York, they should be received for the same purpose in all other
ports of the United States, or an unconstitutional preference would
be given to that port over other ports. If this privilege is denied
to the citizens of other ports, they could make such use of these
notes only by transporting them to New York and transporting the
coin to their homes for payment; and all this not only without
benefit to the government, but with a loss in returning the coin
again to New York, where it is required for redemption purposes.
"The provision in the law for redemption in New York was believed
to be practical redemption in all parts of the United States.
Actual redemption was confined to a single place from the necessity
of maintaining only one coin reserve and where the coin could be
easily accumulated and kept.
"With this view of the resumption act, the secretary will feel it
to be his duty, unless Congress otherwise provides, to direct that
after the 1st day of January next, and while United States notes
are redeemed at the treasury, they be received the same as coin by
the officers of this department, in all payments in all parts of
the United States.
"If any further provision of law is deemed necessary by Congress
to authorize the receipt of United States notes for customs dues
or for bonds, the secretary respectfully submits that this authority
should continue only while the notes are redeemed in coin. However
desirable continuous resumption may be, and however confident we
may feel in its maintenance, yet the experience of many nations
has proven that it may be impossible in periods of great emergency.
In such events the public faith demands that the customs duties
shall be collected in coin and paid to the public creditors, and
this pledge should never be violated or our ability to perform it
endangered.
"Heretofore, the treasury, in the disbursement of currency, has
paid out bills of any denomination desired. In this way the number
of bills of a less denomination than five dollars is determined by
the demand for them. Such would appear to be the true policy after
the 1st of January. It has been urged that, with a view to place
in circulation silver coins, no bills of less than five dollars
should be issued. It would seem to be more just and expedient not
to force any form of money upon a public creditor, but to give him
the option of the kind and denomination. The convenience of the
public, in this respect, should be consulted. The only way by
which moneys of different kinds and intrinsic values can be maintained
in circulation at par with each other is by the ability, when one
kind is in excess, to readily exchange it for the other. This
principle is applicable to coin as well as to paper money. In this
way the largest amount of money of different kinds can be maintained
at par, the different purposes for which each is issued making a
demand for it. The refusal or neglect to maintain this species of
redemption inevitably effects the exclusion from circulation of
the most valuable, which, thereafter, becomes a commodity, bought
and sold at a premium. . . .
"When the resumption act passed, gold was the only coin which by
law was a legal tender in payment of all debts. That act contemplated
resumption in gold coin only. No silver coin of full legal tender
could then be lawfully issued. The only silver coin provided was
fractional coin, which was a legal tender for five dollars only.
The act approved February 28, 1878, made a very important change
in our coinage system. The silver dollar provided for was made a
legal tender for all debts, public and private, except where
otherwise expressly stipulated in the contract.
"The law itself clearly shows that the silver dollar was not to
supersede the gold dollar; nor did Congress propose to adopt the
single standard of silver, but only to create a bimetallic standard
of silver and gold, of equal value and equal purchasing power.
Congress, therefore, limited the amount of silver dollars to be
coined to not less than two millions nor more than four millions
per month, but did not limit the aggregate amount nor the period
of time during which this coinage should continue. The market
value of the silver in the dollar, at the date of the passage of
the act, was 93¼ cents in gold coin. Now it is about 86 cents in
gold coin. If it was intended by Congress to adopt the silver
instead of the gold standard, the amount provided for is totally
inadequate for the purpose. Experience not only in this country,
but in European countries, has established that a certain amount
of silver coin may be maintained in circulation at par with gold,
though of less intrinsic bullion value. It was, no doubt, the
intention of Congress to provide a coin in silver which would answer
a multitude of the purposes of business life, without banishing
from circulation the established gold coin of the country. To
accomplish this it is indispensable either that the silver coin be
limited in amount, or that its bullion value be equal to that of
the gold dollar. If not, it use will be limited to domestic
purposes. It cannot be exported except at its commercial value as
bullion. If issued in excess of demands for domestic purposes, it
will necessarily fall in market value, and, by a well-known principle
of finance, will become the sole coin standard of value. Gold will
be either hoarded or exported. When two currencies, both legal,
are authorized without limit, the cheaper alone will circulate.
If, however, the issue of the silver dollars is limited to an amount
demanded for circulation, there will be no depreciation, and their
convenient use will keep them at par with gold, as fractional silver
coin, issued under the act approved February 21, 1853, was kept at
par with gold.
"The amount of such coin that can thus be maintained at par with
gold cannot be fairly tested until resumption is accomplished. As
yet paper money has been depreciated, and silver dollars, being
receivable for customs dues, have naturally not entered into general
circulation, but have returned to the treasury in payment of such
dues, and thus the only effect of the attempt of the department to
circulate them has been to diminish the gold revenue. After
resumption these coins will circulate in considerable sums for
small payments. To the extent that such demand will give employment
to silver dollars their use will be an aid to resumption rather
than a hindrance, but, if issued in excess of such demand, they
will at once tend to displace gold and become the sole standard,
and gradually, as they increase in number, will fall to their value
as bullion. Even the fear or suspicion of such an excess tends to
banish gold, and, if well established, will cause a continuous
drain of gold until imperative necessity will compel resumption in
silver alone. The serious effect of such a radical change in our
standards of value cannot be exaggerated; and its possibility will
greatly disturb confidence in resumption, and may make necessary
large reserves and further sales of bonds.
"The secretary, therefore, earnestly invokes the attention of
Congress to this subject, with a view that either during the present
or the next session the amount of silver dollars to be issued be
limited, or their ratio to gold for coining purposes be changed.
"Gold and silver have varied in value from time to time in the
history of nations, and laws have been passed to meet this changing
value. In our country, by the act of April 2, 1792, the ratio
between them was fixed at one of gold to fifteen of silver. By
the act of June 28, 1834, the ratio was changed to one of gold to
sixteen of silver. For more than a century the market value of
the two metals had varied between these two ratios, mainly resting
at that fixed by the Latin nations of one to fifteen and a half.
"But we cannot overlook the fact that within a few years, from
causes frequently discussed in Congress, a great change has occurred
in the relative value of the two metals. It would seem to be
expedient to recognize this controlling fact--one that no nation
alone can change--by a careful readjustment of the legal ratio for
coinage of one to sixteen, so as to conform to the relative market
values of the two metals. The ratios heretofore fixed were always
made with that view, and, when made, did conform as near as might
be. Now, that the production and use of the two metals have greatly
changed in relative value, a corresponding change must be made in
the coinage ratio. There is no peculiar force or sanction in the
present ratio that should make us hesitate to adopt another, when,
in the markets of the world, it is proven that such ratio is not
now the true one. The addition of one-tenth or one-eighth to the
thickness of the silver dollar would scarcely be perceived as an
inconvenience by the holder, but would inspire confidence, and add
greatly to its circulation. As prices are now based on United
States notes at par with gold, no disturbance of values would result
from the change.
"It appears, from the recent conference at Paris, invited by us,
that other nations will not join with us in fixing an international
ratio, and that each county must adapt its laws to its own policy.
The tendency of late among commercial nations is to the adoption
of a single standard of gold and the issue of silver for fractional
coin. We may, by ignoring this tendency, give temporarily increased
value to the stores of silver held in Germany and France, until
our market absorbs them, but, by adopting a silver standard as
nearly equal to gold as practicable, we make a market for our large
production of silver, and furnish a full, honest dollar that will
be hoarded, transported, or circulated, without disparagement or
reproach.
"It is respectfully submitted that the United States, already so
largely interested in trade with all parts of the world, and
becoming, by its population, wealth, commerce, and productions, a
leading member of the family of nations, should not adopt a standard
of less intrinsic value than other commercial nations. Alike
interested in silver and gold, as the great producing country of
both, it should coin them at such a ratio and on such conditions
as will secure the largest use and circulation of both metals
without displacing either. Gold must necessarily be the standard
of value in great transactions, from its greater relative value,
but it is not capable of the division required for small transactions;
while silver is indispensable for a multitude of daily wants, and
is too bulky for use in the larger transactions of business, and
the cost of its transportation for long distances would greatly
increase the present rates of exchange. It would, therefore, seem
to be the best policy for the present to limit the aggregate issue
of our silver dollars, based on the ratio of sixteen to one, to
such sums as can clearly be maintained at par with gold, until the
price of silver in the market shall assume a definite ratio to
gold, when that ratio should be adopted, and our coins made to
conform to it; and the secretary respectfully recommends that he
be authorized to discontinue the coinage of the silver dollar when
the amount outstanding shall exceed fifty million dollars.
"The secretary deems it proper to state that in the meantime, in
the execution of the law as it now stands, he will feel it to be
his duty to redeem all United States notes presented on and after
January 1, next, at the office of the assistant treasurer of the
United States, in the city of New York, in sums of not less than
fifty dollars, with either gold or silver coin, as desired by the
holder, but reserving the legal option of the government; and to
pay out United States notes for all other demands on the treasury,
except when coin is demanded on coin liabilities.
"It is his duty, as an executive officer, to frankly state his
opinions, so that if he is in error Congress may prescribe such a
policy as is best for the public interests.
"The amount of four per cent. bonds sold during the present year,
prior to November 23, is $100,270,900, of which $94,770,900 were
sold under the refunding act approved July 14, 1870. Six per cent.
bonds, commonly known as 5-20's, to an equal amount, have been
redeemed, or will be redeemed as calls mature. This beneficial
process was greatly retarded by the requirement of the law that
subscriptions must be paid in coin, the inconvenience of obtaining
which, to the great body of people outside of the large cities,
deterred many sales. This will not affect sales after resumption,
when bonds can be paid for with United States notes. The large
absorption of United States securities in the American market, by
reason of their return from Europe, together with the sale of four
and a half per cent. bonds for resumption purposes, tended to retard
the sale of four per cent. bonds. As, from the best advices, not
more than $200,000,000 of United States bonds are now held out of
the country, it may be fairly anticipated that the sale of four
per cent. bonds, hereafter, will largely increase.
"Prior to May, 1877, United States bonds were mainly sold through
an association of bankers. Experience proves that under the present
plan of selling to all subscribers on terms fixed by public
advertisement, though the aggregate of sales may be less, their
distribution is more satisfactory. Under a popular loan the interest
is paid at home, and the investment is available at all times,
without loss, to meet the needs of the holder. This policy has
been carefully fostered by other nations, and should be specially
so in ours, where every citizen equally participates in the government
of his country. The holding of these bonds at home, in small sums
well distributed, is of great importance in enlisting popular
interest in our national credit and in encouraging habits of thrift,
and such holding in the country is far more stable and less likely
to disturb the market than it would be in cities or by corporations,
where the bonds can be promptly sold in quantities.
"The three months' public notes required by the fourth section of
the refunding act, to be given to holders of the 5-20 bonds to be
redeemed, necessarily involve a loss to the government by the
payment of double interest during that time. The notice should
not be given until subscriptions are made or are reasonably certain
to be made. When they are made and the money is paid into the
treasury, whether it is kept there idle during the three months or
deposited with national banks under existing law, the government
not only pays interest on both classes of bonds during the ninety
days, but, if the sales are large, the hoarding of large sums may
disturb the market. Under existing law this is unavoidable; and,
to mitigate it, the secretary deemed it expedient during the last
summer to make calls in anticipation of subscriptions, but this,
though legal, might, in case of failure of subscriptions, embarrass
the government in paying called bonds. The long notice required
by law is not necessary in the interest of the holder of the bonds,
for, as the calls are made by public notice and the bonds are
indicated and specified by class, date, and number, in the order
of their numbers and issue, he, by ordinary diligence, can know
beforehand when his bonds in due course will probably be called,
and will not be taken by surprise.
"The secretary therefore recommends that the notice to be given
for called bonds be, at his discretion, not less than ten days nor
more than three months. In this way he will be able largely to
avoid the payment of double interest, as well as the temporary
contraction of the currency, and may fix the maturity of the call
at a time when the interest of the called bonds becomes due and
payable."
Soon after the passage of the act authorizing the coinage of the
standard silver dollar, and an attempt being made to procure the
requisite bullion for its coinage to some extent at the mints on
the Pacific coast, it was found that the producers and dealers
there would not sell silver to the government at the equivalent of
the London rate, but demanded in addition thereto an amount equal
to the cost of bringing it from London and laying it down in San
Francisco. These terms, being deemed exorbitant, were rejected,
and arrangements were immediately made to bring the capacity of
the mint at Philadelphia to its maximum, with a view to meet the
provisions of law, which required two millions of silver dollars
to be coined in each month, and the available supplies of silver
from domestic sources being entirely insufficient for the coinage
of this amount, the foreign market was indirectly resorted to and
an amount sufficient to meet the requirements of law secured.
In July, 1878, the principal holders of bullion on the Pacific
coast receded from their position and accepted the equivalent of
the London rate, at which price sufficient bullion was purchased
to employ the mints of San Francisco and Carson on the coinage of
the dollar.
At the date of my report, United States notes were practically at
par with gold. The public mind had settled into a conviction that
the parity of coin and currency was assured, and our people,
accustomed to the convenience of paper money, would not willingly
have received coin to any considerable amount in any business
transactions. The minor coins of silver, were received and paid
out without question at parity with gold coin, because the amount
was limited and they were coined by the government only as demanded
for the public convenience. The silver dollar was too weighty and
cumbersome and when offered in considerable sums was objected to,
though a legal tender for any sum, and coined only in limited
amounts for government account. Every effort was made by the
treasury department to give it the largest circulation, but the
highest amount that could be circulated was from fifty to sixty
millions, and much of this was in the southern states. All sums
in excess of that were returned to the treasury for silver
certificates. These were circulated as money, like United States
notes and bank bills. This was only possible by the guarantee of
the government that all forms of money would be maintained at parity
with each other. If this guarantee had been doubted, or if the
holder of silver bullion could have had it coined at his pleasure
and for his benefit at the ratio of sixteen to one, the silver
dollar would, as the cheaper coin, have excluded all other forms
of money, and the purchasing power of silver coin would have been
reduced to the market value of silver bullion.
On the 3rd of December, 1878, I wrote the following letter:
"Hon. Thomas Hillhouse,
"United States Assistant Treasurer, New York.
"Sir:--I have this day telegraphed you as follows:
'After receipt of this you will please issue no more gold
certificates.'
"In compliance with the above instructions you will not, until
further advised, issue gold certificates either in payment of
interest on the public debt or for gold coin deposited.
"It is desired that you issue currency in payment of coin obligations
to such an amount as will be accepted by public creditors.
"Very respectfully,
"John Sherman, Secretary."
After resumption, United States notes were in fact gold certificates,
being redeemable in coin. On the 4th, I again wrote to General
Hillhouse as follows:
"Your letter of yesterday is received. The necessity of the recent
order about coin certificates became apparent to the department,
and the only doubt was as to the date of issuing it. After full
consideration, it was deemed best to make it immediate, so that no
more certificates could be asked for. By the 21st of this month
the large denominations of greenbacks will be ready for issue to
you, and after the 1st of January they will be received for customs
duties and paid out for gold coin deposited with you. I am led to
suppose that considerable sums of gold coin will be deposited with
you soon after that date. It is important that the business men
of New York should see the propriety of such a course, with a view
to aid in popular opinion the process of resumption.
"I would be pleased to hear from you as to whether any additional
force in your office will be necessary in view of resumption.
Every reasonable facility should be given to persons who apply for
coin, and we should be prepared for a considerable demand during
the first month.
"I will be in New York some time this month, and will confer with
you as to any matters of detail."
I received the following reply:
"Office of United States Assistant Treasurer,}
"New York, December 5, 1878. }
"Sir:--I have received your letter of the 4th instant. The issue
of gold certificates, however convenient to the public, had long
ceased to be of any advantage to the government, and in view of
resumption it had become a positive injury, by enabling speculators
to carry on their operations without the risk and expense of handling
the actual coin. So far as I have discovered, the banks and the
business community generally regard the withdrawal of the certificates
as a wise measure. They may be put to some temporary inconvenience
thereby, but they cannot fail to see that, in the use of this and
all other legitimate means of making the great scheme of resumption
a success, the secretary is really promoting their interests, and
that in the end they will be greatly benefitted by the establishing
of a sound and stable currency, which is the object in view.
* * * * *
"Very respectfully,
"Thomas Hillhouse,
"Assistant Treasurer United States."
On the 5th I wrote him as follows:
"In reply to your letter of the 4th instant, inquiring whether you
are at liberty to pay out the standard silver dollars in exchange
for gold coin, you are authorized to pay out the standard silver
dollars to any amount which may be desired in exchange for gold
coin.
* * * * *
"In reply to your letter of yesterday, I have to advise you that
it was the purpose of the order referred to to prohibit the issue
of gold coin certificates for any purpose, including the redemption
of called bonds. It is believed that the reasons for issuing such
certificates have ceased to exist, and that those outstanding should
be redeemed and not reissued.
"No public end is subserved by receiving coin deposits for private
parties to be held for their benefit, but gold will be received in
exchange for United States notes of any denomination desired, and
such exchange is invited."
On the 18th I wrote him:
"I have concluded to direct the prepayment of the coupons maturing
January 1, in coin or United States notes, _as desired by the
holder_, and interest on registered stock, as soon as you can
receive the schedules, which will be about the 28th. While I wish
no hesitation about paying gold to anyone desiring it, it is better
to get people in the habit of receiving currency rather than coin."
On the 18th General Hillhouse wrote me:
"Since my letter of yesterday gold has sold at par, the prevailing
rate being one sixty-fourth to three sixty-fourth premium. The
indications now are that the combinations which were presumed to
be operating to keep up the premium have failed so far in their
object, and that, unless unlooked for circumstances should intervene,
the premium will be more likely to fall below the present rate than
to advance."
On the 27th I sent the following instructions to the treasurer:
"Treasury Department, December 27, 1878.
"Hon. James Gilfillan, Treasurer United States.
"Sir:--In connection with the department's circular of the 14th
instant concerning the resumption of specie payments, you are
directed, on and after the 1st proximo, to keep no special account
of coin with any public disbursing officer, and to close any account
of that description at that time standing on your books, keeping
thereafter but one money of account in your office.
"Similar instructions have this day been sent to the several
independent treasury officers.
"Very respectfully,
"John Sherman, Secretary."
On the 28th I wrote the First National Bank of New York:
"Your letter of yesterday is received. I do not see my way clear
to issue another call until the one now outstanding is covered by
subscription. There is still a deficit of about $4,000,000 on the
71st call. There is not, however, the slightest objection to your
stating authoritatively, or, if desired, I will do so in response
to a direct inquiry, that every dollar of the proceeds of four per
cent. bonds sold during the present year had been applied on calls
for refunding, and it is my purpose to continue this unless I give
public notice to the contrary.
"I feel the more inclined to refuse to make a call by reason of
the probable requisition that may be made for the Halifax award,
and I do not wish by any chance to impair the resumption fund."
During the latter part of December the air was full of rumors of
a combination in New York for a run upon the sub-treasury on the
opening of the new year. The alarm was so great that the president
of the National Bank of Commerce in that city, who was also chairman
of the clearing house committee, at three o'clock p. m. on the
30th, with the advice of other bankers, sent me, by special messenger,
an urgent request for the transfer to his bank, on the following
day, from the sub-treasury, of $5,000,000 in gold, in exchange for
a like amount in United States notes, to enable the banks, he said,
to meet a "corner" in gold. To this there could be but one reply.
The treasury had no power to make the transfer, even if it desired
to do so. I therefore declined the proposition, and did not believe
in a "corner."
During the exciting events connected with resumption and refunding
I did not overlook the political condition in Ohio, and wrote a
letter in regard to it, which I think proper here to insert, as it
presents my view at its date:
"December 26, 1878.
"My Dear Sir:--Much obliged for your kind letter of the 21st.
"My official duties engross my time so much that I scarcely catch
a glimpse of home affairs by reading the newspapers, and your
intelligent view is therefore the more interesting. It seems to
me that the nomination of General Garfield for governor and Foster
for lieutenant governor would be a very excellent arrangement, but
I understand that it is not agreeable to them. Garfield has no
desire for the position, while Foster feels that he ought to head
the ticket. An understanding that Garfield is to be Senator might
embarrass us in certain doubtful districts, where the chief contest
would be upon that office. Still such a ticket would be universally
conceded to be very strong and would inspire confidence, and would
be entirely satisfactory to me. Indeed, I wish to be in a condition
to support our political friends in anything they may do in the
convention, without taking an active part in it.
"The contingency that you refer to with which my name is connected
is still to remote to talk about. I never supposed that a person
occupying my office, open to attack and compelled to say no to so
many persons, could be sufficiently popular to justify any party
in running him for the presidency, and, therefore, I have always
dismissed such suggestions as the kindly compliments of the hour.
Certainly it has not gained my mental consent, nor is it considered
by me as one of the probabilities of the future. If I should get
the maggot in my brain it would no doubt be more likely to hurt
than help.
"The tendency of public opinion is evidently towards General Grant,
whose absence and good conduct are in his favor, while the involuntary
feeling of Republicans would be in favor of nominating him as a
remonstrance against the violence in the south, and notice that it
must end.
"However, a year hence will be time enough to settle this matter.
"I send my hearty greetings for the holiday season, and remain,
"Very truly yours,
"John Sherman.
"Hon. Richard Smith, Cincinnati, O."
About this time I received the following letter:
"United States Legation, }
"Mexico, December 15, 1878.}
"Hon. John Sherman, Washington, D. C.
"My Dear Sir:--Allow me to send you, as a New Years' greeting, my
hearty congratulations on your successful management of our national
finances and on the resumption of specie payments, which I have no
doubt will be an accomplished fact when this letter reaches you.
"The nation owes you a great debt for your courage, persistence
and wisdom in adhering to your policy for re-establishing and
maintaining our government credit. To your conduct I attribute
the present honorable position of the Republican party, more than
to any other one influence. I believe that neither the country
nor the party will forget your services.
"Very truly,
"John W. Foster."
CHAPTER XXXVII.
REFUNDING THE NATIONAL DEBT.
Over $140,000,000 of Gold Coin and Bullion in the Treasury January
1, 1879--Diversity of Opinion as to the Meaning of Resumption--
Effect of the Act to Advance Public Credit--Funding Redeemable
Bonds Into Four per Cents.--Letters to Levi P. Morton and Others--
Six per Cent. Bonds Aggregating $120,000,000 Called During January,
1879--The Sale in London--Charges of Favoritism--Further Enactments
to Facilitate the Funding--Difficulty of Making Sales of Four per
Cent. Bonds to English Bankers--Large Amounts Taken in the United
States--One Subscription of $190,000,000--Rothschild's Odd Claim--
Complimentary Resolution of the New York Chamber of Commerce.
On the 1st of January, 1879, when the resumption act went into
effect, the aggregate amount of gold coin and bullion in the treasury
exceeded $140,000,000. United States notes, when presented, were
redeemed with gold coin, but instead of the notes being presented
for redemption, gold coin in exchange for them was deposited, thus
increasing the gold in the treasury.
The resumption of specie payments was generally accepted as a
fortunate event by the great body of people of the United States,
but there was a great diversity of opinion as to what was meant by
resumption. The commercial and banking classes generally treated
resumption as if it involved the payment and cancellation of United
States notes and all forms of government money except coin and bank
notes. Another class was opposed to resumption, and favored a
large issue of paper money without any promise or expectation of
redemption in coin. The body of the people, I believe, agreed with
me in opinion that resumption meant, not the cancellation and
withdrawal of greenbacks, but the bringing them up to par and
maintaining them as the equivalent of coin by the payment of them
in coin on demand by the holder. This was my definition of
resumption. I do not believe that any commercial nation can conduct
modern operations of business upon the basis of coin alone. Prior
to our Civil War the United States undertook to collect its taxes
in specie and to pay specie for its obligations; this was the
bullion theory. This narrow view of money compelled the states to
supply paper currency, and this led to a great diversity of money,
depending upon the credit, the habits and the wants of the people
of the different states. The United States notes, commonly called
greenbacks, were the creature of necessity, but proved a great
blessing, and only needed one attribute to make them the best
substitute for coin money that has ever been devised. That quality
was supplied by their redemption in coin, when demanded by the
holder.
The feeling in the treasury department on the day of resumption is
thus described by J. K. Upton, assistant secretary, in an article
written at the close of 1892:
"The year, however, closed with no unpleasant excitement, but with
unpleasant forebodings. The 1st day of January was Sunday and no
business was transacted. On Monday anxiety reigned in the office
of the secretary. Hour after hour passed; no news came from New
York. Inquiry by wire showed all was quiet. At the close of
business came this message: '$135,000 of notes presented for coin
--$400,000 of gold for notes.' That was all. Resumption was
accomplished with no disturbance. By five o'clock the news was
all over the land, and the New York bankers were sipping their tea
in absolute safety.
"Thirteen years have since passed, and the redemption fund still
remains intact in the sub-treasury vaults. The prediction of the
secretary has become history. When gold could with certainty be
obtained for notes, nobody wanted it. The experiment of maintaining
a limited amount of United States notes in circulation, based upon
a reasonable reserve in the treasury pledged for that purpose, and
supported also by the credit of the government, has proved generally
satisfactory, and the exclusive use of these notes for circulation
may become, in time, the fixed financial policy of the government."
The immediate effect of resumption of specie payments was to advance
the public credit, which made it possible to rapidly fund all the
bonds of the United States then redeemable into bonds bearing four
per cent. interest. Early in January, 1879, I issued a circular
offering the four per cent. funded loan of the United States at
par and accrued interest to date of subscription in coin. It was
substantially similar to the one issued on the 16th of January,
1878, but graded the commission, allowing from one-eighth of one
per cent. to one-fourth of one per cent., according to the amount
subscribed.
Several letters written about this date will show my view better
than anything I can say now:
"Washington, D. C., January 6, 1879.
"Dear Sir:--Your note of the 2nd was received upon my return from
the west.
"Much obliged for subscription, and hope that you will soon get
above the ten millions and thus be entitled to the additional one-
tenth. I cannot, however, allow it on the first ten millions
without adopting it as a rule, which would be impossible, by reason
of the limitation of the entire cost to one-half of one per cent.
I may be compelled to allow the one-eighth commission down to
$1,000, but perhaps not, as I have to carefully husband the limited
fund out of which all expenses must be paid. With the energy and
hopefulness now exhibited, we can easily refund the 5-20's within
this year and, perhaps, within six months. The more rapid the
process the less disturbance it will create. I am hopeful and
sanguine of improving business, not that greenbacks will be so
abundant, but that employment will be ready for everyone willing
to work.
"Thanks for your congratulations, which I heartily reciprocate,
for the syndicate are entitled to a large portion of the merit now
given to me. As I got more than my share of the abuse, it is
probably thought that I should get more than my share of the credit.
"Very truly yours,
"John Sherman.
"Hon. L. P. Morton, New York."
"Washington, D. C., January 8, 1879.
"R. C. Stone, Esq., Secretary Bullion Club, New York.
"Dear Sir:--Your letter of the 5th inst., inclosing a card of
invitation from the Bullion Club, to attend a dinner at their club
house on Thursday evening, the 16th inst., is received.
"I regret that my official duties will not permit me, in person,
to respond to the toast you send me, and I cannot do so, by letter,
in words more expressive than the toast itself, 'To Resumption--
may it be forever.'
"Irredeemable money is always the result of war, pestilence, or
some great misfortune. A nation would not, except in dire necessity,
issue its promises to pay money when it is unable to redeem those
promises. I know that when the legal tenders were first issued,
in February, 1862, we were under a dire necessity. The doubt that
prevented several influential Senators, like Fessenden and Collamer,
from voting for the legal tender clause, was that they were not
convinced that our necessities were so extreme as to demand the
issue of irredeemable paper money. Most of those who voted for it
justified their vote upon the ground that the very existence of
the country depended upon its ability to coin into money its promises
to pay. THat was the position taken by me. We were assured by
Secretary Chase that nearly one hundred millions of unpaid requisitions
were lying upon his table, for money due to soldiers in the presence
of the enemy, and for food and clothing to maintain them at the
front. We then provided for the issue of legal tender United States
notes, as an extreme remedy in the nation's peril. It has always
seemed strange that so large and respectable a body of our fellow-
citizens should regard the continuance of irredeemable money as
the permanent policy of a nation so strong and rich as ours, able
to pay every dollar of its debts on demand, after the causes of
its issue had disappeared. To resume is to recover from illness,
to escape danger, to stand sound and healthy in the financial world,
with our currency based upon the intrinsic value of solid coin.
"Therefore I say, may resumption be perpetual. To wish otherwise
is to hope for war, danger, and national peril, calamities to which
our nation, like others, may be subject, but against which the
earnest aspiration of every patriot will be uttered.
"Very respectfully yours,
"John Sherman."
"January 10, 1879.
"H. C. Fahnestock, Esq.,
"Vice President First National Bank, New York.
"Sir:--Your unofficial letter of the 9th inst., suggesting the
danger that may arise from the very large and rapid subscriptions
to the four per cent. bonds, is received.
"The danger is apparent enough to all, and certainly to those who
purchase without ability to pay at the time stipulated, but it is
not one that the government can guard against, except only by taking
care to have ample security for each subscription.
"In the face of the advertisement now outstanding, I could not
withdraw the money from deposit with subscribing banks, until at
or near the time of the maturity of the call, when they must be
prepared to pay. It is not the interest of the government to force
subscriptions beyond the ability of investors, but we cannot check
subscriptions by any violation of the public advertisement or any
public caution against the danger that is open to everyone.
"Very truly yours,
"John Sherman."
"Washington, D. C., January 13, 1879.
"George Kerr, Esq., Janesville, Bremer Co., Iowa.
"Sir:--I have received your letter of the 6th instant inclosing a
slip cut from the Bremer County 'Independent,' a weekly paper
published in Waverly, containing a statement to the effect that
the First National of New York is enjoying, from the department,
special privileges in the matter of holding public money on account
of subscriptions to the four per cent. consols of 1907, and receiving
from the government unusual commissions on subscription.
"It is needless to say to you that the statement is entirely
erroneous from beginning to end.
"In the department's circular of the first instant, a copy of which
is hereby inclosed for your information, _all_ national banks are
invited to become financial agents, and depositaries of public
moneys received on account of the sale of these bonds, and the
commissions allowed on subscriptions are plainly stated therein.
Over one hundred (100) national banks have been thus designated as
depositaries for the purpose mentioned, and all are treated precisely
alike, both as to commissions allowed and balances held.
"The First National Bank of New York enjoys, as a United States
depositary, no special privileges whatever from the department.
It has, however, thus far, subscribed for a larger amount of four
per cent. bonds than any other bank, and has, consequently, received
a larger amount for commissions. But any other bank subscribing
for the same amount of bonds would, of course, receive the same
amount for commissions.
"Very respectfully,
"John Sherman, Secretary."
"Treasury Department, }
"Washington, D. C., January 14, 1879.}
"H. C. Fahnestock, Esq., New York.
"Dear Sir:--Your note of the 13th instant is received.
"In buying the fours thrown upon the market, you are rendering as
much service to the government as if you bought directly. Indeed,
I am glad you are buying from the market rather than from the
department. I do not wish to force this refunding operation too
much, lest it may embarrass resumption. I only fear that some
eager parties may subscribe for more than they can sell and pay
for by called bonds or coin within the running of the call. This
is the only contingency that disturbs me.
"Very respectfully,
"John Sherman."
My published correspondence shows that with all the efforts and
strength of the department it was impossible to keep up with the
subscriptions for bonds pouring in from all parts of the United
States and from Europe. Over sixty millions were subscribed for
in the first two weeks of January. Offers made by me in December,
though not accepted at the time, were made the grounds of demands
in January, when conditions had greatly changed. As the money
received for four per cent. bonds could not be applied to the
payment of six per cent. called bonds until interest on such bonds
ceased, ninety days after the call, I feared that the enormous
deposits would create a serious stringency in the money market,
and perhaps cause a panic after the first of April. The banks and
bankers in New York, as well as in other large cities of the United
States, were actively competing to swell these subscriptions, so
as to get the larger commission offered for the greater amount of
bonds sold. Such a contest occurred between the First National
Bank of New York, and Seligman & Co., and their associates. In
ended in a contract made on the 21st of January, between the
Secretary of the Treasury and the former syndicate, by which the
latter subscribed for $10,000,000 of four per cent. bonds, on the
terms stated in my circular of January 1, and $5,000,000 a month
thereafter, the secretary reserving the power to terminate the
contract.
On the same day a call was made for $20,000,000 of six per cent.
bonds. Another call for a like amount was made on the 28th. The
aggregate call for six per cent. bonds in January was $120,000,000.
Charles F. Conant was again appointed as the funding agent of the
treasury department, and directed to assume the general management
and supervision of all business in London arising from the funding
of bonds. He was instructed to advise me frequently as to the
condition of the business intrusted to him.
The object of this sale of bonds in London was stated in the public
prints, and also in the following letter:
"Treasury Department, January 22, 1879.
"Charles M. Fry, Esq.,
"President Bank of New York, National Banking Association, New
York.
"Sir:--Your telegram was received yesterday.
"The syndicate arrangement was confined to the sale of bonds in
Europe, where it is deemed important to sell bonds partly to cover
called bonds held abroad; and a contract has been made with bankers
having houses in London, on precisely the same terms as were extended
to all in this country. It was thought that this would be best
for the domestic loan. No contract of arrangement will be made to
interfere in any way with the free, open, popular subscriptions in
the United States.
"I am glad to notice your success and will give you every facility
that is extended to anyone else.
"Very respectfully,
"John Sherman, Secretary."
The sale in London was fully justified when the called bonds matured,
and those held abroad were paid for without the exportation of
coin. It was my desire to secure the exchange of four per cent.
bonds directly with the holders of the six per cents. For this
purpose I invited, by a department order widely circulated, such
an exchange, allowing to the holder of any six per cent. bond,
whether called or uncalled, the same commission and allowance for
interest granted to banks and bankers. By these expedients I hoped
for, and succeeded in conducting, the change of bonds without
disturbing the ordinary current of business.
The process of refunding the 5-20 six per cent. bonds, by the sale
of four per cent. bonds, went on with some fluctuations until the
4th of April, 1879, when all the six per cent. bonds then redeemable
were called for payment. This period in the magnitude of business
done was far the most active and important while I was Secretary
of the Treasury. The struggle between banks and bankers, not only
in the United States but in London also, gave rise to many questions
which had to be promptly acted upon, chiefly by cable or telegram.
The amount involved were so large as to induce caution and care.
The principal difficulty in refunding arose out of the provision
in the act of Congress that ninety days' notice should be given,
to the holder of bonds, by the government, when it exercised its
option to pay, after five years, any portion of the bonds known as
the 5-20 bonds, payable in twenty years but redeemable after five
years. Prudence required the actual sale of four per cent. bonds
before a call could be made or notice given to the holders of the
5-20 bonds, designated by description and numbers, of the intention
of the government to pay them. When sales were made the money
received was deposited in the treasury of the United States, or
with national banks acting as public depositaries, which were
required to give security for such deposits.
The necessary effort of the deposit of large amount involved in
refunding operations was to create a stringency in the money market.
I early called the attention of Congress to this difficulty, but
had doubts whether the government would be justified in repealing
the law requiring ninety days' notice. This provision was a part
of the contract between the government and the bondholder, and
could only be changed by the consent of both parties. Congress
failed to act upon my suggestion. The interest accruing for ninety
days at six per cent., or one and a half per cent. on the great
sums involved, was a loss to the government but a gain to the banks
or bankers that sold the bonds. The syndicate of bankers engaged
in the sale of bonds chose the First National Bank of New York as
their depositary. The department was indifferent where the deposits
were made so that they were amply secured. Other banks and bankers
engaged in the sale of bonds chose their own depositaries, and thus
an active competition was created in which the department took no
part or interest.
This struggle led to charges of favoritism on the part of the
department, but they were without the slightest foundation. Every
order, ruling and letter was fully discussed and considered by the
Secretary and other chief officers of the treasury, and also by
General Hillhouse, assistant treasurer at New York, and is in the
printed report of the letters, contracts, circulars and accounts
relating to resumption and refunding made to Congress on the 2nd
of December, 1879.
The charge was especially made that favor was shown the First
National Bank of New York, of which George F. Baker was president
and H. C. Fahnestock was vice president. It was said that I was
a stockholder in that bank, and that I was interested in the
syndicate. It is scarcely necessary for me to say, as I do, that
these charges and imputations were absolutely false. This bank
and the associated bankers sold larger amounts of four per cent.
bonds than any others and received a corresponding commission, but,
instead of being favored, they were constantly complaining of the
severity of the treasury restrictions. Rothschild, the head of
the great banking house in London and the chief of the syndicate,
especially complained of what he called the "stinginess" of the
treasury department. I can say for all the officers of the treasury
that not one of them was interested in transactions growing out of
resumption or refunding, or did or could derive any benefit
therefrom.
The rapid payment of the 5-20 bonds had a more serious effect upon
the English market than upon our own. Here the four per cent.
bonds were received in place of the six per cent. bonds, no doubt
with regret by the holders of the latter for the loss of one-third
of their interest, but accompanied by a sense of national pride
that our credit was so good. In London the process of refunding
was regarded with disfavor and in some cases by denunciation. On
the 4th of March Secretary Evarts wrote me the following letter:
"Department of State, }
"Washington, March 4, 1870.}
"Hon. John Sherman, Secretary of the Treasury.
"Sir:--I have the honor to transmit herewith, for your information,
a copy of a dispatch No. 928, dated February 12, from the consul
general at London, in which the department is advised that there
exists dissatisfaction, among certain holders of the 5-20 bonds of
the issue of 1867, with the rapidity with which the government is
refunding its debt at a lower rate of interest, and that it is the
purpose of such holders to demand payment of their called bonds in
coin. I have to honor to be, sir, your obedient servant.
"Wm. M. Evarts."
This demand was easily met by the sale of four per cent. bonds in
London, and the balance of trade in our favor was increasing. The
anticipated movement of gold did not occur.
Congress, by the act approved January 25, 1879, extended the process
of refunding to the 10-40 bonds bearing interest at the rate of
five per cent., amounting to $195,000,000 as follows:
"AN ACT TO FACILITATE THE REFUNDING THE NATIONAL DEBT.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That the Secretary
of the Treasury is hereby authorized, in the process of refunding
the national debt under existing laws, to exchange directly at par
the bonds of the United States bearing interest at four per centum
per annum, authorized by law, for the bonds of the United States
commonly known as 5-20's, outstanding and uncalled, and, whenever
all such 5-20 bonds shall have been redeemed, the provisions of
this section, and all existing provisions of law authorizing the
refunding of the national debt, shall apply to any bonds of the
United States bearing interest at five per centum per annum or a
higher rate, which may be redeemable. In any exchange made under
the provisions of this section interest may be allowed, on the
bonds redeemed, for a period of three months."
On the 26th of February the following act was passed:
"AN ACT TO AUTHORIZE THE ISSUE OF CERTIFICATES OF DEPOSIT IN AID
OF THE REFUNDING OF THE PUBLIC DEBT.
"_Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled_, That the Secretary
of the Treasury is hereby authorized and directed to issue, in
exchange for lawful money of the United States that may be presented
for such exchange, certificates of deposit, of the denominations
of ten dollars, bearing interest at the rate of four per centum
per annum, and convertible at any time, with accrued interest, into
the four per centum bonds described in the refunding act; and the
money so received shall be applied only to the payment of the bonds
bearing interest at a rate of not less than five per centum in the
mode prescribed by said act, and he is authorized to prescribe
suitable rules and regulations in conformity with this act."
On the 4th of March, 1879, the amount of uncalled 5-20 six per
cent. bonds outstanding was $88,079,800. Anticipating that sales
of four per cent. bonds would continue, I gave the following notice:
"Notice is given that when the 5-20 six per cent. bonds of the
United States are covered by subscriptions to the four per cent.
consols, the latter will be withdrawn from sale upon the terms
proposed by department circular of January 1, 1879, and upon the
terms stated in the contract with the Messrs. Rothschild and others,
of the date of January 21, 1879. The amount of 5-20 six per cent.
bonds outstanding and embraced in calls to this date is $88,079,800.
When this sum is covered by subscriptions under the existing circular
and contract, all further sales of four per cent. consols, to
provide for the refunding of the 10-40 five per cent. bonds, will
be made upon terms which will probably be less favorable to the
purchaser, and in accordance with new proposals and contracts.
This notice is given so that all parties wishing to subscribe for
consols upon the terms stated in the circular and contract may have
an opportunity to do so until the 5-20 bonds are called."
In giving this notice I had in view a change in the mode of refunding
which would save to the government the whole or large part of the
three months' interest pending the call. This notice gave an
additional spur to the market for four per cent. bonds. Copies of
it were sent to Mr. Conant and to all parties interested in pending
operations, and due notice was given to all persons and corporations
engaged in the sale of bonds that all existing contracts would
terminate when the 5-20 bonds were covered by subscriptions.
At this time there was a good deal of anxiety as to the effect of
the large sale of four per cent. bonds. If these could be exchanged,
par for par for six per cent. bonds, the operation would be easy,
but many holders of called bonds would not accept the lower rate
of interest and invested the principal of their bonds in other
securities. General Hillhouse, on the 8th of March, expressed the
common feeling as follows:
"There is a good deal of speculation in the papers, as well as in
business circles, as to the probable effect on the money market of
the settlements to be made in April, during which month, if I am
not mistaken, about $150,000,000 of calls will mature. It is now
seen, however, that investment demand for the fours is much larger
than was anticipated by many; and the subscribing banks will be,
therefore, likely to find themselves loaded with large amounts which
they cannot dispose of. It would not be strange, in the closing
of such vast transactions, if there should be some stringency, but
with the favorable indications, that the public are taking the
bonds freely, and with the power of the secretary in various ways
to facilitate the settlements, it can hardly be more than
temporary."
Mr. Conant wrote me, on March 8, from London:
"I have called on all the members of the syndicate several times
within the past few days, and have urged them very strongly to push
the sales of the bonds here. I have persistently tried to persuade
them that they ought to conduct the business with far more energy,
and I have said to them that, at the time the contract was entered
into, representations were made to you that $50,000,000 of the four
per cent. consols could be disposed of on this side of the Atlantic,
and that as they had undertaken the business they should not
disappoint you. I have represented to them the importance of
preventing the shipments of gold from New York, and that you supposed
that the sales of bonds which you expected they would make would
prevent such shipments. . . .
"The feeling which I alluded to in my last letter, that when the
time arrives for the settlement of the large subscriptions made in
New York and elsewhere at home the market will be found overloaded,
and that a fall in price will take place, still exists here, and
has the effect of causing certain classes of investors to delay
making purchases, which they will ultimately make. I have not
hesitated to say to the associates here that when refunding operations
shall have been completed the four per cent. consols will soon
thereafter go to a premium, and good reasons can be given why such
should be the case."
Soon after I commenced receiving prophecies of stringency and
disaster. A long letter from Fisk & Hatch, of New York, said that
general apprehension had been growing up in financial circles, and
was rapidly gaining ground, that the settlements by the national
banks with the treasury department, in April and May, for the large
subscriptions of four per cent. bonds made in January and February,
would occasion serious disturbance and embarrassment in the money
market. They advised me to pursue a course that, whether proper
or not, was not in accordance with law. Mr. L. P. Morton., on the
same date, took a milder view of it, but still suggested a remedy
not within my power.
On the 13th, General Hillhouse, in referring to the apprehensions
of my correspondents in regard to the settlements in connection
with refunding, said that they might be caused in some instances
by the suspicion, if not by the conviction, that their subscriptions
had been carried beyond the point of absolute safety, "and now that
settlement day is approaching they are naturally desirous of
ascertaining how far they can count on the forbearance of the
government."
This was the same view I had taken of the matter. I did not feel
myself officially bound to do anything but to require prompt payment
for the bonds subscribed. The treasury, however, was well prepared
for any probable stringency, and I was convinced that the settlements
would not cause any serious disturbance. The advices from London
continued to be unfavorable. The bonds were offered in the market
in some cases at a less price than the syndicate were to pay for
them.
In the process of selling the four per cent. bonds I had frequently
been written to by persons of limited means, who wished to invest
their savings in government bonds of small denominations bearing
four per cent. interest. I called the attention of the proper
committee of each House to the expediency of issuing notes or
certificates of that description, and the act of February 26, 1879,
already quoted, was passed.
On the 26th of March I issued a circular relative to these
certificates, prescribing the manner in which they should be sold,
and stated the purpose and probable effect of their issue, as
follows:
"The primary purpose of these certificates is to enable persons of
limited means to husband small savings as they accrue, and place
them where they will draw interest and become the nest egg for
future accumulation. The form of certificate seems better adapted
for the purpose than the French _ventes_ or the English savings
bank system. The objection to a national savings bank is that, in
a country so extensive as ours, the agencies would necessarily be
scattered, and the cost and delay of correspondence and transferring
money to Washington would be considerable; but, more than all, the
United States cannot undertake the risk of repaying deposits at
any time when called for. The necessary reserve for that purpose
would make the system burdensome. The certificate, as issued, may,
at the expense of the subscriber, be either to bearer, or, by being
registered, only transferable by assignment on the books of the
treasury. It combines, in the cheapest form, all the benefits of
any system of savings banks that has been devised. No doubt these
certificates, when first issued, will, by voluntary consent of
parties, be used as currency; but, after they shall have run a
short time, the accruing interest on them will induce their sorting
and holding, and thus, like the compound-interest notes, they will
cease to be a currency and become an investment. Their possible
use as currency is certainly no objection to them; for, though I
adhere as strictly as anyone to a specie standard of value, I think
that, it being constantly maintained by ample reserves and prompt
redemption, current money in different forms should be provided
for daily use. Diversity of the currency, if it is always redeemable,
is no objection. These certificates will always be redeemable in
the bonds stipulated for, and can, with profit, be issued, while
the money received for them can be used in redeeming bonds bearing
a higher rate of interest. They are of as low a denomination as
can be conveniently issued and bear interest. The issue of this
certificate is a safe experiment. I have confidence that it will
be beneficial to the holder, in begetting habits of saving, and to
the treasury, in aiding refunding; but its great benefit will be
that the people themselves will in this way have a direct interest
in preserving and maintaining the public faith."
On the same date I wrote a note for publication to the treasurer
of the United States, to facilitate the payment of called bonds,
as follows:
"As it is desirable to make payment of called bonds in the mode
that will least disturb the market, you will draw from the depositary
banks the proceeds of four per cent. bonds only when required to
make payment of called bonds, and in proportion from the several
depositaries to the amounts held by them, as near as may be, in
sums of $1,000. Money in the treasury received from four per cent.
bonds should be applied to the payment of called bonds before such
drafts are made.
"When practicable, drafts upon depositary banks, for transfers of
deposits on account of proceeds of four per cent. bonds, may be so
drawn as to be payable at the option of the bank, through the New
York clearing house.
"Drafts on depositary banks in cities other than New York should
be drawn a sufficient time in advance to meet payments there.
"Payment by called bonds should be treated as payment in money as
of the date when it would, under this order, be required."
On the 27th I received from Conant the following cablegram:
"Would be pleased to know if subscriptions to be settled during
April can be expected without disturbing market in New York."
I answered on the same day as follows:
"Entirely confident subscriptions during next month will be settled
without disturbing market. Order of the treasury department
yesterday will facilitate greatly."
The following correspondence with Conant, the syndicate and myself
then took place:
"London, March 28, 1879.
"Sherman, Washington.
"Rothschild & Sons request me to say they do not consider contract
of January 21, 1879, requires subscription two million to be made
April 1. On account of market price below par at present time they
desire delay subscription few days. Hope you will consent.
"Conant."
"Treasury Department, March 28, 1879.
"Conant, London.
"I think contract of January 21, 1879, very plain, subscription
should be made April 1, but, if they desire, time will be extended
to April 8.
"Sherman."
"Treasury Department, March 28, 1879.
"August Belmont & Co., New York.
"Gentlemen:--In confirmation of my two telegrams of to-day to you,
copies of which are inclosed, I have to inform you that the proper
legal officers of the department, as well as myself, consider it
very clear that, under the contract of January 21, your option to
make the second subscription expires on the 1st of April, but I am
not at all desirous of raising the question, and therefore am
willing to extend the time a week, within which I am quite confident
the anxiety about the April payments will begin to subside. Thus
far this week, over $17,000,000 called bonds have been redeemed by
credit on subscriptions, and $450,000 only paid by draft. Called
bonds are rapidly coming in for credit. The subscriptions in excess
of bonds called now amount to $6,600,000. With an assurance of a
subscription of $2,000,000 from you, by the 1st, or even the 8th,
of April, I would immediately issue a call for $10,000,000, and
may do so without waiting for your subscription.
"I would prefer that the parties to the contract should not avail
themselves of the extension offered, but leave that entirely to
your good judgment.
"Very respectfully,
"John Sherman, Secretary."
(Telegram.)
"Treasury Department, March 28, 1879.
"August Belmont & Co., New York.
"The contract is very plain that the first subscription should be
made by April 1. The stipulation for five million each month would
have made the second subscription in February or March, but, by
the agreement, it need not be made before April 1.
"John Sherman, Secretary."
"New York, March 28, 1879.
"Hon. John Sherman, Secretary of the Treasury, Washington, D. C.
"Dear Sir:--We received this morning a telegram from Messrs.
Rothschild about the next subscription under the contract of the
21st of January, and telegraphed its contents to you, as follows:
'London associates telegraph consider according contract have all
month April to make next subscription. Please telegraph whether
you agree they are right'
"In reply we received your telegrams reading:
'The contract is very plain that the next subscription should be
made by April 1. The stipulation for five million each month would
have made the second subscription in February or March, but by
agreement it need not be made before April 1.'
"and--
'Have cabled Conant to extend option, if desired, to April 8.'
"contents of which we have communicated to our London friends.
"Yours, very respectfully,
"_Pro_ August Belmont & Co.
"W. Suttgen.
"W. Beuter."
The explanation of these cablegrams is given in the following
letter:
"New Court, St. Swithin's Lane, }
"London, E. C., England, March 29, 1879.}
"Dear Mr. Secretary:--On the 27th instant I had the honor to make
an inquiry of you by cable dispatch, as follows: 'Would be pleased
to know if subscriptions to be settled during April can be effected
without disturbing market in New York.' The constant decline in
the price of all descriptions of our bonds in New York, the strenuous
efforts being made by certain parties to sell American bonds here
at low rates on home account, particularly the four and four and
a half per cent. stock, the advancing rates of interest, and the
condition of the exchanges, together with the rumors concerning
scarcity of money in New Orleans and elsewhere, gave rise to
apprehension, in the minds of many, that refunding operations had
been carried to too great an extent; that too many bonds had been
subscribed for on speculative account, and that any forced settlement
of the subscriptions falling due in April would produce a panic.
Private telegrams sent here conveyed information to the effect that
arrangements would be made between yourself and the banks, by which
the deposits in them would not be drawn upon until absolutely
necessary. The answer, however, which I received from you a few
hours later was highly gratifying and reassuring, and I gave it as
much publicity as possible without, of course, publishing it. It
reads as follows: 'Entirely confident subscriptions during the
next month will be settled without disturbing the market. Order
treasury department yesterday will facilitate greatly.'
"The question of obligation to make a subscription on the 1st day
of April to continue the contract has been under consideration by
the syndicate during the past week, and in fact ever since the
beginning of the decline in the price of the four per cent. stock.
The associates claim that they are only required to take five
millions of the bonds during the month of April, and that having
already taken three-fifths of the amount in advance, they should,
in view of the impossibility of disposing of the stock at present
prices, be allowed the balance of the month in which to subscribe
for the remaining two millions. They argue that it cannot be
expected that they can afford to take the bonds and pay the government
one and a half per cent. above the market prices, and they add that
they do not think you would wish to have them do so. They also
say that if they wanted the bonds for _speculative purposes only_
they should give up the contract and purchase in the open market;
but their policy is to keep the price at par and not to buy or sell
when it is below par. Bonds will sell more rapidly when they are
at par than when below it. It is the speculators and not the
investors, as a rule, who deal in stocks when they are cheap. If
the price of the bonds had remained at par, I have no doubt but
that all the bonds I have here would already have been disposed
of, and that the parties would have been ready and willing to make
the subscription for five millions on April 1.
"The Messrs. Rothschild say that, owing to the high price which
they were compelled to pay for called bonds, and the reduced price
at which they were compelled to part with a portion of the four
per cent. bonds, they have made a slight loss on their transactions
so far. They like to have business relations and connections with
governments, and I think that that disposition on their part is
paramount to the question of profits. The matter of the subscription
was discussed again yesterday, and deferred until Monday for further
consideration, and I was asked to send the following cable message
to you:
'Rothschild & Sons request me to say they do not consider contract
of January 21, 1879, requires subscription $2,000,000 to be made
April 1. On account of market price below par at the present time,
they desire delay subscription a few days. Hope you will consent.'
"I hoped you would consent, because I think it quite important,
for many reasons, that we should dispose of bonds on this side of
the water. They take the place of actual gold in settling exchanges,
and thereby prevent the disturbances in the money market which
always result from the moving of bullion. I have no doubt but that
the use of these bonds in this manner has stimulated purchases of
grain and produce from us which would never have left our shores
if payment for the same could only have been made in bullion. I
received this morning your cable message in answer to the one I
sent yesterday, as follows:
'I think contract of January 21, 1879, very plain. Subscriptions
should be made April 1; but, if they desire, time will be extended
to April 8.'
* * * * *
"With great respect, I remain, yours truly,
"Chas. F. Conant.
"Hon. John Sherman."
I have set out in full this correspondence with Rothschild and his
associates and with Conant, to show that on the eve of complete
success they were discouraged and asked for a postponement of, to
them, the small subscription of $1,000,000, and did not even think
of taking the option of $10,000,000 of bonds subsequently claimed.
With the 1st of April all stringency disappeared. Accounts were
settled without difficulty. The amount of four per cent. consols
sold to March 31, inclusive, was $473,443,400.
On the 4th of April, while attending a meeting of the cabinet, I
was handed the following telegram:
"New York, April 4, 1879.
"Hon. John Sherman, Secretary of the Treasury, Washington, D. C.
"National Bank of Commerce in New York subscribes for forty million
dollars four per cent. bonds. Particulars and certificates by mail.
"Henry F. Vail, President."
I thought the amount was a mistake, that four instead of forty was
meant. I replied as follows:
"Henry F. Vail, President National Bank of Commerce, New York.
"Before making call I prefer you repeat your subscription."
A few moments after sending this telegram I received the following
from Mr. Vail:
"I sent you telegram to-day, which from its importance I beg you
will telegraph me acknowledgment of its receipt."
I replied:
"Your telegram is received, and I have asked repetition of it before
making call."
The following telegraphic correspondence then occurred:
"Hon. John Sherman.
"Please enter to-day for us a subscription for ten million dollars
four per cents. making, however, no announcement until we see you
to-morrow.
"G. F. Baker, President First National Bank, New York.
"Hon. John Sherman.
"We have taken two million subscriptions to-day thus far, and more
to follow.
"E. D. Randolph,
"President Continental National Bank, New York."
"New York, April 4, 1879.
"Hon. John Sherman.
"Your two telegrams received. I hereby confirm my telegram of to-
day, subscribing, in name of National Bank of Commerce in New York,
for forty million dollars four per cent. bonds.
"Henry F. Vail, President."
"Henry F. Vail, President National Bank of Commerce, New York.
"Your subscription for forty million four per cent. bonds, having
been repeated by telegram, is accepted. A call will issue to-day
for the balance of the sixty-sevens and to-morrow a call will issue
for the whole of the sixty-eights.
"John Sherman, Secretary."
"E. D. Randolph, President, etc., New York.
"Your two million subscription received and accepted, but can accept
no more. All 5-20's are covered.
"John Sherman, Secretary."
"New York, April 4, 18979.
"Hon. John Sherman.
"We subscribe for three millions more, making five in all.
"F. Taylor, Cashier Continental National Bank."
"Treasury Department, April 4, 1879.
"F. Taylor, Cashier Continental National Bank, New York.
"Your subscription for three millions arrived too late; all the 5-
20's have been covered by previous subscriptions.
"John Sherman, Secretary."
A similar telegram was sent to the Continental National Bank of
New York, which subscribed $25,000,000 additional, the Hanover
National Bank of New York, $25,000,000, and the New York National
Banking Association, $2,000,000.
I then telegraphed to Mr. Conant as follows:
"Subscriptions have been made covering all 5-20 bonds (consols of
1867 and consols of 1868) outstanding, reserving for contracting
parties the one million not subscribed for.
"Inform the contracting parties and accept no new subscriptions."
On the 4th of April, 1879, I had the satisfaction of issuing the
95th and 96th calls for 5-20 bonds, covering all the bonds outstanding
issued under the act of March 3, 1865, and the last of the United
States 5-20 bonds. The early twenty year bonds, issued during the
first two years of the Civil War, were not yet due or redeemable,
and, therefore, could not be called for payment. This was a
practical illustration of the importance, in issuing government
securities, of reserving the right to redeem them before maturity.
The rapid and irregular subscriptions made on the 4th of April
involved the department in serious difficulty in determining who
of the many subscribers were entitled to the bonds. The aggregate
of subscriptions was more than double the amount of 5-20 bonds
outstanding. By adopting a rule of accepting bids made before a
fixed hour of that day, and by voluntary arrangements among the
bidders, a distribution was made.
The only serious controversy in respect to this distribution was
upon the claim of the Rothschilds that they had option extending
to the 30th of June for ten millions of bonds, and for one million
extended from April 1 to April 8. The latter was allowed, but the
department held that the option for ten millions June 30 was
dependent upon whether the bonds were previously sold, and this
occurred on the 4th of April. This gave rise to a controversy
which was settled by the voluntary transfer, by the National Bank
of Commerce, of ten millions of the forty millions bonds subscribed
for by it. Rothschild, the head of the house, would not accept
this offer, but, with some show of resentment, declined to receive
his share of the bonds, but they were eagerly taken by his
associates.
The 5-20 bonds having been paid off or called, the department
proceeded, as soon as practicable, to execute the laws of January
25 "to facilitate the refunding of the national debt," and February
26 "to authorize the issue of certificates of deposit in aid of
the refunding of the public debt."
On the 16th of April I published the offer of $150,000,000 four
per cent. bonds at one-half of one per cent. above par and accrued
interest, and reserved $44,566,300 of these bonds for the conversion
of ten dollar refunding certificates.
The following telegrams, addressed to the Secretary of the Treasury
on the 17th of April, tell the result:
From the Bank of New York National Banking Association, New York:
"Send two millions four per cent. bonds under terms of to-day's
dispatch."
From Chase National Bank, New York:
"We have subscribed for half million dollars four per cent. bonds
on terms just issued. Can we deposit our securities at the treasury
here, as heretofore?"
From First National Bank, New York:
"Please enter subscription this date for ten million dollars, and
reserve further amount of fifteen millions, awaiting our letter.
Please make no announcement of either to-day, for reasons will
explain."
From Bank of New York National Banking Association, New York:
"Send seventy-five certificates ten thousand each, fifty of five
thousand each, four per cents., in name of I. & S. Wormser. Also
four hundred bonds five hundred each, three hundred of one thousand
each; in all, one million five hundred thousand. Certificate
deposit by mail."
From Baltzer and Lichtenstein, New York:
"We subscribe to-day through the National Bank of the state for
one million fours."
From National Bank of the State of New York:
"We confirm dispatch of Baltzer and Lichtenstein order one million
four per cent. consols, and order, in addition to that and our
previous dispatch, one million more, half each coupon and
registered."
Bank of New York National Banking Association, New York:
"We take two million more fours; particulars later."
From National Bank of the State of New York:
"Please forward immediately four million United States four per
cent. consols."
* * * * *
"Please forward three hundred thousand registered and two hundred
thousand coupons four per cent. consols. Particulars by mail."
* * * * *
"Please forward one million four per cent. consols coupons."
* * * * *
"Please forward immediately fifteen hundred thousand United States
four per cent. consols additional to all former subscriptions."
From Bank of New York National Banking Association:
"Send one hundred and twenty certificates, ten thousand each, in
name of I. & S. Wormser; also eight hundred coupon bonds, one
thousand each, in all, two million fours. Certificate by mail."
* * * * *
"We subscribe for four millions fours; this is in addition to all
other telegrams. Certificates by mail."
From Continental National Bank, New York:
"We subscribe to-day two million four per cents., name Hatch &
Foote. Particulars by mail."
From First National Bank, New York:
"Please enter our subscription under this date for one hundred and
fifty million dollars four per cent. bonds and forty million dollars
refunding certificates, in all, one hundred and ninety million
dollars, under terms of your circulars of April 16 and March 7.
These subscriptions are for this bank and its associates. Will
see you to-morrow morning. This is repetition of dispatch sent to
the department."
From National Bank, State of New York:
"Confirming previous dispatches covering subscriptions of seven
million five hundred thousand dollars to four per cent. loan, please
forward additional two millions coupon bonds."
From Bank of New York National Banking Association:
"We subscribe for one million four per cents. Certificates of
deposit by mail to-morrow."
From National Bank, State of New York:
"Please forward immediately one million more United States four
per cent. consols, making a total, together with former subscriptions,
of ten million five hundred thousand."
I sent the following telegram to the First National Bank of New
York:
"Your telegram covering one hundred and ninety million consols
staggers me. Your telegram for twenty-five million received, and
entered at two o'clock. About thirty million from other parties
were received and entered before your last telegram. Will wait
till letters received. What is the matter? Are you all crazy?"
On the 18th the bids were carefully analyzed and accepted in the
order in which they were received. The bid of the First National
Bank was made on the behalf of an association of banks and bankers.
I declined their offer for refunding certificates and accepted
their offer for $111,000,000.
I wrote to Conant, April 18, as follows:
"Since I wrote you the letters yesterday respecting the recent
circular of April 16, I have sold the whole of the $150,000,000 of
bonds offered therein; $39,000,000 were sold to sundry banks in
the city of New York, and the residue, $111,000,000, were sold to
an association of banks and bankers through First National Bank.
This unexpected and agreeable _denouement_ of our refunding operations
will supersede much that I have written you. I received and answered
your telegram of to-day. Arrangements will be made with the new
associates for delivery of four per cent. consols and the receipt
of called bonds in London.
"Although I have given notice that I will feel at liberty to do so
after the 4th of May, I prefer that you will postpone any new
arrangement for delivery to other parties until the 10th; hoping
that before that time Messrs. J. S. Morgan & Co. will be able to
close out the balance of their last subscription."
On the same day I made a call for $160,000,000 10-40 bonds, being
all of such bonds outstanding, except an amount that would be
covered by the proceeds of ten dollar refunding certificates. The
sale of these certificates gave the department a great deal of
trouble. The object and purpose of the law was to secure to persons
of limited means an opportunity to purchase, at par, certificates
of indebtedness bearing four per cent. interest. As they could be
converted at pleasure into 10-40 bonds of small denominations, it
was thought they would be promptly taken by the persons for whom
they were designed. They were sold in limited amounts to individuals
at post offices, but as they were, when converted into bonds, worth
a premium, bankers and others hired men to stand in line and purchase
certificates. This was a practical fraud on the law, and was mainly
conducted in the cities, and where done the sale was discontinued.
The great body of the certificates were taken by the class of
persons for whom they were designed. In a brief period they were
sold, and the proceeds were in the treasury.
On the 21st of April I made the final call for all outstanding 10-
40 bonds. With this call the refunding operations were practically
at an end for the time. A good deal of correspondence was had as
to priority of bids and sales of refunding certificates, but this
was closed, at the end of ninety days, by the full payment of the
called bonds, and the substitution of bonds bearing a lower rate
of interest. This was accomplished without the loss of a dollar,
or, so far as I can recall, without a lawsuit.
The aggregate amount of bonds refunded from March 4, 1877, to July
21, 1879, was $845,345,950.
The annual interest saved by this operation was $14,290,416.50.
The general approval and appreciation of these results was manifested
by the public press, and especially in Europe. Mr. Conant, in a
letter dated April 19, said:
"On yesterday morning, at the stock exchange, just after the opening
hour, a McLean's cable dispatch was posted up, stating that you
had entered into a contract with a syndicate for the sale of
$150,000,000 of four per cent. bonds, against the outstanding 10-
40 five per cent. bonds. People were astounded at the information,
and they were all the more astonished because the operation followed
so closely upon the transaction of the 4th instant. The effect of
this has been to send the price of the bonds up by three-fourths
per cent., and to create a demand for them."
From the date of these transactions the bonds of the United States
rapidly advanced in value. Many similar transactions of my successors
in office have been made at a still lower rate of interest.
Among the agreeable incidents connected with the resumption of
specie payments was the adoption of resolutions by the Chamber of
Commerce of New York, on the 2nd of July, 1879. The second resolution
was as follows:
"_Resolved_, That this Chamber tenders its congratulations to the
Honorable the Secretary of the Treasury, at once the framer and
executor of the law of 1875, upon the success which has attended
his administration of the national finances; as well in the funding
of the public debt, as in the measures he has pursued to restore
a sound currency."
I subsequently received, by the hands of William E. Dodge, late
president of the Chamber of Commerce of New York, a letter from
that body asking me to sit for my portrait to be placed on the
walls of their Chamber. On the 24th of February I sent the following
reply:
"Gentlemen:--I have the honor to acknowledge the receipt, by the
hands of Wm. E. Dodge, late president of the Chamber of Commerce
of New York, of your letter of the 17th instant, covering a resolution
of your body, asking me to sit for my portrait to be placed upon
the walls of your Chamber.
"The kinds words of Mr. Dodge in delivering the resolution add
greatly to the compliment contained therein. I assure you that I
deeply appreciate the honor of being designated in this manner, by
a body so distinguished as the one you represent, composed of
members having so large an influence in the commercial transactions,
not only of our country, but of other nations, whose familiarity
with financial and commercial subjects gives to its opinions great
respect and authority.
"The resumption of specie payments has been brought about by the
co-operation, not only of many Senators and Members of Congress,
but of the leading merchants, bankers and other business men of
the country. It was my good fortune to be selected, by my colleagues
in the Senate, to present the resumption act, which was framed with
their aid and in their councils, and to hold my present office at
the time when, by its terms, the law was to be enforced. The only
merit I can claim is the honest and earnest effort, with others,
to secure the adoption of the policy of resumption, and to have
executed the law according to its letter and spirit. I feel that
I cannot accept this high compliment, without acknowledging that
I am but one of the many who have contributed to the accomplishment
of this beneficent object.
"I will, with great pleasure, give every facility to any artist
whom you may select to carry your resolution into effect.
"Expressing to you, and the gentlemen you represent, my appreciation
of a compliment so highly prized, I have the honor to be,
"Very respectfully, your obedient servant,
"John Sherman.
"Messrs. A. A. Lone, James M. Brown, Sam'l D. Babcock, Wm. E. Dodge,
Henry F. Spaulding, _Committee of the Chamber of Commerce, New
York_."
Subsequently, in compliance with this request, I gave to Mr.
Huntington, an eminent artist selected by that body, a number of
sittings, and the result was a portrait of great merit, which was
placed in the Chamber of Commerce with that of Alexander Hamilton.
I regarded this as a high compliment from so distinguished a body
of merchants, but I do not indulge in the vanity of a comparison
with Hamilton.
CHAPTER XXXVIII.
GENERAL DESIRE TO NOMINATE ME FOR GOVERNOR OF OHIO.
Death of My Brother Charles--The 46th Congress Convened in Special
Session--"Mending Fences" at My Home in Mansfield--Efforts to Put
Me Forward as a Candidate for the Governorship of Ohio--Letter to
Murat Halstead on the Question of the Presidency, etc.--Result of
My Letter to John B. Haskin--Reasons of My Refusal of the Nomination
for Governor--Invitation from James G. Blaine to Speak in Maine--
My Speech at Portland--Victory of the Republican Party--My Speech
at Steubenville, Ohio--Evidences of Prosperity on Every Hand--Visit
to Cincinnati and Return to Washington--Results in Ohio.
On the morning of January 1, 1879, I received intelligence of the
sudden death of my eldest brother, Charles T. Sherman, at his
residence in Cleveland. In company with General Miles and Senator
Cameron, his sons-in-law, and General Sherman, I went to Cleveland
to attend the funeral. My respect and affection for him has already
been stated. As the eldest member of our family he contributed
more than any other to the happiness of his mother and the success
of his brothers and sisters. He aided and assisted me in every
period of my life, and with uniform kindness did all he could to
advance my interests and add to my comfort and happiness. As
district judge of the United States, for the northern district of
Ohio, he was faithful and just. When, after twelve years service,
he was reproached for aiding in securing the reversal of an order
of the Commissioner of Internal Revenue in collecting an unlawful
and unjust tax in the city of New York, as he had a perfect right
to do, he resigned his position rather than engage in a controversy.
He was unduly sensitive of all accusations or innuendoes touching
his honor. He was honest and faithful to every engagement, and
had a larger personal following of intimate friends and associates
than either of his brothers.
On the 4th of March, 1879, President Hayes convened the 46th Congress
in special session to meet on the 18th of that month, to provide
necessary appropriations for the legislative, executive and judicial
expenses of the government, and also for the support of the army,
the 45th Congress having failed to pass bills for these objects on
account of a disagreement of the two Houses as to certain provisions
relating to the election laws. This session continued until July
1, and was chiefly occupied in political topics, such as reconstruction
and elections. The Democratic party, for the first time in twenty
years, had control of both Houses, but it neither adopted nor
proposed any important financial legislation at that session, the
only law passed in respect to coin, currency or bonds which I recall
being one to provide for the exchange of subsidiary coins for lawful
money, and making such coins a legal tender in all sums not exceeding
ten dollars. Congress seemed to be content with the operations of
the treasury department at that time, and certainly made no obstacle
to their success.
About the 1st of May, Mrs. Sherman, accompanied by our adopted
daughter, Mary Sherman, then a young schoolgirl twelve years old,
and Miss Florence Hoyt, of New York, Miss Jennie Dennison, of
Columbus, and Miss Julia Parsons, of Cleveland, three bright and
accomplished young ladies, embarked on the steamer Adriatic for a
visit to Europe. Mrs. Sherman placed Mary in a very good school
at Neuchâtel, Switzerland, and then with her companions visited
the leading cities of Europe.
After accompanying the party to New York I went to Mansfield, and
as my family was absent and the homestead occupied by comparative
strangers, I stopped at the St. James hotel where, as was natural,
I met a great many of my old neighbors and friends, both Democrats
and Republicans, who welcomed me home.
Among my visitors were several reporters from different parts of
the country who wanted to interview me and especially to learn if
I was a candidate for governor, and why I came home. In the
afternoon I visited my farm near by and my homestead of about twenty
acres adjoining the city. I found them in the usual neglected
condition of the property of a non-resident proprietor, with many
of the fences down. In the evening I was serenaded at the hotel
and made a brief speech to a large audience, commencing as follows:
"I am very happy to be again in your midst, to see your faces and
to greet you as friends. The shaking of your hands is more grateful
to me than the music of bands or any parade. I never felt like
making an explanation in coming before you until now. I found when
I arrived in my old home that the papers said I came west seeking
the nomination for governor. I came purely on private business--
to repair my fences and look after neglected property."
The reporters seized upon the reference to my fences, and construed
it as having a political significance. The phrase "mending fences"
became a byword, and every politician engaged in strengthening his
position is still said to be "mending his fences."
Previous to that time mention had been made of me in different
parts of the country, not only for the nomination of Governor of
Ohio, but for President of the United States. Charles Foster and
Alphonso Taft were then spoken of as the leading candidates for
nomination as governor. Both were my personal friends and eminently
qualified to perform the duties of the office. Although I regarded
the position of governor as dignified and important, well worthy
the ambition of any citizen, still there were reasons which would
prevent my accepting the nomination if it should be tendered me.
I felt that to abandon my duties in the treasury department might
be fairly construed as an evasion of a grave responsibility and an
important public duty. I knew that President Hayes was very anxious
that I should remain in the office of secretary until the close of
his term. I did not desire to compete with the gentlemen already
named, and did all I could to discourage the movement short of
absolute refusal to accept the nomination. The newspapers of the
day, not only in Ohio but in other states, were full of favorable
comments upon my probable nomination for governor, and my correspondence
upon the subject was very large. I have no doubt that had I
consented to be a candidate both Foster and Taft would have acquiesced
in my nomination and I, in all human probability, would have been
duly elected as Foster was.
As for the nomination for the presidency I made no movement or
effort to bring it about, but then believed that General Grant
would, upon his return from his tour around the world, be nominated
and elected. The following letter will explain fully my position
in regard to the office of both governor and president:
"Washington, D. C., May 15, 1879.
"My Dear Sir:--I notice, with heartfelt thanks for your personal
kindness in the matter, the course of the 'Commercial' in regard
to my proposed candidacy for Governor of Ohio, and this induces me
to state to you frankly and fully, in confidence, the reasons why
I could not accept the nomination if tendered, and why I hope you
will give such a turn to the matter as will save me the embarrassment
of declining.
"In ordinary circumstance an election as Governor of Ohio, after
my life in the Senate, would be extremely flattering and agreeable;
but at present, for several reasons, the least of which are personal,
I could not accept it.
"My wife has gone to Europe on a visit of recreation greatly needed
by her, my house in Mansfield is rented, and all my arrangements
are made to be here during the summer. The nomination would require
me to recall her, to resume my house, and to break up my plans for
the summer. If this alone stood in the way, I could easily overcome
it, but I know from letters received that my resignation as secretary
would be regarded as a desertion of a public trust important to
the whole country, with the selfish view of promoting my personal
ambition, not for the governorship merely but for the presidency,
which would impair rather than improve any chance I may have in
that direction.
"The President would regard this change as a great inconvenience
and as defeating a desire he has frequently expressed to maintain
his cabinet intact during his term, so that my obligations to him
forbid this.
* * * * *
"All these objections might be met except the one which I think is
unanswerable, that my presence here in the completion of a public
duty is far more important to the whole country and the cause we
advocate than if I were to run as a candidate for Governor of Ohio
and even succeed with a large majority.
"All things now tend to our success in Ohio and that is likely to
be as complete with any other candidate for governor as myself,
while if left here I will be able to so finish my business that no
one can say it is incomplete.
"As for the mention of my name for the presidency, I am not so
blind as not to perceive some favorable signs for me, but I have
thus far observed and intend strictly to adhere to the policy of
taking no step in that direction, doing no act to promote that
object, and using none of the influence of my office towards it,
except so far as a strict and close attention to duty here may
help. I am not now, and do not intend to get, infected with the
presidential fever.
"With high regard, I am, very truly yours,
"John Sherman.
"M. Halstead, Esq., Cincinnati, Ohio."
During 1879 and the following year I received a multitude of letters
and newspaper paragraphs advocating my nomination for President.
Among the first of such letters was one from an old friend, John
B. Haskin, formerly a Member of Congress from New York. On the
10th of May, 1879, I wrote him in answer a letter, not intended
for publication, but expressing what I would do in the contingency
mentioned by him, as follows:
"What I would aspire to, in case public opinion should decide to
make me a candidate for President, would be to unite in co-operation
with the Republican party all the national elements of the country
that contributed to or aided in any way in the successful vindication
of national authority during the war. I would do this, not for
the purpose of irritating the south or oppressing them in any way,
but to assert and maintain the supremacy of national authority to
the full extent of all the powers conferred by the constitution.
This, as I understand it, is the Jacksonian as well as the Republican
view of national powers.
* * * * *
"You see my general ideas would lead me to lean greatly upon the
war Democrats and soldiers in the service, who have been influenced
by political events since the war to withhold support from the
Republican party.
"The true issue for 1880 is national supremacy in national matters,
honest money and an honest dollar."
Mr. Haskin gave, or showed, this letter to a New York paper, and
it was published. I expressed my opinion, but it was not one that
should have been made public without authority. The letter was
the subject of comment and criticism, and was treated as an open
declaration of my candidacy for the office of President. It was
not written with this purpose, as the context clearly shows. This
incident was a caution to me not to answer such letters, unless I
was assured that my replies would be treated as confidential. Yet
I do not see how a man in public life can refuse to answer a friendly
letter, even if his meaning can be perverted.
During the months of May and June I had a correspondence with John
B. Henderson, of St. Louis, in which he expressed his great interest
in my nomination. This resulted in a conference, which he advised,
with President Hayes. My reply was as follows:
"Treasury Department, June 23, 1879.
"My Dear Sir:--In compliance with your suggestion, I yesterday
mentioned to the President my embarrassment from the general
discussion of my name as a possible candidate for the Republican
nomination. The points I mentioned were how far I should commit
myself to a candidacy and what I should do to promote it, and second
whether, under certain circumstances, he would not, in spite of
his declination, become a candidate for re-election. He was very
explicit on both points--first that I ought at once to let it be
understood that I was a candidate in the sense stated in the Haskin
letter, and no more--that great care should be taken that while a
candidate, I ought not to take part in any movement of opposition
to others named--especially General Grant. The feeling is growing
daily that General Grant will not allow his name to be used and
that, while his eminent services should be fully recognized and
rewarded, it is neither right nor politic to elect him to the
presidency for the third term. The President very truly said that
any appearance of a personal hostility or opposition to General
Grant, would be inconsistent with my constant support of his
administration during eight years, and would induce a concentration
that would surely defeat me. Upon the second point he was very
explicit--that he would not be a candidate under any circumstances,
and as far as he could properly, without any unseemly interference,
he would favor my election. This was the general tenor of his
conversation, which he said he would repeat to General Schurz.
This relieves me from some embarrassment, but I still think it is
better for us to remain absolutely quiet, awaiting the development
of public opinion or the voluntary action of personal and political
friends. Unless there is a clear preponderance of opinion in
preference for my nomination against all others, I do not want to
enter upon the scramble. As yet I do not see any concentration.
Hoping to see you soon, I remain,
"Very sincerely yours,
"John Sherman.
"Hon. John B. Henderson."
After a brief visit to Mansfield I went to Columbus, where I met
with a hearty reception from men of both political parties. The
legislature was in session, and the senators and members, judges
of the courts, and executive officers of the state, called upon me
and gave me cordial greetings. I attended a reception at the house
of Governor Dennison, where I met the leading citizens of Columbus.
On my return to the hotel I was serenaded by a band, and being
introduced by Governor Dennison made a brief speech of a non-partisan
character, and in closing said:
"I want to make one personal remark about myself. Some of my
newspaper friends here have tried to make me a candidate for Governor
of Ohio, but I hope none of you will vote for me in convention or
before the people. I propose to stick to my present place until
the question of resumption is settled beyond a doubt. I want to
convince everybody that the experiment of resumption is a success;
that we can resume; that the United States is not bound to have
its notes hawked about at a discount, but that a note of the United
States may travel about the world, everywhere received as equal to
gold coin, and as good as any note ever issued by any nation, either
in ancient or modern times. I want to see that our debt shall be
reduced, which will be done through four per cent. bonds. If the
present policy prevails, we shall be able to borrow all the money
needed for national uses for less than four per cent., perhaps as
low as three."
I returned directly to Washington. Finding that a determined effort
would be made to force my nomination as governor, I wrote the
following letter to prevent it:
"Treasury Department, }
"Washington, May 15, 1879.}
"My Dear Sir:--In view of the kindly interest manifested by political
friends during my recent visit home, that I should be nominated as
the Republican candidate for Governor of Ohio, I have given the
subject the most careful consideration, and have come to the
conclusion that I cannot, in my present situation, accept such a
nomination if tendered.
"I am now engaged in a public duty which demands my constant
attention and which can clearly better be completed by me than by
anyone coming freshly into the office. To now accept the nomination
for governor, though it is an honor I would otherwise highly prize
and feel deeply grateful for, would be justly regarded as a
abandonment of a trust important to the whole country, to promote
my personal advancement. I earnestly hope, therefore, that the
convention will not embarrass me by a tender of a nomination which
I would be obliged to decline.
"It may be that no such purpose will be manifested, but I write
you so that if the convention should so incline, you may at once
state why I cannot accept.
"Very truly yours,
"John Sherman.
"General J. S. Robinson, Chairman Republican State Committee,
Columbus, Ohio."