Recollections of Forty Years in the House, Senate and Cabinet Part 83

"We must carry New York next year, or see all the results of the war overthrown and the const.i.tutional amendments absolutely nullified.

We cannot do this if our friends defeat a Republican candidate for governor fairly nominated, and against whom, there are no substantial charges affecting his integrity. Besides, the nomination of Mr.

Cornell could easily have been prevented if the friends of the President and the administration had aided to defeat it. He was nominated by our acquiescence, and we should not now complain of it. The expediency of holding the meeting you propose, depends entirely upon the question whether or not it would aid the Republican cause this fall. I am inclined to think it would not, that such a meeting would deter Republicans from supporting the regular ticket and, therefore, is ill advised. I thus frankly state my opinion as you ask it, but without any desire in any way to influence that of others.

"Very truly yours, "John Sherman.

"Hon. John Jay, Katonah, N. Y."

After the election in Ohio I received from General Arthur a list of appointments for me in New York, which if I had attempted to fill would have overtaxed my strength. Mr. Evarts had also been invited, but limited his acceptance to one speech to be made in Cooper Inst.i.tute. I complained to him that it was not fair to request of me so many speeches where he, a citizen of that state, agreed to make but one. His answer was characteristic. He said: "Well, Mr. Sherman, when the people of New York wish my views upon public questions they arrange for a meeting in Cooper Inst.i.tute, or some such place. I make the speech and it is printed and is read." I thought this, under the circ.u.mstances, a refined specimen of egotism, meaning that he had only to p.r.o.nounce his opinion to attract universal attention and he need not therefore repeat his speech at any other place.

This incident recalls to my mind a specimen of his keen wit. Among the early meetings of the cabinet President Hayes announced three or four personal appointments that he intended to make, mainly in the foreign service, in the department of which Mr. Evarts was the head. Evarts seemed to be surprised at these appointments, and after some pause he said: "Mr. President, I have never had the good fortune to see the 'great western reserve' of Ohio, of which we have heard so much." For a moment Hayes did not perceive the quiet sarcasm of Mr. Evarts, which was a polite expression of his feeling that he should have been consulted about these nominations before they were announced. We all caught the idea and the President joined heartily in the laughter. Mr. Evarts is not only a man of keen wit, but is a great lawyer and able advocate. I learned, from my intimate a.s.sociation with him in the cabinet, and subsequently in the Senate as a member of the committee on foreign relations, to respect and love him.

On the 25th of October, when on my way to New York, at the request of General Kilpatrick I made a speech at Paterson, New Jersey, on the occasion of the ratification of the Republican nominations.

In this speech I expressed my opinions upon the subject of fraudulent elections, especially in the south, and, while the government has not been able at any time to completely protect the ballot box in several states, the opinions I then expressed are still entertained.

I believe the right of each lawful voter to vote in national elections should be enforced by the power of the national government in every state and territory of the Union. I said at this time:

"Now I want to serve notice on the Democratic party, that the Republican party has resolved upon two things, and it never makes up its mind upon anything until it is determined to put it through.

_We are going to see that every lawful voter in this country has a right to vote one honest ballot at every national election, and no more_. If the Democratic party stands in the way, so much the worse for the Democratic party. If the south, rebellious as it is, stands in the way again, we will protect every voter in his right to vote wherever the const.i.tution gives the right to vote.

Local elections must be regulated by state laws. Southern voters may cheat each other as they please in local elections. The Republican party never trenched on the rights of states, and does not intend to.

"Whenever national officers or Congressmen are elected, those are national elections, and, under the plain provisions of the const.i.tution, the nation has the right to protect them. The Republican party intends, if the present law is not strong enough, _to make it stronger_. In the south 1,000,000 Republicans are disfranchised. With the help of Almighty G.o.d, we intend to right that wrong. Congress has a right to regulate congressional elections.

The Tweed frauds, reversing the vote of New York state in 1868, led to the pa.s.sage of the first federal election law, breaking up false counts. Then the Mississippi plan was introduced in the south.

"If Congress was purged to-day of men elected by fraud and bloodshed in the south, the Democrats would be in a pitiful minority in the capital. At the last session the Democrats tried to repeal the election laws, and were met by veto after veto from the stanch Republican President. Then they tried to nullify existing laws.

We must as firmly resist nullification now as when Jackson threatened 'by the eternal G.o.d' to hang the original nullifier, Calhoun. _We must have free elections_. We are determined to a.s.sert the _supremacy of the United States in all matters pertaining to the United States_, and to _enforce the laws of the United States, come what will_."

This declaration of mine at the time created a good deal of criticism, especially in the New York papers, but, in spite of this, my convictions have grown stronger with time that it is the imperative duty of the national government to protect the election of all federal officers, including Members of Congress, by wise conservative laws.

On the 27th of October I spoke in Cooper Inst.i.tute, confining myself mainly to an exposition and defense of the financial policy of the administration. This was hardly needed in the city of New York though, as Evarts said of his speech, I knew what I said would be printed, and people who were not familiar with financial topics could read it. The commercial papers, while approving the general tenor of the speech, complained that I did not advocate the retirement of the legal tender notes of the government. They seemed then, as they do now, to favor a policy that would withdraw the government from all partic.i.p.ation in furnishing a currency. I have always honestly entertained the opinion that the United States should furnish the body of circulating notes required for the convenience of the people, and I do yet entertain it, but the notes should always be maintained at parity with coin. In the cities generally, where banks have great influence and where circulating notes are superseded in a great measure by checks, drafts and clearing house certificates, the wants of the people for paper money secured by the highest sanction of law and by the promise and credit of the government are not appreciated. In this speech I referred to the banks as follows:

"They [the banks] are interwoven with all the commercial business of the country, and their loans and discounts form our most active and useful capital. . . . The abolition of the national banks would inevitably lead to the incorporation of state banks, especially in bankrupt states, where any expedient to make paper money cheap will be quickly resorted to. . . . It will open the question of the repeal of the provisions of the loan laws fixing a limit to the amount of United States notes, and thus will shock the public credit and raise new questions of authority which the Supreme Court would probably declare to be unconst.i.tutional. Free banking open to all, with prompt and easy redemption, supplies a currency to meet the varying wants of different periods and seasons. Who would risk such a question to the changing votes of Congress?"

I must add, however, that I do not believe the banking system would be sustained by popular opinion unless the great body of our currency was in the form of United States notes or certificates based upon coin. If there is any profit in the circulation of such notes, it ought to inure to the government. The circulation of banks should only be equal to the local demands for currency and should always be amply secured, as now, by the deposit of United States bonds, or some subst.i.tute for these bonds equally valuable, when the national bonds shall be redeemed. This security ought not to extend beyond the amount of bank notes actually outstanding, leaving the security of deposits by individuals to depend upon the a.s.sets of each bank. The duty of the government is performed when it guards with undoubted security the payment of the circulating notes issued by the banks. In this speech I spoke of the resumption act and the history of resumption as follows:

"The resumption act was a Republican measure, supported, advocated and voted for by Republican Senators and Members, and without the aid of a single Democrat in either House of Congress. It has been adhered to and successfully executed by that party. The Republican party has won no victory more complete than the pa.s.sage, execution and success of the resumption act. This measure was adopted in January, 1875, in the midst of the panic, when our paper money was worth only 85 cents on the dollar. It was a period of wild speculation and inflation. The rate of interest was higher than before or since--the government paying six per cent. in gold, corporations in fair credit from eight to ten per cent., and individuals from ten to twelve per cent. Recklessness in contracting debts was universal. Railroads were built where they were not needed; furnaces were put up in excess of all possible demands; and over-production and over-trading occurred in all branches of business. The balance of trade for ten years had been steadily against us, with an aggregate excess of imports over exports of over $1,000,000,000.

"The panic of 1873 put an end to all these wild, visionary schemes, and left the country prostrate and in ruin. All business enterprises were paralyzed. Congress, in a hopeless quandary, looked in vain for some way of escape from the bankruptcy which threatened every interest and every individual. Then it was the Republican party devised and placed upon the statute book the resumption act, and, against noisy opposition and continual speaking, steadily persevered in its execution.

"Now that resumption is a success, Democrats say the Republican party did not bring it about, but that Providence has done it; that bountiful crops here and bad crops in Europe have been the cause of all the prosperity that has come since resumption. We gratefully acknowledge that Providence has been on the side of the Republican party, or rather, that, having sought to do right, we find ourselves supported by Divine Providence, and we are grateful to the Almighty for the plentiful showers and favorable seasons that brought us good crops; but we also remember that it was the pa.s.sage of the resumption act, the steady steps toward resumption, the acc.u.mulation of the coin reserve, the economy of the people, and their adjustment of business affairs to the time fixed for resumption, that, with the blessings of Divine Providence, brought us resumption.

"We should be, and are, thankful to the Almighty, but we are under no thanks whatever to the Democratic party. It has not, for twenty- five years, had Providence on its side, but we may fairly infer that, as it has steadily resisted Providence and patriotic duty for more than twenty years, it must have had the devil on its side.

Democrats can claim no credit, but stand convicted of a blundering mistake in abandoning the old and tried principles of their party, and following after strange G.o.ds with the hope of a brief and partial success. They have failed, and that dogma for hard money, which they abandoned, has been adopted by the Republican party, as the corner stone of its greatest success."

I spoke at Albany, Rochester, and Syracuse, and, on my way to Washington, at New Brunswick, New Jersey.

After the election in Ohio, I received several letters from members of the legislature, offering their support to me as a candidate for United States Senator, to be elected in January to succeed Mr.

Thurman, for the term commencing on the 4th of March, 1881. Among them was a letter from L. M. Dayton, a member of the general a.s.sembly from Hamilton county, to which I replied as follows:

"Washington, D. C., November 2, 1879.

"My Dear Sir:--Your note of the 30th ult., in which you inquire whether I will be a candidate for election as Senator of the United States in place of Senator Thurman, is received.

"Early last summer, when this subject was first mentioned to me by personal friends, I freely expressed my conviction that as the general a.s.sembly of Ohio had three times conferred upon me this high and much coveted honor, I ought not to stand in the way of others who might fairly aspire to that position. I am of the same opinion now. During the recent canva.s.s I stated to several gentlemen who had been named in the public press as probable candidates, that I would not be a candidate, and I could not now recede from that position without just reproach.

"Please say so to your fellow members, and accept my hearty thanks for your partiality.

"Very truly yours, "John Sherman.

"Hon. L. M. Dayton, Cincinnati, Ohio."

I also wrote the following letter to Senator A. B. Cole, of Portsmouth, in reply to a similar offer:

"Washington, D. C., November 11, 1879.

"My Dear Sir:--Your very kind letter of the 10th inst. is received.

I thank you again for your offer to support me for the Senate, but you will have seen from the letter I wrote to Colonel Dayton, that I have determined, under the circ.u.mstances stated therein, not to be a candidate, so that members may feel entirely free to follow their judgment in the selection of the Senator. I must be impartial between the several candidates.

"I thank you also for what you say about the nomination for the presidency. Such a nomination would be a very exalted honor, so much so that I ought not to do anything to promote or to defeat it. I would be very glad to get the hearty cordial support of the Ohio delegation, and that being granted I am perfectly willing to abide the decision of the national convention, and will be ready to support anyone who is nominated.

"I should be glad to see your son, and hope you will give him a letter of introduction to me.

"Very truly yours, "John Sherman.

"Hon. A. B. Cole, Portsmouth, Ohio."

Cornell was elected Governor of New York, and with him a Republican legislature. The elections generally that fall were in favor of the Republican party, but, as both Houses of the 46th Congress were Democratic, President Hayes had to conduct executive business with a Congress not in political harmony with him until the 4th of March, 1881, when the term of Congress and of the President expired. I feel bound to say that no merely obstructive financial measures were adopted during that Congress.

The message of the President, communicated to Congress on the 1st of December, 1879, dealt with the usual topics of such a doc.u.ment; but, instead of commencing with our foreign relations as usual, he began by congratulating Congress on the successful execution of the resumption act and the funding of all the public debt redeemable, into bonds bearing a lower rate of interest. He recommended the suspension of the coinage of the silver dollar, and the retirement from circulation of United States notes with the capacity of legal tender. He held that the issue of such notes during the Civil War was not authorized except as a means of rescuing the country from imminent peril, and the protracted use of them as money was not contemplated by the framers of the law. While I did not concur in all the views stated by the President, especially as to the policy of retiring United States notes then in circulation, yet his general conclusions in favor of the coin standard were, in my view, sound and just. I was very willing to hold on to the progress made in making United States notes equivalent to coin rather than to attempt to secure their retirement from circulation.

In the report made by me as Secretary of the Treasury I stated my opinion that the existing law was ample to enable the department to maintain resumption upon the volume of United States notes then outstanding; but added, that in view of the large inflow of gold into the country, and the high price of public securities, it would seem to be a favorable time to invest a portion of the sinking fund in United States notes to be retired and canceled, and in this way gradually to reduce the maximum of such notes to the sum of $300,000,000, the amount named in the resumption act.

I would not make such a recommendation now, as I am convinced that United States notes based on coin in the treasury are the best form of currency yet devised, and that the volume might be gradually increased as the volume of business increases. Since resumption such notes have been maintained at par with coin by holding in the treasury coin to the amount of thirty per cent. of the notes outstanding. This coin, lying idle and yielding no interest, costs the government the interest on an equal amount of bonds, or a fraction over one per cent. on the sum of United States notes in circulation. These notes are a part of the debt of the United States, and if redeemed, must be paid by the issue of $346,000,000 of bonds. I see no reason why the people of the United States should not have the benefit of this cheap loan rather than the national banks, and there are many reasons why the issue of a like amount of notes by national banks cannot fill the place or perform the functions of United States notes. The issue of bank notes would be governed by the opinions and interest of the banks, and the amount could be increased or diminished according to their interests and without regard to the public good. As an auxiliary and supplement to United States notes, bank notes may be issued as now when amply secured by United States bonds, but it would be a dangerous experiment to confine our paper money to bank notes alone, the amount of which would depend upon the interest, hopes and fears of corporations which would be guided alone by the supposed interests of their stockholders.

There is another objection to a sole dependence on bank notes as currency: They cannot be made a legal tender either by the states or the United States, while it is settled by the Supreme Court that notes of the United States may be made a legal tender, a function that ought to belong to money.

I know that my views on this subject are not entertained by the influential cla.s.s of our citizens who manage our banks, but in this I prefer the opinion and interest of the great body of our people, who instinctively prefer the notes of the United States, supported by coin reserves, to any form of bank paper that has yet been devised. The only danger in our present currency is that the amount may be increased to a sum that cannot be maintained at par with coin, but the same or a greater danger would exist if the volume of paper money should be left to the interested opinion of bankers alone.

It is sometimes claimed that neither the government nor banks should issue paper money, that coin only is money. It is sufficient to say that all commercial nations have been constrained by necessity to provide some form of paper money as a subst.i.tute for coin. The experience of the United States has proven this necessity and for many years our people were compelled to rely upon state bank notes as a medium of exchange, with resulting loss and bankruptcy. For the want of paper money at the commencement of the Civil War, the United States was compelled to issue its notes and to make them a legal tender. Without this the effort to preserve the Union would have utterly failed. With such a lesson before us it is futile to attempt to conduct the business of a great country like ours with coin alone. Gold can only be a measure or standard of value, but cannot be the current money of the country. Silver also can only be used as money for the small transactions of life, its weight and bulk forbidding its use in commerce or trade. The fluctuations in market value of these metals make it impossible to permit the free coinage of both at any ratio with each other without demonetizing one of them. The cheaper money will always be the money in circulation. Wherever free coinage now exists silver is the only money, while where gold is the standard, silver is employed as a subsidiary coin, maintained at par in gold by the mandate of the government and its receipt for or redemption in gold. The only proposed remedy for this fluctuation is an agreement by commercial nations upon a common ratio, but thus far all efforts for such an agreement have failed. If successful the result might not be as satisfactory as antic.i.p.ated.

I urged, in my report, the importance of adjusting the coinage ratio of the two metals by treaties with commercial nations, and, until this could be done, of limiting the coinage of the silver dollar to such sum as, in the opinion of Congress, would enable the department to readily maintain the standard dollars of gold and silver at par with each other.

In this report I stated the refunding transactions already described, and recommended the refunding of all bonds of the United States in the same manner as they became redeemable. This was successfully executed by my successors in office. I was able to say truly of the treasury department, in conclusion:

"The organization of the several bureaus is such, and the system of accounting so perfect, that the financial transactions of the government during the past two years, aggregating $3,354,345,040.53, have been adjusted without question, with the exception of a few small balances now in the process of collection, of which it is believed the government will eventually lose less than $13,000, or less than four mills on each $1,000 of the amount involved."

The question of the legal tender quality of United States notes, discussed in my report, was followed, on the 3rd of December, by the introduction in the Senate of a resolution by Mr. Bayard as follows:

"_Resolved, etc._, That from and after the pa.s.sage of this resolution the treasury notes of the United States shall be receivable for all dues to the United States excepting duties on imports, and shall not otherwise be a legal tender; and any of said notes hereafter reissued shall bear this inscription."

This resolution, while pending in the committee, was debated at some length, and reported back adversely on the 15th of January, 1880, by Mr. Allison, from a majority of the committee. Mr. Bayard presented the views of the minority in favor of the resolution.

It was subsequently discussed at considerable length by Mr. c.o.ke, of Texas, and Mr. Bayard, on opposite sides. No definite action was taken and the matter rested, and I do not recall that it was ever again brought before the Senate. I felt satisfied with the majority report, as I doubted the expediency or power of Congress to deny to these notes any of the qualities conferred upon them by the law authorizing their issue, as was the legal tender clause.

The beneficial result of resumption was appreciated by both parties and there was no disposition of Congress to pa.s.s any legislation on the subject. The speech of Mr. Bayard, made on the 27th of January, 1880, was a careful and able review of the whole subject of legal tender, but it was evident that neither House of Congress agreed with him in opinion.