THE WEST AND THE GREENBACKS
The activity of the North and the East between 1861 and 1865 was
imitated and magnified among the youthful communities that made up the
western border and ranged in age from a few weeks to thirty years. These
had been mostly agricultural in 1857. Iowa, Minnesota, Wisconsin, and
Kansas had been the frontier before the Civil War. In place of these,
now grown to be populous and more or less sedate, a new group appeared
farther west, within what had been believed to be the "American Desert."
By 1868 Congress completed the subdivision of the last lands between the
Missouri River and the Pacific, since which date only one new political
division has appeared in the United States.
The last frontier, that developed after 1857, was novel as well as new.
It was made up of mining camps. Everywhere in the Rocky Mountains
prospectors staked out claims and introduced their free-and-easy life.
Before 1857 the group of Mormons around the Great Salt Lake was the only
considerable settlement between eastern Kansas and California. Now came
in quick succession the rush to Pike's Peak and Colorado Territory
(1861), the rush from California to the Carson Valley and Nevada
Territory (1861), and the creation of the agricultural territory of
Dakota (1861) for the up-river Missouri country, where in a few more
years were revealed the riches of the Black Hills. In 1863 the mines of
the lower Colorado River gave excuse for Arizona Territory. Those of the
northern Continental Divide were grouped in Idaho in the same year, and
divided in 1864 when Montana was created. Wyoming, the last of the
subdivisions, was the product of mines and railroads in 1868. Oklahoma
was not named for twenty years more, but had existed in its final shape
since the passage of the Kansas-Nebraska Bill in 1854.
The legitimate influence of these mining-camps upon the United States
was great. It was no new thing for Congress to solve its national
problems on the initiative of the West. Since the passage of the
Ordinance of 1787 this had been a frequent occurrence, and the history
of the public lands had always been directed by Western demands. In 1862
the agricultural West, whose capacity to cultivate land had been
magnified by the new reaper of McCormick, had obtained its Homestead
Act, by which land titles were conveyed to the farmer who cleared the
land and used it. Thomas H. Benton had fought for this through a long
lifetime. He died too soon to see the full apotheosis of the squatter,
who gradually developed, in point of law, from the criminal stealing the
public land to the public-spirited pioneer in whose interest a wise
Congress ought to shape its laws. Under the influence of this new
Homestead Law, aided by the Preemption Law, which remained in force,
land titles were established in the Mountain States as rapidly as the
Indians could be removed.
The frontier mining territories were loud in demanding that Congress
should give them more land, remove the Indians, extend police
protection, and give them mails and railroads. The miner disliked the
isolation which his speculations brought upon him, and Congress unfolded
new powers to remove it for him. In 1858 it organized the great overland
mail that ran coaches to California in less than twenty-five days. The
pony express provided faster service in 1860-61. And after private money
had built the telegraph line to the Pacific, both Congress and the West
took up the subject of a continental railway.
In the summer of 1862 a group of railroad companies was authorized to
build a track from the Missouri River (which had already been reached at
St. Joseph by a railway from the East) to California. As modified by law
in 1864 the contract provided for extensive government aid in the
speculation: twenty sections of land for every mile of track, and a loan
of United States bonds at the rate of at least $16,000 per mile. But the
West had little capital, and the prosperous East had better investments
at home, so that money could hardly be got into this scheme on any
terms. The Western promoters were driven to shifty extremes before they
overcame the Eastern belief that no continental railroad could pay. Not
until 1866 was the construction work begun in earnest.
[Illustration: THE WESTERN RAILWAY LANDGRANTS, 1850-1871
Explanation of the map of
THE WESTERN RAILWAY LAND GRANTS, 1850-1871
(This map is based upon the one in Donaldson, Public Domain, 948, and
includes certain wagon-road lands.)
There never were any public lands in the State of Texas. Oklahoma lay
within the Indian Country in which no lands were available for grants
between 1850 and 1871.
The railway land grants, authorized between 1850 and 1871 lay within the
areas shaded, and consisted, in all cases, of alternate sections on each
side of the track. The sections retained by the United States were,
however, withdrawn from entry upon filing of the railway survey, and
remained withdrawn until the railway allotment had been made. Regions
thus impeded in their development often became centers of hostility
toward the railroads.]
Between 1866 and 1869 the building of the Union Pacific was the most
picturesque enterprise in America. Across the great plains, the desert,
and the mountains, from Council Bluffs to Sacramento, it was pushed. In
the West, Stanford and his group of California visionaries carried the
burden. The eastern end brought out no single great promoter. Both ends
fought the problem of timber and stone and railroad iron, but most of
all of labor. Stanford finally imported the Chinese coolie for the job.
Civil War veterans and new immigrants did most of the work on the
eastern end. And along the eastern stretches the Indian tribes of the
plains watched the work with jealous eyes. The Pawnee, the Sioux, the
Arapaho, and the Cheyenne saw in the new road the end of a tribal life
based upon wild game.
Severe Indian outbreaks accompanied the construction of the railroad, as
the tribes made their last stand in Wyoming, Colorado, and the Indian
Territory. Before the line was done, the tribes of the plains were under
control in two great concentration camps, in South Dakota and Indian
Territory, and the worst of the Indian fighting in the West was over.
In the spring of 1869 the railroad was finished and a spectacular
celebration was held near Ogden, in Utah Territory. The finishing stroke
was everywhere regarded as national, since not only had Congress given
aid, but the union of the oceans was an object of national ambition.
With the completion, the problem shifted from the exciting risks of
construction and finance to the prosaic duties of paying the bills, and
with the shift came a natural falling-off in enthusiasm.
The Union Pacific was the longest railroad of the sixties, and aroused
the greatest interest. In an economic way it is merely typical of the
speculative expansion of the North that began early in the Civil War and
continued increasingly thereafter. The United States was engaged in a
period of hopeful growth such as has followed every panic. After a few
years of depression, stagnation, and enforced economy, business had
revived about 1861. Confidence had increased, loans had been made more
freely, and capital had taken up again its search for profitable
investment. In the newer regions, where permanent improvements were
least numerous, the field for exploitation had been great. The climax of
exploitation was reached throughout the West.
As had been true at all the stages of the westward movement, the West
was heavily in debt, and upon a forced balance would generally have
shown an excess of liabilities over assets. Borrowed money paid much of
the cost of emigration. During the first year the pioneer often raised
no crops and lived upon his savings or his borrowings. He and his local
merchant and his bank and his new railroad had borrowed all they could,
while the creditor, living necessarily in the older communities where
saving had created a surplus for investment, lived in the East, or even
in Europe. The necessary conditions of settlement and development had
prepared the way for a new sectional alignment of business interests,
those of the Far West and the Northwest taking their tone from the
interests of a debtor class, while those of the East represented those
of the creditor. The possible cleavage was revealed as real when the
United States Treasury Department, in its work toward financial
reconstruction, approached the subject of the greenbacks.
The legal-tender greenbacks, which were in circulation to the extent of
$433,000,000 in 1865, constituted not only a part of the debt of the
war, but the foundation of the currency in circulation. Throughout most
of the war they were supplemented by the notes of state banks, local
token-money, and fractional currency, or "shinplasters," of the United
States. Coin ceased to circulate in 1862 and was used only by those
whose contracts obliged them to pay in gold or silver. In 1863 Secretary
Chase inaugurated a system of national banks, to circulate a uniform
currency, secured by United States bonds, but these did not become a
factor in business until the state bank notes had been taxed out of
existence in 1865. After this time national banks were formed in large
numbers, replacing the uncertain notes of the state banks with their own
notes, which were quite as good as greenbacks. But all paper money was
below par in 1865, and gold remained out of circulation, at a premium,
until the end of 1878.
The depreciation of the greenbacks reflected a popular doubt as to the
outcome of the Civil War. They entailed hardship upon all who received
them as dollars, since their purchasing value was below the standard of
one hundred cents in gold. When the Government, desperate in war time,
forced its creditors to accept them at par, it did an injustice which
it regarded as real, though necessary. The speedy restoration of the
greenbacks to par received the immediate attention of the Treasury upon
the return of peace.
Hugh McCulloch, of Indiana, who became Secretary of the Treasury in
1865, was a banker of long experience and success. He proposed, if
allowed, to reduce the whole war debt, including the greenbacks, to
long-term bonds bearing a low rate of interest, and to create a sinking
fund which should redeem them as they fell due. This involved the
withdrawal from circulation of the greenbacks, and the destruction of
that amount of the money used in business. Congress authorized it,
however, and McCulloch canceled greenbacks from month to month until he
had reduced the total to $356,000,000 in February, 1868.
The withdrawal of the legal tenders had not been long under way before
protests began to come in upon the Treasury and Congress from the West.
Bad as the depreciated currency was, it was the only currency available
for the active business of the country. If the greenbacks should go
there would be nothing to take their place until coin should finally
emerge from hiding. The reduction of the volume of money in a time of
increasing business would enforce upon each dollar an enlarged activity
and a greater market value. The price of money rising, the price of all
commodities measured in money would necessarily fall, and in a period of
falling prices the West thought it saw financial catastrophe. There was
enough real truth in the contention that resumption meant a fall in
prices for the Treasury to be compelled to make the difficult choice
between this evil and the other evil of a depreciated currency forced
upon the people.
The creditor East regarded the possible increase in the purchasing value
of the dollar with entire complacency. Its selfish interests harmonized
with sound theories of finance. But in the debtor West the process had
so different an aspect that the financial obligations of the United
States were obscured by the local interest.
The great "boom" of the West began after the depreciation had commenced.
Most of the Western debts, whether on the farm of the settler, the stock
of the merchant, or the bonds of the industrial corporation, had been
created in legal-tender dollars of the value of the depreciated
greenbacks. Any appreciation which might come to the greenbacks must
increase the content-value of the debt. If "dollars," borrowed when they
were worth sixty cents in gold, were to be repaid in "dollars" worth
eighty or more cents in gold, the debtor was repaying one third more
than he had received, and no appeal to the importance of public credit
could make him forget his loss. He resented not only the decrease in the
actual amount of money, but the appreciated value of the remainder.
McCulloch, trained in finance, was ready to sacrifice the debtor for the
sake of national solvency,--and, indeed, one or the other had to yield.
But Congress felt the pressure, which was strong from all the West, and
most strong from the Northwest, between Pittsburg and Chicago, whose
industry had been reorganized during the years of war. In February,
1868, the retirement of more greenbacks was forbidden by law, the amount
then in circulation being $356,000,000. The inflation which war had
brought about was legalized in time of peace, and the Supreme Court
ultimately ruled[1] that the issue of legal tenders, in either war or
peace, is at the free discretion of Congress.
Like every other West, the West of 1868 was in debt; like every other
debtor community, it was liable to yield to theories of inflation, and
was prone to look to politics for redress of grievances. The farmers of
Massachusetts and Connecticut had followed Shays for this purpose in
1786; Ohio and Kentucky had attacked the second Bank of the United
States when it forced their banks to pay their debts; and now the
Northwest listened to politicians who told them that more greenbacks
would cure their ills.
The advocates of the Greenback movement urged that the legal tenders be
retained as the foundation of the currency, and that all bonds and
interest payable in "lawful money" be paid in paper. By thus increasing
the volume of greenbacks in circulation they hoped to avoid a fall in
prices or an increased pressure on the debtor. Wherever men were heavily
in debt, they accepted this doctrine. George H. Pendleton, of Ohio,
became its most prominent spokesman, though it received the support of
men as far apart as Thaddeus Stevens and B.F. Butler, and on it as an
issue Pendleton sought to obtain for himself the Democratic nomination
for the presidency in 1868.
[Footnote 1: In the cases of Knox _vs._ Lee and Juilliard _vs._
Greenman.]
The aspirations of Pendleton, when his friends brought his "Ohio Idea"
to the national convention, in Tammany Hall, New York, on July 4, were
opposed by the similar desires of Chief Justice Chase, who still wanted
the Presidency, and Horatio Seymour, the Democratic war Governor of New
York. In its leader, commenting on the convention, _Harper's Weekly_
asserted that "The Democratic Convention of 1864 declared the war a
failure. The loyal people scorned the words and fought on to an
unconditional victory. The Democratic Convention of 1868 declares that
the war debt shall be repudiated. And their words will be equally
spurned by the same honorable people." Pendleton failed to secure the
nomination, which went to Seymour, on the twenty-second ballot, with
Francis P. Blair, Jr., for the Vice-Presidency, but the "Ohio idea" was
embodied in the platform of the party, although Seymour distinctly
disavowed it.
Pledged to what the East commonly regarded as repudiation, the
Democratic party was severely handicapped at the beginning of the
campaign. Not only could their opponents reproach Seymour as a
Copperhead, but they could profess to be frightened by Wade Hampton and
the "hundred other rebel officers who sat in the Convention." Already
including "treason," and disloyalty, the indictment was amended to
include dishonor, by the Republicans, who scarcely needed the strong
popularity of Grant to carry them into office.
The Republican party was compelled to disguise itself as "Union" in
1864, and it paid for the disguise during the next four years. Upon the
death of Lincoln, the Tennessee Democrat, Andrew Johnson, took the oath
of office. The bond which kept Democrats and Republicans together as
Unionists had dissolved with the surrender of Lee, so that Johnson was
enabled to follow his natural bent as a strict constructionist. His
policies had carried him far away from the radical Republicans before
Congress convened for its session of 1865-66, and led to a positive
breach with that body in 1866.
The quarrel between Johnson and the Republican leaders was occasioned by
his views upon the rights of the Southern States, conquered in war and
held within the military grasp of the United States. It was his belief,
as it had been Lincoln's, that these States were still States and were
in the Union, even though in a temporarily deranged condition. As
President, entrusted with force to be used in executing the laws, he
regarded himself as sole judge of the time when force should no longer
be needed. And in this spirit he offered pardon to many leaders of the
Confederacy in May, 1865. He followed amnesty with provisional
governments, and proclaimed rules according to which the conquered
States should revise their constitutions and reestablish orderly and
loyal governments. He had reorganized the last of the eleven States
before Congress could interfere with him.
The difference between Johnson and his Republican associates lay in the
character of the restored electorates in the South. The whole white
population had, in most States, been implicated in secession. There was
no Union faction in the South that remained loyal throughout the war.
Pardoned and restored to a full share in the Government, these Southern
leaders would come back into Congress as Democrats, and with increased
strength. The Thirteenth Amendment abolished slavery, and raised the
representation of the negroes in the South from the old three-fifths
ratio to par. Every State would come back with more Representatives than
it had had before the war, and with the aid of Northern Democrats it was
not unlikely that a control of Congress might be obtained.
To Northern Republicans it was unreasonable that the conquered South
should be rewarded instead of punished, and that any theory of
reconstruction should risk bringing into power the party that Union men,
headed by Lincoln, had defeated in 1864. Politicians, interested in the
spoils of office, were enraged at the thought of losing them.
Disinterested Northerners, who had sacrificed much to save the Union,
believed it unsafe at once to hand it over to a combination of peace
Democrats and former "rebels." Yet this was Johnson's plan, and
Congress, with radical Republicans in control, set about to prevent it.
Although Johnson, as President, controlled the patronage, Congress
possessed the power, if not the moral right, to limit him in its use. No
appointment could be made without the consent of the Senate, which was
Republican. In 1867 Congress enacted that no removal should be made
without the same consent, in a Tenure-of-Office Bill that brought the
dispute to a climax. More important than this power of concurrence was
the exclusive right of each house to judge of "the elections, returns,
and qualifications" of its own members. So long as the Southern Senators
and Representatives were out of Congress no power could get them in
without the consent of either house. Violent advisers of the President
argued that a Congress excluding the members of eleven States by
prearrangement was a "rump," and without authority, but they failed to
influence either the conduct of the majority or the acts of Johnson.
In the Thirty-ninth Congress, which sat in 1865 and 1866, it was the
problem of the leaders, Charles Sumner in the Senate and Thaddeus
Stevens in the House, to hold the party together and to block the
designs of the President. In the House, the heavy Republican majority
made this easy. In the Senate the majority was slighter, and could be
kept at two thirds only by unseating a Democratic Senator from New
Jersey, after which event both houses were able to defy Johnson and to
pass measures over his veto. The vetoes began when Johnson refused his
consent to the Freedmen's Bureau and the Civil Rights Bills. These and
all other important acts of reconstruction were forced upon the
President by the two-thirds vote.
The split, so far as founded upon honest divergence in legal theory, was
embarrassing. It was made disgraceful by the violence of the radical
Republicans and the intemperate retorts of Johnson. In 1866 Congress
sent the Fourteenth Amendment to the States for ratification. In 1867 it
passed its bills for actual reconstruction under the control of the army
of the United States, and defied Johnson to interfere by refusing to
allow him to remove officials from office.
Johnson carried himself through the partisan struggle with ability and
success. His language was often extreme, but he enforced the acts which
Congress passed as vigorously as if they had been his own. So far as any
theory of the Constitution met the facts of reconstruction, his has the
advantage, but in a situation not foreseen by the Constitution force
outranked logic, and the radical Republicans with two-thirds in each
house possessed the force. There was no lapse in the President's
diligence and no flaw in his official character which his enemies could
use. They began to talk of impeachment in 1866, but could find no basis
for it.
The Tenure-of-Office Act furnished the pretext for impeachment. Advised
by his Attorney-General that it was unconstitutional, Johnson dismissed
the Secretary of War, Edwin M. Stanton, for whose protection the law had
been passed. In removing Stanton he broke with Grant, commanding the
army, over a question of veracity, and gave to Congress its chance. In
February, 1868, the House of Representatives voted to impeach him.
The trial of Andrew Johnson before the Senate dragged through April and
May. The articles of impeachment were long and detailed in their
description of the unquestioned bad manners of the President, but the
only specific violation of law cited was in the case of Stanton, and
here it could be urged both that the law was unconstitutional and that
it was so loosely drawn that it did not really cover this case. In
brief, it was the policy of Johnson that was on trial, and it was
finally impossible to persuade two-thirds of the Senators that this
constituted a high crime or a misdemeanor. The President was acquitted
in the middle of May, while the Republican party turned to the more
hopeful work of electing his successor.
In the fight over Johnson party lines had been strengthened and defined
so that no Unionist, not in sympathy with congressional reconstruction,
could hope for the nomination. No other issue equaled this in strength.
The greenback issue was condemned in a plank that denounced "all forms
of repudiation as a national crime," but ran second to the basis of
reconstruction. No other candidate than Ulysses S. Grant was considered
at the Chicago Convention.
Few men have emerged from deserved obscurity to deserved prominence as
rapidly as General Grant. In 1861 he was a retired army officer, and a
failure. In 1863, as the victor at Fort Donelson and at Vicksburg, he
loomed up in national proportions. In the hammering of 1864 and 1865 it
was his persistence and moral courage that won the day. In 1868, as
commander of the army, and fortunate in his quarrel with Johnson, he was
the coveted candidate of both parties, for he had no politics. Held by
his associations to the Republican leaders, he was nominated at Chicago
on the first ballot, with Schuyler Colfax, of Indiana, as his
Vice-President.
The nomination of Grant occurred as the impeachment trial was drawing to
a close. Before Congress adjourned it readmitted several of the Southern
States that had been restored under the control of Republican
majorities. Tennessee was already back; the new States were North
Carolina, South Carolina, Georgia, Florida, Alabama, Louisiana, and
Arkansas. Only three States remained under provisional control when
Grant was elected in November and seated in the following March. As he
took the oath of office there were few, North, South, or West, who did
not rejoice in his election; he had defeated the Greenback pretension,
which endeared him to the East; the West remembered that he had been
born and bred in the Mississippi Valley; and to the South he presented
the clean hands of the regular army officer, and the welcome promise of
his letter of acceptance, "Let us have peace."
BIBLIOGRAPHICAL NOTE
For general accounts of the Far West in this period consult K. Coman,
Economic _Beginnings of the Far West_ (2 vols., 1912), and F.L. Paxson,
_The Last American Frontier_ (1910). These should be supplemented by
E.L. Bogart, _Economic History of the United States_ (1907), K. Coman,
_Industrial History of the United States_ (2d ed., 1910), W.A. Scott,
_The Repudiation of State Debts_ (1893), and W.C. Mitchell, _History of
the Greenbacks_. The more valuable memoirs include H. McCulloch, _Men
and Measures of Half a Century_ (1888), and J.G. Blaine, _Twenty Years
of Congress_ (2 vols., 1884). A brilliant analysis of the financial
interests of the debtor sections is M.S. Wildman, _Money Inflation in
the United States_ (1905). Rhodes continues to furnish a comprehensive
narrative, and is paralleled by the shorter W.A. Dunning,
_Reconstruction, Political and Economic, 1865-1877_ (in _The American
Nation_, vol. 22, 1907). A detailed account of impeachment politics is
in D.M. DeWitt, _Impeachment and Trial of Andrew Johnson_ (1903), and in
J.A. Woodburn, _The Life of Thaddeus Stevens_ (1913). J.P. Davis, _The
Union Pacific Railway_ (1894), is the standard account of the early
movement for a continental railroad. S.L. Clemens (Mark Twain) presents
a vivid picture of frontier life in _Roughing It_ (1872), while A.B.
Paine, _Mark Twain_ (3 vols., 1912), contains much material of general
historical interest for this period.