Recollections of Forty Years in the House, Senate and Cabinet Part 60

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 ma.s.ses 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 pa.s.sage 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 circ.u.mstances 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 pa.s.sed 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 subst.i.tution 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 subst.i.tute for Mr. Ferry's amendment, by a vote of yeas 30, nays 29:

"That from and after the pa.s.sage 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, pa.s.sed the Senate by a large majority. In this form it had no proper relevancy to the bill as it pa.s.sed 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 partic.i.p.ated. 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 pa.s.s, the executive veto would prevent any action by Congress that would interfere with the execution of the law. My princ.i.p.al 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 acc.u.mulation 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 a.s.sumed 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.

ILl.u.s.tRATED 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

ILl.u.s.tRATIONS 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, c.o.x, 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. c.o.x, January 23, 1886 W. T. Sherman, February 3, 1891

TABLE OF CONTENTS.