Recollections of Forty Years in the House, Senate and Cabinet Part 70

"By this ready, pointed and satisfactory answer the speaker turned the tide, and the applause was hearty in his favor. When answering Judge Thurman the speaker alluded to the charge made by him that the 'Republican party was the enemy of the country.' Then, after calling attention to the war record of the Democratic party, the speaker said: 'Who is the enemy of the country?' [A voice from a 'hoodlum,' 'John Sherman.'] 'Why,' says the speaker; 'because he has brought greenbacks up to par value, and is in favor of honest money?' This was another cause for an outburst of applause and approval to the speaker, although it was very doubtful, in the beginning of the speech, whether he could carry enough of the vast audience, with the large disturbing element opposing intermingled among them, with him. But long before the closing of his discourse it became apparent that John Sherman is able to defend his position, even in the camp of the enemy, while the ungentlemanly acts of the disorganizing element were disgusting to the better element of their party. It also effectively revived the lukewarm Republicans in this community, and it may be well said that John Sherman did what no other man could have done, that is, to go to a place like Toledo, stand before an organized party which was determined to prevent his speaking, while his own party was lukewarm toward him --it was frequently a.s.serted here 'John Sherman had not a single friend in the city'--and during his speech of two hours turn the popular tide in his favor, as was evident he did from the hearty applause he received as he proceeded in his remarks; and it is safe to say that no man in these United States could have done the Republican cause, in this place, the good that Secretary Sherman did by his speech, and the 'Toledo National hoodlums,' in their efforts to break up the meeting, 'gave the old man a reception,'

as was remarked on the streets; but throughout his speech he kept his temper, kept cool and considerate, made remarks of cheer by saying, 'This is only a love feast,' and 'We will feel better natured after a while, as we become better acquainted,' etc., etc."

The narrative given by the correspondent is perhaps a little exaggerated, but the general outlines are correct, as I very distinctly remember. The result was that my carefully prepared speech was knocked into "pi," and I had to depend upon the resources of the moment to make a speech suitable to the occasion and the crowd. The Cincinnati "Enquirer," to which, as to other papers, a copy of the prepared address had been sent, had two stenographers in Toledo to report the speech as made and telegraph it to the paper. They did so and the speech as reported and published in the "Enquirer" was so much more sensational and better than the prepared speech that it was selected by the Republican state committee for publication as a campaign doc.u.ment. This enterprise of an unfriendly newspaper resulted to my advantage rather than my detriment, for on account of the interruptions the speech reported was much more readable than the other.

No doubt the feeling in Toledo grew out of the long depression that followed the panic of 1873, that for a time arrested the growth and progress of that thriving and prosperous city. The people wanted more money, and I was doing all I could, not only to increase the volume of money by adding coin to our circulation, but to give it value and stability. I have spoken in Toledo nearly every year since, and have always been treated with courtesy and kindness, and many of my best friends now in Toledo are among those who joined in interrupting me, and especially their leader, Mr. Scott.

From Toledo I went to Cincinnati. I have been for many years an honorary member of the Chamber of Commerce of Cincinnati, a body of business men as intelligent and enterprising as can be found anywhere. It has been my habit to meet them once a year and to make a short speech. This I did on August 28. The "Gazette"

reported my visit as follows:

"Secretary Sherman was on 'change yesterday, and, at the close of the business hour, he was introduced by President Hartwell, and was greeted with applause, after which he spoke as follows:

'Gentlemen:--It gives me pleasure to meet so many of the active business men of Cincinnati, even for a brief period. In the office which I hold I have a great deal to do with merchants, like these engaged in the exchange of the products of our industries, and I congratulate you, first of all, that this fall, by the bounty of Divine Providence, you will have to market the largest crop we have ever gathered in this country since the world was born.

'In every part of our country, with but few exceptions, and only as to certain crops, are crops greater than ever before, and you will have to buy and sell them.

'The only point of an unpleasant nature, that occurs to me, affecting the industrial interests which you so largely represent, is the misfortune which has befallen large portions of the south, where yellow fever, one of the worst enemies of human life, now has spread a pall of distress among our southern brethren. I am glad, fellow- citizens, that you are doing something to contribute to the relief of their sufferings, because business men, above all others, are to be humane and generous to those who are in distress.

'That this will, to some extent, affect the business of gathering cotton, I have no doubt will occur to you all, but you can only hope that it will be but a brief season until the frost will dissipate the distress of the south and the cotton crop may be safely gathered.

'There is another thing I can congratulate you upon as business men, that is--our currency is soon to be based upon the solid money of the world. I do not want to talk politics to you, and I do not intend to do so, but I suppose it is the common desire of all men engaged in business to have a stable, certain standard of value, and although you and I may differ as to the best means of obtaining it, and as to whether the means that have been adopted have been the proper means, yet I believe the merchants of Cincinnati desire that their money shall be as good as the money of any country with which we trade. And that, I think, will soon be accomplished.

'Now, gentlemen, I do not know that there is any other topic on which you desire to hear from me. I take a hopeful view of our business affairs. I think all the signs of the times are hopeful.

I think it a hopeful fact that, after this week, there will be an end of bankruptcies, that all men who believe that they are not in a condition to pay their debts will have taken the benefit of the law provided for their relief, and, after Sat.u.r.day next, we will all stand upon a better basis--on the basis of our property and our deserved credit.

'It has been the habit, you know, of one of your able and influential journals to charge me with all the bankruptcies of the country.

If a grocer could not sell goods enough to pay expenses, and a saloon keeper could not sell beer enough to get rich, and took the short way of paying his debts, this paper would announce the fact that he had "Shermanized." [Laughter.] And if a bank was robbed, or the cas.h.i.+er gobbled the money in the safe and left for parts unknown, this able editor announced that the bank had "Shermanized."

And thus this paper contributed largely to the very result it denounced. You understand how this thing works.

'But we have pa.s.sed through this severe crisis. It has been common in all countries and all states that carry on extensive commercial transactions with each other. I believe that we are through with this one; a ray of hope has dawned on us, and we are certainly entering upon a career of prosperity. Every sign of business is hopeful. We have paid off immense amount of our debts. We do not owe Europe anything of consequence. We have gone through the debt paying process. A few years ago we were running in debt at the rate of $100,000,000 a year, but lately we have been paying off our debt at the rate of $100,000,000 a year. From this time on we will be more prosperous. Take heart, you men of Cincinnati; you men who represent the great interests in this great city; you who live in the heart of the great west, take heart in the transaction of your business, because I believe you have reached a solid basis upon which to conduct your business profitably, the basis of solid coin.'"

From Cincinnati I went to Lancaster, the place of my birth, and where my eldest sister, Mrs. Reese, resides. I need not say that the visit was a pleasant one, for it was necessarily so. A great many among those whom I saw had been my a.s.sociates in boyhood, and, as a matter of course, the topics of conversation were mainly of the past. A dispatch to the Cincinnati "Gazette" of the date of August 30, briefly describes my visit and gives the substance of a few remarks I was called upon to make by an impromptu gathering in the evening at the residence of my sister:

"The Lancaster band serenaded Secretary John Sherman this evening, at the residence of his sister, Mrs. General Reese. A very large crowd a.s.sembled on the occasion, and, in response, Senator Sherman made one of the neatest, pleasantest, and most satisfactory little talks heard here for many a day. Of course he began by touching upon his early boyhood, and some of the incidents of the same spent here in old Lancaster, the place of his nativity; told of his incipient struggles in life with the rod and chain on an engineer corps in the Muskingum valley; how he was ushered into the sterner vicissitudes of life, and how he drifted into politics; and then, without using the occasion for party purposes, without making a political speech, he explained in well selected language his position as an officer of the government; what was the course prescribed for him to do, how he was doing it, and concluding with a most clear and intelligible exegesis of the resumption act; what it was, its intent, purpose and meaning; and with convincing nicety and clearness, and evident satisfactoriness, was his explanation given, that he was frequently interrupted by spontaneous applause from the crowd. He told how the credit of the country was advancing as we near the solid foundation of hard money; how the American people were the most favored, the greatest blest, the freest and most prosperous people on the earth; how the signs of the times in busy shops and abounding field told of the disappearing hard times, and the dawning of an era of greater peace and prosperity."

I returned to Was.h.i.+ngton, and at once proceeded to arrange with the treasurer and a.s.sistant treasurers of the United States to make the change from currency to coin easy. I conferred with General Hillhouse, a.s.sistant treasurer at New York, upon the subject and had his opinions verbally and in writing. I conferred freely with James Gilfillan, treasurer of the United States, and, as a result of these conferences, on the 3rd of September, I directed the treasurer of the United States, upon the receipt by him, from any person, of a certificate, issued by any a.s.sistant treasurer, designed depositary, or national bank designated as a public depositary of the United States, stating that a deposit of currency had been made to his credit in general account of the sum of one thousand dollars, and any multiple thereof, not exceeding ten thousand dollars, to cause a s.h.i.+pment to be made, from some mint of the United States to the person in whose name the certificate was issued, of a like amount of standard silver dollars, the expense of transportation to be paid by the mint.

The sole purpose of this order was to facilitate the circulation of standard silver dollars for all purposes as currency, but not to issue them so as to be used directly in making those payments to the government which were required to be made in coin. I wished to avoid their deposit for silver certificates. Officers receiving deposits of currency were expected, as far as practicable, to see that the silver dollars were put in circulation. s.h.i.+pments, however, were to be made only to points in the United States reached through the established express lines by continuous railway or steamboat communication.

I regarded this as practically the resumption of specie payments in silver dollars, but the chief object aimed at was to secure a general distribution of these dollars throughout the United States, to the extent of the demand for them, without forcing them into circulation.

General Hillhouse recommended the payment of silver for all purposes, not only for circulation, but for the payment of bonds and customs duties. This I fully considered, but thought it best for the present to get into ordinary circulation among the people, in points remote from the ports of entry, as much silver coin as practicable, before offering it freely in cities where it would be immediately used for customs duties. I said: "If, within a month or so, we are able to reduce our stock of silver to five or six millions, I should not hesitate a moment to offer it then freely in New York and elsewhere, and run the risk of doing without gold revenue for awhile."

On September 7 I issued the following order:

"Treasury Department, September 7, 1878.

"Hon. James Gilfillan, Treasurer of the United States.

"Sir:--On and after the 16th day of this month you are authorized, at the treasury in Was.h.i.+ngton, and at the several sub-treasuries in the United States, to exchange standard silver dollars for United States notes.

"Very respectfully, "John Sherman, Secretary."

The question was raised in the public prints, and in the department, whether I had legal authority, under the existing laws, to pay silver dollars in exchange for United States notes before the 1st of January. It was plausibly urged that the payment of this coin in advance of the time fixed for resumption was the exercise of authority not authorized by law. I, therefore, on the 13th day of September, three days before the previous order would take effect, directed the treasurer of the United States as follows:

"Treasury Department, September 13, 1878.

"Hon. James Gilfillan, Treasurer United States.

"Sir:--Some question has been made whether the issue of silver dollars in exchange for United States notes, before January 1, next, is in entire accordance with the legislation of Congress bearing on the subject, and, therefore, you will please postpone the execution of department order of the 3rd instant until further instructions, and withhold from transmission to a.s.sistant treasurers the order of the 7th.

"Silver dollars will be issued as heretofore, in the purchase of silver bullion, in payment of coin liabilities, and in the mode pointed out in your order of July 19, as modified.

"With a view to their payment on current liabilities, you will request that each disbursing officer estimate the amount he can conveniently disburse.

"Very respectfully, "John Sherman, Secretary."

This change of my opinion was the subject of much criticism in the public prints. Some complained that I was unfriendly to the silver dollar and sought to prevent its use, and others complained that its use before the 1st of January as a subst.i.tute for gold coin was a violation of the law. My only purpose was to accustom the people to the use of the silver dollar in the interior of the country at places where it could not be used in the payment of customs duties. These could only be paid in coin, and, in view of resumption, I desired to strengthen the treasury as much as possible by the receipt of gold coin. The charge that I was guilty of changing my mind did not disturb me when I was convinced that I had exceeded my authority in the issue of the first order.

At that time there was an evident reluctance to pay coin into the treasury for four per cent. bonds sold, when, within a brief period, United States notes could be paid for such bonds. I therefore directed the treasurer of the United States: "Where deposits with national banks on account of subscriptions to the four per cent.

loan have not been paid into the treasury within ninety days after the deposit was made, you will at once draw for the amount of such deposits, to be forthwith paid into the treasury, and as such deposits accrue under this rule, you will make such withdrawals until the whole is paid."

I also directed the chief of the loan division as follows:

"No doubt most of the depositaries will place coin to their credit within the period of the call outstanding after subscriptions are made, according to the circular of the 1st ultimo, but if this is not done, the deposit must be withdrawn at the expiration of ninety days from the date of subscription."

I also advised August Belmont & Co., that the department expected that by the 1st of October the remainder of the coin then due upon the four and a half per cent. bonds, both from the American sales and those made in London, would be paid into the treasury; that it was deemed best that this should be done, so that the account of this loan might be closed as soon thereafter as the books could be made up. This request was promptly complied with.

Early in October there were many rumors in circulation charging that prominent capitalists and speculators were combining to defeat resumption. Among them Jay Gould was mentioned as being actively engaged in "bearing" the market. About this period I received from him the following letter:

"578 Fifth Avenue, Oct. 17, 1878.

"Hon. John Sherman.

"Dear Sir:--Referring to recent newspaper statements that I have been interested in movements either to tighten money or create a scarcity of gold and thus interfere with natural and early resumption, I beg to say that they are without the slightest foundation. On the contrary I feel a very deep interest in your efforts, so far eminently successful in carrying the country to a successful resumption.

"_If resumption is made a real success it will be accompanied with substantial business prosperity and do more to strengthen and retain the ascendency of the Republican party than any and all other reasons_.

"The real causes of the recent disturbances in the money market are the following:

"First. Government bonds have come back from Europe faster than investment orders would absorb them--the surplus are carried on call loans and have absorbed several millions of dollars.

"Second. The financial troubles in England are r.e.t.a.r.ding the rapid movement of western produce. The elevators at Chicago and Milwaukee are full of grain; at Chicago alone about 7,000,000 bushels. The currency sent west to pay for this grain will not be released until the grain is marketed.

"Third. A large amount of foreign capital usually lent on call in Wall street has been transferred to London and Liverpool as money commands (or has until recently) better rates there than in New York.

"I remain, yours very truly, "Jay Gould."

The purchase of four per cent. bonds sensibly increased in October.

As the six per cent. bonds could not be paid within ninety days after the call, the purchasers of the four per cent. bonds claimed the right to pay for such bonds in United States notes, which on the 1st of January would be redeemable in coin. To this I replied that as the sale of four per cent. bonds was solely for the purpose of refunding the six per cent. bonds, the proceeds of the sale must be such as could be lawfully paid for called bonds. "Under existing law the treasury is required to and will redeem in coin, on and after January 1, 1879, United States legal tender notes, on presentation at the sub-treasury in New York, and will then receive such notes in payment for four per cent. bonds. The department does not antic.i.p.ate any change in the law that would operate to prevent this, but cannot stipulate against any act which Congress in its judgment may pa.s.s."

Every facility which the law allowed to promote the easy change in the basis of our currency was carefully considered and adopted.

The chief measure adopted was to promote exchanges in the clearing house in New York, so that only the balance of debits or credits would actually be paid. I requested a.s.sistant Secretary French to examine whether, under existing law, such an arrangement was in the power of the department, and called his attention to previous correspondence in 1875 in the department on this subject. He came to the conclusion that the existing law would not justify such an arrangement. John Jay Knox, comptroller of the currency, however, favored the admission of the a.s.sistant treasurer of the United States at New York as a member of the clearing house. He said: