Recollections of Forty Years in the House, Senate and Cabinet Part 49

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 pa.s.s his judgment upon them readily.

"Now I desire to approach a cla.s.s 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 mult.i.tude 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 t.i.tle 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 cla.s.ses. 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, pa.s.sed 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 Canva.s.s 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 pa.s.sed 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 pa.s.sed without debate and that its inception and pa.s.sage 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 a.s.sume 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 canva.s.s 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 canva.s.s 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 canva.s.s. 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 const.i.tutional 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 circ.u.mstances 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 a.s.surance 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 canva.s.s 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 canva.s.s, 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 compet.i.tors, 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 dispa.s.sionately 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 a.s.surance 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 pa.s.s 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.