 |
"The tendency of public opinion is evidently towards General Grant, whose absence and good conduct are in his favor, while the involuntary feeling of Republicans would be in favor of nominating him as a remonstrance against the violence in the south, and notice that it must end.
"However, a year hence will be time enough to settle this matter.
"I send my hearty greetings for the holiday season, and remain,
"Very truly yours, "John Sherman. "Hon. Richard Smith, Cincinnati, O."
About this time I received the following letter:
"United States Legation, } "Mexico, December 15, 1878.} "Hon. John Sherman, Washington, D. C.
"My Dear Sir:—Allow me to send you, as a New Years' greeting, my hearty congratulations on your successful management of our national finances and on the resumption of specie payments, which I have no doubt will be an accomplished fact when this letter reaches you.
"The nation owes you a great debt for your courage, persistence and wisdom in adhering to your policy for re-establishing and maintaining our government credit. To your conduct I attribute the present honorable position of the Republican party, more than to any other one influence. I believe that neither the country nor the party will forget your services.
"Very truly, "John W. Foster."
CHAPTER XXXVII. REFUNDING THE NATIONAL DEBT. Over $140,000,000 of Gold Coin and Bullion in the Treasury January 1, 1879—Diversity of Opinion as to the Meaning of Resumption— Effect of the Act to Advance Public Credit—Funding Redeemable Bonds Into Four per Cents.—Letters to Levi P. Morton and Others— Six per Cent. Bonds Aggregating $120,000,000 Called During January, 1879—The Sale in London—Charges of Favoritism—Further Enactments to Facilitate the Funding—Difficulty of Making Sales of Four per Cent. Bonds to English Bankers—Large Amounts Taken in the United States—One Subscription of $190,000,000—Rothschild's Odd Claim— Complimentary Resolution of the New York Chamber of Commerce.
On the 1st of January, 1879, when the resumption act went into effect, the aggregate amount of gold coin and bullion in the treasury exceeded $140,000,000. United States notes, when presented, were redeemed with gold coin, but instead of the notes being presented for redemption, gold coin in exchange for them was deposited, thus increasing the gold in the treasury.
The resumption of specie payments was generally accepted as a fortunate event by the great body of people of the United States, but there was a great diversity of opinion as to what was meant by resumption. The commercial and banking classes generally treated resumption as if it involved the payment and cancellation of United States notes and all forms of government money except coin and bank notes. Another class was opposed to resumption, and favored a large issue of paper money without any promise or expectation of redemption in coin. The body of the people, I believe, agreed with me in opinion that resumption meant, not the cancellation and withdrawal of greenbacks, but the bringing them up to par and maintaining them as the equivalent of coin by the payment of them in coin on demand by the holder. This was my definition of resumption. I do not believe that any commercial nation can conduct modern operations of business upon the basis of coin alone. Prior to our Civil War the United States undertook to collect its taxes in specie and to pay specie for its obligations; this was the bullion theory. This narrow view of money compelled the states to supply paper currency, and this led to a great diversity of money, depending upon the credit, the habits and the wants of the people of the different states. The United States notes, commonly called greenbacks, were the creature of necessity, but proved a great blessing, and only needed one attribute to make them the best substitute for coin money that has ever been devised. That quality was supplied by their redemption in coin, when demanded by the holder.
The feeling in the treasury department on the day of resumption is thus described by J. K. Upton, assistant secretary, in an article written at the close of 1892:
"The year, however, closed with no unpleasant excitement, but with unpleasant forebodings. The 1st day of January was Sunday and no business was transacted. On Monday anxiety reigned in the office of the secretary. Hour after hour passed; no news came from New York. Inquiry by wire showed all was quiet. At the close of business came this message: '$135,000 of notes presented for coin —$400,000 of gold for notes.' That was all. Resumption was accomplished with no disturbance. By five o'clock the news was all over the land, and the New York bankers were sipping their tea in absolute safety.
"Thirteen years have since passed, and the redemption fund still remains intact in the sub-treasury vaults. The prediction of the secretary has become history. When gold could with certainty be obtained for notes, nobody wanted it. The experiment of maintaining a limited amount of United States notes in circulation, based upon a reasonable reserve in the treasury pledged for that purpose, and supported also by the credit of the government, has proved generally satisfactory, and the exclusive use of these notes for circulation may become, in time, the fixed financial policy of the government."
The immediate effect of resumption of specie payments was to advance the public credit, which made it possible to rapidly fund all the bonds of the United States then redeemable into bonds bearing four per cent. interest. Early in January, 1879, I issued a circular offering the four per cent. funded loan of the United States at par and accrued interest to date of subscription in coin. It was substantially similar to the one issued on the 16th of January, 1878, but graded the commission, allowing from one-eighth of one per cent. to one-fourth of one per cent., according to the amount subscribed.
Several letters written about this date will show my view better than anything I can say now:
"Washington, D. C., January 6, 1879. "Dear Sir:—Your note of the 2nd was received upon my return from the west.
"Much obliged for subscription, and hope that you will soon get above the ten millions and thus be entitled to the additional one- tenth. I cannot, however, allow it on the first ten millions without adopting it as a rule, which would be impossible, by reason of the limitation of the entire cost to one-half of one per cent. I may be compelled to allow the one-eighth commission down to $1,000, but perhaps not, as I have to carefully husband the limited fund out of which all expenses must be paid. With the energy and hopefulness now exhibited, we can easily refund the 5-20's within this year and, perhaps, within six months. The more rapid the process the less disturbance it will create. I am hopeful and sanguine of improving business, not that greenbacks will be so abundant, but that employment will be ready for everyone willing to work.
"Thanks for your congratulations, which I heartily reciprocate, for the syndicate are entitled to a large portion of the merit now given to me. As I got more than my share of the abuse, it is probably thought that I should get more than my share of the credit.
"Very truly yours, "John Sherman. "Hon. L. P. Morton, New York."
"Washington, D. C., January 8, 1879. "R. C. Stone, Esq., Secretary Bullion Club, New York.
"Dear Sir:—Your letter of the 5th inst., inclosing a card of invitation from the Bullion Club, to attend a dinner at their club house on Thursday evening, the 16th inst., is received.
"I regret that my official duties will not permit me, in person, to respond to the toast you send me, and I cannot do so, by letter, in words more expressive than the toast itself, 'To Resumption— may it be forever.'
"Irredeemable money is always the result of war, pestilence, or some great misfortune. A nation would not, except in dire necessity, issue its promises to pay money when it is unable to redeem those promises. I know that when the legal tenders were first issued, in February, 1862, we were under a dire necessity. The doubt that prevented several influential Senators, like Fessenden and Collamer, from voting for the legal tender clause, was that they were not convinced that our necessities were so extreme as to demand the issue of irredeemable paper money. Most of those who voted for it justified their vote upon the ground that the very existence of the country depended upon its ability to coin into money its promises to pay. THat was the position taken by me. We were assured by Secretary Chase that nearly one hundred millions of unpaid requisitions were lying upon his table, for money due to soldiers in the presence of the enemy, and for food and clothing to maintain them at the front. We then provided for the issue of legal tender United States notes, as an extreme remedy in the nation's peril. It has always seemed strange that so large and respectable a body of our fellow- citizens should regard the continuance of irredeemable money as the permanent policy of a nation so strong and rich as ours, able to pay every dollar of its debts on demand, after the causes of its issue had disappeared. To resume is to recover from illness, to escape danger, to stand sound and healthy in the financial world, with our currency based upon the intrinsic value of solid coin.
"Therefore I say, may resumption be perpetual. To wish otherwise is to hope for war, danger, and national peril, calamities to which our nation, like others, may be subject, but against which the earnest aspiration of every patriot will be uttered.
"Very respectfully yours, "John Sherman."
"January 10, 1879. "H. C. Fahnestock, Esq., "Vice President First National Bank, New York. "Sir:—Your unofficial letter of the 9th inst., suggesting the danger that may arise from the very large and rapid subscriptions to the four per cent. bonds, is received.
"The danger is apparent enough to all, and certainly to those who purchase without ability to pay at the time stipulated, but it is not one that the government can guard against, except only by taking care to have ample security for each subscription.
"In the face of the advertisement now outstanding, I could not withdraw the money from deposit with subscribing banks, until at or near the time of the maturity of the call, when they must be prepared to pay. It is not the interest of the government to force subscriptions beyond the ability of investors, but we cannot check subscriptions by any violation of the public advertisement or any public caution against the danger that is open to everyone.
"Very truly yours, "John Sherman."
"Washington, D. C., January 13, 1879. "George Kerr, Esq., Janesville, Bremer Co., Iowa.
"Sir:—I have received your letter of the 6th instant inclosing a slip cut from the Bremer County 'Independent,' a weekly paper published in Waverly, containing a statement to the effect that the First National of New York is enjoying, from the department, special privileges in the matter of holding public money on account of subscriptions to the four per cent. consols of 1907, and receiving from the government unusual commissions on subscription.
"It is needless to say to you that the statement is entirely erroneous from beginning to end.
"In the department's circular of the first instant, a copy of which is hereby inclosed for your information, all national banks are invited to become financial agents, and depositaries of public moneys received on account of the sale of these bonds, and the commissions allowed on subscriptions are plainly stated therein. Over one hundred (100) national banks have been thus designated as depositaries for the purpose mentioned, and all are treated precisely alike, both as to commissions allowed and balances held.
"The First National Bank of New York enjoys, as a United States depositary, no special privileges whatever from the department. It has, however, thus far, subscribed for a larger amount of four per cent. bonds than any other bank, and has, consequently, received a larger amount for commissions. But any other bank subscribing for the same amount of bonds would, of course, receive the same amount for commissions.
"Very respectfully, "John Sherman, Secretary."
"Treasury Department, } "Washington, D. C., January 14, 1879.} "H. C. Fahnestock, Esq., New York.
"Dear Sir:—Your note of the 13th instant is received.
"In buying the fours thrown upon the market, you are rendering as much service to the government as if you bought directly. Indeed, I am glad you are buying from the market rather than from the department. I do not wish to force this refunding operation too much, lest it may embarrass resumption. I only fear that some eager parties may subscribe for more than they can sell and pay for by called bonds or coin within the running of the call. This is the only contingency that disturbs me.
"Very respectfully, "John Sherman."
My published correspondence shows that with all the efforts and strength of the department it was impossible to keep up with the subscriptions for bonds pouring in from all parts of the United States and from Europe. Over sixty millions were subscribed for in the first two weeks of January. Offers made by me in December, though not accepted at the time, were made the grounds of demands in January, when conditions had greatly changed. As the money received for four per cent. bonds could not be applied to the payment of six per cent. called bonds until interest on such bonds ceased, ninety days after the call, I feared that the enormous deposits would create a serious stringency in the money market, and perhaps cause a panic after the first of April. The banks and bankers in New York, as well as in other large cities of the United States, were actively competing to swell these subscriptions, so as to get the larger commission offered for the greater amount of bonds sold. Such a contest occurred between the First National Bank of New York, and Seligman & Co., and their associates. In ended in a contract made on the 21st of January, between the Secretary of the Treasury and the former syndicate, by which the latter subscribed for $10,000,000 of four per cent. bonds, on the terms stated in my circular of January 1, and $5,000,000 a month thereafter, the secretary reserving the power to terminate the contract.
On the same day a call was made for $20,000,000 of six per cent. bonds. Another call for a like amount was made on the 28th. The aggregate call for six per cent. bonds in January was $120,000,000.
Charles F. Conant was again appointed as the funding agent of the treasury department, and directed to assume the general management and supervision of all business in London arising from the funding of bonds. He was instructed to advise me frequently as to the condition of the business intrusted to him.
The object of this sale of bonds in London was stated in the public prints, and also in the following letter:
"Treasury Department, January 22, 1879. "Charles M. Fry, Esq., "President Bank of New York, National Banking Association, New York. "Sir:—Your telegram was received yesterday.
"The syndicate arrangement was confined to the sale of bonds in Europe, where it is deemed important to sell bonds partly to cover called bonds held abroad; and a contract has been made with bankers having houses in London, on precisely the same terms as were extended to all in this country. It was thought that this would be best for the domestic loan. No contract of arrangement will be made to interfere in any way with the free, open, popular subscriptions in the United States.
"I am glad to notice your success and will give you every facility that is extended to anyone else.
"Very respectfully, "John Sherman, Secretary."
The sale in London was fully justified when the called bonds matured, and those held abroad were paid for without the exportation of coin. It was my desire to secure the exchange of four per cent. bonds directly with the holders of the six per cents. For this purpose I invited, by a department order widely circulated, such an exchange, allowing to the holder of any six per cent. bond, whether called or uncalled, the same commission and allowance for interest granted to banks and bankers. By these expedients I hoped for, and succeeded in conducting, the change of bonds without disturbing the ordinary current of business.
The process of refunding the 5-20 six per cent. bonds, by the sale of four per cent. bonds, went on with some fluctuations until the 4th of April, 1879, when all the six per cent. bonds then redeemable were called for payment. This period in the magnitude of business done was far the most active and important while I was Secretary of the Treasury. The struggle between banks and bankers, not only in the United States but in London also, gave rise to many questions which had to be promptly acted upon, chiefly by cable or telegram. The amount involved were so large as to induce caution and care. The principal difficulty in refunding arose out of the provision in the act of Congress that ninety days' notice should be given, to the holder of bonds, by the government, when it exercised its option to pay, after five years, any portion of the bonds known as the 5-20 bonds, payable in twenty years but redeemable after five years. Prudence required the actual sale of four per cent. bonds before a call could be made or notice given to the holders of the 5-20 bonds, designated by description and numbers, of the intention of the government to pay them. When sales were made the money received was deposited in the treasury of the United States, or with national banks acting as public depositaries, which were required to give security for such deposits.
The necessary effort of the deposit of large amount involved in refunding operations was to create a stringency in the money market. I early called the attention of Congress to this difficulty, but had doubts whether the government would be justified in repealing the law requiring ninety days' notice. This provision was a part of the contract between the government and the bondholder, and could only be changed by the consent of both parties. Congress failed to act upon my suggestion. The interest accruing for ninety days at six per cent., or one and a half per cent. on the great sums involved, was a loss to the government but a gain to the banks or bankers that sold the bonds. The syndicate of bankers engaged in the sale of bonds chose the First National Bank of New York as their depositary. The department was indifferent where the deposits were made so that they were amply secured. Other banks and bankers engaged in the sale of bonds chose their own depositaries, and thus an active competition was created in which the department took no part or interest.
This struggle led to charges of favoritism on the part of the department, but they were without the slightest foundation. Every order, ruling and letter was fully discussed and considered by the Secretary and other chief officers of the treasury, and also by General Hillhouse, assistant treasurer at New York, and is in the printed report of the letters, contracts, circulars and accounts relating to resumption and refunding made to Congress on the 2nd of December, 1879.
The charge was especially made that favor was shown the First National Bank of New York, of which George F. Baker was president and H. C. Fahnestock was vice president. It was said that I was a stockholder in that bank, and that I was interested in the syndicate. It is scarcely necessary for me to say, as I do, that these charges and imputations were absolutely false. This bank and the associated bankers sold larger amounts of four per cent. bonds than any others and received a corresponding commission, but, instead of being favored, they were constantly complaining of the severity of the treasury restrictions. Rothschild, the head of the great banking house in London and the chief of the syndicate, especially complained of what he called the "stinginess" of the treasury department. I can say for all the officers of the treasury that not one of them was interested in transactions growing out of resumption or refunding, or did or could derive any benefit therefrom.
The rapid payment of the 5-20 bonds had a more serious effect upon the English market than upon our own. Here the four per cent. bonds were received in place of the six per cent. bonds, no doubt with regret by the holders of the latter for the loss of one-third of their interest, but accompanied by a sense of national pride that our credit was so good. In London the process of refunding was regarded with disfavor and in some cases by denunciation. On the 4th of March Secretary Evarts wrote me the following letter:
"Department of State, } "Washington, March 4, 1870.} "Hon. John Sherman, Secretary of the Treasury.
"Sir:—I have the honor to transmit herewith, for your information, a copy of a dispatch No. 928, dated February 12, from the consul general at London, in which the department is advised that there exists dissatisfaction, among certain holders of the 5-20 bonds of the issue of 1867, with the rapidity with which the government is refunding its debt at a lower rate of interest, and that it is the purpose of such holders to demand payment of their called bonds in coin. I have to honor to be, sir, your obedient servant.
"Wm. M. Evarts."
This demand was easily met by the sale of four per cent. bonds in London, and the balance of trade in our favor was increasing. The anticipated movement of gold did not occur.
Congress, by the act approved January 25, 1879, extended the process of refunding to the 10-40 bonds bearing interest at the rate of five per cent., amounting to $195,000,000 as follows:
"AN ACT TO FACILITATE THE REFUNDING THE NATIONAL DEBT.
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized, in the process of refunding the national debt under existing laws, to exchange directly at par the bonds of the United States bearing interest at four per centum per annum, authorized by law, for the bonds of the United States commonly known as 5-20's, outstanding and uncalled, and, whenever all such 5-20 bonds shall have been redeemed, the provisions of this section, and all existing provisions of law authorizing the refunding of the national debt, shall apply to any bonds of the United States bearing interest at five per centum per annum or a higher rate, which may be redeemable. In any exchange made under the provisions of this section interest may be allowed, on the bonds redeemed, for a period of three months."
On the 26th of February the following act was passed:
"AN ACT TO AUTHORIZE THE ISSUE OF CERTIFICATES OF DEPOSIT IN AID OF THE REFUNDING OF THE PUBLIC DEBT.
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized and directed to issue, in exchange for lawful money of the United States that may be presented for such exchange, certificates of deposit, of the denominations of ten dollars, bearing interest at the rate of four per centum per annum, and convertible at any time, with accrued interest, into the four per centum bonds described in the refunding act; and the money so received shall be applied only to the payment of the bonds bearing interest at a rate of not less than five per centum in the mode prescribed by said act, and he is authorized to prescribe suitable rules and regulations in conformity with this act."
On the 4th of March, 1879, the amount of uncalled 5-20 six per cent. bonds outstanding was $88,079,800. Anticipating that sales of four per cent. bonds would continue, I gave the following notice:
"Notice is given that when the 5-20 six per cent. bonds of the United States are covered by subscriptions to the four per cent. consols, the latter will be withdrawn from sale upon the terms proposed by department circular of January 1, 1879, and upon the terms stated in the contract with the Messrs. Rothschild and others, of the date of January 21, 1879. The amount of 5-20 six per cent. bonds outstanding and embraced in calls to this date is $88,079,800. When this sum is covered by subscriptions under the existing circular and contract, all further sales of four per cent. consols, to provide for the refunding of the 10-40 five per cent. bonds, will be made upon terms which will probably be less favorable to the purchaser, and in accordance with new proposals and contracts. This notice is given so that all parties wishing to subscribe for consols upon the terms stated in the circular and contract may have an opportunity to do so until the 5-20 bonds are called."
In giving this notice I had in view a change in the mode of refunding which would save to the government the whole or large part of the three months' interest pending the call. This notice gave an additional spur to the market for four per cent. bonds. Copies of it were sent to Mr. Conant and to all parties interested in pending operations, and due notice was given to all persons and corporations engaged in the sale of bonds that all existing contracts would terminate when the 5-20 bonds were covered by subscriptions.
At this time there was a good deal of anxiety as to the effect of the large sale of four per cent. bonds. If these could be exchanged, par for par for six per cent. bonds, the operation would be easy, but many holders of called bonds would not accept the lower rate of interest and invested the principal of their bonds in other securities. General Hillhouse, on the 8th of March, expressed the common feeling as follows:
"There is a good deal of speculation in the papers, as well as in business circles, as to the probable effect on the money market of the settlements to be made in April, during which month, if I am not mistaken, about $150,000,000 of calls will mature. It is now seen, however, that investment demand for the fours is much larger than was anticipated by many; and the subscribing banks will be, therefore, likely to find themselves loaded with large amounts which they cannot dispose of. It would not be strange, in the closing of such vast transactions, if there should be some stringency, but with the favorable indications, that the public are taking the bonds freely, and with the power of the secretary in various ways to facilitate the settlements, it can hardly be more than temporary."
Mr. Conant wrote me, on March 8, from London:
"I have called on all the members of the syndicate several times within the past few days, and have urged them very strongly to push the sales of the bonds here. I have persistently tried to persuade them that they ought to conduct the business with far more energy, and I have said to them that, at the time the contract was entered into, representations were made to you that $50,000,000 of the four per cent. consols could be disposed of on this side of the Atlantic, and that as they had undertaken the business they should not disappoint you. I have represented to them the importance of preventing the shipments of gold from New York, and that you supposed that the sales of bonds which you expected they would make would prevent such shipments. . . .
"The feeling which I alluded to in my last letter, that when the time arrives for the settlement of the large subscriptions made in New York and elsewhere at home the market will be found overloaded, and that a fall in price will take place, still exists here, and has the effect of causing certain classes of investors to delay making purchases, which they will ultimately make. I have not hesitated to say to the associates here that when refunding operations shall have been completed the four per cent. consols will soon thereafter go to a premium, and good reasons can be given why such should be the case."
Soon after I commenced receiving prophecies of stringency and disaster. A long letter from Fisk & Hatch, of New York, said that general apprehension had been growing up in financial circles, and was rapidly gaining ground, that the settlements by the national banks with the treasury department, in April and May, for the large subscriptions of four per cent. bonds made in January and February, would occasion serious disturbance and embarrassment in the money market. They advised me to pursue a course that, whether proper or not, was not in accordance with law. Mr. L. P. Morton., on the same date, took a milder view of it, but still suggested a remedy not within my power.
On the 13th, General Hillhouse, in referring to the apprehensions of my correspondents in regard to the settlements in connection with refunding, said that they might be caused in some instances by the suspicion, if not by the conviction, that their subscriptions had been carried beyond the point of absolute safety, "and now that settlement day is approaching they are naturally desirous of ascertaining how far they can count on the forbearance of the government."
This was the same view I had taken of the matter. I did not feel myself officially bound to do anything but to require prompt payment for the bonds subscribed. The treasury, however, was well prepared for any probable stringency, and I was convinced that the settlements would not cause any serious disturbance. The advices from London continued to be unfavorable. The bonds were offered in the market in some cases at a less price than the syndicate were to pay for them.
In the process of selling the four per cent. bonds I had frequently been written to by persons of limited means, who wished to invest their savings in government bonds of small denominations bearing four per cent. interest. I called the attention of the proper committee of each House to the expediency of issuing notes or certificates of that description, and the act of February 26, 1879, already quoted, was passed.
On the 26th of March I issued a circular relative to these certificates, prescribing the manner in which they should be sold, and stated the purpose and probable effect of their issue, as follows:
"The primary purpose of these certificates is to enable persons of limited means to husband small savings as they accrue, and place them where they will draw interest and become the nest egg for future accumulation. The form of certificate seems better adapted for the purpose than the French ventes or the English savings bank system. The objection to a national savings bank is that, in a country so extensive as ours, the agencies would necessarily be scattered, and the cost and delay of correspondence and transferring money to Washington would be considerable; but, more than all, the United States cannot undertake the risk of repaying deposits at any time when called for. The necessary reserve for that purpose would make the system burdensome. The certificate, as issued, may, at the expense of the subscriber, be either to bearer, or, by being registered, only transferable by assignment on the books of the treasury. It combines, in the cheapest form, all the benefits of any system of savings banks that has been devised. No doubt these certificates, when first issued, will, by voluntary consent of parties, be used as currency; but, after they shall have run a short time, the accruing interest on them will induce their sorting and holding, and thus, like the compound-interest notes, they will cease to be a currency and become an investment. Their possible use as currency is certainly no objection to them; for, though I adhere as strictly as anyone to a specie standard of value, I think that, it being constantly maintained by ample reserves and prompt redemption, current money in different forms should be provided for daily use. Diversity of the currency, if it is always redeemable, is no objection. These certificates will always be redeemable in the bonds stipulated for, and can, with profit, be issued, while the money received for them can be used in redeeming bonds bearing a higher rate of interest. They are of as low a denomination as can be conveniently issued and bear interest. The issue of this certificate is a safe experiment. I have confidence that it will be beneficial to the holder, in begetting habits of saving, and to the treasury, in aiding refunding; but its great benefit will be that the people themselves will in this way have a direct interest in preserving and maintaining the public faith."
On the same date I wrote a note for publication to the treasurer of the United States, to facilitate the payment of called bonds, as follows:
"As it is desirable to make payment of called bonds in the mode that will least disturb the market, you will draw from the depositary banks the proceeds of four per cent. bonds only when required to make payment of called bonds, and in proportion from the several depositaries to the amounts held by them, as near as may be, in sums of $1,000. Money in the treasury received from four per cent. bonds should be applied to the payment of called bonds before such drafts are made.
"When practicable, drafts upon depositary banks, for transfers of deposits on account of proceeds of four per cent. bonds, may be so drawn as to be payable at the option of the bank, through the New York clearing house.
"Drafts on depositary banks in cities other than New York should be drawn a sufficient time in advance to meet payments there.
"Payment by called bonds should be treated as payment in money as of the date when it would, under this order, be required."
On the 27th I received from Conant the following cablegram:
"Would be pleased to know if subscriptions to be settled during April can be expected without disturbing market in New York."
I answered on the same day as follows:
"Entirely confident subscriptions during next month will be settled without disturbing market. Order of the treasury department yesterday will facilitate greatly."
The following correspondence with Conant, the syndicate and myself then took place:
"London, March 28, 1879. "Sherman, Washington.
"Rothschild & Sons request me to say they do not consider contract of January 21, 1879, requires subscription two million to be made April 1. On account of market price below par at present time they desire delay subscription few days. Hope you will consent.
"Conant."
"Treasury Department, March 28, 1879. "Conant, London.
"I think contract of January 21, 1879, very plain, subscription should be made April 1, but, if they desire, time will be extended to April 8.
"Sherman."
"Treasury Department, March 28, 1879. "August Belmont & Co., New York.
"Gentlemen:—In confirmation of my two telegrams of to-day to you, copies of which are inclosed, I have to inform you that the proper legal officers of the department, as well as myself, consider it very clear that, under the contract of January 21, your option to make the second subscription expires on the 1st of April, but I am not at all desirous of raising the question, and therefore am willing to extend the time a week, within which I am quite confident the anxiety about the April payments will begin to subside. Thus far this week, over $17,000,000 called bonds have been redeemed by credit on subscriptions, and $450,000 only paid by draft. Called bonds are rapidly coming in for credit. The subscriptions in excess of bonds called now amount to $6,600,000. With an assurance of a subscription of $2,000,000 from you, by the 1st, or even the 8th, of April, I would immediately issue a call for $10,000,000, and may do so without waiting for your subscription.
"I would prefer that the parties to the contract should not avail themselves of the extension offered, but leave that entirely to your good judgment.
"Very respectfully, "John Sherman, Secretary."
(Telegram.) "Treasury Department, March 28, 1879. "August Belmont & Co., New York.
"The contract is very plain that the first subscription should be made by April 1. The stipulation for five million each month would have made the second subscription in February or March, but, by the agreement, it need not be made before April 1.
"John Sherman, Secretary."
"New York, March 28, 1879. "Hon. John Sherman, Secretary of the Treasury, Washington, D. C.
"Dear Sir:—We received this morning a telegram from Messrs. Rothschild about the next subscription under the contract of the 21st of January, and telegraphed its contents to you, as follows:
'London associates telegraph consider according contract have all month April to make next subscription. Please telegraph whether you agree they are right'
"In reply we received your telegrams reading:
'The contract is very plain that the next subscription should be made by April 1. The stipulation for five million each month would have made the second subscription in February or March, but by agreement it need not be made before April 1.'
"and—
'Have cabled Conant to extend option, if desired, to April 8.'
"contents of which we have communicated to our London friends.
"Yours, very respectfully, "Pro August Belmont & Co. "W. Suttgen. "W. Beuter."
The explanation of these cablegrams is given in the following letter:
"New Court, St. Swithin's Lane, } "London, E. C., England, March 29, 1879.} "Dear Mr. Secretary:—On the 27th instant I had the honor to make an inquiry of you by cable dispatch, as follows: 'Would be pleased to know if subscriptions to be settled during April can be effected without disturbing market in New York.' The constant decline in the price of all descriptions of our bonds in New York, the strenuous efforts being made by certain parties to sell American bonds here at low rates on home account, particularly the four and four and a half per cent. stock, the advancing rates of interest, and the condition of the exchanges, together with the rumors concerning scarcity of money in New Orleans and elsewhere, gave rise to apprehension, in the minds of many, that refunding operations had been carried to too great an extent; that too many bonds had been subscribed for on speculative account, and that any forced settlement of the subscriptions falling due in April would produce a panic. Private telegrams sent here conveyed information to the effect that arrangements would be made between yourself and the banks, by which the deposits in them would not be drawn upon until absolutely necessary. The answer, however, which I received from you a few hours later was highly gratifying and reassuring, and I gave it as much publicity as possible without, of course, publishing it. It reads as follows: 'Entirely confident subscriptions during the next month will be settled without disturbing the market. Order treasury department yesterday will facilitate greatly.'
"The question of obligation to make a subscription on the 1st day of April to continue the contract has been under consideration by the syndicate during the past week, and in fact ever since the beginning of the decline in the price of the four per cent. stock. The associates claim that they are only required to take five millions of the bonds during the month of April, and that having already taken three-fifths of the amount in advance, they should, in view of the impossibility of disposing of the stock at present prices, be allowed the balance of the month in which to subscribe for the remaining two millions. They argue that it cannot be expected that they can afford to take the bonds and pay the government one and a half per cent. above the market prices, and they add that they do not think you would wish to have them do so. They also say that if they wanted the bonds for speculative purposes only they should give up the contract and purchase in the open market; but their policy is to keep the price at par and not to buy or sell when it is below par. Bonds will sell more rapidly when they are at par than when below it. It is the speculators and not the investors, as a rule, who deal in stocks when they are cheap. If the price of the bonds had remained at par, I have no doubt but that all the bonds I have here would already have been disposed of, and that the parties would have been ready and willing to make the subscription for five millions on April 1.
"The Messrs. Rothschild say that, owing to the high price which they were compelled to pay for called bonds, and the reduced price at which they were compelled to part with a portion of the four per cent. bonds, they have made a slight loss on their transactions so far. They like to have business relations and connections with governments, and I think that that disposition on their part is paramount to the question of profits. The matter of the subscription was discussed again yesterday, and deferred until Monday for further consideration, and I was asked to send the following cable message to you:
'Rothschild & Sons request me to say they do not consider contract of January 21, 1879, requires subscription $2,000,000 to be made April 1. On account of market price below par at the present time, they desire delay subscription a few days. Hope you will consent.'
"I hoped you would consent, because I think it quite important, for many reasons, that we should dispose of bonds on this side of the water. They take the place of actual gold in settling exchanges, and thereby prevent the disturbances in the money market which always result from the moving of bullion. I have no doubt but that the use of these bonds in this manner has stimulated purchases of grain and produce from us which would never have left our shores if payment for the same could only have been made in bullion. I received this morning your cable message in answer to the one I sent yesterday, as follows:
'I think contract of January 21, 1879, very plain. Subscriptions should be made April 1; but, if they desire, time will be extended to April 8.'
* * * * *
"With great respect, I remain, yours truly, "Chas. F. Conant. "Hon. John Sherman."
I have set out in full this correspondence with Rothschild and his associates and with Conant, to show that on the eve of complete success they were discouraged and asked for a postponement of, to them, the small subscription of $1,000,000, and did not even think of taking the option of $10,000,000 of bonds subsequently claimed.
With the 1st of April all stringency disappeared. Accounts were settled without difficulty. The amount of four per cent. consols sold to March 31, inclusive, was $473,443,400.
On the 4th of April, while attending a meeting of the cabinet, I was handed the following telegram:
"New York, April 4, 1879. "Hon. John Sherman, Secretary of the Treasury, Washington, D. C.
"National Bank of Commerce in New York subscribes for forty million dollars four per cent. bonds. Particulars and certificates by mail.
"Henry F. Vail, President."
I thought the amount was a mistake, that four instead of forty was meant. I replied as follows:
"Henry F. Vail, President National Bank of Commerce, New York. "Before making call I prefer you repeat your subscription."
A few moments after sending this telegram I received the following from Mr. Vail:
"I sent you telegram to-day, which from its importance I beg you will telegraph me acknowledgment of its receipt."
I replied:
"Your telegram is received, and I have asked repetition of it before making call."
The following telegraphic correspondence then occurred:
"Hon. John Sherman.
"Please enter to-day for us a subscription for ten million dollars four per cents. making, however, no announcement until we see you to-morrow.
"G. F. Baker, President First National Bank, New York.
"Hon. John Sherman.
"We have taken two million subscriptions to-day thus far, and more to follow.
"E. D. Randolph, "President Continental National Bank, New York."
"New York, April 4, 1879. "Hon. John Sherman.
"Your two telegrams received. I hereby confirm my telegram of to- day, subscribing, in name of National Bank of Commerce in New York, for forty million dollars four per cent. bonds.
"Henry F. Vail, President."
"Henry F. Vail, President National Bank of Commerce, New York.
"Your subscription for forty million four per cent. bonds, having been repeated by telegram, is accepted. A call will issue to-day for the balance of the sixty-sevens and to-morrow a call will issue for the whole of the sixty-eights.
"John Sherman, Secretary."
"E. D. Randolph, President, etc., New York.
"Your two million subscription received and accepted, but can accept no more. All 5-20's are covered.
"John Sherman, Secretary."
"New York, April 4, 18979. "Hon. John Sherman.
"We subscribe for three millions more, making five in all.
"F. Taylor, Cashier Continental National Bank."
"Treasury Department, April 4, 1879. "F. Taylor, Cashier Continental National Bank, New York.
"Your subscription for three millions arrived too late; all the 5- 20's have been covered by previous subscriptions.
"John Sherman, Secretary."
A similar telegram was sent to the Continental National Bank of New York, which subscribed $25,000,000 additional, the Hanover National Bank of New York, $25,000,000, and the New York National Banking Association, $2,000,000.
I then telegraphed to Mr. Conant as follows:
"Subscriptions have been made covering all 5-20 bonds (consols of 1867 and consols of 1868) outstanding, reserving for contracting parties the one million not subscribed for.
"Inform the contracting parties and accept no new subscriptions."
On the 4th of April, 1879, I had the satisfaction of issuing the 95th and 96th calls for 5-20 bonds, covering all the bonds outstanding issued under the act of March 3, 1865, and the last of the United States 5-20 bonds. The early twenty year bonds, issued during the first two years of the Civil War, were not yet due or redeemable, and, therefore, could not be called for payment. This was a practical illustration of the importance, in issuing government securities, of reserving the right to redeem them before maturity.
The rapid and irregular subscriptions made on the 4th of April involved the department in serious difficulty in determining who of the many subscribers were entitled to the bonds. The aggregate of subscriptions was more than double the amount of 5-20 bonds outstanding. By adopting a rule of accepting bids made before a fixed hour of that day, and by voluntary arrangements among the bidders, a distribution was made.
The only serious controversy in respect to this distribution was upon the claim of the Rothschilds that they had option extending to the 30th of June for ten millions of bonds, and for one million extended from April 1 to April 8. The latter was allowed, but the department held that the option for ten millions June 30 was dependent upon whether the bonds were previously sold, and this occurred on the 4th of April. This gave rise to a controversy which was settled by the voluntary transfer, by the National Bank of Commerce, of ten millions of the forty millions bonds subscribed for by it. Rothschild, the head of the house, would not accept this offer, but, with some show of resentment, declined to receive his share of the bonds, but they were eagerly taken by his associates.
The 5-20 bonds having been paid off or called, the department proceeded, as soon as practicable, to execute the laws of January 25 "to facilitate the refunding of the national debt," and February 26 "to authorize the issue of certificates of deposit in aid of the refunding of the public debt."
On the 16th of April I published the offer of $150,000,000 four per cent. bonds at one-half of one per cent. above par and accrued interest, and reserved $44,566,300 of these bonds for the conversion of ten dollar refunding certificates.
The following telegrams, addressed to the Secretary of the Treasury on the 17th of April, tell the result:
From the Bank of New York National Banking Association, New York:
"Send two millions four per cent. bonds under terms of to-day's dispatch."
From Chase National Bank, New York:
"We have subscribed for half million dollars four per cent. bonds on terms just issued. Can we deposit our securities at the treasury here, as heretofore?"
From First National Bank, New York:
"Please enter subscription this date for ten million dollars, and reserve further amount of fifteen millions, awaiting our letter. Please make no announcement of either to-day, for reasons will explain."
From Bank of New York National Banking Association, New York:
"Send seventy-five certificates ten thousand each, fifty of five thousand each, four per cents., in name of I. & S. Wormser. Also four hundred bonds five hundred each, three hundred of one thousand each; in all, one million five hundred thousand. Certificate deposit by mail."
From Baltzer and Lichtenstein, New York:
"We subscribe to-day through the National Bank of the state for one million fours."
From National Bank of the State of New York:
"We confirm dispatch of Baltzer and Lichtenstein order one million four per cent. consols, and order, in addition to that and our previous dispatch, one million more, half each coupon and registered."
Bank of New York National Banking Association, New York:
"We take two million more fours; particulars later."
From National Bank of the State of New York:
"Please forward immediately four million United States four per cent. consols."
* * * * *
"Please forward three hundred thousand registered and two hundred thousand coupons four per cent. consols. Particulars by mail."
* * * * *
"Please forward one million four per cent. consols coupons."
* * * * *
"Please forward immediately fifteen hundred thousand United States four per cent. consols additional to all former subscriptions."
From Bank of New York National Banking Association:
"Send one hundred and twenty certificates, ten thousand each, in name of I. & S. Wormser; also eight hundred coupon bonds, one thousand each, in all, two million fours. Certificate by mail."
* * * * *
"We subscribe for four millions fours; this is in addition to all other telegrams. Certificates by mail."
From Continental National Bank, New York:
"We subscribe to-day two million four per cents., name Hatch & Foote. Particulars by mail."
From First National Bank, New York:
"Please enter our subscription under this date for one hundred and fifty million dollars four per cent. bonds and forty million dollars refunding certificates, in all, one hundred and ninety million dollars, under terms of your circulars of April 16 and March 7. These subscriptions are for this bank and its associates. Will see you to-morrow morning. This is repetition of dispatch sent to the department."
From National Bank, State of New York:
"Confirming previous dispatches covering subscriptions of seven million five hundred thousand dollars to four per cent. loan, please forward additional two millions coupon bonds."
From Bank of New York National Banking Association:
"We subscribe for one million four per cents. Certificates of deposit by mail to-morrow."
From National Bank, State of New York:
"Please forward immediately one million more United States four per cent. consols, making a total, together with former subscriptions, of ten million five hundred thousand."
I sent the following telegram to the First National Bank of New York:
"Your telegram covering one hundred and ninety million consols staggers me. Your telegram for twenty-five million received, and entered at two o'clock. About thirty million from other parties were received and entered before your last telegram. Will wait till letters received. What is the matter? Are you all crazy?"
On the 18th the bids were carefully analyzed and accepted in the order in which they were received. The bid of the First National Bank was made on the behalf of an association of banks and bankers. I declined their offer for refunding certificates and accepted their offer for $111,000,000.
I wrote to Conant, April 18, as follows:
"Since I wrote you the letters yesterday respecting the recent circular of April 16, I have sold the whole of the $150,000,000 of bonds offered therein; $39,000,000 were sold to sundry banks in the city of New York, and the residue, $111,000,000, were sold to an association of banks and bankers through First National Bank. This unexpected and agreeable denouement of our refunding operations will supersede much that I have written you. I received and answered your telegram of to-day. Arrangements will be made with the new associates for delivery of four per cent. consols and the receipt of called bonds in London.
"Although I have given notice that I will feel at liberty to do so after the 4th of May, I prefer that you will postpone any new arrangement for delivery to other parties until the 10th; hoping that before that time Messrs. J. S. Morgan & Co. will be able to close out the balance of their last subscription."
On the same day I made a call for $160,000,000 10-40 bonds, being all of such bonds outstanding, except an amount that would be covered by the proceeds of ten dollar refunding certificates. The sale of these certificates gave the department a great deal of trouble. The object and purpose of the law was to secure to persons of limited means an opportunity to purchase, at par, certificates of indebtedness bearing four per cent. interest. As they could be converted at pleasure into 10-40 bonds of small denominations, it was thought they would be promptly taken by the persons for whom they were designed. They were sold in limited amounts to individuals at post offices, but as they were, when converted into bonds, worth a premium, bankers and others hired men to stand in line and purchase certificates. This was a practical fraud on the law, and was mainly conducted in the cities, and where done the sale was discontinued. The great body of the certificates were taken by the class of persons for whom they were designed. In a brief period they were sold, and the proceeds were in the treasury.
On the 21st of April I made the final call for all outstanding 10- 40 bonds. With this call the refunding operations were practically at an end for the time. A good deal of correspondence was had as to priority of bids and sales of refunding certificates, but this was closed, at the end of ninety days, by the full payment of the called bonds, and the substitution of bonds bearing a lower rate of interest. This was accomplished without the loss of a dollar, or, so far as I can recall, without a lawsuit.
The aggregate amount of bonds refunded from March 4, 1877, to July 21, 1879, was $845,345,950.
The annual interest saved by this operation was $14,290,416.50.
The general approval and appreciation of these results was manifested by the public press, and especially in Europe. Mr. Conant, in a letter dated April 19, said:
"On yesterday morning, at the stock exchange, just after the opening hour, a McLean's cable dispatch was posted up, stating that you had entered into a contract with a syndicate for the sale of $150,000,000 of four per cent. bonds, against the outstanding 10- 40 five per cent. bonds. People were astounded at the information, and they were all the more astonished because the operation followed so closely upon the transaction of the 4th instant. The effect of this has been to send the price of the bonds up by three-fourths per cent., and to create a demand for them."
From the date of these transactions the bonds of the United States rapidly advanced in value. Many similar transactions of my successors in office have been made at a still lower rate of interest.
Among the agreeable incidents connected with the resumption of specie payments was the adoption of resolutions by the Chamber of Commerce of New York, on the 2nd of July, 1879. The second resolution was as follows:
"Resolved, That this Chamber tenders its congratulations to the Honorable the Secretary of the Treasury, at once the framer and executor of the law of 1875, upon the success which has attended his administration of the national finances; as well in the funding of the public debt, as in the measures he has pursued to restore a sound currency."
I subsequently received, by the hands of William E. Dodge, late president of the Chamber of Commerce of New York, a letter from that body asking me to sit for my portrait to be placed on the walls of their Chamber. On the 24th of February I sent the following reply:
"Gentlemen:—I have the honor to acknowledge the receipt, by the hands of Wm. E. Dodge, late president of the Chamber of Commerce of New York, of your letter of the 17th instant, covering a resolution of your body, asking me to sit for my portrait to be placed upon the walls of your Chamber.
"The kinds words of Mr. Dodge in delivering the resolution add greatly to the compliment contained therein. I assure you that I deeply appreciate the honor of being designated in this manner, by a body so distinguished as the one you represent, composed of members having so large an influence in the commercial transactions, not only of our country, but of other nations, whose familiarity with financial and commercial subjects gives to its opinions great respect and authority.
"The resumption of specie payments has been brought about by the co-operation, not only of many Senators and Members of Congress, but of the leading merchants, bankers and other business men of the country. It was my good fortune to be selected, by my colleagues in the Senate, to present the resumption act, which was framed with their aid and in their councils, and to hold my present office at the time when, by its terms, the law was to be enforced. The only merit I can claim is the honest and earnest effort, with others, to secure the adoption of the policy of resumption, and to have executed the law according to its letter and spirit. I feel that I cannot accept this high compliment, without acknowledging that I am but one of the many who have contributed to the accomplishment of this beneficent object.
"I will, with great pleasure, give every facility to any artist whom you may select to carry your resolution into effect.
"Expressing to you, and the gentlemen you represent, my appreciation of a compliment so highly prized, I have the honor to be,
"Very respectfully, your obedient servant, "John Sherman. "Messrs. A. A. Lone, James M. Brown, Sam'l D. Babcock, Wm. E. Dodge, Henry F. Spaulding, Committee of the Chamber of Commerce, New York."
Subsequently, in compliance with this request, I gave to Mr. Huntington, an eminent artist selected by that body, a number of sittings, and the result was a portrait of great merit, which was placed in the Chamber of Commerce with that of Alexander Hamilton. I regarded this as a high compliment from so distinguished a body of merchants, but I do not indulge in the vanity of a comparison with Hamilton.
CHAPTER XXXVIII. GENERAL DESIRE TO NOMINATE ME FOR GOVERNOR OF OHIO. Death of My Brother Charles—The 46th Congress Convened in Special Session—"Mending Fences" at My Home in Mansfield—Efforts to Put Me Forward as a Candidate for the Governorship of Ohio—Letter to Murat Halstead on the Question of the Presidency, etc.—Result of My Letter to John B. Haskin—Reasons of My Refusal of the Nomination for Governor—Invitation from James G. Blaine to Speak in Maine— My Speech at Portland—Victory of the Republican Party—My Speech at Steubenville, Ohio—Evidences of Prosperity on Every Hand—Visit to Cincinnati and Return to Washington—Results in Ohio.
On the morning of January 1, 1879, I received intelligence of the sudden death of my eldest brother, Charles T. Sherman, at his residence in Cleveland. In company with General Miles and Senator Cameron, his sons-in-law, and General Sherman, I went to Cleveland to attend the funeral. My respect and affection for him has already been stated. As the eldest member of our family he contributed more than any other to the happiness of his mother and the success of his brothers and sisters. He aided and assisted me in every period of my life, and with uniform kindness did all he could to advance my interests and add to my comfort and happiness. As district judge of the United States, for the northern district of Ohio, he was faithful and just. When, after twelve years service, he was reproached for aiding in securing the reversal of an order of the Commissioner of Internal Revenue in collecting an unlawful and unjust tax in the city of New York, as he had a perfect right to do, he resigned his position rather than engage in a controversy. He was unduly sensitive of all accusations or innuendoes touching his honor. He was honest and faithful to every engagement, and had a larger personal following of intimate friends and associates than either of his brothers.
On the 4th of March, 1879, President Hayes convened the 46th Congress in special session to meet on the 18th of that month, to provide necessary appropriations for the legislative, executive and judicial expenses of the government, and also for the support of the army, the 45th Congress having failed to pass bills for these objects on account of a disagreement of the two Houses as to certain provisions relating to the election laws. This session continued until July 1, and was chiefly occupied in political topics, such as reconstruction and elections. The Democratic party, for the first time in twenty years, had control of both Houses, but it neither adopted nor proposed any important financial legislation at that session, the only law passed in respect to coin, currency or bonds which I recall being one to provide for the exchange of subsidiary coins for lawful money, and making such coins a legal tender in all sums not exceeding ten dollars. Congress seemed to be content with the operations of the treasury department at that time, and certainly made no obstacle to their success.
About the 1st of May, Mrs. Sherman, accompanied by our adopted daughter, Mary Sherman, then a young schoolgirl twelve years old, and Miss Florence Hoyt, of New York, Miss Jennie Dennison, of Columbus, and Miss Julia Parsons, of Cleveland, three bright and accomplished young ladies, embarked on the steamer Adriatic for a visit to Europe. Mrs. Sherman placed Mary in a very good school at Neuchatel, Switzerland, and then with her companions visited the leading cities of Europe.
After accompanying the party to New York I went to Mansfield, and as my family was absent and the homestead occupied by comparative strangers, I stopped at the St. James hotel where, as was natural, I met a great many of my old neighbors and friends, both Democrats and Republicans, who welcomed me home.
Among my visitors were several reporters from different parts of the country who wanted to interview me and especially to learn if I was a candidate for governor, and why I came home. In the afternoon I visited my farm near by and my homestead of about twenty acres adjoining the city. I found them in the usual neglected condition of the property of a non-resident proprietor, with many of the fences down. In the evening I was serenaded at the hotel and made a brief speech to a large audience, commencing as follows:
"I am very happy to be again in your midst, to see your faces and to greet you as friends. The shaking of your hands is more grateful to me than the music of bands or any parade. I never felt like making an explanation in coming before you until now. I found when I arrived in my old home that the papers said I came west seeking the nomination for governor. I came purely on private business— to repair my fences and look after neglected property."
The reporters seized upon the reference to my fences, and construed it as having a political significance. The phrase "mending fences" became a byword, and every politician engaged in strengthening his position is still said to be "mending his fences."
Previous to that time mention had been made of me in different parts of the country, not only for the nomination of Governor of Ohio, but for President of the United States. Charles Foster and Alphonso Taft were then spoken of as the leading candidates for nomination as governor. Both were my personal friends and eminently qualified to perform the duties of the office. Although I regarded the position of governor as dignified and important, well worthy the ambition of any citizen, still there were reasons which would prevent my accepting the nomination if it should be tendered me. I felt that to abandon my duties in the treasury department might be fairly construed as an evasion of a grave responsibility and an important public duty. I knew that President Hayes was very anxious that I should remain in the office of secretary until the close of his term. I did not desire to compete with the gentlemen already named, and did all I could to discourage the movement short of absolute refusal to accept the nomination. The newspapers of the day, not only in Ohio but in other states, were full of favorable comments upon my probable nomination for governor, and my correspondence upon the subject was very large. I have no doubt that had I consented to be a candidate both Foster and Taft would have acquiesced in my nomination and I, in all human probability, would have been duly elected as Foster was.
As for the nomination for the presidency I made no movement or effort to bring it about, but then believed that General Grant would, upon his return from his tour around the world, be nominated and elected. The following letter will explain fully my position in regard to the office of both governor and president:
"Washington, D. C., May 15, 1879. "My Dear Sir:—I notice, with heartfelt thanks for your personal kindness in the matter, the course of the 'Commercial' in regard to my proposed candidacy for Governor of Ohio, and this induces me to state to you frankly and fully, in confidence, the reasons why I could not accept the nomination if tendered, and why I hope you will give such a turn to the matter as will save me the embarrassment of declining.
"In ordinary circumstance an election as Governor of Ohio, after my life in the Senate, would be extremely flattering and agreeable; but at present, for several reasons, the least of which are personal, I could not accept it.
"My wife has gone to Europe on a visit of recreation greatly needed by her, my house in Mansfield is rented, and all my arrangements are made to be here during the summer. The nomination would require me to recall her, to resume my house, and to break up my plans for the summer. If this alone stood in the way, I could easily overcome it, but I know from letters received that my resignation as secretary would be regarded as a desertion of a public trust important to the whole country, with the selfish view of promoting my personal ambition, not for the governorship merely but for the presidency, which would impair rather than improve any chance I may have in that direction.
"The President would regard this change as a great inconvenience and as defeating a desire he has frequently expressed to maintain his cabinet intact during his term, so that my obligations to him forbid this.
* * * * *
"All these objections might be met except the one which I think is unanswerable, that my presence here in the completion of a public duty is far more important to the whole country and the cause we advocate than if I were to run as a candidate for Governor of Ohio and even succeed with a large majority.
"All things now tend to our success in Ohio and that is likely to be as complete with any other candidate for governor as myself, while if left here I will be able to so finish my business that no one can say it is incomplete.
"As for the mention of my name for the presidency, I am not so blind as not to perceive some favorable signs for me, but I have thus far observed and intend strictly to adhere to the policy of taking no step in that direction, doing no act to promote that object, and using none of the influence of my office towards it, except so far as a strict and close attention to duty here may help. I am not now, and do not intend to get, infected with the presidential fever.
"With high regard, I am, very truly yours, "John Sherman. "M. Halstead, Esq., Cincinnati, Ohio."
During 1879 and the following year I received a multitude of letters and newspaper paragraphs advocating my nomination for President. Among the first of such letters was one from an old friend, John B. Haskin, formerly a Member of Congress from New York. On the 10th of May, 1879, I wrote him in answer a letter, not intended for publication, but expressing what I would do in the contingency mentioned by him, as follows:
"What I would aspire to, in case public opinion should decide to make me a candidate for President, would be to unite in co-operation with the Republican party all the national elements of the country that contributed to or aided in any way in the successful vindication of national authority during the war. I would do this, not for the purpose of irritating the south or oppressing them in any way, but to assert and maintain the supremacy of national authority to the full extent of all the powers conferred by the constitution. This, as I understand it, is the Jacksonian as well as the Republican view of national powers.
* * * * *
"You see my general ideas would lead me to lean greatly upon the war Democrats and soldiers in the service, who have been influenced by political events since the war to withhold support from the Republican party.
"The true issue for 1880 is national supremacy in national matters, honest money and an honest dollar."
Mr. Haskin gave, or showed, this letter to a New York paper, and it was published. I expressed my opinion, but it was not one that should have been made public without authority. The letter was the subject of comment and criticism, and was treated as an open declaration of my candidacy for the office of President. It was not written with this purpose, as the context clearly shows. This incident was a caution to me not to answer such letters, unless I was assured that my replies would be treated as confidential. Yet I do not see how a man in public life can refuse to answer a friendly letter, even if his meaning can be perverted.
During the months of May and June I had a correspondence with John B. Henderson, of St. Louis, in which he expressed his great interest in my nomination. This resulted in a conference, which he advised, with President Hayes. My reply was as follows:
"Treasury Department, June 23, 1879. "My Dear Sir:—In compliance with your suggestion, I yesterday mentioned to the President my embarrassment from the general discussion of my name as a possible candidate for the Republican nomination. The points I mentioned were how far I should commit myself to a candidacy and what I should do to promote it, and second whether, under certain circumstances, he would not, in spite of his declination, become a candidate for re-election. He was very explicit on both points—first that I ought at once to let it be understood that I was a candidate in the sense stated in the Haskin letter, and no more—that great care should be taken that while a candidate, I ought not to take part in any movement of opposition to others named—especially General Grant. The feeling is growing daily that General Grant will not allow his name to be used and that, while his eminent services should be fully recognized and rewarded, it is neither right nor politic to elect him to the presidency for the third term. The President very truly said that any appearance of a personal hostility or opposition to General Grant, would be inconsistent with my constant support of his administration during eight years, and would induce a concentration that would surely defeat me. Upon the second point he was very explicit—that he would not be a candidate under any circumstances, and as far as he could properly, without any unseemly interference, he would favor my election. This was the general tenor of his conversation, which he said he would repeat to General Schurz. This relieves me from some embarrassment, but I still think it is better for us to remain absolutely quiet, awaiting the development of public opinion or the voluntary action of personal and political friends. Unless there is a clear preponderance of opinion in preference for my nomination against all others, I do not want to enter upon the scramble. As yet I do not see any concentration. Hoping to see you soon, I remain,
"Very sincerely yours, "John Sherman. "Hon. John B. Henderson."
After a brief visit to Mansfield I went to Columbus, where I met with a hearty reception from men of both political parties. The legislature was in session, and the senators and members, judges of the courts, and executive officers of the state, called upon me and gave me cordial greetings. I attended a reception at the house of Governor Dennison, where I met the leading citizens of Columbus. On my return to the hotel I was serenaded by a band, and being introduced by Governor Dennison made a brief speech of a non-partisan character, and in closing said:
"I want to make one personal remark about myself. Some of my newspaper friends here have tried to make me a candidate for Governor of Ohio, but I hope none of you will vote for me in convention or before the people. I propose to stick to my present place until the question of resumption is settled beyond a doubt. I want to convince everybody that the experiment of resumption is a success; that we can resume; that the United States is not bound to have its notes hawked about at a discount, but that a note of the United States may travel about the world, everywhere received as equal to gold coin, and as good as any note ever issued by any nation, either in ancient or modern times. I want to see that our debt shall be reduced, which will be done through four per cent. bonds. If the present policy prevails, we shall be able to borrow all the money needed for national uses for less than four per cent., perhaps as low as three."
I returned directly to Washington. Finding that a determined effort would be made to force my nomination as governor, I wrote the following letter to prevent it:
"Treasury Department, } "Washington, May 15, 1879.} "My Dear Sir:—In view of the kindly interest manifested by political friends during my recent visit home, that I should be nominated as the Republican candidate for Governor of Ohio, I have given the subject the most careful consideration, and have come to the conclusion that I cannot, in my present situation, accept such a nomination if tendered.
"I am now engaged in a public duty which demands my constant attention and which can clearly better be completed by me than by anyone coming freshly into the office. To now accept the nomination for governor, though it is an honor I would otherwise highly prize and feel deeply grateful for, would be justly regarded as a abandonment of a trust important to the whole country, to promote my personal advancement. I earnestly hope, therefore, that the convention will not embarrass me by a tender of a nomination which I would be obliged to decline.
"It may be that no such purpose will be manifested, but I write you so that if the convention should so incline, you may at once state why I cannot accept.
"Very truly yours, "John Sherman. "General J. S. Robinson, Chairman Republican State Committee, Columbus, Ohio."
Charles Foster was nominated by the Republican convention in the latter part of May, and Thomas Ewing by the Democratic convention. These nominations necessarily made prominent the financial questions of the time. After the close of the funding operations, I received from Mr. Blaine, as chairman of the Republican committee of Maine, the following invitation, which I accepted:
"Augusta, Me., July 3, 1879. "Hon. John Sherman, Secy. of Treas.
"My Dear Sir:—Could you speak at Portland, Tuesday, July 23, and then during the same week at Augusta and Bangor—say 25th-27th? Your Portland speech we should expect to have printed the next day, accurately from your own slips.
"Your two other speeches, hardly less important to us, might be made with less care and accuracy, that is, more on the order of the general stump speech.
"In your Portland speech I hope, however, you will talk on something more than the finance, making it, however, the leading and prominent topic—but giving a heavy hit at the conduct of the Democrats during the extra session.
"Sincerely, "James G. Blaine."
The election in the State of Maine preceding those of other states, great interest was taken in it, as the result there would have much influence in other parts of the country. That state in the previous year had faltered in support of the Republican party. In that year there were three candidates in the field for governor, the Republican, whose name I do not recall, the Democratic, Garcelon, for hard money, and the Greenback, Smith, under the lead of Solon Chase, an alleged lunatic in favor of fiat money, the repeal of the resumption law, and the enactment of an eight-hour law. Smith received about 40,000 votes, Garcelon about 28,000, and the Republican candidate about 54,000. Many Republicans either did not vote or voted the Democratic or Greenback ticket. By the constitution of that state a majority of all the votes cast is required to elect a governor, and in case of failure the house of representatives of the state proceeds to ballot for choice. The names are then sent to the senate for the action of that body. The result was the election of Garcelon, the Democratic candidate.
This was due to a strong feeling then prevailing in favor of irredeemable or fiat money, and to some discontent among Republicans with the liberal measures adopted by President Hayes to secure peace and quiet in the south, especially the recognition of Hampton as Governor of South Carolina and of Nichols as Governor of Louisiana.
I thought it important to turn the issues of the campaign to the financial measures accomplished by the Republican party, and therefore prepared with some care a speech to be delivered at Portland, and confined mainly to this subject. This speech was made on the 23rd of July, 1879. I regard it as the best statement of the financial question made by me in that canvass. In it I stated fully the action of the administration in respect to the resumption of specie payments, and the refunding of the public debt. The people of Maine had been greatly divided upon these measures. The Greenback party was opposed to the effort to advance the United States note to the value of coin which it represented, but wished to make it depend upon some imaginary value given to it by law. I said the people of Maine would have to choose between those who strictly sought to preserve the national faith, and to maintain the greenback at par with coin, and those who, with utter disregard of the public faith, wished to restore the old state of affairs, when the greenback could only be passed at a discount, and could neither be received for customs duties, nor be paid upon the public debt.
The Greenback party had embodied in their platform the following dogmas:
"The general government should issue an ample volume of full legal tender currency to meet the business needs of the country, and to promptly pay all of its debts."
"The national banking system should be immediately abolished."
"We demand the immediate calling-in and payment of all United States bonds in full legal tender money."
One of the Members of Congress from the State of Maine, Hon. G. W. Ladd, was reported to have paid his attention to me, in a speech in Portland, in the following language:
"Mr. Sherman has sold one hundred and ninety millions of four per cent. bonds in one day to bloodsuckers who were choking the country, and he should be impeached."
In closing my speech I said:
"It is to support such dogmas, my Republican friends, that we are invited to desert the great party to which we belong. It may be that the Republican party has made in the last twenty years some mistakes. It may not always have come up to your aspirations. Sometimes power may have been abused. To err is human; but where it has erred it has always been on the side of liberty and justice. It led our country in the great struggle for union and nationality, which more than all else tended to make it great and powerful. It has always taken side with the poor and the feeble. It emancipated a whole race, and has invested them with liberty and all the rights of citizenship. It never robbed the ballot box. It has never deprived any class of people, for any cause, of the elective franchise. It maintains the supremacy of the national government on all national affairs, while observing and protecting the rights of the states. It has tried to secure the equality of all citizens before the law. It opposes all distinctions among men, whether white or black, native or naturalized. It invites them all to partake of equal privileges, and secures them an equal chance in life. It has secured, for the first time in our history, the rights of a naturalized citizen to protection against claims of military duty in his native country. It prescribes no religious test. While it respects religion for its beneficial influence upon civil society, it recognizes the right of each individual to worship God according to the dictates of his own conscience, without prejudice or interference. It supports free common schools as the basis of republican institutions. It has done more than any party that ever existed to provide lands for the landless. It devised and enacted the homestead law, and has constantly extended this policy, so that all citizens, native and naturalized, may enjoy, without cost, limited portions of this public land. It protects American labor. It is in favor of American industry. It seeks to diversity productions. It has steadily pursued, as an object of national importance, the development of our commerce on inland waters and on the high seas. It has protected our flag on every sea; not the stars and bars, not the flag of a state, but the stars and stripes of the Union. It seeks to establish in this republic of ours a great, strong, free government of free men. It would, with frankness and sincerity, without malice or hate, extend the right hand of fellowship and fraternity to those who lately were at war with us, aid them in making fruitful their waste places and in developing their immense resources, if only they would allow the poor and ignorant men among them the benefits conferred by the constitution and the laws. No hand of oppression rests upon them. No bayonet points to them except in their political imaginings.
"We would gladly fraternize with them if they would allow us, and have but one creed—the constitution and laws of our country, to be executed and enforced by our country, and for the equal benefit of all our countrymen. If they will not accept this, but will keep up sectionalism, maintain the solid south upon the basis of the principles of the Confederate states, we must prepare to stand together as the loyal north, true to the Union, true to liberty, and faithful to every national obligation. I appeal to every man who ever, at any time, belonged to the Republican party, to every man who supported his country in its time of danger, to every lover of liberty regulated by law, and every intelligent Democrat who can see with us the evil tendencies of the dogmas I have commented upon, to join us in reforming all that is evil, all the abuses of the past, and in developing the principles and policies which in twenty years have done so much to strengthen our government, to consolidate our institutions, and to excite the respect and admiration of mankind."
I made similar speeches at Lewiston, Augusta, Waterville and Bangor. General Sherman's estimate of my speech at Portland, in reply to an inquiry, is characteristic of him, viz: |
|
