Recollections of Forty Years in the House, Senate and Cabinet Part 59

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 cla.s.ses 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 const.i.tutional duty, and from the highest motives of patriotism.

Some are foolish enough to talk of his abandoning the colored people and their const.i.tutional 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 cla.s.s 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 const.i.tutionality 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 a.s.sume, 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 acc.u.mulate 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 acc.u.mulating 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 cla.s.ses 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 doc.u.ments 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 a.s.sistance, 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 doc.u.ments 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 canva.s.s 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 partic.i.p.ate 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 indors.e.m.e.nt in Ma.s.sachusetts, 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.