"Affectionately yours, "John Sherman."

"Headquarters Military Division of the Missouri,} "St. Louis, March 14, 1868. } "Dear Brother:—I don't know what Grant means by his silence in the midst of the very great indications of his receiving the nomination in May. Doubtless he intends to hold aloof from the expression of any opinion, till the actual nomination is made, when, if he accepts with a strong radical platform, I shall be surprised. My notion is that he thinks that the Democrats ought not to succeed to power, and that he would be willing to stand a sacrifice rather than see that result. . . . I notice that you Republicans have divided on some of the side questions on impeachment, and am glad that you concede to the President the largest limits in his defense that are offered. I don't see what the Republicans can gain by shoving matters to an extent that looks like a foregone conclusion.

"No matter what men may think of Mr. Johnson, his office is one that ought to have a pretty wide latitude of opinion. Nevertheless, the trial is one that will be closely and sternly criticised by all the civilized world. . . .

"Your brother, "W. T. Sherman."

At this time I wrote from Washington:

"You notice the impeachment proceedings have commenced. As a matter of course, I have nothing to say about them. It is strange that they have so little effect on prices and business. The struggle has been so long that the effect has been discounted. . . .

"The President was very anxious to send you to Louisiana, and only gave it up by reason of your Indian command. He might think that your visit to Europe now was not consistent with the reason given for your remaining at St. Louis. Still, on this point you could readily ask his opinion, and if that agrees with Grant's you need feel no delicacy in going. No more favorable opportunity or time to visit Europe will likely occur. . . ."

General Sherman replied:

"I hardly know what to think of the impeachment. Was in hopes Mr. Johnson would be allowed to live out his term, and doubt if any good will result by a change for the few months still remaining of his term. A new cabinet, and the changes foreshadowed by Wade's friends, though natural enough, would have insufficient time to do any good. I have a private letter from Grant as late as March 18, but he says not a word of his political intentions. So far as I know, he would yet be glad of a change that would enable him to remain as now. . . ."

On the 27th of February, 1868, Mr. Stevens made the following report:

"The committee on reconstruction, to whom was referred, on the 27th of January last, the following resolution:

'Resolved, That the committee on reconstruction be authorized to inquire what combinations have been made or attempted to be made to obstruct the due execution of the laws; and to that end the committee have powers to send for persons and papers, and to examine witnesses on oath, and report to this House what action, if any, they may deem necessary; and that said committee have leave to report at any time.'

"And to whom was also referred, on the 21st day of February, instant, a communication from Hon. Edwin M. Stanton, Secretary of War, dated on said 21st day of February, together with a copy of a letter from Andrew Johnson, President of the United States, to the said Edwin M. Stanton, as follows:

'Executive Mansion, } 'Washington, D. C., February 21, 1868.} 'Sir:—By virtue of the power and authority vested in me, as President, by the constitution and laws of the United States, you are hereby removed from office as secretary for the department of war, and your functions as such will terminate upon the receipt of this communication.

'You will transfer to Brevet Major General Lorenzo Thomas, Adjutant General of the Army, who has this day been authorized and empowered to act as Secretary of War ad interim, all records, books, papers, and other public property now in your custody and charge.

'Respectfully yours, 'Andrew Johnson. 'Hon. Edwin M. Stanton, Washington, D. C.'

"And to whom was also referred by the House of Representatives the following resolution, namely:

'Resolved, That Andrew Johnson, President of the United States, be impeached of high crimes and misdemeanors.'

"Have considered the several subjects referred to them, and submit the following report:

"That in addition to the papers referred to the committee, the committee find that the President, on the 21st day of February, 1868, signed and issued a commission or letter of authority to one Lorenzo Thomas, directing and authorizing said Thomas to act as Secretary of War ad interim, and to take possession of the books, records, and papers, and other public property in the war department, of which the following is a copy:

'Executive Mansion, } 'Washington, February 21, 1868.} 'Sir:—Hon. Edwin M. Stanton having been this day removed from office as secretary for the department of war, you are hereby authorized and empowered to act as Secretary of War ad interim, and will immediately enter upon the discharge of the duties pertaining to that office. Mr. Stanton has been instructed to transfer to you all the records, books, papers, and other public property now in his custody and charge.

'Respectfully yours, 'Andrew Johnson. 'To Brevet Major General Lorenzo Thomas, Adjutant General of the United States Army, Washington, District of Columbia.

'Official copy respectfully furnished to Hon. Edwin M. Stanton.

'L. Thomas 'Secretary of War ad interim.'

"Upon the evidence collected by the committee, which is herewith presented, and in virtue of the powers with which they have been invested by the House, they are of the opinion that Andrew Johnson, President of the United States, be impeached of high crimes and misdemeanors. They therefore recommend to the House the adoption of the accompanying resolution:

"Thaddeus Stevens, "George S. Boutwell, "John A. Bingham, "C. T. Hulburd, "John F. Farnsworth, "F. C. Beaman, "H. E. Paine.

"Resolution providing for the impeachment of Andrew Johnson, President of the United States:

'Resolved, That Andrew Johnson, President of the United States, be impeached of high crimes and misdemeanors in office.'"

On the 24th of February the resolution providing for impeachment was adopted by a vote of 126 yeas and 47 nays.

On the same day Mr. Stevens introduced the following resolution, which was agreed to:

"Resolved, That a committee of two be appointed to go to the Senate and, at the bar thereof, in the name of the House of Representatives and of all the people of the United States, to impeach Andrew Johnson, President of the United States, of high crimes and misdemeanors in office, and acquaint the Senate that the House of Representatives will, in due time, exhibit particular articles of impeachment against him and make good the same; and that the committee do demand that the Senate take order for the appearance of said Andrew Johnson to answer to said impeachment.

"2. Resolved, That a committee of seven be appointed to prepare and report articles of impeachment against Andrew Johnson, President of the United States, with power to send for persons, papers, and records, and to take testimony under oath."

The speaker then announced the following committees under these resolutions:

"Committee to communicate to the Senate the action of the House ordering an impeachment of the President of the United States:— Thaddeus Stevens, of Pennsylvania, and John A. Bingham, of Ohio.

"Committee to declare articles of impeachment against the President of the United States:—George S. Boutwell, of Massachusetts; Thaddeus Stevens, of Pennsylvania; John A. Bingham, of Ohio; James F. Wilson, of Iowa; John A. Logan, of Illinois; George W. Julian, of Indiana; and Hamilton Ward, of New York."

The trial of this impeachment by the Senate was an imposing spectacle, which excited profound interest during its continuance. It was soon developed that the gravamen of the charges was not the removal of Stanton, but was the attempt of the President to force General Lorenzo Thomas into a high office without the advice and consent of the Senate.

In the trial of this impeachment I wished to be, and I think I was, absolutely impartial. I liked the President personally and harbored against him none of the prejudice and animosity of some others. I knew he was bold and rash, better fitted for the storms of political life than the grave responsibilities of the chief magistrate of a great country. His education, such as it was, was acquired late in life, when his character was formed and his habits fixed. Still, his mind was vigorous and his body strong, and when thoroughly aroused he was an able speaker; his language was forcible and apt and his influence over a popular audience was effective. I disliked above all things to be a judge in his case. I knew some of my associates were already against the President, and others were decided in his favor. I resolutely made up my mind, so far as human nature would admit, to fairly hear and impartially consider all the evidence produced and all the arguments made.

The counsel for the President were Henry Stanbery, B. R. Curtis, Jeremiah S. Black, William M. Evarts, William S. Groesbeck, and Thomas A. R. Nelson. The managers on the part of the House of Representatives were John A. Bingham, George S. Boutwell, James F. Wilson, John A. Logan, Thomas Williams, Benjamin F. Butler and Thaddeus Stevens. The trial lasted nearly two months, was ably conducted on both sides, and ended by the acquittal of the President, on the eleventh article of impeachment, by a vote of 35 guilty and 19 not guilty. Two-thirds of those voting not having pronounced "guilty," as required by the constitution, the President was acquitted upon this article. Two other articles were voted on with the same result. Thereupon, on the 26th day of May, 1868, the Senate sitting as a court of impeachment adjourned without day. Mr. Stanton resigned and General Schofield became Secretary of War.

I voted for conviction for the reasons stated in the opinion given by me. I have carefully reviewed this opinion and am entirely content with it. I stated in the beginning my desire to consider the case without bias or feeling. I quote in full the opening paragraphs:

"This cause must be decided upon the reasons and presumptions which by law apply to all other criminal accusations. Justice is blind to the official station of the respondent, and to the attitude of the accusers speaking in the name of all the people of the United States. It only demands of the Senate the application to this cause of the principles and safeguards provided for every human being accused of crime. For the proper application of these principles we ourselves are on trial before the bar of public opinion. The novelty of this proceeding, the historical character of the trial, and the grave interests involved, only deepen the obligation of the special oath we have taken to do impartial justice according to the constitution and laws.

"And this case must be tried upon the charges now made by the House of Representatives. We cannot consider other offenses. An appeal is made to the conscience of each Senator of guilty or not guilty by the President of eleven specific offenses. In answering this appeal a Senator cannot justify himself by public opinion, or by political, personal, or partisan demands, or even grave considerations of public policy. His conscientious conviction of the truth of these charges is the only test that will justify a verdict of guilty. God forbid that any other shall prevail here. In forming this conviction we are not limited merely to the rules of evidence, which, by the experience of ages, have been found best adapted to the trial of offenses in the double tribunal of court and jury, but we may seek light from history, from personal knowledge, and from all sources that will tend to form a conscientious conviction of the truth. And we are not bound to technical definitions of crimes and misdemeanors.

"A willful violation of the law, a gross and palpable breach of moral obligations tending to unfit an officer for the proper discharge of his office, or to bring the office into public contempt and derision, is, when charged and proven, an impeachable offense. And the nature and criminality of the offense may depend on the official character of the accused. A judge would be held to higher official purity, and an executive officer to a stricter observance of the letter of the law. The President, bound as a citizen to obey the law, and specially sworn to execute the law, may properly, in his high office as chief magistrate, be held to a stricter responsibility than if his example was less dangerous to the public safety. Still, to justify the conviction of the President there must be specific allegations of some crime or misdemeanor involving moral turpitude, gross misconduct, or a willful violation of law, and the proof must be such as to satisfy the conscience of the truth of the charge.

"The principal charges against the President are that he willfully and purposely violated the constitution and the laws, in the order for the removal of Mr. Stanton, and in the order for the appointment of General Thomas as Secretary of War ad interim. These two orders were contemporaneous—part of the same transaction—but are distinct acts, and are made the basis of separate articles of impeachment."

I stated the grounds of my conviction that the action of the President, in placing Lorenzo Thomas in charge of the office of Secretary of War, without the advice and consent of the Senate, was a clearly illegal act, committed for the purpose of obtaining control of that office. I held that the President had the power to remove Secretary Stanton, but that he had not the power to put anyone in his place unless the person appointed was confirmed by the Senate.

Did the act of March 2, 1867, commonly known as the "tenure of office act," confer this authority? On the contrary, it plainly prohibits all temporary appointments except as specially provided for. The third section repeats the constitutional authority of the President to fill all vacancies happening during the recess of the Senate by death or resignation, and provides that if no appointment is made during the following session to fill such vacancy, the office shall remain in abeyance until an appointment is duly made and confirmed, and provision is made for the discharge of the duties of the office in the meantime. The second session provides for the suspension of an officer during the recess, and for a temporary appointment during the recess. This power was exercised and fully exhausted by the suspension of Mr. Stanton until restored by the Senate, in compliance with the law. No authority whatever is conferred by this act for any temporary appointment during the session of the Senate, but, on the contrary, such an appointment is plainly inconsistent with the act, and could not be inferred or implied for it. The sixth section further provides:

"That every removal, appointment, or employment, made, had, or exercised, contrary to the provisions of this act, and the making, signing, sending, countersigning, or issuing of any commission or letter of authority for, or in respect to, any such appointment or employment, shall be deemed, and are hereby declared to be, high misdemeanors, and, upon trial and conviction thereof, every person guilty thereof shall be punished by a fine not exceeding $10,000, or by imprisonment not exceeding five years, or both said punishments, in the discretion of the court."

This language is plain, explicit, and was inserted not only to prohibit all temporary appointments except during the recess, and in the mode provided for in the second section, but the unusual course was taken of affixing a penalty to a law defining the official duty of the President. The original bill did not contain penal clauses; but it was objected in the Senate that the President had already disregarded mandatory provisions of law, and would this; and therefore, after debate, these penal sections were added to secure obedience to the law, and to give to it the highest sanction.

I quote my view of the action of the President:

"Was not this act willfully violated by the President during the session of the Senate?

"It appears, from the letter of the President to General Grant, from his conversation with General Sherman, and from his answer, that he had formed a fixed resolve to get rid of Mr. Stanton, and fill the vacancy without the advice of the Senate. He might have secured a new Secretary of War by sending a proper nomination to the Senate. This he neglected and refused to do. He cannot allege that the Senate refused to relieve him from an obnoxious minister. He could not say that the Senate refused to confirm a proper appointee, for he would make no appointment to them. The Senate had declared that the reasons assigned for suspending Mr. Stanton did not make the case required by the tenure of office act, but I affirm as my conviction that the Senate would have confirmed any one of a great number of patriotic citizens if nominated to the Senate. I cannot resist the conclusion, from the evidence before us, that he was resolved to obtain a vacancy in the department of war in such a way that he might fill the vacancy by an appointment without the consent of the Senate, and in violation of the constitution and the law. This was the purpose of the offer to General Sherman. This was the purpose of the appointment of General Thomas. If he had succeeded as he hoped, he could have changed his temporary appointment at pleasure, and thus have defied the authority of the Senate and the mandatory provisions of the constitution and the law. I cannot in any other way account for his refusal to send a nomination to the Senate until after the appointment of General Thomas. The removal of Mr. Stanton by a new appointment, confirmed by the Senate, would have complied with the constitution. The absolute removal of Mr. Stanton would have created a temporary vacancy, but the Senate was in session to share in the appointment of another. An ad interim appointment, without authority of law, during the session of the Senate, would place the department of war at his control in defiance fo the Senate and the law, and would have set an evil example, dangerous to the public safety—one which, if allowed to pass unchallenged, would place the President above and beyond the law.

"The claim now made, that it was the sole desire of the President to test the constitutionality of the tenure of office act, is not supported by reason or by proof. He might, in August last, or at any time since, without an ad interim appointment, have tested this law by a writ of quo warranto. He might have done so by an order of removal, and a refusal of Mr. Stanton's requisitions. He might have done so by assigning a head of department to the place made vacant by the order of removal. Such was not his purpose or expectation. He expected by the appointment of General Sherman at once to get possession of the war department, so when General Thomas was appointed there was no suggestion of a suit at law, until the unexpected resistance of Mr. Stanton, supported by the action of the Senate, indicated that as the only way left."

It is difficult to convey, by extracts, a correct idea of a carefully prepared opinion, but this statement shows my view of the case, and, entertaining it, I felt bound, with much regret, to vote "guilty" in response to my name, but I was entirely satisfied with the result of the vote, brought about by the action of several Republican Senators. There was some disposition to arraign these Senators and to attribute their action to corrupt motives, but there was not the slightest ground for the imputations. Johnson was allowed to serve out his term, but there was a sense of relief when General Grant was sworn into office as President of the United States.

CHAPTER XX. THE FORTIETH CONGRESS. Legislation During the Two Years—Further Reduction of the Currency by the Secretary Prohibited—Report of the Committee of Conference —Bill for Refunding the National Debt—Amounted to $2,639,382,572.68 on December 1, 1867—Resumption of Specie Payments Recommended— Refunding Bill in the Senate—Change in My Views—Debate Participated in by Nearly Every Senator—Why the Bill Failed to Become a Law— Breach Between Congress and the President Paralyzes Legislation— Nomination and Election of Grant for President—His Correspondence with General Sherman.

During the 40th Congress, extending from the 4th of March, 1867, to the 4th of March, 1869, the chief subjects of debate were the contraction of the currency, the refunding of the public debt, the payment of United States notes in coin, and a revision of the laws imposing internal taxation and duties on imported goods.

Early in the first session of this Congress, the opposition of the people to the policy of contraction, constantly pressed by Secretary McCulloch, became so imperative that both Houses determined to take from him all power to diminish the volume of currency then in circulation. On the 5th of December, 1867, Robert C. Schenck, chairman of the committee of ways and means, reported a bill in the following words:

"Be it enacted, etc., That so much of an act entitled 'An act to amend an act to provide ways and means to support the government,' approved April 12, 1866, as authorizes the Secretary of the Treasury to retire United States notes to an amount not exceeding $4,000,000 in any one month, is hereby repealed.

"Sec. 2. And be it further enacted, That from and after the passage of this act the further reduction of the currency by retiring or canceling United States notes shall be, and hereby is, prohibited."

This bill was taken up for consideration on the 7th of December, and, after a brief debate, with little opposition, passed the House by the vote of 127 yeas and 32 nays. It was sent to the Senate, referred to the committee on finance, and was carefully considered. That committee, with but two dissenting voices, directed me to report the bill to the Senate with a single amendment. On the 9th of January, 1868, I called up the bill for consideration, and made a brief explanation, in which I said the committee, after full reflection, had thought proper to recommend the passage of the bill of the House of Representatives, in substance as it was sent to us, only changing the phraseology. I said that the bill contemplated further legislation during that session. It was understood by all that some more comprehensive measures must be adopted during that session, but until further legislation there should be no more contraction of the currency. I thus stated the reasons which, in my opinion, justified the passage of the bill:

"First. It will satisfy the public mind that no further contraction will be made when industry is in a measure paralyzed. We hear the complaint from all parts of the country, from all branches of industry, from every state in the Union, that industry for some reason is paralyzed, and that trade and enterprise are not so well rewarded as they were. Many, perhaps erroneous, attribute all this to the contraction of the currency—a contraction that I believe is unexampled in the history of any nation. $140,000,000 has been withdrawn out of $737,000,000 in less than two years. There is no example, that I know of, of such rapid contraction. It may be wise, it may be beneficial, but still it has been so rapid as to excite a stringency that is causing complaint, and I think the people have a right to be relieved from that.

"Second. This bill will restore to the legislature their power over the currency, a power too important to be delegated to any single officer of the government. I do not wish to renew the discussion that occurred here two years ago on the passage of the law of April 12, 1866; but it is still my opinion, as it has been always, that the question of the amount of currency ought to be fixed by Congress. We have the power to coin money, and to regulate the value thereof. We have coined money in the form of paper money, and certainly the power of Congress in this respect ought not to be delegated to any single officer. If contraction ought to be established as a policy it should be by Congress, not by the Secretary of the Treasury, and it is not wise to confer upon any officer of the government a power of this kind, which can be and may be properly controlled and limited by Congress.

"Third. This will strongly impress upon Congress the imperative duty of acting wisely upon financial measures, for the responsibility will then rest entirely upon Congress, and will not be shared with them by the Secretary of the Treasury.

"Fourth. It will encourage business men to continue old, and embark in new, enterprises, when they are assured that no change will be made in the measure of value without the open and deliberate consent of their representatives.

"These considerations are amply sufficient to justify this measure, but it is only preliminary to others of far greater importance that must command our attention. These involve—

"1. The existence of the banking system of the United States.

"2. The time and manner of resuming specie payments.

"3. The mode of redeeming the debt of the United States and the kind of money in which it may be redeemed; and, in this connection, the taxes, if any, that may be levied upon the public creditors.

"4. Such a reduction of our expenditures and taxes as will relieve our constituents, as far as practicable, from the burdens resulting from the recent war."

This led to a long debate, which continued until the 15th of January, when the bill, as amended, passed by a vote of 33 years and 4 nays.

These decisive votes against contraction definitely settled the policy of the government to retain in circulation the then existing volume of United States notes. The disagreement between the two Houses was referred to a committee of conference, and the conferees reported the bill in the following form:

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

"That, from and after the passage of this act, the authority of the Secretary of the Treasury to make any reduction of the currency, by retiring or canceling United States notes, shall be, and is hereby, suspended; but nothing herein contained shall prevent the cancellation and destruction of mutilated United States notes, and the replacing of the same with notes of the same character and amount."

This bill was sent to the President, and, not having been returned by him within ten days, it became a law without his approval, under the constitution of the United States.

On the 17th of December, 1867, I reported from the committee on finance a bill for refunding the national debt and for a conversion of the notes of the United States. This bill was accompanied by an elaborate report. This report was carefully prepared by me, and met, I believe, the general approval of the committee on finance. In that Congress there were but five Democratic Senators, and it so happened that all the members of the committee on finance were Republicans, but these represented widely different opinions on financial subjects. I undertook, in this report, to deal in a general way with these topics. Upon a careful reading of it now I find but little that I do not approve. The general policy set out in this report was subsequently embodied into laws, but the measures relating to refunding the debt and the resumption of specie payments were not adopted until several years after the date of the report.

The ascertained debt on the first day of December, 1867, as stated by the Secretary of the Treasury, was $2,639,382,572.68, divided as follows:

Debt bearing coin interest. 5 per cent. bonds, 10-40's, and old fives $205,532,580.00 6 per cent. bonds of 1867 and 1868 . . . . 14,690,941.80 6 per cent. bonds, 1881 . . . . . . . . . 282,731,550.00 6 per cent. 5-20 bonds . . . . . . . . . . 1,324,412,550.00 Navy pension fund . . . . . . . . . . . . 13,000,000.00 ———————— $1,840,367,891.80 Debt bearing currency interest. 6 per cent. bonds . . . . . . . . . . . . $18,601,000.00 3-year compound interest notes . . . . . . 62,249,360.00 3-year 7-30 notes . . . . . . . . . . . . 285,587,100.00 3 per cent. certificates . . . . . . . . . 12,855,000.00 ———————— $379,292,460.00 Matured debt not presented for payment. 3 year 7-30 notes, due August 15, 1867 . . $2,855,400.00 Compound interest notes, matured June 10, July 15, August 15, and October 15, 1867 7,065,750.00 Bonds, Texas indemnity . . . . . . . . . . 260,000.00 Treasury notes, acts July 17, 1861 and prior thereto . . . . . . . . . . . . . 163,011.64 Bonds, April 15, 1842 . . . . . . . . . . 54,061.64 Treasury notes, March 3, 1863 . . . . . . 868,240.00 Temporary loan . . . . . . . . . . . . . . 2,880,900.55 Certificates of indebtedness . . . . . . . 31,000.00 ———————— $14,178,363.83 Debt bearing no interest. United States notes . . . . . . . . . . . $356,212,473.00 Fractional currency . . . . . . . . . . . 30,929,984.05 Gold certificates of deposit . . . . . . . 18,401,400.00 ———————— $405,543,857.05 Total debt . . . . . . . . . . . . . . . . . . . . . . . $2,639,382,572.68 Amount in treasury, coin . . . . . . . . . $100,690,645.69 Amount in treasury, currency . . . . . . . 37,486,175.24 Amount of debt less cash in treasury . . . . . . . . . . . $2,501,205,751.75

Besides the amounts thus stated there were large balances due to loyal states, upon accounts not then rendered or ascertained, and to individuals for losses sustained during the war.

The ascertained debt consisted of twenty different forms of liability, some payable in coin and some in lawful money. Much of this debt was due on demand, but the great body of it was payable in from one to twenty years, while the unascertained debt was being stated from time to time and had to be met from accruing revenues. Nearly $300,000,000 of debt had been paid out of current revenue since the close of the war. The first recommendation of the committee was that the debt should be refunded as rapidly as practicable into bonds bearing as low a rate of interest as possible, payable in twenty or thirty years, but redeemable at the pleasure of the United States in five or ten years. This recommendation was based on the fixed policy of the government to limit the duration of a bond within its lifetime, and thus leave it to the option of the government to pay its indebtedness and to reduce the rate of interest after a brief period, if the condition of the public revenues and of the money market should enable it to do so.

Here the question arose whether the bonds known as the 5-20 bonds could be paid in lawful money after the period of five years, when, by their terms, they were redeemable. These bonds promised to pay so many dollars. Other bonds were specifically payable in coin, and still other bonds were payable in lawful money; that is, in United States notes. These notes were then at a discount, being worth in the market about 88 cents in coin. But the notes were obligations of the United States, and it was the duty, and then within the power of the United States, to advance these notes to par in coin.

The majority of the committee, I among them, believed that the United States should not take advantage of its own wrong, in not redeeming its notes in coin, but should either advance these notes to par in coin, or pay its bonds in coin. The committee, therefore, recommended that both the notes and bonds should be received in exchange for the funding bonds, and that the notes should be reissued and maintained at par with coin, and be supported by a reserve of coin ample to maintain the notes at par with coin. In other words, the United States would resume specie payments. The committee expressed the opinion that, with the system of taxation then in existence, this policy of refunding and resumption could be maintained, and that the rate of interest then paid could be reduced to four or five per cent., and the money then in circulation would be kept at par with coin at the cost only of the interest on the bullion and coin held to meet any notes presented for redemption. The committee also recommended that the internal and tariff taxes be revised to correct irregularities or defects, and to repeal such as were oppressive.

While the committee opposed any contraction of the currency it also opposed any increase of it. The general theory of the report was to advance both bonds and notes to par in coin, and to issue bonds in such form and terms that the government could redeem them, or renew them at lower rates of interest.

The report states:

"Your committee are therefore of opinion that no legal tender notes, beyond the amount now limited by law, should be issued under any pressure of financial or political necessity until they are convertible into gold and silver. Our duty is to elevate the 'greenback,' the standard of national credit, to the standard of gold, the money of the world. Until then we are not on a substantial foundation. Let us make the dollar of our promise in the pocket of a laboring man equal to the dollar of our mint. The rapidity of the process is a question of public policy. It may be by gradually diminishing the volume of currency, or be left at its present amount until increased business or improved credit bring it up to the specie standard."

The refunding bill was taken up by the Senate on the 27th of February, 1868, and was fully discussed by me. After stating its general objects I said:

"It is with this view, and actuated by this principle, that the committee on finance have endeavored to make this a bill of relief, reducing, if possible, consistent with the public faith, the interest of the public debt, and giving increased value to United States notes. We have endeavored in this bill to accomplish three results: First, to reduce the rate of interest with the voluntary consent of the holders of our securities; second, to make a distinct provision for the payment of the public debt; and third, to give increased value to United States notes, and to provide for a gradual resumption of specie payments. All these are objects admitted to be of the highest importance. The only question is, whether the measure proposed tends to accomplish them."

I then quoted the example of the United States and Great Britain in reducing the rate of interest on public securities. I do not approve all I said in that speech. It has been frequently quoted as being inconsistent with my opinions and action at a later period. It is more important to be right than to be consistent. I then proposed to use the doubt expressed by many people as to the right of the government to redeem the 5-20 bonds in the legal tender money in circulation when the bonds were sold, as an inducement to the holders of bonds to convert them into securities bearing a less rate of interest but specifically payable in coin. Upon this policy I changed my opinion. I became convinced that it was neither right nor expedient to pay these bonds in money less valuable than coin, that the government ought not to take advantage of its neglect to resume specie payments after the war was over, by refusing the payment of the bonds with coin. I acted on this conviction when years afterwards the resumption act was adopted, and the beneficial results from this action fully justified my change of opinion.

The debate on this bill was participated in by nearly every Senator, and was conceded to be the most comprehensive and instructive debate on financial questions for many years.

The bill, as it then stood, authorized the Secretary of the Treasury to issue registered or coupon bonds of the United States, in such form and of such denominations as he might prescribe, payable, principal and interest, in coin, and bearing interest at the rate of five per cent. per annum, payable semi-annually, such bonds to be payable forty years from date and to be redeemable in coin after ten years.

It authorized the exchange of the bonds commonly known as the 5-20 bonds for the bonds authorized by that bill. It also authorized the holders of United States notes to the amount of $1,000, or any multiple of that sum, to convert them into the five per cent. bonds provided for by the bill. This bill passed the Senate on the 14th of July, 1868. It passed the House of Representatives soon after, with amendments that were disagreed to by the Senate. The bill and amendments were referred to a conference committee which reported a modified bill which passed both Houses and was sent to President Johnson, but at so late a period of the session that it was not approved by him and thus failed to become a law.

The committee on finance at the next and closing session of that Congress deemed it useless to report another funding bill, and on the 16th of December, 1868, I reported, by direction of that committee, the following resolution:

"Resolved by the Senate, That neither public policy nor the good faith of the nation will allow the redemption of the 5-20 bonds until the United States shall perform its primary duty of paying its notes in coin or making them equivalent thereto; and measures shall be adopted by Congress to secure the resumption of specie payments at as early a period as practicable."

This resolution was the foundation of the act "to strengthen the public credit," the first act subsequently adopted in General Grant's administration. Neither this nor any other financial measure was pressed to a conclusion, as we knew that any measure that would be sanctioned by Congress would probably be vetoed by the President. This, however, did not stop the almost continuous financial debate which extended to the currency, banking, funding and taxation. The drift of opinion was in favor of resumption without contraction, and funding at low rates of interest on a coin basis. The wide breach between Congress and the President paralyzed legislation. But one vital question had been settled, that no further contraction of the currency should occur; and it was well settled, though not embodied in law, that no question would be made as to the payment of bonds in coin.

While Congress was drifting to a sound financial policy, the President and his Secretary of the Treasury were widely divergent, the former in favor of repudiation, and the latter in favor of paying and canceling all United States notes.

President Johnson, in his last annual message to Congress, on the 9th of December, 1868, substantially recommended a repudiation of the bonds of the United States, as follows:

"Upon this statement of facts it would seem but just and equitable that the six per cent. interest now paid by the government should be applied to the reduction of the principal in semi-annual installments, which in sixteen years and eight months would liquidate the entire national debt. Six per cent. in gold would, at present rates, be equal to nine per cent. in currency, and equivalent to the payment of the debt one and half times in a fraction less than seventeen years. This, in connection with the other advantages derived from their investment, would afford to the public creditors a fair and liberal compensation for the use of their capital, and with this they should be satisfied. The lessons of the past admonish the lender that it is not well to be over anxious in exacting from the borrower rigid compliance with the letter of the bond."

While the President wished to apply the interest on the United States bonds to the redemption of the principal, the Secretary of the Treasury was pressing for the restoration of the specie standard. I quote from his report to Congress, made on the same day the message of the President was sent us:

"The first and most important of these measures are those which shall bring about, without unnecessary delay, the restoration of the specie standard. The financial difficulties under which the country is laboring may be traced directly to the issue, and continuance in circulation, of irredeemable promises as lawful money. The country will not be really and reliably prosperous until there is a return to specie payments. The question of a solvent, convertible currency, underlies all the other financial and economical questions. It is, in fact, a fundamental question; and until it is settled, and settled in accordance with the teachings of experience, all attempts in other financial and economical reforms will either fail absolutely, or be but partially successful. A sound economy is the lifeblood of a commercial nation. If this is debased the whole current of its commercial life must be disordered and irregular. The starting point in reformatory legislation must be here. Our debased currency must be retired or raised to the par of specie, or cease to be lawful money, before substantial progress can be made with other reforms."

Under these circumstances, it was manifest that no wise financial legislation could be secured until General Grant should become President of the United States.

The Republican national convention met at the city of Chicago, on the 20th of May, 1868. It declared its approval of the reconstruction policy of Congress, denounced all forms of repudiation as a national crime, and pledged the national good faith to all creditors at home and abroad, to pay all public indebtedness, not only according to the letter, but the spirit, of the law. It favored the extension of the national debt over a fair period for redemption, and the reduction of the rate of interest whenever it could be honestly made. It arraigned, with severity, the treachery of Andrew Johnson, and deplored the tragic death of Abraham Lincoln. The entire resolutions were temperate in tone; they embodied the recognized policy of the Republican party, and made no issue on which Republicans were divided.

The real issue was not one of measures, but of men. The nomination of General Grant for President, and Schuyler Colfax for Vice President, upon the basis of reconstruction by loyal men, was antagonized by the nomination, by the Democratic convention, of Horatio Seymour for President, and Francis P. Blair for Vice President, upon the basis of universal amnesty, and immediate restoration to power, in the states lately in rebellion, of the men who had waged war against the government.

In this contest, Grant was the representative Union soldier of the war, and Seymour was the special representative of the opponents in the north to the war. Grant received 197 electoral votes, and Seymour 72.

A few hours in advance of the meeting of the national convention, there was a great mass meeting of soldiers and sailors of the war, a delegation from whom, headed by General Lucius Fairchild, of Wisconsin, entered the convention after its organization and presented this resolution:

"Resolved, That as the soldiers and sailors, steadfast now as ever to the Union and the flag, fully recognize the claims of Gen. Ulysses S. Grant to the confidence of the American people, and believing that the victories won under his guidance in war will be illustrated by him in peace by such measures as will secure the fruits of our exertions and restore the Union upon a loyal basis, we declare our deliberate conviction that he is the choice of the soldiers and sailors of the Union for the office of President of the United States."

This resolution was received with great applause. Henry S. Lane, of Indiana, leaped upon a chair, and moved to nominate Grant by acclamation. This was done without rules and amid great excitement.

I need not say that I gave to General Grant my cordial and active support. From the beginning of the canvass to the end, there was no doubt about the result. I spoke on his behalf in several states and had frequent letters from him. Assuming that his election was already foreordained, I invited him to stop with me in Mansfield, on his way to Washington, and received from him the following autograph letter, which, though dated at Headquarters Army of the United States, was written at Galena, Illinois:

"Headquarters Army of the United States,} "Washington, D. C., October 26, 1868. } "Dear Senator:—Your invitation to Mrs. Grant and myself to break our journey east and spend a day or two with you was duly received, and should have been sooner acknowledged. I thank you for the invitation and would gladly accept it, but my party will be large and having a special car it will inconvenience so many people to stop over. Mrs. Grant too and her father are anxious, when they start, to get through to Washington before they unpack.

"Yours truly, "U. S. Grant. "Hon. J. Sherman, U. S. S."

On the same day he wrote a letter to General Sherman, which was referred to me by the latter. I regard this letter, which exhibits closely the cordial relations existing, at the time, between the two men, as of sufficient interest to justify its publication:

"Headquarters Army of the United States,} "Washington, D. C., October 26, 1868. } "Dear General:—Your letter inclosing one from your brother was duly received. As I did not want to change your determination in regard to the publication of the correspondence between us, and am getting to be a little lazy, I have been slow in answering. I had forgotten what my letter to you said but did remember that you spoke of the probable course the Ewings would take, or something about them which you would not probably want published with the letters. The fact is, general, I never wanted the letters published half so much on my own account as yours. There are a great many people who do not understand as I do your friendship for me. I do not believe it will make any difference to you in the end, but I do fear that, in case I am elected, there will be men to advocate the 'abolition of the general' bill who will charge, in support of their motion, lack of evidence that you supported the Union cause in the canvass. I would do all I could to prevent any such legislation, and believe that without my doing anything the confidence in you is too genuine with the great majority of Congress for any such legislation to succeed. If anything more should be necessary to prove the falsity of such an assumption the correspondence between us heretofore could then be produced.

"I agree with you that Sheridan should be left alone to prosecute the Indian War to its end. If no treaty is made with the Indians until they can hold out no longer we can dictate terms, and they will then keep them. This is the course that was pursued in the northwest, where Crook has prosecuted war in his own way, and now a white man can travel through all that country with as much security as if there was not an Indian in it.

"I have concluded not to return to Washington until after the election. I shall go very soon after that event, however. My family are all well and join me in respects to Mrs. Sherman and the children.

"Yours truly, "U. S. Grant. "Lt. Gen. W. T. Sherman, U. S. Army."

In the spring of 1871 there was a good deal of feeling against Grant, and some opposition indicated to his renomination for the presidency. Several influential papers had recommended the nomination of General Sherman, who then, as always afterwards, had resolutely announced his purpose not to allow his name to be used in connection with the office of President. This suggestion arose out of the feeling that injustice had been done to General Sherman by the Secretary of War, Mr. Belknap, who practically ignored him, and issued orders in the name of the President, greatly interfering with the personnel of the army. This led to the transfer of General Sherman from Washington to St. Louis. General Sherman made no complaint of Grant, who had the power to control the action of the Secretary of War, but the general impression prevailed that the friendly relations that had always subsisted between the President and General Sherman had been disturbed, but this was not true. I have no doubt that Grant, in the following letter, stated truthfully his perfect willingness that General Sherman should, if he wished, be made his successor as President:

"Long Branch, N. J., June 14, 1871. "Dear Senator:—Being absent at West Point until last evening, for the last week, your letter of the 5th inst., inclosing one to you from General Sherman, is only just received. Under no circumstances would I publish it; and now that the 'New York Herald' has published like statements from him it is particularly unnecessary. I think his determination never to give up his present position a wise one, for his own comfort, and the public, knowing it, will relieve him from the suspicion of acting and speaking with reference to the effect his acts and sayings may have had upon his claims for political preferment. If he should ever change his mind, however, no one has a better right than he has to aspire to anything within the gift of the American people.

"Very truly yours, "U. S. Grant. "Hon. J. Sherman, U. S. S."

CHAPTER XXI. BEGINNING OF GRANT'S ADMINISTRATION. His Arrival at Washington in 1864 to Take Command of the Armies of the United States—Inaugural Address as President—"An Act to Strengthen the Public Credit"—Becomes a Law on March 19, 1869— Formation of the President's Cabinet—Fifteenth Amendment to the Constitution—Bill to Fund the Public Debt and Aid in the Resumption of Specie Payments—Bill Finally Agreed to by the House and Senate —A Redemption Stipulation Omitted—Reduction of the Public Debt— Problem of Advancing United States Notes to Par with Coin.

President Grant entered into his high office without any experience in civil life. In his training he was a soldier. His education at West Point, his services as a subordinate officer in the Mexican War, and as the principal officer in the Civil War of the Rebellion, had demonstrated his capacity as a soldier, but he was yet to be tested in civil life, where his duties required him to deal with problems widely differing from those he had successfully performed in military life. I do not recall when I first met him, but was confident it was before his coming to Washington, in March, 1864, to take command of the armies of the United States. His arrival in Washington then was not generally known until he entered the dining hall at Willard's hotel. He came in alone, and was modestly looking for a vacant seat when I recognized him and went to him and invited him to a seat at my table. He quietly accepted, and then the word soon passed among the many guests to the tables, that General Grant was there, and something like an ovation was given him. His face was unknown, but his name and praise had been sounded for two years throughout the civilized world. His coming to take full command of the Union forces was an augury of success to every loyal citizen of the United States. His personal memoirs, written in the face of death, tell the story of his life in a modest way, without pretension or guile. I am not sure that he added to his fame by his eight years of service as President of the United States, but what he did in subduing the Rebellion will always keep his name among those of the greatest benefactors of his country. He was elected because of his military services, and would have been elected in 1868 by any party that put him in nomination, without respect to platform or creed.

He opened his inaugural address with these words:

"Your suffrages, having elected me to the office of President of the United States, I have, in conformity with the constitution of our country, taken the oath of office prescribed therein. I have taken this oath without mental reservation and with the determination to do to the best of my ability all that it requires of me. The responsibilities of the position I feel but accept them without fear. The office has come to me unsought. I commence its duties untrammeled. I bring to it a conscientious desire and determination to fill it to the best of my ability to the satisfaction of the people.

"On all leading questions agitating the public mind I will always express my views to Congress, and urge them according to my judgment; and when I think it advisable will exercise the constitutional privilege of interposing a veto to defeat measures which I oppose. But all laws will be faithfully executed whether they meet my approval or not.

"I shall on all subjects have a policy to recommend, but none to enforce against the will of the people. Laws are to govern all alike, those opposed as well as those who favor them. I know no method to secure the repeal of bad or obnoxious laws so effective as their stringent execution."

And closed with these words:

"In conclusion I ask patient forbearance one toward another throughout the land, and a determined effort on the part of every citizen to do his share toward cementing a happy Union; and I ask the prayers of the nation to Almighty God in behalf of this consummation."

I believe he strictly performed what he thought was his duty, and if he erred, it was from a want of experience in the complicated problems of our form of government. The executive department of a republic like ours should be subordinate to the legislative department. The President should obey and enforce the laws, leaving to the people the duty of correcting any errors committed by their representatives in Congress.

The first act of the 41st Congress, entitled "An act to strengthen the public credit," was introduced in the House of Representatives by General Schenck, on the 12th of March, 1869, and was passed the same day. It came to the Senate on the 15th of March, and, on my motion, was substituted for a similar bill, reported from the committee on finance, and, after a brief debate, was passed by the decisive vote of 42 yeas and 13 nays, as follows:

"That in order to remove any doubt as to the purpose of the government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the law by virtue of which said obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all obligations of the United States not bearing interest, known as United States notes, and of all interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligations has expressly provided that the same may be paid in lawful money or other currency than gold and silver. But none of said interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such time United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin. And the United States also solemnly pledges its faith to make provision, at the earliest practicable period, for the redemption of United States notes in coin."

It was approved by the President and became a law on the 19th of March. Thus the controversy as to the payment of bonds in coin was definitely decided.

But little else of importance was done by Congress during this session. The usual general appropriation bill for the Indian department having failed in the previous Congress, a bill for that purpose was introduced in the House of Representatives and became a law on the 10th of April. The bill to provide for deficiencies was passed on the same day. A change was made in the tax on distilled spirits and tobacco, and provision was made for submitting the constitutions of Virginia, Mississippi and Texas to a vote of the people. A number of measures of local importance were passed, and, on the 10th of April, the Congress adjourned without day.

The Senate convened in pursuance of a proclamation of the President immediately on the adjournment of Congress, and after a few days, confined mainly to executive business, adjourned.

The early movements of Grant as President were very discouraging. His attempt to form a cabinet without consultation with anyone, and with very little knowledge, except social intercourse with the persons appointed, created a doubt that he would not be as successful as a President as he had been as a general, a doubt that increased and became a conviction in the minds of many of his best friends. The appointments of Stewart and Borie were especially objectionable. George S. Boutwell was well fitted for the office of Secretary of the Treasury, to which he was appointed after Stewart was excluded by the law. Washburne was a man of ability and experience, but he was appointed Secretary of State only for a brief time, and was succeeded by Hamilton Fish. Mr. Fish was eminently qualified for the office, and during both of the terms of Grant discharged the duties of it with great ability and success. Jacob D. Cox, of Ohio, was an educated gentleman, a soldier of great merit, and an industrious and competent Secretary of the Interior.

The impression prevailed that the President regarded these heads of departments, invested by law with specific and independent duties, as mere subordinates, whose function he might assume. This is not the true theory of our government. The President is intrusted by the constitution and laws with important powers, and so by law are the heads of departments. The President has no more right to control or exercise the powers conferred by law upon them than they have to control him in the discharge of his duties. It is especially the custom of Congress to intrust to the Secretary of the Treasury specific powers over the currency, the public debt and the collection of the revenue. If he violates or neglects his duty he is subject to removal by the President, or impeachment by the House of Representatives, but the President cannot exercise or control the discretion reposed by law in the Secretary of the Treasury, or in any head or subordinate in any department of the government. This limitation of the power of the President, and the distribution of power among the departments, is an essential requisite of a republican government, and it is one that an army officer, accustomed to give or receive orders, finds it difficult to understand and to observe when elected President.

Congress convened on the 6th of December, 1869. The chief recommendations submitted to Congress by the President related to the gradual reconstruction of the states lately in rebellion, to the resumption of specie payments and the reduction of taxation. The relations of Great Britain and the United States growing out of the war were treated as a grave question, and a hope was expressed that both governments would give immediate attention to a solution of the just claims of the United States growing out of the Civil War. The message was brief, modest, conservative and clear. He closed by saying that on his part he promised a rigid adherence to the laws and their strict enforcement.

The most important measure consummated during this Congress was the adoption of the 15th amendment of the constitution of the United States, declared, in a proclamation of the Secretary of State, dated March 30, 1870, to have been ratified by the legislatures of twenty-nine of the thirty-seven states, as follows:

"The right of citizens of the United States to vote shall not be denied or abridged by the United States, or by any state, on account of race, color, or previous condition of servitude."

It is a question of grave doubt whether this amendment, though right in principle, was wise or expedient. The declared object was to secure impartial suffrage to the negro race. The practical result has been that the wise provisions of the 14th amendment have been modified by the 15th amendment. The latter amendment has been practically nullified by the action of most of the states where the great body of this race live and will probably always remain. This is done, not by an express denial to them of the right of suffrage, but by ingenious provisions, which exclude them on the alleged ground of ignorance, while permitting all of the white race, however ignorant, to vote at all elections. No way is pointed out by which Congress can enforce this amendment. If the principle of the 14th amendment had remained in full force, Congress could have reduced the representation of any state, in the proportion which the number of the male inhabitants of such state, denied the right of suffrage, might bear to the whole number of male citizens twenty-one years of age, in such state. This simple remedy, easily enforced by Congress, would have secured the right of all persons, without distinction of race or color, to vote at all elections. The reduction of representation would have deterred every state from excluding the vote of any portion of the male population above twenty-one years of age. As the result of the 15th amendment, the political power of the states lately in rebellion has been increased, while the population, conferring this increase, is practically denied all political power. I see no remedy for this wrong except the growing intelligence of the negro race, which, in time, I trust, will enable them to demand and to receive the right of suffrage.

The most important financial measure of that Congress was the act to refund the national debt. The bonds known as the 5-20's, bearing interest at six per cent., became redeemable, and the public credit had so advanced that a bond bearing a less rate of interest could be sold at par. The committee on finance of the Senate, on the 3rd day of February, 1870, after more care and deliberation, than, so far as I know, it has ever bestowed on any other bill, finally reported a bill to fund the public debt, to aid in the resumption of specie payments, and to advance the public credit.

The first section authorized the issue of $400,000,000 of bonds, redeemable in coin at the pleasure of the United States, at any time after ten years, bearing interest at five per cent.

The second section authorized the issue of bonds to the amount of $400,000,000, redeemable at the pleasure of the government, at any time after fifteen years, and bearing interest at four and a half per cent.

The third section authorized the issue of $400,000,000 of bonds, redeemable at any time after twenty years, and bearing interest at the rate of four per cent.

The proceeds of all these bonds were to be applied to the redemption of 5-20 and 10-40 bonds, and other obligations of the United States then outstanding.

It will be perceived that this bill provided for the issue of securities, all of which were redeemable within twenty years, and two-thirds of which were redeemable within fifteen years, so that if the bill, as reported by the committee on finance, had become the law, no such difficulty as we labored under eighteen years later, when we had a large surplus revenue, would have existed.

The bill passed the Senate, in substantially the form reported from the committee on finance, by the large vote of 33 to 10, and was, perhaps, the most carefully prepared of any of the financial measures of the government.

In opening the debate, I called the attention of the Senate to the great advantage the government had derived from making its bonds redeemable at brief periods, like the 5-20 bonds, the 10-40 bonds, and the treasury notes. I also called attention to the fact that the same principle of maintaining the right to redeem had been ingrafted in the bill then before the Senate, that the duration of the bonds was divided into three periods of ten, fifteen, and twenty years, during which time, by the gradual application of the surplus revenue, the whole debt might be paid. This was the bill sent by the Senate to the House of Representatives, and if it had been adopted by the House, there would have been no trouble about the application of the surplus revenue, but by common consent it would have been used in the speedy extinction of the public debt.

The bill was sent to the House of Representatives on the 11th of March, and there seems to have slept for nearly three months without any action on the part of the House.

On the 6th of June the committee on ways and means reported House bill 2167, covering the same subject-matters as were contained in the Senate bill. The consideration of this bill was commenced, by sections, on the 30th of June. The material part of the first section of this bill is as follows:

"That the Secretary of the Treasury is hereby authorized to issue, in a sum or sums not exceeding in the aggregate $1,000,000,000, coupon or registered bonds of the United States, in such form as he may prescribe, and of denomination of $50, or some multiple of that sum, redeemable in coin of the present standard value at the pleasure of the United States after thirty years from the date of their issue, and bearing interest payable semi-annually in such coin at the rate of four per cent. per annum."

Thus it will be perceived that instead of the three series of bonds provided by the Senate, the House proposed to authorize the issue of $1,000,000,000, redeemable in coin after thirty years from the date of their issue, with interest at four per cent. This difference in the description of the bonds was the chief difference between the propositions of the House and the Senate. To emphasize this difference I quote what was said by the chairman of the House committee, Mr. Schenck, in reporting the bill:

"It is a proposition to refund a portion of the public debt of the country at a very much lower rate of interest. It is a proposition that $1,000,000,000 of that debt shall take the form of bonds, upon which the United States will agree to pay only four per cent. per annum. But, in order to make those bonds acceptable to capitalists at home and abroad, further provision is made that the bonds themselves shall have a longer time to run, not merely for thirty years, but that they shall only be redeemable after thirty years; thus giving them, without the objections, the advantages which in a great degree attach to a perpetual loan."

This bill, with a very limited debate, passed the House on the 1st of July, and then immediately was offered as a substitute for the Senate bill, and was adopted.

Those two rival propositions, differing mainly upon the question of the character of the bonds to be issued, were sent to a committee of conference, composed on the part of the Senate of Messrs. Sherman, Sumner and Davis. The chief controversy in the conference was as to the description of funding bonds to be provided for. After many meetings it was finally agreed that the bonds authorized should be $200,000,000 five per cent. bonds, $300,000,000 four and a half per cent. bonds, of the character described in the Senate bill, and $1,000,000,000 of four per cent. bonds, as described in the House bill. In other words, it was a compromise which, like many other compromises, was in its results an injury of great magnitude, but it was an honest difference of opinion between the Senate and the House, in which, tested by the march of time, the Senate was right and the House was wrong. But it was perfectly manifest that without this concession by the Senate to the House, the bill could not have passed, and even with this concession, the first report of the committee of conference was disagreed to by the House, because of certain provisions requiring the national banks to substitute the new bonds as the basis of banking circulation.

This disagreement by the House compelled a second committee of conference, in which the contested banking section was stricken out, and the bill agreed to as it now stands on the statute books.

And thus thirty-year securities, subsequently at a premium of more than twenty-five per cent., were forced into the law by the determined action of the House.

This proved to be an error. No bonds should have been authorized that did not contain a stipulation that the government might pay them at pleasure, after a brief period and before they became due. This stipulation during the war was inserted in the 5-20 and the 10-40 bonds. Its wisdom and importance were demonstrated by the early substitution of bonds bearing a lower rate of interest for the 5-20 six per cent. bonds. When this precedent was cited, and its saving to the government shown, it was strongly urged by the House conferees that such a provision would prevent the sale of bonds, and that there was no probability that bonds bearing less than four per cent. could be sold at any time at par. This was proven to be an error within a short period, for securities of the United States bearing three per cent. interest have been sold at par.

Some years later, Senator Beck, of Kentucky, arraigned me for consenting to the issue of bonds running thirty years, but I was able to show by the public records that I resisted this long duration of the four per cent. bonds, that the House insisted upon it, and that Mr. Beck, then a Member of the House, voted for it. The same objection was made by the Senate conferees to the bonds bearing four and a half and five per cent., that no stipulation was made authorizing the government to anticipate the payment of these bonds. Under the Senate bill the bonds would have been redeemable in a brief period, and would, no doubt, have been redeemed by bonds bearing four, three and a half, or three per cent. interest.

The bill, as it passed, authorized the conversion of all forms of securities, then outstanding, into the bonds provided for by the refunding act at par one with the other. The Secretary of the Treasury could sell the bonds provided for by the refunding act at par, and with the proceeds pay off the then existing securities as they became redeemable. In the discussion of this bill in the Senate, on the 28th of February, 1870, I made a carefully prepared speech, giving a detailed history of the various securities outstanding, and expressed the confident opinion that the existing coin bonds bearing six per cent. interest, and other securities bearing interest in lawful money, could be refunded into bonds running for a short period, bearing a reduced rate of interest. I said:

"After a long and memorable debate of over two months in both Houses of Congress, the act of February 25, 1862, was adopted. That was a revolutionary act. It was a departure from every principle of the financial policy of this government from its foundation. It overthrew, not only the mode and manner of borrowing money, but the character of our public securities, and was the beginning of a new financial system, unlike anything that had been ventured upon by any people in the world before. This new policy was adopted under the pressure of the severest necessities, and only because of those necessities, and was intended to meet a state of affairs never foreseen by the framers of the constitution.

"Now, sir, it is important to understand the principles of this act; for this act was the foundation of all the financial measures during the war. It was upon the basis of this act, enlarged and modified from time to time, that we were enabled to borrow $3,000,000,000 in three years and to put down the most formidable rebellion in modern history. This act was based upon certain fundamental conditions.

"Extraordinary power was conferred upon the Secretary of the Treasury to borrow money in almost any form, at home or abroad, practically without limitation as to amount, or with limits repeatedly enlarged. Every form of security which the ingenuity of man could devise was provided for by this act or the acts amending it. Under these acts bonds were issued, payable in twenty years, treasury notes were issued, certificates of indebtedness, compound-interest notes, and other forms of indebtedness, with varying rates of interest. There were, however, distinct limitations upon the nature and character of these loans. It was stipulated first, that more than six per cent. interest in gold should not be paid on the bonds issued, nor more than seven and three-tenths interest in currency should be paid on the notes issued; and second, all the loans provided by this act were short loans, redeemable within a short period of time at the pleasure of the United States. Thus the gold bonds were redeemable after five years, the treasury notes were redeemable after three years, and all forms of security were within the power of the United States at the end of five years at furthest. And third, no securities were to be sold at less than par. Their unavoidable depreciation was measured, not by the rate of their discount, but by the depreciation of the currency. We held our bonds at par in paper money, though at times they were worth only forty per cent. of gold. . . .

"Now, Mr. president, it may be proper to state the reasons for this policy. Short loans were adopted that we might not bind the future to the payment of usurious rates of interest. We recognized the existence of a great pressing necessity that would tend to depreciate the public credit; and we took care, therefore, not to make these loans for a long period, so as to bind the future to the payment of the rates which we were then compelled to pay.

"We provided for gold interest and gold revenue, to avoid the extreme inflations of an irredeemable currency. We wished to rest our paper fabric on a coin basis, and to keep constantly in view ultimate specie payments. I believe but for that provision in the loan act of February 25, 1862, that in 1864 our financial system would have been utterly overthrown. There was nothing to anchor it to the earth except the collection of duties in coin and the payment of the interest on our bonds in coin.

"But, sir, the most important and the most revolutionary principle of the act of February 25, 1862, was the legal tender clause. This was a measure of imperious and pressing necessity. I can recall very well the debates in the Senate and in the House of Representatives upon the legal tender clause. We were then standing in the face of a deficit of some $70,000,000 of unpaid requisitions to our soldiers. Creditors in all parts of the country, among them the most powerful corporations of this country, had refused our demand notes, then very slightly depressed. We were under the necessity of raising two or three million dollars per day. We were then organizing armies unheard of before. We stood also in the presence of defeat, constant and imminent, which fell upon our armies in all parts of the country. It was before daylight was shed upon any part of our military operations. We adopted the legal tender clause then as an absolute expedient. Remembering the debate, I know with what slow steps the majority of the Senate came to the necessity of adopting legal tenders."

The debt of the United States on the 31st of August, 1866, when it reached its maximum, amounted to $2,844,649,627. On the 1st of March, 1870, the debt had been reduced to less than $2,500,000,000, of which about $400,000,000 was in United States notes, for the redemption of which no provision was made. It was the confident expectation of Congress, which proved to be correct, that before the refunding operations were complete, the debt would be gradually reduced, so that the sum of $1,500,000,000, provided for in the law, would be sufficient to refund all existing debts, except United States notes, into the new securities.

The process of refunding progressed slowly, was confined to the five per cent. bonds, and was somewhat interrupted by the financial stringency of 1873.

By the act approved January 20, 1871, the amount of five per cent. bonds authorized by the act approved July 14, 1870, was increased to $500,000,000, but the act was not to be construed to authorize any increase of bonds provided for by the refunding act.

Prior to the 24th of August, 1876, there had been sold, for refunding purposes, the whole of the $500,000,000 five per cents. authorized by that act, and on that day Lot M. Morrill, Secretary of the Treasury, entered into a contract for the sale of $40,000,000 of the four and a half per cent. bonds authorized by the refunding act. By this process of refunding an annual saving had been made of $5,400,000 a year, by the reduction of interest in the sale of $540,000,000 bonds. On the 9th day of June, 1877, I, as Secretary of the Treasury, terminated the contract made by Mr. Morrill, my predecessor, and placed on the market the four per cent. bonds provided for by the refunding act. The subsequent proceedings under this act will be more appropriately referred to hereafter.

The more difficult problem remained of advancing United States notes to par in coin. This could be accomplished by reducing the amount of these notes outstanding, and, thus, by their scarcity, add to their value. They were a legal tender in payment for all debts, public and private, except for duties on imported goods and interest on the public debt. As long as these notes were at a discount for coin they could circulate only in the United States, and until they were at par with coin, coin would not circulate as money in the United States, except to pay coin liabilities. The notes were a dishonored, depreciated promise, the purchasing power of which varied day by day, the football of "bulls and bears." In many respects these notes were better than any other form of depreciated paper money, for the people of the United States had full confidence in their ultimate redemption. They were much better and in higher favor with the people than the state bank notes which they replaced and which were not only depreciated like United States notes but had been often proven worthless in the hands of innocent holders. They were as good as national bank notes, however well secured, for these notes were not payable in coin, but could be redeemed by United States notes. Still, with all their defects the United States notes were the favorite money of the people, and any attempt to contract their volume was met by a strong popular opposition.

As already stated, the gradual reduction of the volume of United States notes, urged so strongly by Secretary McCulloch, and provided for by the resumption act, met with popular opposition and was repealed by Congress. Under these conditions it became necessary to approach the specie standard of value without a contraction of the currency. The act to strengthen the public credit, already referred to, was the beginning of this struggle. The government was, by this act, committed to the payment of the United States notes in coin or its equivalent. But when and how was not stated or even considered. The extent to which Congress would then go, and to which popular opinion would then consent, was the declaration that the "United States solemnly pledges its faith to make provision at the earliest practicable period for the redemption of United States notes, in coin." Many events must occur before the fulfillment of this promise could be attempted.

CHAPTER XXII. OUR COINAGE BEFORE AND AFTER THE WAR. But Little Coin in Circulation in 1869—General Use of Spanish Pieces—No Mention of the Dollar Piece in the Act of 1853—Free Circulation of Gold After the 1853 Act—No Truth in the "Demonetization" Charge—Account of the Bill Revising the Laws Relative to the Mint, Assay Offices and Coinage of the United States—Why the Dollar was Dropped from the Coins—Then Known Only as a Coin for the Foreign Market—Establishment of the "Trade Dollar"—A Legal Tender for Only Five Dollars—Repeated Attempts to Have Congress Pass a Free Coinage Act—How It Would Affect Us—Controversy Between Senator Sumner and Secretary Fish.

At the date of the passage of the act "to strengthen the public credit," on March 19, 1869, there was but little coin in circulation in the United States except gold coin, and that was chiefly confined to the Pacific coast, or to the large ports of entry, to be used in payment of duties on imported goods. Silver coins were not in circulation. The amount of silver coined in 1869 was less than one million dollars and that mainly for exportation. Fractional notes of different denominations, from ten to fifty cents, were issued by the treasury to the amount of $160,000,000, of which $120,000,000 had been redeemed, and $40,000,000 were outstanding in circulation or had been destroyed. These fractional notes superseded silver coin as United States notes superseded gold coin. The coinage laws as they then existed were scattered through the laws of the United States from 1793 to 1853, and were in many respects imperfect and conflicting.

The ratio fixed by Alexander Hamilton, of fifteen ounces of silver as the equivalent of one ounce of gold, was, at the time it was adopted, substantially the market ratio, but the constant tendency of silver to decline in relative value to gold had been going on for years and it continued to decline, almost imperceptibly perhaps, and the legal ratio in France having been fixed at fifteen and a half to one, there was an advantage in shipping gold to that country from this, and consequently very little if any of our gold, even if coined, came into circulation. By the act of 1793 foreign coins were made a legal tender for circulation in this country, and the Spanish silver dollar, on which ours was founded, with the 8th or "real" pieces, found great favor. Singularly enough, in Mexico and the West Indies, the Spanish population would exchange their dollars for ours, dollar for dollar, although their pieces, if not worn, were each three grains heavier. This led to an exchange of our dollars for the Spanish ones, which were promptly recoined at the mint at a fair profit to the depositor.

This put upon the government the expense of manufacturing coins with no advantage. The evil grew so great that in 1806 the further coinage of our silver dollars was prohibited by President Jefferson, in an order issued through the state department, as follows:

"Department of State, May 1, 1806. "Sir:—In consequence of a representation from the director of the Bank of the United States, that considerable purchases have been made of dollars coined at the mint for the purpose of exporting them, and as it is probable further purchases and exportations will be made, the President directs that all the silver to be coined at the mint shall be of small denominations, so that the value of the largest pieces shall not exceed half a dollar.

"I am, etc., "James Madison. "Robert Patterson, Esq., Director of the Mint."

The coinage of the silver dollar at our mint was not resumed until 1836. The small and worn Spanish pieces, being legal tender, also drove from circulation our fractional coins coming bright and plump from the mint. Bank notes and these worn pieces furnished the circulation of the country.

The condition of the currency became so objectionable that in 1830 the subject was taken up by a special committee of the House of Representatives, appointed for the purpose. Three reports were submitted, in one of which the committee stated that of $37,000,000 coined at our mints only $5,000,000 remained in circulation. A bill was submitted to the House fixing the ratio at 15.625 to one, and was strongly urged. There appeared no special opposition to the measure for a time, but the feeling of opposition to the circulation of bank bills had become very strong among the people and was reflected by the administration.

In the Senate the opposition to bank bills was headed by Thomas H. Benton, who openly advocated so changing the coinage ratio that gold would circulate to the exclusion of the notes, and perhaps incidentally of silver also. The matter of providing for silver, however, received little attention. The ratio was changed to sixteen to one, John Quincy Adams and Daniel Webster joining with Calhoun and Benton in bringing it about. It was well understood at the time that the operation of this act would banish silver. The object of the change was distinctly stated, especially by Mr. Benton, who said:

"To enable the friends of gold to go to work at the right place to effect the recovery of that precious metal, which their fathers once possessed; which the subjects of European kings now possess; which the citizens of the young republics to the south all possess; which even the free negroes of San Domingo possess; but of which the yeomanry of America have been deprived for more than twenty years, and will be deprived forever, unless they discover the cause of the evil and apply the remedy to its root."

By the act of 1834, superadded to by the act of 1837, the ratio of sixteen to one instead of fifteen to one was adopted. The result was that gold coins were largely introduced and circulated; but as sixteen ounces of silver were worth more than one ounce of gold, the silver coins disappeared, except the depreciated silver coin of other countries, then a legal tender. To correct this evil, Congress, on the 21st of February, 1853, provided for the purchase of silver bullion by the government, to be coined by it and not for the owners of the bullion. That was the first time the government had ever undertaken to buy bullion for coinage purposes. It provided for the purchase of silver bullion and the coinage of subsidiary silver coins at the ratio of less than fifteen to one. No mention was made of the dollar in the act of 1853. It had fallen into disuse and when coined was exported, being more valuable as bullion than as coin.

As the value of the minor coins was less that gold at the coinage ratio, they were limited as a legal tender to five dollars in any one payment. They were, in fact, a subsidiary coin made on government account, and, from their convenience and necessity, were maintained in circulation. They were similar to the coins now in use, revived and re-enacted by the resumption act of 1875.

It was not the intention of the framers of this law to demonetize silver, because they were openly avowed bimetallists, but it limited coinage to silver bought by the government at market price. They saw, in this expedient, a way in which silver could be more generally utilized than in any other. Mr. R. M. T. Hunter, an avowed bimetallist, in a report to the United States Senate, said:

"The mischief would be great indeed if all the world were to adopt but one of the precious metals as the standard of value. To adopt gold alone would diminish the specie currency more than one-half; and the reduction the other way, should silver be taken as the only standard, would be large enough to prove highly disastrous to the human race."

He evidently did not consider the purchase of silver bullion at its coinage value by the government, instead of the free coinage of silver, as monometallism.

After the passage of the act of 1853, gold in great quantities, the produce of the mines of California, was freely coined at the ratio of sixteen to one, and was in general circulation. If, then, the purchase of silver, instead of the free coinage of silver, is the demonetization of silver, it was demonetized practically in 1834, and certainly in 1853, when the purchase of silver and its use as money increased enormously. In 1852 the coinage of silver was less than $1,000,000. In the next year the coinage of silver rose to over $9,000,000, and reached the aggregate of nearly $50,000,000 before the beginning of the Civil War. Then, as now, the purchase of silver bullion led to a greater coinage than free coinage.

This was the condition of our coinage until the war, like all other great wars in history, drove all coins into hoarding or exportation, and paper promises, great and small, from five cents to a thousand dollars, supplanted both silver and gold.

When, therefore, it became necessary to prepare for the coinage of gold and silver to meet the requirements of the act of 1869, "to strengthen the public credit," it was deemed by the treasury department advisable to revise and codify the coinage laws of the United States. Mr. Boutwell, then Secretary of the Treasury, with the assistance of John Jay Knox, deputy comptroller, afterwards comptroller, of the currency, and the officers of the mints of the United States, prepared a complete code of the coinage laws. It was submitted to experts, not only to those in the treasury but also to all persons familiar with the subject. The bill was entitled, "An act revising and amending the laws relative to the mint, assay offices, and coinage of the United States."

The law, tested by experience, is conceded to be an excellent measure. A single provision of the bill has been the subject of charges and imputations that the silver dollar was, in a fraudulent and surreptitious way, "demonetized" by this act. There is not the slightest foundation for this imputation. The bill was sent to me as chairman of the committee on finance, and submitted to the Senate with this letter:

"Treasury Department, April 25, 1870. "Sir:—I have the honor to transmit herewith a bill revising the laws relative to the mint, assay offices, and coinage of the United States, and accompanying report. The bill has been prepared under the supervision of John Jay Knox, deputy comptroller of the currency, and its passage is recommended in the form presented. It includes, in a condensed form, all the important legislation upon the coinage, not now obsolete, since the first mint was established, in 1792; and the report gives a concise statement of the various amendments proposed to existing laws and the necessity for the change recommended. There has been no revision of the laws pertaining to the mint and coinage since 1837, and it is believed that the passage of the inclosed bill will conduce greatly to the efficiency and economy of this important branch of the government service.

"I am, very respectfully, your obedient servant, "Geo. S. Boutwell, Secretary of the Treasury. "Hon. John Sherman, "Chairman Finance Committee, United States Senate."

Section 15 of the original bill omitted the silver dollar. It was as follows:

"Sec. 15. And be it further enacted, That of the silver coin, the weight of the half dollar, or piece of 50 cents, shall be 192 grains; and that of the quarter dollar and dime shall be, respectively, one-half and one-fifth of the weight of said half dollar. That the silver coin issued in conformity with the above section shall be a legal tender in any one payment of debts for all sums less than one dollar."

Section 18 prohibited all coins except those named, as follows:

"Sec. 18. And be it further enacted, That no coins, either gold, silver, or minor coinage, shall hereafter be issued from the mint other than those of the denominations, standards, and weights herein set forth."

Special attention was called to the dropping out of the silver dollar, both by Secretary Boutwell and Mr. Knox, and the opinion of experts was invited and given on this special matter and communicated to Congress. These sections, in the three years that the bill was pending in Congress, were changed either in the House or Senate in only one or two unimportant particulars.

Accompanying the report of Mr. Knox were the statements of Robert Patterson, of Philadelphia, confessedly one of the ablest scientists and metallists in the United States, in favor of dropping from our coinage the silver dollar. Dr. Linderman, the director of the mint, made the same recommendation. In the report accompanying the introduction of the bill, under date of April 25, 1870, Comptroller Knox gives the history of the silver dollar and the reasons for its discontinuance as follows:

"The dollar unit, as money of account, was established by the act of Congress April 2, 1792, and the same act provides for the coinage of a silver dollar, 'of the value of a Spanish milled or pillar dollar, as the same is now current.' The silver dollar was first coined in 1794, weighing 416 grains, of which 3711/4 grains were pure silver, the fineness being 892.4. The act of January 18, 1837, reduces the standard weight to 4121/2 grains, but increases the fineness to 900, the quantity of pure silver remaining 3711/4 grains as before, and at these rates it is still coined in limited amounts."

He then says:

"The coinage of the silver dollar piece, the history of which is here given, is discontinued in the proposed bill. It is, by existing law, the dollar unit, and assuming the value of gold to be fifteen and one-half times that of silver, being about the mean ratio for the past six years, is worth in gold a premium of about three per cent. (its value being 103.12) and intrinsically more than seven per cent. premium in our other silver coin, its value thus being 107.42. The present laws consequently authorize both a gold dollar unit and a silver dollar unit, differing from each other in intrinsic value. The present gold dollar piece is made the dollar unit in the proposed bill, and the silver dollar piece is discontinued. If, however, such a coin is authorized, it should be issued only as a commercial dollar, not as a standard unit of account, and of the exact value of the Mexican dollar, which is the favorite for circulation in China and Japan and other oriental countries.