I appointed Mr. Knox commissioner to codify the mint laws and to suggest alterations. He was assisted by Dr. Linderman, then an eminent expert in the theory and practice of coinage, by Mr. Patterson, superintendent of the mint at Philadelphia, and by others.

When the codification of the laws relating to the mint service had been completed the statute, as passed, contained seventy-one sections, including a number of new provisions. The political and personal controversy of twenty years and more was directed to a single section, which was in these words: "No coins, either of gold, silver, or minor coinage, shall hereafter be issued from the mints other than those of the denominations, standards and weights herein set forth." The coinage of the silver dollar piece was discontinued in the bill as prepared by the commissioners and the purpose to discontinue its coinage was thus announced in the report that was made to Congress:

"The coinage of the silver dollar piece, the history of which is here given, is discontinued in the proposed bill. . . . The present gold dollar piece is made the dollar unit in the proposed bill, and the silver piece is discontinued."

In 1873 I had come to believe that it was wise for every nation to recognize, establish, and maintain the gold standard. I was of the opinion then, as I am of the opinion now, that nations cannot escape from the gold standard in all inter-state transactions. The value of every article is resolved finally by the ascertainment of its value in gold. Silver or paper may be used for domestic purposes, but the value of that silver or paper is determined by its value in gold.

In America, as in England, all the attempts to fix a ratio between gold and silver coins and to maintain that ratio in business had failed, and hence it was that I determined to abandon the idea of a double standard, reserving in mind, however, the possibility that an agreement by commercial countries might overcome the difficulty. That possibility has now disappeared. The history of the United States is an instructive history. The coin ratio between gold and silver was fixed in Mr. Hamilton's time and with the concurrence of Mr. Jefferson.

In 1870 silver was at a premium upon the legal ratio between gold and silver coins, and such had been the fact from the year 1837, and probably from the year 1792. Indeed, there has never been a day, from the organization of the government, when the actual standard was silver. Until the act of 1878 was passed, silver coins had had no appreciable influence upon the volume of currency or the business of the country. The total coinage of silver dollars had been 8,000,000 pieces only. The coinage was suspended in 1805 or 1806, and the silver dollars had been exported or they had disappeared in melting pots. Such was the commercial demand for American silver coins that in 1853 Congress authorized the debasement of the subsidiary silver coins as the only means of securing their circulation.

It is quite doubtful whether in the year 1860 there was a person living who had seen an American silver dollar doing duty in the channels of trade. From 1806 to 1873 the business standard of the country was the gold standard. Silver had been recognized in the Coinage Act, but practically it had not played any part in the financial policy or fortunes of the country.

The choice of gold as the standard was not due to hostility to silver or to the silver mining interests, but to the well grounded opinion that gold was a universal currency, while in some countries, as in England and Germany, silver coins were not a debt-paying currency.

These—within the limits of a statement—are the reasons for the demonetization of the silver dollar and the adoption of the single gold standard. The measure was in accord with my policy, and it was in accord with the unbiased judgment of the commission.

It is a singular instance in legislative proceedings that a measure that had no active support and that was free from opposition at its enactment should be assailed vigorously after the lapse of years and through a long period of time. The measure was soon followed by the depreciation of silver and coincident with that change came the attacks upon the Mint Bill, and the denunciation of the "Crime of 1873."

The charges were two:

First: The authors of the change had been corrupted by English gold through one Ernest Seyd, a writer on economic topics. It was alleged that Seyd came to this country at the time when the measure was under consideration. Seyd was not living when the charges were made, but the fact of a visit to this country was denied by his son. Hon. Samuel Hooper was chairman of the Committee on Coinage. In the search for information Mr. Hooper invited Mr. Seyd to give him his opinion. Seyd was a writer, a man of good reputation, and a bimetallist. In a letter to Mr. Hooper, which is still in existence, and which is printed in the Congressional Record, Seyd condemned the demonetization of the silver dollar. His letter was dated at London, February 17, 1872.

The second charge was secrecy. The answer to this charge was to be found in historical facts.

The evidence is this: Mr. Knox's report contained two specific statements that it was a purpose of the bill to prohibit the coinage of the silver dollar; the report of the Secretary of the Treasury for the year 1872 made a specific recommendation to that effect; the bill was printed six times; it was considered in each House during the Forty-first and Forty-second Congresses; the precise question in controversy was the subject of discussion, and two years and ten months were given to the consideration of the bill.

The bill was discussed in the House of Representatives. Mr. Reed has stated that the report of the debate covers one hundred and ninety-six columns of the Congressional Record. Senator Jones, in his report of 1876, as chairman of the Silver Commission, refers to the debate in these words: "In the brief discussion on the bill in the House of Representatives, the principal reason assigned in favor of those sections which interdicted the future coinage of the silver dollar was that its value was three per cent greater than the value of the gold dollar." Thus Senator Jones admits that the debate in the House of Representatives was upon the question of the abolition of the silver dollar, and he recognizes his knowledge of the fact of the debate.

Finally the bill passed the Senate without one dissenting vote.

The downfall of silver has not been due to any legislation in America or Europe, nor to any decrees or despotic policy in Asia, but to the inventive faculties of one Charles Burleigh, of Fitchburg, Massachusetts, the inventor of the power drill.

If through him many silver mines have been rendered valueless, so it is to him that the world is indebted for a new application of force by which mountains are penetrated and mining in all its forms is carried on at one fourth part of the former cost. Every step in civilization, every advance movement that we call progress, is a peril to many and a ruin to some. By one stroke of genius, and limiting our thoughts to one only of its many consequences we may say that Burleigh has made gold so abundant and cheap that all substitutes for a currency from wampum to silver must soon disappear.

There is historical evidence tending to show that the representatives of the silver mining interest had sufficient and worthy reasons for assenting to the suspension of the silver dollar. In 1872 silver was at a slight premium as compared with gold. Therefore the privilege of coinage of the dollar was of no advantage to the owners of bullion.

The Mint Bill had a new and attractive feature. It provided for the coinage of a dollar that was to contain 420 grains of standard silver, and was to be known as the trade dollar.

This passage may be found in my report to Congress for the year 1872:

"Therefore, in renewing the recommendations heretofore made for the passage of the Mint Bill, I suggest such alterations as will prohibit the coinage of silver for circulation in this country, but that authority be given for the coinage of a silver dollar that shall be as valuable as the Mexican dollar and to be furnished at its actual cost."

The dollar was coined and it was known as the Trade Dollar. It contained 420 grains of standard silver.

The Mexican dollar which contained about 416 grains, was then sold at a premium, and it was used extensively in the China and India trade.

It was my expectation and the expectation of all concerned, that the trade dollar, from its added value, would take the place of the Mexican dollar in the immense trade of the East. My own confidence was great. Indeed, the thought of failure never occurred to me. Unfortunately, the stolidity of the Chinese and the force of habit among that people were not considered by us. From long use they had become accustomed to the Mexican dollar. They refused our trade dollar, notwithstanding its greater weight.

We coined and put into circulation, at home and abroad, about 36,000,000 pieces, many of which were afterwards recoined as legal tender dollars under a special act of Congress.

With the failure of that undertaking came the crusade against the act of 1873. Whether the two events sustained to each other the relation of cause and effect, I cannot say.

The suggestion that Senator Stewart of Nevada was assenting to the demonetization of the silver dollar derives support from the fact that, in the month of February, 1874, he indorsed the gold standard in two speeches, delivered, respectively, on the 11th and 20th days of that month. On the 11th he said: "I want the standard gold, and no paper money not redeemable in gold." On the 20th he added: "Gold is the universal standard of the world. Everybody knows what a dollar in gold is worth."

It is certain that in the month of February, 1874, when the contents of the Mint Bill were in the public statutes, the demonetization of the silver dollar, and the recognition of the gold dollar as the unit of value, had not affected the judgment nor disturbed the sensibilities of the advocates of silver.

I dismiss this branch of the subject with the observation that the act of 1873 placed the United States in a commanding position in regard to the use of silver. If that metal had continued to maintain its supremacy upon the ratio then established between gold and silver coin, there could have arisen no demand for the coinage of silver. If, on the other hand, silver should depreciate, the government might, at its pleasure, use, or it might decline to use, that metal as coin.

I now pass to a part of the history of the controversy not heretofore considered in public discussions, from which it will appear that the trusted representatives of the silver interest put aside the most inviting opportunity, if not the only opportunity, for the adoption of the bimetallic system by the commercial nations of the world.

The act of 1873 prepared the way for the use of silver by the commercial nations of the world, upon an agreed ratio with gold, if indeed, the possibility of such an arrangement ever existed. We were upon a gold basis; the balance of trade, by groups of years, was in our favor; we had a gold revenue from customs of about $200,000,000, and the excess of Treasury receipts over expenditures was nearly $100,000,000 a year.

If we had chosen to accumulate gold and postpone payments upon the Public Debt, we could have brought the nations of the earth to our feet.

It was under circumstances thus favorable for negotiations for the use of silver that the Silver Commission of 1876 was constituted, and authorized, among other things, to inquire "into the policy of the restoration of the double standard in this country, and if restored, what the legal relation between the two coins of silver and gold, should be."

This authority opened a way for the introduction of a policy on the part of the United States looking to an arrangement for the use of silver by the states of Europe, and on that authority the commission dealt with the project of an international bimetallic system.

The commission consisted of eight persons. Senator Jones was the chairman, and Mr. Bland, of Missouri, was an influential member. It was my fortune to be of the commission and it was my fortune also to be alone in opinion upon the main questions that were treated in the reports.

The majority of the commission consisted of Messrs. Jones, Bogy, Willard, Bland and Groesbeck. They favored the remonetization of the silver dollar, and that without delay.

Of the points made in their report, I mention these. They said: "The supply of gold is diminishing, being now but little more than one half what it was in 1852, and is always so fitful and irregular from the method of its production that it is ill-suited to be a sole measure of value."

This statement as a statement of an existing fact was wide of the truth, and as a prophecy it was as fallacious as are the prophecies which predict the destruction of the world. From 1851 to 1855 the annual gold product of the world was 6,410,324 ounces. From 1876 to 1880 the annual gold product of the world was 5,543,110 ounces. The gold product of the latter period was eighty-six per cent of the gold product of the former period.

Far wide of the truth were the predictions of the majority in regard to the future product of gold. For the year 1894 the product was 8,737,788 ounces, or about thirty-seven per cent over the product of 1851-'55.

They, the majority, said: "No increase in the yield of silver in the immediate future seems upon the whole to be probable." The commission said further: "The exchanges of the world, and especially of this country, are continually and largely increasing; while the supplies of both the precious metals, taken together, if not diminishing, are at least stationary, and the supply of gold, taken by itself, is falling off."

Each of these two statements in regard to the precious metals was a serious error, and in their controlling influence upon the judgment of the commission they were fatal errors.

The gold product of the world in 1876 was 5,016,488 ounces. In 1894 the product had risen to 8,737,788 ounces, a gain of more than seventy-four per cent in the short period of eighteen years.

In 1876 the product of silver was 67,753,125 ounces, and in 1894 it was 167,752,561 ounces, a gain of about 147 per cent in eighteen years.

Upon these errors the majority of the commission based a policy by which the only opportunity that the country ever had for the establishment of a bimetallic system which should include the commercial nations of Europe, was put aside and forever lost.

If, in 1876, I had anticipated the immense increase in the product of silver, I might have hesitated, but in the view that I was then able to command I had great confidence that a bimetallic arrangement might be secured.

The majority of the commission favored bimetallism but they demanded, first, the remonetization of the silver dollar. On the other hand, I claimed that all thought of the further use of silver should be postponed until the attempt to secure the co-operation of other countries had been tried faithfully.

The policy of the majority of the commission prevailed, and it was consummated by the Statute of 1878, which was passed over the veto of President Hayes, and which authorized the coinage of the silver dollar.

When we had accepted silver, when we had abandoned the vantage ground that we had occupied, it was in vain that we solicited the co-operation of England, France and Germany. The adoption by the United States of a silver-using policy led the statesmen of those countries to anticipate the more extended and continuous use of silver leaving to them a monopoly of gold, while we should sink financially to the level of the degraded states of the world. That catastrophe we have escaped after an experience of twenty-five years, and then only by the combined efforts of the two great political parties.

I submit brief extracts from the report of the majority of the commission and from my individual report of 1876, that our relative positions may be understood.

The commission said: "We believe that the remonetization of silver in this country will have a powerful influence in preventing, and probably will prevent, the demonetization of silver in France and in other European countries in which the double standard is still legally and theoretically maintained."

Again the majority said: "It may be added that a legislative remonetization on the relation to gold of 15.5 to 1 accomplishes without delay all the objects of the proposition for an international conference, which is urged from various quarters."

That I may place myself where I stood in 1876 I present brief extracts from my report of that year.

First I said: "There can be but one standard of value in any country at the same time, and a successful use of gold and silver simultaneously can be effected only by their consolidation upon an agreed ratio of value, and by the concurrence of the commercial nations of the world.

"The undersigned is also of opinion that it is expedient for this Government to extend an invitation to the commercial nations of the world to join in convention for the purpose of considering whether it is wise to provide by treaties and concurrent legislation for the use of both silver and gold in all such nations upon a fixed relative valuation of the two metals; and, finally, that until such an agreement between this Government and other commercial nations can be effected, the United States should pursue the existing policy in regard to the resumption of specie payments."

Further I said: "It is to be apprehended that the remonetization of silver by the United States at the present time would be followed by such a depreciation in its value as to furnish a reason against the adoption of the plan by the rest of the world, and that an independent movement on our part would increase the difficulties rather than diminish them."

These extracts shall suffice. I now repeat the assertion with which I introduced this topic, viz.: That in 1876 the majority of the Silver Commission put aside the most favorable opportunity, indeed the only opportunity, that the country has ever had for the organization of a universal system of bimetallism.

Of that majority, Senator Jones of Nevada, and Representative Bland, of Missouri, were the leading members. If in defence or in extenuation of the policy of the majority it shall be said that the United States has not remonetized silver, and that, therefore, the policy of the majority has not been tested, a partial rejoinder, if not, indeed, a satisfactory reply, may be deduced from the facts that between the years 1878 and the year 1893 the Government coined more than 400,000,000 silver dollars, and yet, in that period of time, silver bullion fell from 1.15 plus per ounce to .65 plus per ounce.

It is worthy of notice that the product of silver in the United States has increased with the demand for silver. Upon the passage of the Sherman Bill the product advanced from 45,000,000 ounces in 1888 to an average of 55,000,000 ounces from 1889 to 1893, inclusive. Upon the repeal of that act the product fell to 49,000,000 ounces in 1894.

It is not only probable, it is certain, that with every increasing demand for silver there will be an added supply. Consider what has happened since the appearance of the inventions of which I have spoken.

The world's annual product of silver from 1493 to 1865, inclusive, was 16,887,157 ounces. The largest annual product was from 1861 to 1865, when it reached 35,401,972 ounces. From 1866 to 1894 inclusive, the annual average product was 114,326,397 ounces. In 1894 the product was 167,752,561 ounces, which, as will be observed, was about nine times the annual product from 1493 to 1865.

From 1876 to 1894 the business of silver mining was increased 147 per cent. Can any one name any other business or pursuit in which there was a like increase? And is not the inference justified that the profits have been large and tempting, notwithstanding the demonetization of silver in some countries and the suspension of coinage in other countries?

I turn now to the future, and first as to the possibility of the further use of silver as currency.

I assume that in countries where the standard is gold there may be a considerable use of silver, as in the United States to-day.

An international bimetallic system, binding nations to each other for a definite term of years, is a proposition involving large responsibilities.

If in 1885 it was not practicable to secure the adoption of the bimetallic system, when silver was worth eighty-four cents per ounce, what is the prospect of its adoption when silver is worth only sixty- four cents per ounce, with an annually increasing product and a diminishing price?

What remains? This, possibly: That the nations may agree to purchase each a per cent of a fixed amount of silver as the product of each year. This scheme might prove, and probably it would prove, to be only a temporary expedient.

The enormous increase in the business of silver mining is evidence that the profits are far in excess of the profits that are gained in other pursuits. The increase in product is likely to be followed by a fall in price. Such are the resources of the earth that an increase in the demand for silver will be followed by an increase in the supply.

Gold mining is obedient to the same law. From 1876 to 1894 the product increased 74 per cent. That ratio of increase is likely to continue. The world is not in peril of a gold famine. Gold as a currency, passing from hand to hand, will be used less and less. Substitutes, for which gold can be obtained, will be preferred. The volume of currency in a country is not limited by the amount of gold that a country may possess. It may increase the amount of subsidiary coin very largely, and it may add to the sum of paper money, provided that that paper money is always redeemable in gold.

Nor does the quantity of gold in a country determine the price of commodities, except as that gold is a part of the total volume of the currency of the country. The volume of currency as a whole is the force by which the salable value of commodities is affected.

In truth, gold plays a small part only in actual business. It is a regulator of business rather than an active instrument for the transaction of business. It is not an exaggeration to say that the use of gold in business is limited to a small fraction of one per cent of the aggregate transactions in countries where gold is the standard.

It is not improbable that in the near future the world is to meet a surfeit of gold, as it is now meeting a surfeit of silver. Yet even then its capacity as a standard will not be affected. History does not carry us to a time when gold was not the recognized standard for the measurement of every other kind of property, and that not by one tribe or people only, but by mankind in every clime and in every stage of savageness or of civilization.

As the Mint Bill and the demonetization of silver have occupied the attention of the country for a third of a century, and as there may be a revival of the controversy at a time in the future I have thought it wise for me to make a record of the facts in the most enduring form at my command.

At the end this is my claim for the Mint Bill of 1873: It established the gold standard for the United States for all time. All the subsequent legislation has rested upon the fact that the Statute of 1873 made the gold dollar the standard of value in the United States.

XXXV BLACK FRIDAY—SEPTEMBER 24, 1869

So much time has passed since September 24, 1869, that there may be a large public who may become interested in a review of the events of the spring and summer of that year which culminated in Wall Street, New York, in the transactions and experiences of the day known as "Black Friday."

When the Forty-first Congress assembled in December of that year, the House of Representatives directed the Committee on Banking and Currency "to investigate the causes that led to the unusual and extraordinary fluctuations of gold in the city of New York, from the 21st to the 27th of September, 1869." The committee made a report which was printed under date of March 1, 1870, and which may be found in a volume entitled "Garfield's Report on the Gold Panic Investigation." From that report it appears that certain persons in the city of New York entered into an arrangement, or understanding, or combination, as early as the month of April, 1869, for the purpose of forcing the price of gold artificially to a rate far beyond what might be called the natural price. The committee, of which General Garfield was chairman, characterized the combination as a conspiracy. Technically and in a legal point of view the parties concerned could not be treated properly as conspirators. It does not appear that they contemplated the violation of any law, but only a policy by which gold might be advanced from time to time, and out of which advance large sums of money might be realized by those who were holders of gold. Upon that theory Jay Gould and James Fisk, Jr., who were the leaders and organizers of the combination, with their associates, made large purchases of gold at prices varying from thirty to thirty-five per cent premium. At the close of the month of April, the price of gold, not then, as far as known, under the influence of any speculative movement, was at a premium of about thirty-four per cent. The indications were that, during the months of May and June, the parties interested in the combination made large purchases. By the 20th of May the price had reached a premium of forty-four per cent. From that time onward, until the last of July, the premium diminished, and at that date the rate was thirty-six per cent.

When I entered the Treasury Department in March, there had not been sales of gold nor purchases of bonds by the Treasury Department as a policy, and but few transactions on either side had been made by my predecessors in office. As early as the 12th day of May I commenced the purchase of bonds for the sinking fund and for the reduction of the interest-bearing public debt. The total purchases during the year 1869 amounted to something more than $88,000,000, for which there was paid in currency $102,000,000 and a margin over. At that time, the customs receipts were in gold exclusively, and the purchase of bonds could only be made by a sale of gold or by a direct purchase of bonds to be paid for in gold. Suggestions were made by bankers and others in the city of New York, and perhaps elsewhere, that the purchase of bonds should be made in gold. This suggestion was not acceptable to me, and upon the ground that the sale of gold would be limited to those who had bonds, or who could procure bonds, for the payment of gold. From the 29th of April, when the first sale of gold was made, until the 31st day of December, the sales amounted to something more than $53,000,000, and the proceeds to something over $70,000,000. The difference in the amount realized from the sale of gold and the amount paid for bonds purchased was met by the excess of receipts over the expenditures of the Government during that period.

As having some connection, and perhaps an important connection, with what is to be said hereafter touching General Grant's action in the days of September, when the speculation was going on, I think it proper to make a statement of my relations to the President. I had declined the office of Secretary of the Treasury, and on the morning of my nomination to the Senate I wrote a letter to Mr. Washburne, through whom the invitation of the President that I should accept the office was made, requesting him and urging him to say to the President that I was unwilling to accept the place. My nomination was sent to the Senate and confirmed, and as there seemed to be no alternative for me, I entered upon the duties of the office. Due in part to these circumstances, as I think, the President accepted the idea that the management of the Treasury Department was in my hands, and from first to last, during the four years that I was in his Cabinet, his acts and his conversation proceeded upon that idea. Moreover, he was influenced by a military view that an officer who was charged with the conduct of a business, or of a undertaking, should be left free to act, that he should be made responsible, and that, in case of failure, the consequences should rest upon him. It happened, and as a plan on my part, that neither the President nor the Cabinet was made responsible for what was done in the Treasury Department. Hence it was that I presented to the Cabinet but two questions. One of these was of no considerable consequence. The other related to the political effect that might follow a loan that I contemplated making upon certain terms in the year 1872, when the Presidential contest was pending. In the line of these views, it happened that I announced my purpose to purchase bonds in May, 1869, without conference either with the Cabinet or with the President. When the announcement was made, there was a slight advance in bonds. In order that the business interests of the country might not be influenced by an apprehension that changes might take place in the policy of the Department, I announced (as stated in Chapter XXXIII) at the beginning of each month the sales of gold and the purchases of bonds that were to be made during the coming month. Those announcements were sent out on the evening of Sunday, either the last Sunday of the closing month or the first Sunday of the opening month. The despatches were written by myself Sunday evening, and sent to the Assistant Treasurer at New York. A copy was given to the agent of the Associated Press, that the public might be informed in the morning of the policy for the ensuing month, and that there should be no opportunity for speculation by persons who might obtain information in advance of the general public. Unhappily, this policy was made the basis of the proceedings in New York which culminated in "Black Friday." The parties interested—I do not call them conspirators—assumed that for thirty days the policy of the department as to the sale of gold and the purchase of bonds would remain unchanged, and on that basis they proceeded to make arrangements for the advance in gold. Not satisfied with that policy, which was designed to save the business community from unnecessary apprehensions, an attempt was made to induce me to make an announcement for two or three months. Such suggestions were made in letters that I received from interested parties in the city of New York.

Speculation in gold was not all on one side. There were speculators who were anxious to break down the price of gold, and between the lines I could read the condition of the respective parties from whom I received letters. Under date of September 23, I received a letter from a prominent house in New York in which the writer said: "I am actuated to again portray to you the state of financial affairs as they now exist in this city. The speculative advance in gold has brought legitimate business almost to a standstill, owing to the apprehension of a corner, which from appearances may appear at any moment."

It did not follow that the writer of the letter was "short on gold," as the phrase is. I had, however, in my possession at the time a list of persons in New York who were supposed to be contestants, some for an advance in gold and others for a fall. The writer of the letter was among those whose names had been given to me as speculators for a fall in gold. In this connection I may say that it was no part of my policy to regulate affairs in Wall Street or State Street or Lombard Street. Until it became apparent that the operations in New York affected largely and seriously the business interests of the country, and until it became apparent that the Treasury receipts were diminished by the panic that had taken possession of the public, I refrained from any interference with those who were engaged either in forcing up or forcing down the price of gold.

Under date of the 24th day of September, I received a letter from my special and trusted correspondent in the city of New York in which I find this statement: "This has been the most dreadful day I have ever seen in this city. While gold was jumping from forty-three to sixty- one the excitement was painful. Old, conservative merchants looked aghast, nobody was in their offices, and the agony depicted on the faces of men who crowded the streets made one feel as if Gettysburg had been lost and that the rebels were marching down Broadway. Friends of the Administration openly stated that the President or yourself must have given these men to feel that you would not interfere with them or they would never dare to rush gold up so rapidly. In truth, many parties of real responsibility and friends of the Government openly declared that somebody in Washington must be in this combination."

The last sentence in this quotation unfolds the policy which had guided Gould and Fisk and their associates from April to the culmination of their undertaking, the 24th day of September. As far as I know, the effort had been directed chiefly to the support of a false theory that the President was opposed to the sale of gold, especially during the autumn months, when a large amount of currency is required, or in those days was supposed to be required, for "the moving," as it was called, of the produce of the West to the sea coast for shipment to Europe. They even went so far as to allege that the President had ordered the Secretary of the Treasury to suspend the sale of gold during the month of September, for which there was no foundation whatever. Indeed, up to the 22d of September, when I introduced the subject of the price of gold to the President, he had neither said nor done anything, except to write a letter from New York City under date of September 12, 1869, in the following words:

NEW YORK CITY, September 12, 1869.

DEAR SIR: I leave here for western Pennsylvania to-morrow morning and will not reach Washington before the middle or last of next week. Had I known before making my arrangements for starting that you would be in this city early this week, I would have remained to meet you. I am satisfied that on your arrival you will be met by the bulls and bears of Wall Street, and probably by merchants, too, to induce you to sell gold, or pay the November interest in advance, on the one side, and to hold fast on the other. The fact is, a desperate struggle is now taking place, and each party wants the Government to help him out. I write this letter to advise you of what I think you may expect, to put you on your guard.

I think, from the lights before me, I would move on without change until the present struggle is over. If you want to write me this week, my address will be Washington, Pennsylvania. I would like to hear your experience with the factions, at all events, if they give you time to write. No doubt you will have a better chance to judge than I, for I have avoided general discussion on the subject.

Yours truly, U. S. GRANT.

Hon. GEORGE S. BOUTWELL, Secretary of Treasury.

At a meeting, which was accidental, as far as the President was concerned, on board one of Fisk and Gould's Fall River steamers, when he was on his way to Boston, in June of that year, to attend the Peace Jubilee, an attempt was made to commit General Grant to the policy of holding gold. I was present on the trip with the President. What happened on the boat may be best given in the language of Mr. Fisk and Mr. Gould. Mr. Fisk, in his testimony before the committee, said:

"On our passage over to Boston with General Grant, we endeavored to ascertain what his position in regard to the finances was. We went down to supper about nine o'clock, intending while we were there to have this thing pretty thoroughly talked up, and, if possible, to relieve him from any idea of putting the price of gold down."

Mr. Gould's account before the committee was as follows:

"At this supper the question came up about the state of the country, the crops, prospects ahead, etc. The President was a listener; the other gentlemen were discussing. Some were in favor of Boutwell's selling gold, and some were opposed to it. After they had all interchanged their views, some one asked the President what his view was. He remarked that he thought there was a certain amount of fictitiousness about the prosperity of the country, and that the bubble might as well be tapped in one way as another. . . . We supposed from that conversation that the President was a contractionist. His remark struck across us like a wet blanket."

The error of Fisk and Gould and their associates, from the beginning to the end of the contest, was in the supposition that the President was taking any part in the operations of the Treasury concerning the price of gold. If he expressed any opinions outside in conversation, there were no acts on his part in harmony with or in antagonism to the views he entertained. As a matter of fact, with the exception of the letter from the city of New York, he had no conference or correspondence with me up to the 22d day of September, when I called upon him, and gave him a statement of the price of gold in the city of New York, and of the nature and character of the combination that existed there, as far as it was understood by me. Their policy was directed to two points: first, to influence the President, if possible, to interfere in a way to advance the price of gold; and, second, to satisfy their adherents and opponents that the President either had so interfered or would so interfere.

Even Fisk and Gould may at a period of time have rested in the belief that the President either had interfered or that he would interfere. Their confidence was in Mr. A. R. Corbin, a brother-in-law of the President, who, under the influence of various considerations, which appear to have been personal and pecuniary to a very large extent, lent himself to the task of influencing the President. As a matter of fact, his attempts were very feeble and misdirected and of no consequence whatever. Indeed, such is my opinion of the President, and such my belief as to his opinion concerning Mr. Corbin, that nothing which Mr. Corbin did say, or could have said, did have or could have had the least influence upon the President's opinion or conduct. It is, however, also true that Fisk and Gould employed Corbin and gave him consideration in their undertakings out of which he realized some money. I received information, also, which may not have been true, that they suggested to him that he might become president of the Tenth National Bank, which had a very conspicuous part in the events which culminated in Black Friday.

An attempt to strengthen the impression that it was the purpose of the President to prevent the sale of gold was made through an article prepared by Mr. Corbin, probably under the direction of Mr. Gould and others, which appeared finally, with some alterations and omissions, in the New York Times of the 25th of August. It appears to have been the purpose of the parties interested to mislead the Times as to the authorship of the article, and they secured the agency of Mr. James McHenry, a prominent English capitalist, who called at the Times office, and presented the article to Mr. Bigelow, the editor, as the opinion of a person in the intimate confidence of the President. The article was put in type and double leaded. When so prepared, suspicions were aroused, and the financial editor, Mr. Norvell, made very important corrections, taking care to omit sentences and paragraphs that contained explicit statements as to the purposes of the President. Some of the phrases omitted were in these words: "It may be that further purchases of bonds will be made directly with gold." "As gold accumulates, the less would be the premium upon it. High prices for gold before the sale of our products would cause lower prices of gold after the sale of products."

Among the statements made which were preserved in the article as printed finally were these: "The President evidently intends to pay off the 5-20s as rapidly as he may in gold"; "So far as current movements of the Treasury are concerned, until crops are moved it is not likely Treasury gold will be sold for currency to be locked up."

Following the appearance of this article, I received a letter from Mr. Gould, dated the 30th of August, in which this sentence appears: "If the New York Times correctly reflects your financial policy during the next three or four months; namely, to unloose the currency balance at the Treasury or keep it at the lowest possible figure, and also to refrain during the same period from selling or putting gold on the market, thus preventing a depression of the premium at a season of the year when the bulk of our agricultural products have to be marketed, then I think the country peculiarly fortunate in having a financial head who can take a broad view of the situation, and who realizes the importance of settling the large balance of debt against us by the export of our agricultural and mining products instead of bonds and gold."

Of my reply to that letter, the committee say: "The brief and formal reply of the Secretary gave Gould no clew to the purpose of the Government."

Under date of September 20, I received a letter from Gould to which I made no reply. Aside from the topics to which he directed my attention in the letter, it is the unavoidable inference from the context as a whole that Gould had then no faith in the statements given to the public that the President was in any manner pledged to interfere and prevent the sale of gold. The following extracts from the letter of September 20 are a full exposition of his policy and of the means on which he relied to advance the price of gold during the month of September:

"On the subject of the price of gold and its effect upon the producing interests of the West, permit me to say that during the months of September of the past two years the price has averaged about forty- five. Gold must range this year at about that premium to enable the export of the surplus crops of wheat and corn. We have to compete with the grain-producing countries bordering on the Black and Mediterranean seas, and it requires a premium of over forty per cent on gold to equalize our high-priced labor and long rail transportation to the seaboard.

"My theory is to let gold go to a price that we can export our surplus products to pay our foreign debts, and the moment we turn the balance of trade in our favor gold will decline from natural causes. In my judgment, the Government cannot afford to sell gold during the next three months while the crops are being marketed, and if such a policy were announced, it would immediately cause a high export of bread- stuffs and an active fall trade.

"P. S. In addition to the above, if gold were put upon the market, government bonds would decline to at least fifteen, leaving the purchases made by the Government in the past few months open to criticism as showing a loss."

As early as the 20th of September, I had evidence satisfactory to me that the Tenth National Bank in the city of New York was a party to the speculation in gold, and that its assistance was rendered largely through the certification of checks drawn by the brokers, and largely in excess of the balances due them upon the books of the bank when the certifications were made. It appeared from the evidence submitted that these certifications of checks in excess of the balances due to brokers amounted to about $18,000,000 on the 22d and 23d of September, when the speculation was at its height.

For the purpose of arresting that process and checking the speculation in gold, I detained the comptroller of the currency and three competent clerks after the close of business on the 22d of September. The clerks received commissions as bank examiners, and were instructed to go to New York that night and to take possession of the Tenth National Bank, at the opening of business in the morning, and to give directions that the habit of certifying checks in excess of the balances due must be suspended. It was my expectation that the enforcement of that rule would, or might, end the speculation, inasmuch as the purchasers of gold would be unable to meet their obligations, and therefore it would be out of their power to create them. This expectation was not realized. Whether the certification went on at the Tenth National Bak in defiance of the order, or whether other banks were so connected with the speculation that checks were certified elsewhere, was not known to me.

I called upon the President after business on the 23d of September, and made a statement of the condition of the gold market in the city of New York, as far as it had been communicated to me during the day. I then said that a sale of gold should be made for the purpose of breaking the market and ending the excitement. He asked me what sum I proposed to sell. I said: "Three million dollars will be sufficient to break the combination."

He said in reply: "I think you had better make it $5,000,000."

Without assenting to his proposition or dissenting from it, I returned to the department, and sent an order for the sale of $4,000,000 of gold the next day. The order was to the assistant treasurer in these words: "Sell $4,000,000 gold to-morrow, and buy $4,000,000 bonds." The message was not in cipher, and there was no attempt to keep it secret. It was duplicated and sent by each of the rival telegraph lines to New York. Within the space of fifteen minutes after the receipt of the despatch, the price of gold fell from 160 to 133, and in the language of one of the witnesses, "half of Wall Street was involved in ruin."

For the moment, the condition of Wall Street and the Gold Exchange seemed to justify the statement of the person whose language has just been quoted. As a matter of fact, however, many of the people involved recovered from the panic, and were able to meet their obligations. Some were gainers, probably, by the proceedings of the month of September, and some were losers. As I have already said, I had no purpose to help anybody or to hurt anybody, and I interfered in Wall Street only when the operations that were going on there involved innocent parties who were engaged in legitimate business, and also imposed upon the Government a sacrifice in the loss of revenue.

Following the downfall of the combination, there appeared in the newspapers statements and imputations which reflected upon the President and his family as to their relations to the gold operations. All these statements were without foundation. Mr. Corbin's connection was established beyond controversy, but the evidence which established his relations to the parties engaged in the gold speculation was also conclusive as to the fact that the President had no connection with it, and that he was not in any way interested in any policy calculated to advance the interests of the combination.

The apprehensions that were entertained on the evening of the 24th and on the 25th of September as to the extent of the disaster to business and to individuals engaged in gold speculation were not realized in full. My special correspondent in New York said in a letter dated September 25: "Many of the houses hurt and reported failed yesterday are likely to recover." Again he said: "The demoralization in the street was never equaled, and it must take several days at least before matters get fairly straightened. There is a wholesome dread against making any obligations. Smith, Gould and Martin are just reported as paying in full."

In a letter dated September 27 at 6:30 P. M., the assistant treasurer at New York wrote me: "From the best evidence to be gathered in the excitement here, it is safe to infer that the Gold Exchange Bank will suffer losses to the extent of its capital and surplus at least, and perhaps more." To the contrary of that prediction, it is to be said that the Gold Exchange Bank was able to meet all its obligations.

In a letter written by Mr. Grinnell, then collector of the port of New York, under date of September 24, after the announcement of the sale of gold had been made, I find this statement: "Had you not taken the course which you did, I believe a large proportion of our most reliable merchants and bankers would have been obliged to suspend before three o'clock to-day, as confidence was entirely gone and the panic was becoming universal."

Following the break in the price of gold, there were persons who became apprehensive that the rate would fall to a point which would affect their interests unfavorably, and I received a letter, dated after business hours on the 24th, in which the writer said: "It is not impossible that, in view of the largeness of the amount of gold to be sold to-morrow, there may be a combination to procure it at a low price, and you will therefore excuse a suggestion that, as the effect of your intervention has already been realized, it might be well to protect the Government by making it known that you will reject all unacceptable bids."

These extracts from letters received previous to and during the crisis may lead to the conclusion that it is not safe to trust to persons engaged in large business and commercial transactions as guides for the administration of the Government in financial matters. Indeed, one may go still further, and say that it is not safe to trust the guidance of the Government in financial affairs to men whose life business it has been to convert information into gold.

The most unpleasant incident of the gold speculation of 1869 was the fact that General Butterfield, the assistant treasurer in the city of New York, was so far involved as to lead the President to ask for his resignation. That request did not arise from any evidence that General Butterfield was in any way concerned in the movement or combination, which led to the advance in gold. Indeed, the evidence was conclusive to the contrary. This fact, however, did appear—that during the period of the excitement he had made some purchases and sales of gold and bonds. The suspicions that existed in the city of New York as to his connection with the gold movement were largely exaggerations of the actual facts. There was no evidence which impeached his official or personal integrity in business. His resignation was requested upon the ground that it was essential to the proper administration of the office that the person holding the important place of assistant treasurer in the city of New York, should not be engaged in business transactions which might give rise to the conjecture that he had advantages over others in consequence of his connection with the Government.

It ought to be said the Mr. Gould, in his testimony before the committee, which was given at great length and with singular clearness of statement, denied expressly the existence of any combination. In fine, he claimed, what may have been the truth, and upon the whole probably was the truth, that it was not part of his purpose to carry the price of gold above forty or forty-five per cent premium. He attributed the excessive and rapid advance of the price of gold to the persons who had sold short and who, becoming alarmed, attempted to cover their sales by making purchases, and by bidding against each other carried the price from about 140 to 160.

The same statement was made by Mr. Fisk as to the cause of the excessive rise in the price of gold. He said: "It went up to sixty, for the reason that there were in that market a hundred men short of gold. There were banking houses which had stood for fifty years, and who did not know but what they were ruined. They rushed into the market to cover their shorts. I think it went from forty-five to sixty without the purchase of more than $600,000 or $700,000 of gold. It went there in consequence of the frightened bear interests. There was a feeling that there was no gold in the market and that the Government would not let any gold go out."

At the time of the gold panic, Gould and Fisk were interested in the business of railway transportation from the West to the seaboard, and Mr. Fisk made a statement which sets forth the theory on which he and Gould professed to act. Fisk said: "The whole movement was based upon a desire on our part to employ our men and work our power getting surplus crops moved East and receiving for ourselves that portion of the transportation properly belonging to our road. That was the beginning of the movement, and the further operations were based upon the promise of what Corbin said the Government would do."

From the testimony of Jay Gould and James Fisk, Jr., as it appeared in the printed report, we are able to comprehend the characteristics of the two men. Gould was cool and collected from beginning to end, with no indication in his statements that the events of the 24th of September had in any particular disturbed him in temper or nerve or confidence in his ability to meet the exigencies of the situation. On the other hand, the testimony of Fisk indicated the absence of the qualities ascribed to Gould, and during his examination he failed to maintain even ordinary equanimity of temper. He interfered with the proceedings, and delivered this address to the committee: "I must state that I must ask you gentlemen to summon witnesses whose names I shall give you. My men are starving. When the newspapers told you we were keeping away from this committee, I say to you that there is no man in this country who wants to come before you as bad as Jim Fisk, Jr. I have thirty or forty thousand wives and children to feed with the money disbursed from our office. We have no money to pay them, and I know what has brought them to this condition."

Another extract from Fisk's testimony gives a graphic view of his condition when the crash came: "I went down to the neighborhood of Wall Street Friday morning. When I got back to our office you can imagine I was in no enviable state of mind, and the moment I got up street that afternoon I started right round to old Corbin's to rake him out. I went into the room, and sent word that Mr. Fisk wanted to see him in the dining-room. I was too mad to say anything civil, and when he came into the room, said I, 'Do you know what you have done here, you and your people?' He began to wring his hands, and 'Oh,' he says, 'this is a horrible position. Are you ruined?' I said I didn't know whether I was or not; and I asked him again if he knew what had happened. He had been crying, and said he had just heard; that he had been sure everything was all right; but that something had occurred entirely different from what he had anticipated. Said I, 'That don't amount to anything. We know that gold ought not to be at thirty-one, and that it would not be but for such performances as you have had this last week; you know —— well it would not if you had not failed.' I knew that somebody had run a saw right into us, and said I, 'This whole —— thing has turned out just as I told you it would.' I considered the whole party a pack of cowards; and I expected that, when we came to clear our hands, they would sock it right into us. I said to him, 'I don't know whether you have lied or not, and I don't know what ought to be done with you.'

"He was on the other side of the table, weeping and wailing, and I was gnashing my teeth. 'Now,' he says, 'you must quiet yourself.' I told him I didn't want to be quiet; I had no desire to ever be quiet again. He says, 'But, my dear sir, you will lose your reason.' Says I, 'Speyers has already lost his reason; reason has gone out of everybody but me.'"

My part and my interest in the events of Black Friday came to an end with an effort to ascertain the authorship of an anonymous communication, written in red ink, that I received the 6th day of October. It was postmarked at New York, the 5th of October, 1869. (A reduced facsimile of the communication is shown below.) An attempt was made through the police and the secret service system to trace the authorship of the superscription. The attempt was ineffectual.

[Facsimile] If gold does not sell at 150 within 15 days I am a ruined man. You will be the cause of my ruin! Your life will be in danger. Wilkes Booth.

It appears in the review that Mr. Gould originated the scheme of advancing the price of gold and that Mr. Fisk was his principal coadjutor. It also appears that Mr. Fisk entered into the arrangement upon the basis of friendship for Mr. Gould, and not in consequence of an opinion on his part that the scheme was a wise one. Mr. Gould had two main purposes in view: first, the profit that he might realize from an advance in gold; and, second, the advantage that might accrue to the railroad with which he was connected through an increase of its business in the transportation of products from the West. As set forth in Mr. Gould's letter, he entertained the opinion, which rested upon satisfactory business grounds, that an advance in the price of gold would stimulate the sale of Western products, increase the business of transportation over the railways, and aid us in the payment of liabilities abroad. If the price of gold had not been advanced beyond a premium of forty or perhaps forty-five per cent, all these results might have been realized, without detriment to the public, while Mr. Gould and his associates would have realized large profits. When the price had advanced to forty or forty-five per cent, Mr. Gould or his associates made calls upon those who were under contracts to deliver gold to make their margins good or else to produce the gold. These demands created a panic, and the parties who had agreed to deliver gold entered the market, and bidding against each other, they carried the price beyond the point that Mr. Gould had contemplated.

XXXVI AN HISTORIC SALE OF UNITED STATES BONDS IN ENGLAND

If there should be any considerable interest in the history of the funding system of the United States, the interest would be due to a sale of bonds some thirty years ago and certain incidents which could not have been anticipated, which arose from the execution of the trust.

In the month of July, 1868, a bill for funding the national debt which had passed the Senate of the United States was reported, without amendments, to the House of Representatives by the Committee on Ways and Means.

When the bill was under consideration in the House, I proposed a substitute. In the debate of July 21 I made a statement of the nature of my substitute, and I reproduce an extract which sets forth the first step in a policy which culminated in the Act for Funding the Public Debt, and which was approved by President Grant July 14, 1870:

"The amendment to which I wish to call the attention of the House provides for the funding of $1,200,000,000 of the public debt $400,000,000 payable in fifteen years @ 5 per cent interest, $400,000,000 payable in twenty years @ 4 1/2 per cent interest, and $400,000,000 payable in twenty-five years @ 3.65 per cent interest, the latter sum of $400,000,000 payable, principal and interest, at the option of the takers, either in the United States, or in London, Paris, or Frankfort."

At that time I had not entertained the thought that I might come to be the head of the Treasury Department. Indeed, I had no other purpose in public life than to remain in the House of Representatives.

I had had experience on the executive side of the Government and also on the legislative side, and I had a fixed opinion in favor of the latter form of service.

As Secretary of the Treasury, I proposed a bill in 1869 in the line of the substitute for the bill of the Committee on Ways and Means which I had challenged in July, 1868. The bill proposed an issue of three classes of bonds, each of four hundred million dollars, which were to mature at different dates, and to bear interest at the rates of 5, 4 1/2, and 4 per cent. It was further provided that the principal and interest of the bonds bearing the lowest rate should be made payable either in the United States, or at Frankfort, Paris, or London, as the takers might prefer. The provision was rejected through the influence of General Schenck, who had then returned recently from Europe, and with the opinion that the concession involved an impairment of national honor. As a substitute for the feature so rejected, I originated a plan for the issue of registered bonds, upon the condition that the interest could be paid in checks to be forwarded by the mails to the holders of bonds at the places designated by them in any part of the world. This plan is far superior to the first suggestion, as it is susceptible of a much wider application.

I have received from Mr. Roberts, the Treasurer of the United States, the following letter and statement:

STATEMENT SHOWING THE PROPORTION OF UNITED STATES BONDS OUTSTANDING JANUARY 25, 1900, ON WHICH INTEREST IS PAID BY CHECK.

TITLE OF LOAN. Total issue. Registered Percentage bonds on of bonds on which interest which interest is paid by is paid by check. check.

Funded loan of 1891 continued at 2 per cent . . . . . . . . .$ 25,364,500 $ 25,364,500 100.00 Four per cent funded loan of 1907 . . . . . . . . . 545,342,950 478,195,600 87.69 Five per cent loan of 1904 . . . . . . . . . 95,009,700 64,615,650 68.01 Four per cent loan of 1925 . . . . . . . . . 162,315,400 117,997,200 72.70 Three per cent ten-twenties of 1898 . . . . . . . . . 168,679,000 109,450,060 55.09

Totals . . . . . . . . $996,711,550 $795,623,030 77.49

TREASURY DEPARTMENT. OFFICE OF THE TREASURER, WASHINGTON, D. C. January 25, 1900.

HONORABLE GEORGE S. BOUTWELL, Boston, Massachusetts.

My Dear Mr. Secretary: It gives me pleasure to enclose to you a table showing by classes of bonds the percentage of interest paid by checks. The interest on all registered bonds is now so paid. Only the coupon bonds, by their nature, are differently treated.

Your plan has worked admirably, and the drift is slowly from the coupon to the registered form, and so to an increase of the payment of interest by checks.

With kind regards, Yours very truly, (Signed) ELLIS H. ROBERTS, Treasurer of the United States.

The plan has been adopted by corporations that are borrowers of large sums of money upon an issue of bonds, and the use of the system is very general in the United States.

In my report to Congress in December, 1869, I made recommendation of the Funding Bill, and I placed copies of the bill that I had prepared in the hands of the Finance Committee of the Senate, and in the hands of the Committee of Ways and Means of the House of Representatives.

When the bill became a law, the authorized issue of five per cent bonds was limited to two hundred million dollars, and the issue of four per cent was raised to twelve hundred million. Simultaneously with the passage of the Funding Bill of July, 1870, the war between France and Prussia opened, and the opportunity for negotiations was postponed until the early months of the year 1871. In these later years, when bonds of the United States have been sold upon the basis of their par value at two per cent income, it is difficult to realize that in 1869 the six per cent bonds of the United States were worth in gold only 83-5/10 cents to the dollar. The first attempt to dispose of the five per cent bonds was made by the Treasury Department through an invitation to the public to subscribe for the bonds, payment to be made in the currency of the country, or by an exchange of outstanding five-twenty bonds which bore interest at the rate of six per cent. The subscriptions reached the sum of sixty-six million dollars, of which the national banks were subscribers to the amount of sixty-four million, leaving two million only as the loan to the general public. A portion of the amount taken by the banks was for the account of patrons and clients. This experience justified the opinion that future efforts with the general public would be unsuccessful, while the credit of the country was not established and placed beyond the influence of cavilers and doubters.

It was under such circumstances that the aid of banks and bankers became important for the furtherance of subscriptions, in view of the fact that they could give personal service of a nature not possible in the case of salaried officers of the Government, nor compatible with their daily duties.

It is not easy, in this age of comparative freedom and power in financial affairs, to comprehend that in the year 1871 the long established bankers of New York, Amsterdam, and London, either declined or neglected the opportunity to negotiate the five per cent coin bonds of the United States upon the basis of their par value. It may not be out of place for me to mention Mr. Morton, of the house of Morton, Bliss & Co., as an exception, to the bankers of Europe and the United States.

It was in the same months of 1871 that I recommended the issue of a four per cent fifty-year bond as the basis of the currency to be issued by the national banks. This proposition, which would have been advantageous to the banks, in an increasing ratio as the value of money diminished, was defeated by the organized opposition of the banks through an effective lobby that was assembled in the city of Washington. Such was the public sentiment in the year 1871, even in the presence of these important facts, that in the month of December I was able to say in my annual report that the debt had been diminished during the next preceding year in the sum of ninety-four million dollars, and that the total decrease from March 1, 1869 to December 1, 1871, was over two hundred and seventy-seven million dollars.

It was in this situation of affairs that Messrs. Jay Cooke & Co. proposed to undertake the sale in London, by subscription, of one hundred and thirty-four million five per cent bonds then unsold. Authority was given to Cooke & Co. to proceed with the undertaking, and when the books were closed, September 1, I was informed that the loan had been taken in full. By the terms prescribed by Cooke & Co., the subscribers deposited five per cent as security for the validity of their subscriptions. The bonds were to be delivered the first day of December.

Upon the receipt of the information that the undertaking had been a success, the bonds were prepared, and the Hon. William A. Richardson, then an assistant secretary of the Treasury, was designated as the agent of the department for the delivery of the bonds. The bonds were placed in safes, on each of which there were three locks. The clerks were sent over in different vessels, and the keys were so distributed among them, that there were not keys in any one vessel by which any one of the safes could be opened.

The success of the subscription gave rise to an unexpected difficulty.

At that time there were outstanding one hundred and ninety-four million ten-forty United States bonds that carried interest at the rate of five per cent.

It was a singular coincidence, and a coincidence probably not due to natural causes, that some five per cent bonds, having fifteen years to run, should be at par, and that other five per cent bonds that might run thirty years should fall below par in the same market. In the three months from August to December, these ten-forties were quoted as low as ninety-seven, or even for a time at ninety-six. Cooke became anxious, if not alarmed, lest the rate should fall below ninety-five, and consequently lest the subscribers should refuse to meet their obligations. Early on the morning of the first Monday in December, I received the information that the bonds were taken as soon as the offices were open. I may mention in passing that Cooke & Co. paid for the bonds as they were delivered, either in coin or in five-twenty bonds.

As bonds were taken, and as payments were made, a difficulty appeared which had been anticipated, but not in its fullness. The proceeds from the sales of the five per cent bonds were pledged to the redemption of the six per cent five-twenty bonds, reckoned at their par value.

It was provided by the statute that whenever five-twenty bonds were called, a notice of ninety days should be given, when interest would cease. Thus it happened that whenever a bond was called it was worth par and interest to the end of the ninety days. Of the called bonds some were in America, and the owners did not choose to present them in London in exchange for five per cent bonds, nor for coin. Hence it happened that the total proceeds of the five per cent bonds, about twenty million dollars were paid in gold coin by Cooke & Co. This coin was deposited in the Bank of England, but upon such terms as were imposed by the governors:

(1) The deposits must be made in the name of William A. Richardson. This was done, but a statement was made by Judge Richardson that the deposit was the property of the United States.

(2) The gold was not to be taken out of the country. This stipulation was in the line of our policy, which was to invest the entire sum in five-twenty bonds, whenever they could be bought at par. The opportunity came in a manner that was not anticipated. The documents referred to are of historical value, and they are therefore inserted as follows:

(a) A declaration of trust by William A. Richardson, Assistant Secretary of the Treasury, dated at London, December 28, 1871.

(b) Letter of William A. Richardson, Assistant Secretary of the Treasury, to John P. Bigelow, Chief of the Loan Division of the Treasury, dated also at London, December 28, 1871.

(c) Letter of George Forbes, Chief Cashier of the Bank of England, to Judge Richardson, dated January 4, 1872.

(d) Letter of Judge Richardson to George Lyall, Governor of the Bank of England, dated January 15, 1872.

(e) Reply to the same by George Forbes, Chief Cashier, dated January 17, 1872.

(f) William A. Richardson's report of January 25, 1872.

(a) DECLARATION BY WILLIAM A. RICHARDSON

Whereas, I have this day deposited in my name, as Assistant Secretary of the Treasury, U. S. A., in the Bank of England, two million five hundred and fifty thousand pounds sterling, and shall probably hereafter make further deposits on the same account:

Now I hereby declare that said amount and deposits, present and future, are official and belong to the Government of the United States, and not to me personally that the moneys so deposited are the proceeds of the sale of five per cent bonds of the "Funded Loan"; that whatever money I may at any time have in said Bank under said account, will be the property of the United States Government, held by me officially as Assistant Secretary of the Treasury, acting under orders from the Secretary; that the same is, and will continue to be subject to the draft, order, and control of the Secretary of the Treasury, independently of, and superior to my authority, whenever he so elects, and that upon his assuming control thereof, my power over the same will wholly cease. In case of my decease before said account is closed, the money on deposit will not belong to my estate, but to the Government of the United States.

Witness my hand and seal, (Signed) WILLIAM A. RICHARDSON, Assistant Secretary of the Treasury, U. S. A. LONDON, ENGLAND, December 28, 1871.

Witnesses: JNO. P. BIGELOW, E. W. BOWEN, GEO. L. WARREN.

(b) JUDGE RICHARDSON TO JOHN P. BIGELOW

41 LOMBARD ST., LONDON, ENGLAND, December 28, 1871.

To JOHN P. BIGELOW, Chief of the Loan Division, Secretary's Office, Treasury Department, U. S. A.

I have this day deposited in the Bank of England, in my name as Assistant Secretary of the Treasury, two million five hundred and fifty thousand pounds sterling money, belonging to the United States, received in payment of five per cent bonds of the Funded Loan delivered here in London.

All money hereafter received for future delivery of bonds will be deposited to the same account.

Herewith I hand you a declaration of trust signed by me declaring that said account and moneys belong to the United States, and not to me personally, also the Deposit Book and a book of blank checks numbered from 35,101 to 35,150, both inclusive, received from said Bank, all of which you will take into your custody and carefully keep in one of the iron safes sent here from the department in the same manner as the books are kept.

This money, and all the money deposited in said bank on the account aforesaid, will be drawn and used only in accordance with the orders of the Secretary of the Treasury to redeem or purchase five-twenty bonds and matured coupons, or such other and further orders as he may make in relation thereto.

When money is to be drawn to pay for bonds or coupons, it must be drawn only by filling up a check from the book of checks above referred to, and you will open an account in which you will enter the amount of all deposits, the number and amount of each check drawn, specifying also to whom the same is made payable and on what account it is drawn.

The checks will be filled up by Mr. Prentiss of the Register's Office, who will place his check mark on the upper left corner, and will enter the same in the book. You will then carefully examine the check, see that it is correctly drawn for the amount actually payable for bonds or coupons received and properly recorded, and you will, when found correct, place your check mark on the right hand upper corner before the same is signed by me. All checks will be signed by me with my full name as Assistant Secretary of the Treasury, as this is signed.

(Signed) WILLIAM A. RICHARDSON, Assistant Secretary of the Treasury, U. S. A.

(c) MR. FORBES TO JUDGE RICHARDSON

BANK OF ENGLAND, E. C., January 4, 1872.

HON. W. A. RICHARDSON, Assistant Secretary of the Treasury of the United States, 41, Lombard Street.

Sir: To preclude any possible misunderstanding hereafter as to the character of the drawing account opened in your name, I am instructed by the Governors to communicate to you in writing that, in conformity with the rule of the Bank, the account is considered a personal one; that the Governors have admitted the words appended to your name merely as an honorary designation; and the bank take no cognizance of, or responsibility with reference to the real ownership, or intended application of the sums deposited to the credit of the account.

I am, sir, Your obedient servant, (Signed) GEORGE FORBES, Chief Cashier.

(d) JUDGE RICHARDSON TO MR. LYALL

41 LOMBARD STREET, LONDON, ENGLAND, January 15, 1872.

GEORGE LYALL, ESQ., Governor of the Bank of England.

Dear Sir: Referring to the several conversations which I have had with you, and with your principal cashier, Mr. Forbes, relative to the manner and form of keeping the account which I desire to have in the bank, I beg leave to renew in writing my request heretofore made orally, that the account of money deposited by me may stand in the name of Hon. George S. Boutwell, Secretary of the Treasury, U. S. A., and myself, Assistant Secretary, jointly and severally, so as to be subject to a several draft of either, and of the survivor, in the case of death of either one.

I suppose I must regard the letter of Mr. Forbes to me, dated January 4, 1872, and written under instructions from the Governors of the Bank as expressing your final conclusion that the account in whatever form it may be kept, must be considered a personal one.

You know my anxiety to have by deposits received by the Bank, and entered in such way that in case of my death the balance may be drawn at once by the Secretary of the Treasury or some other officer of the Government, and although you are unwilling to regard the account as an official one, I hope that on further consideration you will allow it to be opened in the name of Mr. Boutwell and myself jointly and severally as above stated. I am, sir, Your obedient servant, (Signed) WILLIAM A. RICHARDSON, Assistant Secretary of the United States Treasury Department.

(e) MR. FORBES TO JUDGE RICHARDSON

BANK OF ENGLAND, E. C. January 17, 1872.

HON. W. A. RICHARDSON, Assistant Secretary of the Treasury of the United States, 41, Lombard St. Sir: I am directed by the Governor to acknowledge the receipt of your letter of the 15th inst., requesting that the account of money deposited by you in the Bank may stand in the name of the Hon. George S. Boutwell, Secretary of the Treasury, U. S. A., and yourself, the Assistant Secretary, jointly and severally, so as to be subject to the several draft of either, and of the survivor in case of death of either one.

I am to inform you that the Bank is prepared to open an account in this form, as a personal account; but it is essential that Mr. Boutwell should join in the request and concur in the conditions proposed before each party can in that case draw upon the account. I am, sir, Your obedient servant, (Signed) GEORGE FORBES, Chief Cashier.

(f) JUDGE RICHARDSON'S REPORT

41, LOMBARD STREET, LONDON, January 25, 1872.

HON. GEORGE S. BOUTWELL, Secretary of the Treasury.

Dear Sir: It is my purpose in this letter to give you an account of the way in which I have kept the money arising from the sale of the Funded Loan, and the manner in which it has been drawn from time to time to pay for bonds purchased and redeemed.

Immediately after the first of December, 1871, the money began to accumulate very rapidly. Up to the first of December no money whatever had been received, all bonds delivered having been paid for by the called bonds and coupons or secured by deposit of other bonds; but on the second day of that month nearly two and a half millions of dollars cash were paid to me; then on the fourth, nearly five millions of dollars more; and on the fifth, above three millions, and so on in different sums till the present time.

Of course it was wholly impracticable to receive, handle, count and keep on hand such large amounts of gold coin, weighing between a ton and three quarters and two tons to each million of dollars. At one time my account showed more than sixteen millions of dollars on hand, and to have withdrawn from circulation that amount of coin would have produced a panic in the London market; and the risk in having it hoarded in any place within my reach would have been immense, especially as it would have soon been known where it was.

I ascertained that there would be some difficulty in keeping an official Government account in the Bank of England, and I did not feel authorized, or justified in my own judgment, in entrusting so much money to any other banking institution in this city. I found, also, that the Bank of England never issues certificates of deposit, as do our banks in the United States. But it issues "post notes," which are very nearly like its ordinary demand notes, but payable to order, and on seven days' time, thus differing only in the matter of time from certificates of deposit. Availing myself of this custom of the Bank of England, I put all the money into post notes, and locked them up in one of the safes from which the bonds had been taken. This I regarded as a safe method of keeping the funds, and I anticipated no further difficulty.

But when the Bank made its next monthly or weekly return of its condition, and published it in all of the newspapers as usual, the attention of all the financial agents, bankers, and financial writers of the daily money articles in the journals was immediately attracted to the sudden increase of the "post notes" outstanding, and the unusually large amount of them, so many times greater than had ever been known before. They were immensely alarmed lest the notes should come in for redemption in a few days, and the coin therefor should be withdrawn from London and taken to a foreign country; and lest there should be a panic on account thereof. Some of the financial writers said they belonged to Germany, and that they represented coin which must soon be transmitted to Berlin. The Bank officers themselves, although they knew very well that these notes belonged to the United States, were not less alarmed because they feared that I would withdraw the money to send it to New York, which they knew would make trouble in the London Exchange. Money, which for a short time before had been at the high rate of interest, for this place, of five per cent, had become abundant, and the people were demanding of the Bank a reduction in the rate; but so timid were they about these post notes that they did not change the rate until I took measures to allay their fears. This I did because I thought it would be injurious and prejudicial to the Funded Loan to have a panic in London, in which the market price of the new loan would drop considerably below par just at a time when its price and popularity were gradually rising, and just as it was coming into great favor with a new class of investors in England, the immensely rich but timid conservatives.

I determined to open a deposit account with the Bank of England, and in doing so experienced the difficulties which I anticipated. I assured the officers that the money was Government (U. S.) money, which I did not intend, and was not instructed to take home with me; but which I should use in London in redeeming bonds and coupons, and should leave in the bank on deposit unless by the peculiarity of their rules, I should be obliged to withdraw it. They objected to taking the money as a Government deposit, or as an official deposit in my name, having some vague idea that if they took it and opened an official Government account they should be liable for the appropriation of the money unless documents from the United States were filed with them taking away that liability, but they could not tell me exactly what documents they wanted nor from whom they must come. They did, however, agree to open an account with me, and that was the best I could do. In signing my name to their book, I added my official title, and when, some time after, I came to drawing checks, I signed in the same way. This brought from the officers a letter which I annex hereto, saying that my deposit would be regarded as a private and personal one.

What I was most anxious to provide for was the power in some United States officer to draw the money in case of my death (knowing the uncertainty of life), without the delay, expense, and trouble which must necessarily arise, if it stood wholly to my personal credit. I asked the officers to allow it to stand in your name as Secretary and mine as Assistant Secretary, jointly and severally, so as to be drawn upon the several check of either, and by the survivor in case of the death of either one. I suggested other arrangements which would have had the same result, but they said their rules prevented their agreeing to my requests, that they were conservative and did not like to introduce anything new into their customs.

On the 15th day of January, 1872, I renewed my request in writing, after having had several conversations with the officers on the subject, and received an answer which, with the letter of request, is hereto annexed.

In this, their most recent communication, they express a willingness to enter the account in our joint names as I suggested, regarding it, however, as a "personal account" and requiring that you should "join in the request and concur in the conditions proposed before either party can in that case draw upon the account."

As I must now almost daily draw from the account for money with which to pay bonds, I cannot join your name therein until you have sent me a written compliance with the conditions which they set forth, because to do so would shut me out from the account altogether for several weeks.

Besides, having no instruction from you on the subject, I don't know that you would care to give written directions as to the deposit. I know very well that, in case of my sudden decease, you would be glad enough to find that you could at once avail yourself of the whole amount of money here on deposit, and so I should have joined your name as I have stated. Now you can do as you please. I have taken every possible precaution within my power, and have no fear that the arrangements are insufficient to protect the Government in any contingency whatever. With the correspondence which has passed between the officers of the Bank and myself, and our conversation together, the account is sufficiently well known to them as a U. S. Government deposit, and is fully enough stamped with that character, as I intended it should be, however much they may ignore it now.

But for still greater caution, I made the written declaration of trust on the very day of the first deposit, signed and sealed by me, declaring the money and account as belonging to our Government, and not to me, a copy of which is hereto annexed.

I also gave written instruction to Messrs. Bigelow and Prentiss to draw all the checks, and how to draw them and keep an account thereof. As I make all my purchases through Jay Cooke, McCullough & Co., every check is in fact payable to that house, so that the account is easily kept, and the transactions cannot be mingled with others, for there are no others. I annex a copy of these instructions.

This, I believe, will give you a pretty correct idea of the difficulties which have been presented to me in the matter of taking, keeping, and paying out the money arising from the sale of the bonds, and the manner in which I have met them.

I may add that when the officers of the Bank were satisfied that I was not to withdraw the money and take it to New York, they reduced the rate of interest and there has been an easy market ever since.

There are now on deposit more than twelve million dollars; but I hope it will be reduced very fast next month. Had you not sent over the last ten million of bonds, we should have been able to close up very soon. I hope now that you will make another call of twenty million at least, because I think it would enable us to purchase more rapidly.

I annex: (1) Copy of declaration of trust. (2) Copy of instructions for drawing checks. (3) Copy of letter from Cashier of Bank of England, stating that the account would be considered personal. (4) Copy of my letter to the Governor of the Bank, asking that your name might be joined. (5) Copy of reply to last mentioned letter.

I am, very respectfully, Your obedient servant, (Signed) WILLIAM A. RICHARDSON.

When Cooke & Co. had completed their undertaking, the deposits in the Bank of England exceeded fifteen million dollars, and for three months they were for the most part unavailable, as the five-twenty bonds which had not matured under the calls that had been made were above par in the market. It was a condition of the loan that the five-twenty bonds redeemed should equal the 5 per cent bonds that had been issued, both issued to be reckoned at their par value.

In the month of April, 1872, the Commissioners who had been designated under the Treaty of Washington of 1871 to ascertain and determine the character and magnitude of the claims that had been preferred by the United States against Great Britain, growing out of the depredations committed by the "Alabama" and her associate cruisers, were about to meet at Geneva for the discharge of their duties.

The administration had appointed the Hon. J. C. Bancroft Davis, the most accomplished diplomatist of the country, as the agent of the United States, and the preparation of "the Case of the United States" was placed in his hands.

The British Ministry discovered—or they fancied that there was concealed in covert language—a claim for damages, known as "consequential or indirect damages"—in other words, a claim to compensation for the value of American shipping that had been driven from the ocean and made worthless through fear of the cruisers that had been fitted out in British ports.

This claim, in the extreme form in which it had been presented by Mr. Sumner, had been relinquished by the Administration, and a present reading of "the Case of the United States" may not justify the construction that was put upon it by the British Ministry.

Nevertheless, the Administration received notice that Great Britain would not be represented at the Geneva Conference.

The subject was considered by the President and Cabinet on three consecutive days at called sessions. At the final meeting I handed a memorandum to the President, which he passed to the Secretary of State. The memorandum was not read to the Cabinet.

Mr. Adams, the Commissioner for the United States, had not then left the country. By a despatch from the Secretary of State Mr. Adams was asked to meet me at the Parker House in Boston, on the second day after the day of the date of the despatch.

What occurred at the meeting may be best given through an extract from the diary of Mr. Adams, which has been placed in my hands by Mr. Charles Francis Adams, Jr., with the privilege of its full and free use by me.

The first entry is under date of Saturday, April 20, 1872, and is in these words: "Charles brought me a telegram from Governor Fish, desiring me to meet Mr. Boutwell, who will be at the Parker House at eleven o'clock on Monday." The second entry is under date of "Monday, 22d of April."

"At eleven o'clock called on Mr. Boutwell, the Secretary of the Treasury, at Parker's Hotel, according to agreement. Found him alone in his minute bedroom. He soon opened his subject—handed over to me a packet from Governor Fish, and said that it was the desire of the Government, it I could find it consistent with what they understood to be my views of the question of indirect damages, that I would make such intimation of them to persons of authority in London as might relieve them of the difficulty which had been occasioned by them. I told them of my conversation held with the Marquis of Ripon, in which I had assumed the heavy responsibility of assuring him that the Government would not press them. I was glad now to find that I had not been mistaken. I should cheerfully do all in my power to confirm the impressions consistently with my own position."

Thus, through Mr. Adams, the claim for "indirect damages" was relinquished. When the fact of the disturbed relations between the United States and Great Britain became public there was a panic in the London stock market, and in the brief period of eight and forty hours our deposit of twelve million or more in the Bank of England was converted into five-twenty United States 6 per cent bonds, purchased at par.

In my annual report for December, 1872, I was able to make this statement:

"Since my last annual report the business of negotiating two hundred million of 5 per cent bonds, and the redemption of two hundred million 6 per cent five-twenty bonds has been completed and the accounts have been settled by the accounting officers of the Treasury.

"Further negotiations of 5 per cent bonds can now be made on the basis of the former negotiation."

XXXVII GENERAL GRANT'S ADMINISTRATION

The greatness of General Grant in war, in civil affairs, and in personal qualities which at once excite our admiration and deserve our commendation, was not fully appreciated by the generation to which he belonged, nor can it be appreciated by the generations that can know of him only as his life and character may appear upon the written record. He had weaknesses, and of some of them I may speak; but they do not qualify in any essential manner his claim to greatness in the particulars named. He was not fortunate in the circumstances incident to the appointment of his Cabinet. The appointment of Mr. Washburne as Secretary of State for the brief period of one or two weeks was not a wise opening of the administration, if the arrangement was designed, and was a misfortune, if the brief term was due to events not anticipated. The selection of Mr. Fish compensated, and more than compensated, for the errors which preceded his appointment. The country can never expect an administration of the affairs of the Department of State more worthy of approval and eulogy than the administration of Mr. Fish. Apparently we were then on the verge of war with Great Britain, and demands were made in very responsible quarters which offered no alternative but war. The treaty of 1871, which was the outcome of Mr. Fish's diplomacy, re-established our relations of friendship with Great Britain, and the treaty was then accepted as a step in the direction of general peace.

In the month of February, 1869, I received an invitation from General Grant to call upon him on an evening named and at an hour specified. At the interview General Grant asked me to take the office of Secretary of the Interior. As reasons for declining the place, I said that my duties and position in the House were agreeable to me and that my services there might be as valuable to the Administration as my services in the Cabinet. General Grant then said that he intended to give a place to Massachusetts, and it might be the Secretary of the Interior or the Attorney-Generalship. He then asked for my advice as to persons, and said that if he named an Attorney-General from Massachusetts, he had in mind Governor Clifford, whom he had met. Governor Clifford was my personal friend, he had been the Attorney- General of the State during my term as Governor, he was a gentleman of great urbanity of manner, a well-equipped lawyer, and as an advocate he had secured and maintained a good standing in the profession and through many years. He had come into the Republican Party from the Webster wing of the Whig Party. To me he was a conservative, and I was apprehensive that his views upon questions arising, or that might arise, from our plan of reconstruction might not be in harmony with the policy of the party. Upon this ground, which I stated to General Grant, I advised against his appointment. I named Judge Hoar for Attorney-General and Governor Claflin for the Interior Department. I wrote the full address of Judge Hoar upon a card, which I gave to General Grant. Judge Hoar was nominated and confirmed.

At the same time, Alexander T. Stewart, of New York, was nominated and confirmed as Secretary of the Treasury. It was soon discovered that Mr. Stewart, being an importer, was ineligible for the office. Mr. Conkling said there were nine statutes in his way. A more effectual bar was in the reason on which the statutes rested, namely, that no man should be put in a situation to be a judge in his own cause. The President made a vain effort to secure legislation for the removal of the bar. Next, Judge Hilton, then Mr. Stewart's attorney, submitted a deed of trust by which Mr. Stewart relinquished his interest in the business during his term of office. The President submitted that paper to Chief Justice Cartter of the Supreme Court of the District of Columbia. The Chief Justice gave a brief, adverse, oral opinion, and in language not quotable upon a printed page.