changed in relative value, a corresponding change must be made in the coinage ratio. There is no peculiar force or sanction in the present ratio that should make us hesitate to adopt another, when, in the markets of the world, it is proven that such ratio is not now the true one. The addition of one-tenth or one-eighth to the thickness of the silver dollar would scarcely be perceived as an inconvenience by the holder, but would inspire confidence, and add greatly to its circulation. As prices are now based on United States notes at par with gold, no disturbance of values would result from the change.

Spotted a typo or a problem in this chapter? Tell us