Recollections of Forty Years in the House, Senate and Cabinet Part 120

She states that in 1868 $473,000,000 of our money was destroyed, and in 1869 $500,000,000 of our money pa.s.sed into a cremation furnace, and in 1870 $67,000,000 was destroyed. Now these statements are absolutely false. What she calls money in these paragraphs was the most burdensome form of interest-bearing securities, treasury notes bearing seven and three-tenths per cent. interest, and compound interest notes. These were the chief and most burdensome items of the public debt. They were paid off in the years named and were never at any time for more than a single day money in circulation.

When issued they were received as money, but, as interest accrued they became investments and were not at all in circulation.

"These statements of Mrs. Emery are palpable falsehoods, which if stated by a man would justify a stronger word. It is true that in 1866 Mr. McCulloch, Secretary of the Treasury under the administration of Andrew Johnson, wished to bring about resumption by contraction, and a bill was pa.s.sed providing for a gradual reduction of the greenbacks to $300,000,000, but this was very soon after repealed and the greenbacks retained in circulation. I was not in favor of the contraction of the greenbacks, and the very speech that she quotes, in which I described the effects of contraction and the difficulty of resuming, was made against the bill providing for the reduction of the greenbacks.

"The next 'conspiracy' to which she refers was the first act of General Grant's administration 'to strengthen the public credit.'

A controversy had existed whether the 5-20 bonds could be paid in greenbacks. I maintained and still believe that by a fair construction of the loan laws we had a right to pay the princ.i.p.al of the bonds as they matured in greenbacks of the kind and character in existence when the bonds were issued, but I insisted that it was the duty of the government to define a time when the greenbacks should be either redeemed or maintained at par in coin, that this was a plain obligation of honor and duty which rested upon the United States, and that it was not honorable or right to avail ourselves of our own negligence in restoring these notes to the specie standard in order to pay the bonds in the depreciated money. This idea is embodied in the credit-strengthening act.

"The fifth 'conspiracy' of what she calls 'this infernal scheme'

was the refunding of the national debt. This operation of refunding is regarded by all intelligent statesmen as of the highest value, and was conducted with remarkable success. At the date of the pa.s.sage of the refunding act, July 14, 1870, we had outstanding bonds bearing five and six per cent. interest for about $1,500,000,000.

By the wise providence of Congress, we had reserved the right of redeeming a portion of this debt within five years, and a portion of it within ten years, so that the debt was, in the main, then redeemable at our pleasure. It was not possible to pay it in coin and it was not honorable to pay it in greenbacks, especially as that could only have been done by issuing new greenbacks far beyond the volume existing during the war, and which would at once depreciate in value and destroy the public credit and dishonor the country.

We, therefore, authorized the exchange, par for par, of bonds bearing four, four and a half, and five per cent. interest for the bonds bearing a higher rate of interest. The only contest in Congress upon the subject was whether the new bonds should run five, ten and fifteen years, or ten, fifteen and thirty years. I advocated the shorter period, but the House of Representatives, believing that the new bonds would not sell at par unless running for a longer period, insisted that the four per cent. bonds should run for thirty years. Greenbackers, like Mrs. Emery, who now complain that the bonds run so long and cannot be paid until due, are the same people who insisted upon making the bonds run thirty years. It required some ten years to complete these refunding operations--of which the larger part was accomplished when I was Secretary of the Treasury--and they resulted in a saving of one- third of the interest on the debt. So far from it being in the interest of the bondholders, it was to their detriment and only in the interest of the people of the United States.

"The next 'conspiracy' complained of is the alleged demonetization of silver. By the act revising the coinage in 1873, the silver dollar, which had been suspended by Jefferson in 1805 and practically demonetized in 1835 and suspended by minor coins in 1853, and which was issued only in later years as a convenient form in which to export silver bullion, and the whole amount of which, from the beginning of the government to the pa.s.sage of the act referred to, was only eight million dollars, was, by the unanimous vote of both Houses of Congress, without objection from anyone, dropped from our coinage, and in its place, upon the pet.i.tion of the legislature of California, was subst.i.tuted the trade dollar containing a few more grains of silver. A few years afterwards, silver having fallen rapidly in market prices, Congress restored the coinage of the silver dollar, limiting the amount to not exceeding four million nor less than two million a month, and under ths law in a period of twelve years we issued over 400,000,000 silver dollars, fifty times the amount that had been coined prior to 1873. And now under existing law we are purchasing 54,000,000 ounces of silver a year; so that what she calls the demonetization of silver has resulted in its use in our country to an extent more than fiftyfold greater than before its demonetization.

"In spite of this, in consequence of the increased supply of silver and the cheapening processes of its production, it is going down in the market and is only maintained at par with gold by the fiat of the different governments coining it. Now the deluded people belonging to the cla.s.s of Mrs. Emery are seeking to cheapen the purchasing power of the dollar, in the hands of the farmer and laborer, by the free coinage of silver and the demonetization of gold. Silver and gold should be used and maintained as current money, but only on a par with each other, and this can only be done by treating the cheaper metal as subsidiary and coining it only as demanded for the use of the people.

"The seventh 'financial conspiracy' is the pride and boast of the government of the United States, the restoration of our notes, long after the war was over, to the standard of coin; in other words, the resumption of specie payments. This measure, which met the violent opposition of such wild theorists as Mrs. Emery, has demonstrated its success, in the judgment of all intelligent people, not only in the United States, but in all the countries of the world. There is no standard for paper money, except coin. The United States postponed too long the restoration of its notes to coin standards. Since it had the courage to do this under the resumption act, on the 1st day of January, 1879, we have had in the United States a standard of gold with coins of silver, nickel and copper, maintained at that standard by the fiat of the government, and paper money in various forms, as United States notes, national bank notes, gold certificates, silver certificates, and treasury notes, all at par with gold.

"To call this a 'conspiracy' or an 'infamous plot' is a misnomer of terms which will not deceive any intelligent man, but it is rather the glory and pride of the people of the United States that it not only has been able, in the past thirty years, to put down a great rebellion and to abolish slavery, but to advance the credit of the United States to the highest rank among nations, to largely increase the currency of the country, to add enormously to our productive interests, and to develop the resources of the mine, the field, and the workshop, to a degree unexampled in the history of nations. Intelligent people, who reason and observe, will not be deceived or misled by the wild fanaticism and the gloomy prophecies of Mrs. Emery. Temporary conditions growing out of the failure of any portion of our crops will not discourage them; the exaggerations of the morbid fancy will not mislead them.

"A candid examination of the great financial measures of the last thirty years will lead people to name what Mrs. Emery calls 'the seven financial conspiracies' as the seven great, wise and statesmanlike steps which have led the people of the United States, through perils and dangers rarely encountered by any nation, from a feeble confederacy with four millions of slaves, and discordant theories of const.i.tutional power, to a great, free republic, made stronger by the dangers it has pa.s.sed, a model and guide for the nations of the world.

"As for Mrs. Emery's criticisms upon me personally, I do not even deem them worthy of answer. She repeats the old story that I was interested in the First National Bank of New York and gave it the free use of the people's money. This is a plain lie, contradicted and disproved over and over again. I never had the slightest interest in the bank, direct or indirect, and, as the public records will show, gave it no favors, but treated it like all other depositaries of public money and held it to the most rigid accountability; nor have I in any case derived the slightest pecuniary benefit from any measure either pending in or before Congress since I have been in public life.

"Very truly yours, "John Sherman."

I had faith in the good sense and conservative tendencies of the people, and believed they would not be deluded by such fantasies and fallacies as were contained in the platform of the People's party. That party made a very active canva.s.s, and expected, as a prominent member of it said, "to hold the balance of power in the legislature and dictate who the next United States Senator from Ohio shall be, and you may depend upon it that that man will not be John Sherman."

This Alliance subsequently changed its ground from irredeemable paper money to the free coinage of silver. Professing to care for the farmers and laborers it sought in every way to depreciate the purchasing power of their money.

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.

In the progress of the canva.s.s of 1891 it was apparent that the farmers of Ohio would not agree to free coinage of silver, and divided as usual between the two great parties. In the heat of this contest I wrote to the "Cyclone" the following letter:

"Mansfield, O., July 7, 1891.

"Editors 'Cyclone,' Washington C. H.

"My Dear Sirs:--In answer to your letter of the 6th, I can only say that my views on the question of the free coinage of silver are fully stated in the speech I made at the last session of the Senate, a copy of which I send you, and I can add nothing new to it.

"I can appreciate the earnest demand of the producers of silver bullion, that the United States should pay $1.29 an ounce for silver bullion which in the markets of the world has been for a series of years worth only about one dollar an ounce--sometimes a little more, sometimes a little less, but I cannot appreciate why any farmer or other producer should desire that the government should pay for any article more than its market value. The government should purchase the articles it needs, like all other purchasers, at the market price. The distinction sought to be made in favor of silver is without just foundation. The government now buys in the open market more than the entire domestic production of silver bullion, because it needs it for coinage and as the basis of treasury notes. I gladly contributed my full share to this measure, and would do anything in my power to advance the market value of silver to its legal ratio to gold, but this can only be done in concert with other commercial nations. The attempt to do it by the United States alone would only demonstrate our weakness.

"To the extent that the enormous demand made by the existing law advances the price of silver, the producer receives the benefit, and to-day the production of silver is probably the most profitable industry in the United States. To ask more seems to me unreasonable, and, if yielded to, will bring all our money to the single silver standard alone, demonetize gold and detach the United States from the standards of the great commercial nations of the world. The unreasonable demand for the free coinage of silver has nothing to do with the reasonable demand for the increase of the volume of money required by the increase of business and population of the United States.

"We have provided by existing laws for the increase of money to an amount greater than the increase of business and population; but, even if more money is required, there are many ways of providing it without cheapening its purchasing power, or making a wide difference between the kinds of money in circulation based on silver and gold. More than ninety-two per cent. of all payments is now made in checks, drafts and other commercial devices. All kinds of circulating notes are now equal to each other and are kept at the gold standard by redemption and exchange. Our money and our credit are now equal to or better than those of the most civilized nations of the world, our productions of every kind are increasing, and it seems to me almost a wild lunacy for us to disturb this happy condition by changing the standard of all contracts, including special contracts payable in gold, and again paying gold to the capitalists, and silver (at an exaggerated price) to the farmer, laborer and pensioner.

"I would not be true to my conviction of what is best for the good of my const.i.tuents if I did not frankly and firmly stand by my opinions, whatever may be the effect upon me personally. My greatest obligations have been to the farmers of Ohio, and I would be unworthy of their trust and confidence if I did not beseech them to stand by the financial policy which will secure them the best results for their labor and productions, and the comfort and prosperity of all cla.s.ses alike.

"Very truly yours, "John Sherman."

When this letter was written the demand for the free coinage of silver was at its height. I knew that my position was not a popular one, yet felt confident that in the end the people would become convinced that no change should be made in the standard of value then existing, and that the use of silver as money should be continued and it should be maintained at par with gold, but that when the volume of it became so great as to threaten the demonetization of gold, its coinage should be discontinued and silver bullion in the treasury should be represented by treasury notes in circulation equal in amount to the cost of the silver bullion. This was the basis of the act of 1890, but, unfortunately, the amount of silver bullion produced in the United States and in the world at large so rapidly increased that it continually declined in market value.

Every purchase of it entailed great loss to the United States.

How to deal with this condition was the problem for the next Congress to solve.

On the 31st of August, in response to an inquiry from the editor of the "Citizen," a newspaper published in Urbana, Ohio, I wrote the following letter in regard to the policy of protection to American industries by tariff laws:

"A protective tariff was the first measure provided by the first Congress of the United States. No nation can be independent without a diversity of industries. A single occupation may answer for an individual, but a nation must be composed of many men of many employments. Every nation ought to be independent of other nations in respect to all productions necessary for life and comfort that can be made at home. These are axioms of political economy so manifestly true that they need no demonstration. The measure of protection is a proper subject of dispute, but there should be no dispute as to the principle of protection in a country like ours, possessing almost every raw material of nature and almost every variety of productions. We have prospered most when our industries have been best protected. The vast variety of our manufactures, now rivaling in quant.i.ty those of countries much older than ours, is the result of protection.

"Every President, from Washington down to Jackson, inclusive, declared in favor of the principle of protection. Every eminent statesman of the early period, including Calhoun, favored this policy. The owners of slaves, engaged chiefly in the production of cotton, became hostile to protection, and, with those engaged in foreign commerce, were the representative free traders of the United States. Now that slavery is abolished and the south has entered upon the development of her vast natural resources, and it has been proven that our foreign commerce is greater under protective laws, there should be no opposition in any portion of our country to the protection of American industry by wise discriminating duties.

"The principle of protection should be applied impartially and fairly to all productions, whether of the workshop or the farm.

The object is to diversify employment and to protect labor, and this protection should be impartially applied without respect to the nature of the production. All experience has established the invariable fact that domestic production, by inducing compet.i.tion, in a brief period, lowers the price of all protected articles. In the whole range of productions this result has been universal.

Whenever it is apparent that a new industry can be established, as is the case now with the manufacture of tin plate, it is good policy to give to the industry a liberal degree of protection, with the a.s.surance that if we have the raw material on equal conditions we can after a time compete with the imported article.

"The policy of a nation upon economic questions should be fixed and stable. The McKinley law, as now framed, though it may be open to criticism as to details, is a strictly protective measure, fair and just as applied to all industries, with ample provisions to secure reciprocity in the exchange of domestic productions for articles we cannot produce. It ought to be thoroughly tested by the experience of several years. It is not good policy to disturb it or keep the public mind in suspense about it. It will, as I think, demonstrate its wisdom, but if not, with the light of experience, it can be modified. The highest policy and the greatest good to our people lie in the full trial of this effort, to establish, upon a firm foundation, the domestic production of every article essential to American life and independence."

These two letters, on the "free coinage of silver" and the "McKinley tariff law," frankly expressed my opinions on the salient questions of the day. With respect to the principles that underlie the policy of protection, I have already stated my opinions in commenting upon the Morrill tariff law. No general tariff bill has pa.s.sed during my service in Congress that met my entire approval. It is easy to formulate general principles, but when we come to apply them to the great number of articles named on the tariff list, we find that the interests of their const.i.tuents control the action of Senator and Members. The McKinley tariff bill was not improved in the Senate. The compact and influential delegation from New England made its influence felt in support of industries pursued in that section, while the delegations from other sections were divided on party lines. The tariff law was not, therefore, consistent with any general principle, but it was nearer so than the one in force before its pa.s.sage, and the necessity of pa.s.sing some law that would reduce taxation was so imperative that the differences between the two Houses were readily compromised. The execution of the McKinley law under President Harrison demonstrated that it would furnish ample revenue to support the government, and it should have remained on the statute book with such slight changes as experience might have shown to be necessary. The Democratic party, however, was opposed to the protective features of this law, took advantage of its defects, and, subsequently, when that party came into power, it unwisely undertook to make a new tariff which has proven to be insufficient to yield the needed revenue, and thus created the necessity of using, for current expenses, the reserve of gold specially acc.u.mulated in the treasury for the redemption of United States notes.

I felt the deepest interest in this campaign, not from the selfish desire to hold longer an office I had held for nearly thirty years, but I thought that in Ohio we were to have a great financial battle, upon the result of which might depend the monetary system of the United States. On the 17th of August I said to a reporter:

"The people of the east do not seem to understand this campaign.

They do not appear to have any comprehension of what it means to them as well as the country. No matter what their differences upon the tariff question may be, every Republican who wishes the success of his party should be made to understand that there is another and perhaps a graver question to be settled in Ohio this year.

While our politics for the past few campaigns have hinged upon minor questions, we are to-day brought back to the financial problem which we all thought had been settled, in 1875, when Mr. Hayes won the fight for an honest dollar against Governor Allen, who represented the liberal currency idea. Then it came in the guise of greenbacks, and now it comes in the garb of free silver. That conflict made Mr. Hayes President of the United States. What the decision may be this year no man can tell."

I further said the arguments that year were identically the same as in the Hayes and Allen contest if the word "silver" were subst.i.tuted for "greenbacks." The Democrats had declared for unlimited coinage, and we had declared against it. The Farmers'

Alliance came in as allies of the Democracy, but, while they were an unknown quant.i.ty, they did not appear to be very dangerous. I could not find that they made much impression on Republican farmers.

It had fallen to the lot of Ohio to be the battle ground on which these financial question were fought, but we had never been saddled with so grave a conflict as that year, not merely for the reason that we had both the financial and economic questions depending upon the result, but because of the lack of action and moral force which did not seem to come to us from outside the state, as it should and had years before. I had too much faith in the Republicans of the country to believe that when they understood the situation they would fail to arouse themselves to the necessities of the hour.

In answer to a question as to how the canva.s.s would be conducted, I said that Major McKinley and those close to him were perfectly competent to deal with the management of the campaign and would do so. I should in my opening speech devote myself entirely to a presentation of the financial part of the contest, which was equal in importance with the tariff. It was perhaps unfortunate for both that two such questions should come up for discussion at the same time, but they did and the issue had to be met. The only thing that was necessary to insure a crowning success was that the Republicans of the country should understand that, no matter what their differences upon the tariff were, they had a vital interest in settling the financial question for all time at the next election in the State of Ohio. The prosperity in Ohio was a great aid to the Republicans. The crops in that state and the west were larger than for many years. Prices were good and the farmers as a rule prosperous. This naturally made them regard with grim humor the talk of the Alliance lecturers about poverty and distress. Another thing which helped us was the fact that short crops were the rule in Europe. In reply to a question as to the senatorial issue, I said in one of my speeches:

"I have no regret that this character of battle is prominent. I am rather complimented than otherwise to be again selected as the target of this crusade against a sound currency. It is a question that has been nearest my heart for a good many years, and I am perfectly willing to abide the result upon my position thereon.

As I said before, I have no fears as to the decision for the right.

I have less opposition to encounter than I have ever had before, and should we carry the legislature, which I believe we will, I am content to stand by the judgment of the Republicans of that body, no matter what it may be."

I made my opening speech in this campaign at Paulding, on the 27th of August. It was mainly confined to the silver question. I quote a few extracts from it:

"It has been said by many persons of both political parties that this is to be a campaign of education. I believe it ought to be so, for the leading questions involved are purely business questions, affecting material interests common alike to men of all parties.

"Upon two great measures of public policy the Republican and Democratic parties have made a formal and distinct issue, and these are to be submitted to the people of Ohio in November, and your decision will have a marked effect upon public opinion throughout the United States. One is whether the holder of silver bullion may deposit it in the treasury of the United States, and demand and receive for it one dollar of coined money for every 371 grains of fine silver deposited. The market value of so much silver bullion is now about 77 cents, varying, however, from day to day, like other commodities, sometimes more and sometimes less. The other question is whether the policy of taxing imported goods by the government of the United States, embodied in our existing tariff law, known as the McKinley tariff, is a wise public policy, or whether it should be superseded by what is called a tariff for revenue only, as embodied in what is known as the Mills bill, which pa.s.sed the House of Representatives in 1888, and was rejected by the Senate.

"I propose upon this occasion to confine myself mainly to a frank and homely discussion of the money question, as the most pressing, not that the tariff question is not equally important, but for the reason that I can only do one thing at a time, and the money question is a newer one, is now before us, upon which Republicans and Democrats alike are somewhat divided. I wish to appeal to the reason and common sense of the people who hear me, for that is said to be the highest wisdom.

"Now, you all know that the money in circulation in the United States--all of it--is good, good as gold. It will pa.s.s everywhere and buy as much as the same amount of any other money in the world.