Recollections of Forty Years in the House, Senate and Cabinet Part 67

'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 antic.i.p.ate 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 antic.i.p.ate 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 princ.i.p.al 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 a.s.sistant 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 pa.s.sed 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 pa.s.s. If pa.s.sed it would no doubt have been vetoed, but the moral effect of its pa.s.sage 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 circ.u.mstances, 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 circ.u.mstances, 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 a.s.sume a fresh load, and I a.s.sure you that a mandatory provision requiring the secretary to receive United States notes in payment of customs duties, without regard to the time and circ.u.mstances, 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 a.s.sume 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 a.s.sociates 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."