Another incident occurred which does not require explanation, and which may not be open to any explanation. After the report of the Judiciary Committee, and its rejection by the House of Representatives, I was surprised to receive an invitation from the President to dine with him at what is known as a State dinner. I assumed that arrangements had been made for a series of such dinners, and that the invitation had been sent out by a clerk upon a prearranged plan as to the order of invitations. When the matter had passed out of my mind, but before the day named for the dinner, I received a call on the floor of the House from Mr. Cooper, son-in-law of the President and secretary in the Executive Mansion. He asked me if I had received an invitation to dine with the President. I said I had. Next he said, "Have you answered it?" I said, "No, I have not." That was followed by the further question, "Will you answer it?" I said, "No, I shall not." That ended the conversation.
After the decision in the Senate had been made, the managers proceeded under the order of the House to investigate the truthfulness of rumors that were afloat, that money and other valuable considerations had been used to secure the acquittal of the President. That investigation established the fact that money had been in the possession of persons who had been engaged in efforts to secure the acquittal of the President. Those persons, with perhaps a single exception, were persons who had no official connection with the Government, and none of them were connected with the Government at Washington. As to most of them, it appeared that they had no reasons, indeed no good cause, why they should have taken part either for the conviction of the President or in behalf of his acquittal. The sources from which funds were obtained did not appear, nor was there evidence indicating the amount that had been used, nor the objects to which the money had been applied. It should be said as to Senators, that there was no evidence implicating them in the receipt of money or other valuable considerations. One very important fact not then known to the managers appeared afterwards in the report of the Treasury Department, showing a very large loss by the Government during the last eighteen months of Mr. Johnson's administration. In that period the total receipts from the duties on spirits amounted to $41,678,684.34. During the first eighteen months of General Grant's administration, when the rates of duties and taxation remained the same, the total receipts of revenue from spirits amounted to $82,417,419.85, showing a difference of $40,738,735.51. It is not easy to explain in full this money loss in one branch of the public service. Something may be attributed to the fact that persons obtained nominations for office by representations to the President that they were his friends and supporters, and would continue to be so, under all circumstances. When their nominations came to the Senate, they made representations of an opposite character. When they had received their appointments, they very naturally allied themselves with the President's policy, inasmuch as they could not be easily removed except upon an initiative taken by him. This deficiency occurred in the states and districts in which the money should have been collected and through the agents employed there. It other words, no part of the deficiency ever passed into the Treasury of the United States.
It is not improbable that a majority of the people now entertain the opinion that the action of the House of Representatives in the attempt that was made to impeach President Johnson was an error.
It is not for me to engage in a discussion on that point. I end by the expression of the opinion that the vote of the House and the vote of the Senate, by which the doctrine was established that a civil officer is liable to impeachment for misdemeanor in office, is a gain to the public that is full compensation for the undertaking, and that these proceedings against Mr. Johnson were free from any element or quality of injustice.
Johnson's case ought to be borne in mind in all agitation for a longer Presidential term. Whenever the country is engaged in a Presidential contest there are complains by business men accompanied by a demand for an extension of the term of office to six or in some instances to ten years. The disturbance of business is due to the importance of the election, and the importance of an election is due to the amount of power that is to be secured by the successful party. An extension of the term would add to the importance of the election, and a term of six or ten years would intensify the contest and the injury to business would be intensified, proportionately. It is doubtful whether in a period of twenty or fifty years any appreciable relief to business would be furnished by an extension of the term of the Presidential office.
It is by no means certain that the total of business is not as great as it would be in the same four years if the term were ten years instead of four. The total of production and consumption cannot be affected seriously by a political controversy that does not extend usually, over a period of more than three months. If business is diminished during those months there will be a corresponding gain in the months that are to follow.
In a popular government there must be elections, and in all such governments business interests must be subordinated to the general welfare. The changes that have taken place since the Government was organized would justify the shortening rather than the lengthening of the Presidential term. The means of communication are such that two years may give the mass of the people better means for judging men and measures than could be had in four years at the opening of this century.
There is no form of education that more fully justifies its cost than the education that is gained in a Presidential canvass. The newspapers, the magazines, and more than all the speakers—"stump orators" as they are called—communicate information and stimulate thought. The voters are converted into a great jury, and after full allowance is made for weakness, corruption and coercion, they are advanced at each quadrennial contest in their knowledge of men, in their ability to deal with measures of policy, and in comprehension of the principles of government. If the losses in business were as great as is ever represented, the educational advantages of a Presidential canvass are an adequate set-off. The people have an opportunity to see and hear the men who are engaged in public affairs and questions are discussed upon their intrinsic merits. In the sixty years of my experience there has been a great advance in the quality of the speeches to which the people have listened. The speeches of 1840 would not be tolerated in 1900.
When great questions are under debate appeals are made to the principles of government and proportionately the education of the people is of a higher grade.
A serious objection to a long term in the Presidential office is the fact that a spirit of discontent, that always exists, will develop into insubordination or even revolution. We have an example in the history of the Republic of Hayti. The term is seven years and in many cases the President has been superseded by the leader of a revolutionary party. The most recent instance was the overthrow of President Legitime and the instalment of Hyppolite. The peace and prosperity of Hayti would be promoted by reducing the term of the Presidential office to two years. The contests that are sure to arise among a mercurial people would thus be transferred from the battle-field to the ballot- box. Who could have answered for the peace of the United States in 1868 if President Johnson's term had been six years instead of eight months?
[* This was a race riot, which occurred July 30, 1866, and in which many negroes were killed.—EDITOR.]
In March, 1869, I was appointed Secretary of the Treasury by President Grant. Soon after my appointment Mr. McCulloch, the retiring Secretary, said to me that I should find the department in excellent order, and that in his opinion the financial difficulties of the Government had been overcome. The first of these statements was true in part, and in part it was very erroneous.
The accounting branch of the service was properly administered practically, but there were about one hundred persons on the pay rolls who had no desks in the department, and who performed but little work at their homes, where some of them ostensibly were employed in copying.
Several heads of bureaus were notoriously intemperate. This condition of things was due in part to the war and to the exigencies of the department consequent upon the war; and in part it was due to the constitutional infirmities of Mr. Chase and Mr. McCulloch. In some respects they resembled each other. They were phlegmatic in temperament, lacking in versatility, and lacking in facility for labor and business.
Mr. McCulloch was diligent, industrious and conscientiously devoted to his duties. He had been crippled in his administration by the conflict between Congress and the President. The head of the Treasury needs the confidence of the President, and the confidence and the support of Congress. The latter Mr. McCulloch did not enjoy, and there were indications that in some respects he differed with the President. He was hampered by the fact that any change in the personnel of his department would be followed by inquiries from one party or the other, coupled oftentimes with complaints and criticisms.
Great evils existed in the revenue system. The controversy between Congress and the President led to many removals of collectors of customs and of internal revenue. Their places were supplied by persons who could accommodate themselves to both parties. The President was made to believe that the applicants were his friends, but that their relations with Republican Senators were such that they could secure confirmation. When nominated these men represented themselves as good Republicans and friendly to the Congressional policy. From such persons an honest performance of duty could not have been expected. Hence gross frauds upon the revenue were perpetrated and in most instances by the connivance of those in office.
The returns for the last year of Johnson's administration, and the first years of Grant's administration, showed that the loss on whisky in the first named period was not less than thirty million dollars.
That there were other great losses was proved by the facts that the payments on the public debt were less than thirty million dollars during the last year of Johnson's administration and that the payments were one hundred million dollars during the first year of Grant's administration, and that without any additional sources of revenue.
If Mr. McCulloch's first statement had been true in the most important particulars, his second claim would not have been open to debate. It was true that the department had passed the point where there was any exigency for money. The Government was no longer a borrower. Payments on the public debt had been made, but otherwise nothing had been done to relieve the country of the interest account, nor was the credit of the Government such that any practicable movement in that direction could have been made.
The six per cent bonds were worth only 83 or 84, and no step had been taken to redeem the pledge of the Government in regard to the Sinking Fund made in the act of February 25, 1862. The interest account exceeded two hundred and thirty-three million dollars.
Mr. S. M. Clark was the chief of the Bureau of Printing and Engraving and everything was confided to him. It is to be said after the lapse of thirty years for examination, that not a tittle of evidence has been found warranting any imputation upon his integrity. It is true that in one instance a dishonest plate printer took an impression of a bond upon a sheet of lead for use in counterfeiting. The possibility of such an act was due to a lack of system and not to any want of fidelity in Mr. Clark. One of my first acts was to remove Mr. Clark, and then to open a new set of books. The printing of the old issues was suspended permanently, and new plates were prepared. Mr. Clark had had control of the manufacture of the paper, the control of the engravers, the control of the plates, the control of the printers, of the counters, and he had had the custody of the red seal. The postal currency was printed under his direction. The pieces were not numbered, they were due bills only. At the end of twenty years the books showed an issue of about fifteen million dollars in excess of the redemptions.
His power was unlimited as there were no checks upon him. He once said to me when a committee of Congress was investigating his bureau, during Mr. McCulloch's administration:
"They will never find a five cent piece out of the way."
After the discharge of Clark, I ordered an account of stock to be taken. I appointed a custodian of the plates after a full inventory had been made, whose duty it was to deliver the plates each morning to the printers, to charge them to the printers, to receive them at the close of the day, and to settle the account of each man. A special paper was designated and public notice was given under the statute by which it was made a crime for any person to make, use or have in his possession any paper so designated. The paper was manufactured under the supervision of an agent of the department, who was authorized to count and receive all the paper at the mills and to answer the orders for its delivery to the printers. The paper making machine was equipped with a register which numbered the sheets of paper. That record was compared daily with the number of sheets received by the agent, and thus the Government was protected against any fraudulent or erroneous issue of paper. Registers were also placed upon each printing press. Each morning one thousand sheets of paper were delivered to each plate printer, and at the close of work his printed sheets were counted and the number compared with the register before the printer was allowed to leave the office. In like manner there was an accounting with each counter. The same system was extended to the managers of the machines used for numbering bonds and bank notes. The registering machine was made by an employee, under my direction, and at the cost of the Government.
Books of account were opened upon the new system. During my administration, as far as I know, there was never the loss of a sheet of paper nor was there a fraud committed in connection with the business of the bureau. For further security, I made arrangements by which two bank note companies in the City of New York prepared sets of plates for a single printing on each security, the red seal being imprinted in the Treasury Bureau. By this arrangement collusion was impossible. The expense of printing was increased by this arrangement, but it seemed to be more important to attain absolute security against fraud than to save money. My successors have thought otherwise and the printing is now done in the Treasury.
During my term I ascertained that a man in New York who had once been employed to print certain securities, had in his possession the plates which he had used and which he claimed as his property. The printing had been done in Mr. Chase's administration and there was no agreement that the plates were to be delivered to the Government. The plates were obtained, finally, by the payment of a sum of money. The person who had the plates was an old man, and there was danger that they might fall into the hands of dishonest parties.
When I was in charge of the Treasury I had an understanding with Colonel Whiteley, the Chief of the Secret Service that I should have an interview with any expert professional criminals who might fall into his hands. I recall an interview with one such criminal. A man of forty years and a gentleman in appearance, and a professional gentleman, as well as a criminal by profession.
Upon the suggestion of Colonel Whiteley I gave the prisoner a fresh one dollar green-back note. He took a phial of liquid from his pocket, wet one half of the paper with the liquid and in my presence the colors disappeared from the paper. Time and exposure have given a dark tinge to the paper which was a pure white when the experiment was ended. By the use of the liquid the counterfeiter was able to obtain a piece of fibre paper on which a bill of large denomination might be printed, given only the engraving.
The revenue marine service was impaired by the incompetency of many of the officers, and its efficiency was also impaired by the size and quality of the ships. Some of them were sailing vessels, most of them were of wood, and the modern ones were unnecessarily large in size. I created a commission and all the officers except a few who were too old for active service were subjected to an examination and those who were found incompetent were discharged from the service. Their places were filled by young, active and well qualified men.
A commission was appointed to consider and report upon the size of the vessels that were best adapted to the service. Three reports from successive commissions were made before a satisfactory result was reached. Finally, a report was made by Captain Carlisle Patterson, that was approved by me and by a committee of Congress. The recommendations of that report have been followed, as far as I know.
At that time the Mint Service was without organization. Each mint and assay office was in charge of an officer called superintendent, but there was no head unless the Secretary of the Treasury could be so considered, as all the business came to him. Upon my recommendation Congress authorized the appointment of a Director of the Mint, and upon my recommendation the President appointed Dr. Linderman, a Philadelphia Democrat, but a gentleman familiar with the service. Under him the service was organized and made systematic.
When I took charge of the Treasury Department there was no system of bookkeeping and accounting, that was uniform in the various customs houses of the country. Each port had a plan or mode of its own, and there was no one that was so perfect that it could be accepted as a model in all the ports. The books and forms were made and prepared at the several ports and often at inordinate rates of cost.
I appointed a commission of Treasury experts to prepare forms and books for every branch of business. Their report was accepted and since that time the modes of accounting have been the same at all the ports. The stationery prepared is furnished through the Government printing office, at a considerable saving in cost, and clerks in the accounting branch of the Treasury are relieved of much labor in the preparation of statements.
Upon the transfer of Mr. Columbus Delano from the office of commissioner of Internal Revenue to the Secretaryship of the Interior Department, the question of the appointment of a successor was considered. The President named General Alfred Pleasanton, who was then a collector of internal revenue in the city of New York. He had been a good cavalry officer, a graduate of West Point, and the President was attached to him. My acquaintance with Pleasanton was limited, but I was quite doubtful of his fitness for the place. My opposition gave rise to some delay, but at the end the appointment was made, the President saying in reply to my doubts that if he did not succeed he had only to say so to the General and he would leave at once. The appointment of Pleasanton was urged by Mr. Delano and General Horace Porter as I understood, both of whom were very near the President.
Pleasanton had been informed of my position, and although I was his immediate superior he did not call upon me, nor did he ever, except upon one occasion, come into my office, unless I sent for him. On my part I resolved to avoid any criticism upon his official conduct unless compelled to do so. He entered upon his duties the first of January, 1871, and although in several instances I had occasion to control his purposes in regard to contracts and to the refund of taxes, I did not feel called upon to mention the facts to the President. In May the President said:
"I have come to the conclusion that Pleasanton is not succeeding in his office."
I replied: "That is so."
The President then said: "I will try to find some other place for him, and I will then ask him to resign."
The President went to Long Branch for the summer and nothing was done. I had very early discovered that Samuel Ward was exercising a good deal of influence over the commissioner. It was his policy to secure influence by giving dinners and entertainments, and, as far as possible, he obtained the attendance of influential members of Congress and of the chief officers in the executive departments. He once said:
"I do not introduce my measures at these entertainments, but I put myself upon terms with persons who have power."
On a time I received a report on the subject of refunding a cotton tax amounting to about $600,000. It bore two endorsements—one by the solicitor "Examined and disallowed, Chesley," and one by the commissioner "Allowed, Pleasanton."
I placed the report in my private drawer with the purpose of delaying action until I should ascertain where the propelling force existed. Having occasion to go to Massachusetts I was absent about two weeks. Upon my return Mr. Ward came into my office and inquired whether I had received the report. I replied that I had received it. "Had I acted upon it?" I said that I had not. He then proceeded to say that the claim was a good one,—that Mr. Delano had examined it, and had concluded to pass it, but as he left the office rather suddenly he had neglected to act upon it. Finally, he expressed the hope that I would act without delay. I had already decided the case adversely upon the ground that the allowance was unauthorized. Therefore I had only to endorse the word "disallowed" with my signature and to return the report to the commissioner. I learned that the commissioner was engaged through the agency of Ward in making a contract with a Connecticut firm that was in my opinion at once improvident and irregular. This act led me to determine to end the difficulty at once. I went to the Executive Mansion and asked General Babcock to go to Long Branch and say to the President that the business of the Internal Revenue Office was in such a condition that immediate action was necessary. As a result the President returned that night and early the next morning he sent for me. I stated the facts, and he said he would send for General Pleasanton and ask him to resign. At the interview Pleasanton asked for the reasons. The President said: "The Secretary is not satisfied with your administration." Pleasanton replied: "I think I can make everything satisfactory to the Secretary." The President replied, naturally: "If you can, I am content." Then for the first time Pleasanton came to my office without a request from me. I invited him into my private room, and when he had related his interview with the President, I said: "General, if this were a personal matter we might come to an understanding, but your administration of the office has been a failure from the first and you must resign." This ended the interview. He refused to resign and the President removed him. He appealed to the Senate in a lengthy communication, but without effect. Pleasanton may have been, and probably was, a good military officer, but he did not possess the qualities that are essential in the discharge of important civil trusts.
Neither from my experience in Congress nor in the Treasury Department can I deduce much support for the doctrines of the class of politicians called Civil Service Reformers. From their statements it would appear that every member of Congress was the recipient of an amount of patronage in the nature of clerkships that he could and did control. I can say for myself that as a member I never asserted any such right and as the head of the Treasury I can say that no such claim was ever made upon me by any member of Congress. The nearest approach to it was by George W. Julian. During one of his canvasses for re-nomination, a clerk named Smith, and a correspondent of a journal in Mr. Julian's district, had advocated the nomination of Mr. Wilson (Jeremiah). When Mr. Julian secured the nomination, Smith gave him his support. Nevertheless when Julian returned to Washington he demanded Smith's removal. After hearing all the facts I declined to act. Julian was very indignant, and afterwards from the Astor House, New York, wrote me a violent, I think I might say unreasonable letter.
The public mind has been much misled by the statements in regard to removals and appointments. The employees in a department are of two sorts. There is a class who are trained men in the places that they occupy. They have been in the service for a long period. They are familiar with the laws relating to their duties, and to the decisions of the courts thereon, and they are the possessors of the traditions of the offices. They are as nearly indispensable as one man can be to another, or to the safe management of business. The head of a department cannot dispense with the services of such men. All thought of political opinions disappears. The responsibility of a change in such a case is very great. No prudent administrator of a public trust will venture upon such experiments. There is another class of clerks who are employed in copying, in making computations in simple arithmetic, in writing letters under dictation, and in other ordinary clerical work.
The public interest is not very large in the retention of such persons. The ordinary graduates of the high schools of the country are competent for all those duties. But the clerks of this class are not removed in mass, and they never will be, under any administration. Even a fresh man at the head of a department will soon find that the fancied political advantages are no adequate compensation for the trouble that he assumes and the risk of error and fraud that he runs when he takes new and untried persons in the place of those who have been tested. As late as 1870 about thirty per cent. of the employees of the Treasury in 1860 were in office, and this notwithstanding that the Treasury furnished recruits for both armies. During my time and for years afterward, the post of Assistant Secretary was held by Mr. Hartley, a Democrat from the days of Pierce and Buchanan. He was experienced, diligent and entirely trustworthy.
Of the first class of employees it is to be said that there is no occasion to embalm them in their offices, and if their pay is adequate there is no ground for placing them upon the pension rolls. Their duties are not as exacting as the duties and labors of men in corresponding stations in private life. As to the second class, their relations to the public are such that no public obligation arises except to pay them the stipulated salaries.
It is essential to a proper administration that the Secretary or the President should have the power of removal, and it should never be coupled with the duty of making a statement of the cause. Not infrequently a statement would be the occasion of scandal and of suffering by innocent parties. The power may be abused as every power may be, in the hands of dishonest or corrupt men. This is one of the perils to the public, a peril from which no government can escape. With us a change of rulers is a remedy for political wrongs that do not belong to the catalogue of crimes. It may be said, however, that this power of removal gives to a dishonest administrator of a department the opportunity to secure the appointment of his political friends in the place of political opponents removed, and this whatever may be the method of appointment. The candidates may pass the competitive examination, and they may enter upon their duties, but their chief in thirty or sixty days may find them lacking in practical aptitude, and so on, until those of the true faith shall be sent forward by the examining board.
Honest administrators of official duties are embarrassed by the system and dishonest ones evade it. The system may become the enemy of honesty and the shield of hypocrisy. Only this is needed. When the appointing power has designated a person for an office, let that person be examined by an independent board with reference to character and those qualifications which seem to be a fit preparation for the practical duties of the place. Whenever the power of appointment and removal is abused the public has a remedy in a change of administration. And herein is one reason why the Presidential term should not be extended. There may be many evils of administration which are not so flagrant as to warrant proceedings for impeachment. Such evils may be borne for brief periods, when if the term of the President were extended to six or eight years the dissatisfied elements of society might be tempted to engage in revolutionary movements. Nor is there wisdom in limiting the Presidential office to a single term in the same person. The thought that one has a future is a great stimulus to careful and energetic action in the performance of public duties. For a President there is no future except a re-election, which is in fact an approval by the country of his administration. A wise man will strive to so conduct affairs as to merit that approval. A House of Representatives already condemned by a popular verdict is but a poor guardian of the rights of the people; and a defeated administration performs its duties in the most indifferent manner. After a defeat appointments will be made and acts done that would not have been hazarded pending an election. It is true, probably, of every administration, not excepting that of General Washington, that the second term was less acceptable to the country than the first. Mr. Lincoln had no second term, and it is useless to speculate upon its probable character, if he had lived to perform its duties.
It was my habit to be at the Treasury every morning at nine o'clock, and I usually sent immediately for one or more heads of division or chiefs of bureau for conference upon some matter connected with their duties. By frequent interviews I acquired such knowledge of their duties and of pending questions that I always had a reason for those interviews. By this course I maintained relations of familiarity with the officers who constituted the department for administrative purposes, and I also established a system of punctuality in the matter of attendance. When the head of a division is tardy, the clerks soon venture to follow his example, and if he is prompt they are ashamed to be dilatory unless they have an adequate excuse. The same relation exists between the bureau officers and the head of a department.
One of my first acts in the nature of a financial policy was to establish the Sinking Fund, agreeably to the act of February 25, 1862. Seven years had passed since the passage of the law and four years since the end of the war and yet nothing had been done to provide for the redemption of the public debt agreeably to the promise that had been made when the Government was a large borrower of money and when its credit was depreciated, seriously, in all the markets of the world. In my first annual report, December, 1869, I advised Congress of my action and I recommended the application of the bonds that I had then purchased, amounting to about fifty-four million dollars, to the Sinking Fund, until the deficiency then existing had been met. The step that I then took was taken in obedience to the law, and not from any great faith in the wisdom of the Sinking Fund policy, nor was it from any fear that the Government could not pay its debts whether a Sinking Fund was or was not created.
The faith of the Government had been pledged to a particular policy and I thought that the observance of that policy was both wise and just. A government cannot afford to disregard the terms of its undertakings even if a violation or neglect does not work harm to anyone. The payments to the Sinking Fund were made regularly during General Grant's administration, and the credit of the Government was thereby somewhat strengthened. The chief element of strength was in the fact that the payments were such as to astonish the heavily taxed and debt burdened States of Europe. In my four years of service as the head of the Treasury the payments on the debt reached the enormous sum of three hundred and sixty-four million dollars. No one of my successors has paid an equal amount, nor has an equal amount been paid in any other equal period of time by the United States or by any other government.
At the time I entered the Treasury the price of gold was at about forty per cent premium and when I left the Treasury it was at about twelve per cent premium. In the summer of 1869 I entered upon the policy of selling gold and buying bonds. The sales and purchases were made by the Assistant Treasurer in New York, but the bids were reported to me and by me accepted or rejected. A leading criticism was this: It was claimed that the simple method was to buy bonds in gold and thus to secure the bonds by one transaction.
This policy would have limited the number of purchasers of gold to those who could command bonds. By the policy pursued the sales of gold were open to anyone who had money. The gold was sold for currency, and the bonds were purchased with currency. When the Treasury announced its purpose to purchase bonds the price advanced in the market. The President remarked to me jocularly that he had suffered by not knowing what the department was about to do, inasmuch as he had sold bonds a few days too early and at a price below their then present value. During my service as Secretary of the Treasury I carried two questions only to the Cabinet discussions—and I have forgotten one of the questions, but it had some political significance. The other arose in this manner: My method of negotiating the sale of new bonds under the Funding Act of July, 1870, had been severely criticized. The Government was compelled to give ninety days' notice of its purpose to redeem five-twenty bonds, and as we could not with safety make a call until we had the funds, and as our chief source was the proceeds of new bonds we could not call until a sale was made. As a consequence the Government was a loser of interest on all called bonds for the period of ninety days. I arranged with the subscribers for new bonds, that they should have the interest for the ninety days upon a deposit of old bonds as security for the new ones subscribed and taken. The Government lost nothing, and the subscribers were benefitted greatly, and thus the subscriptions were increased.
During the campaign of 1872 I had an opportunity to negotiate a new loan upon the same basis. Knowing that the proceeding would renew criticism, I thought it proper to lay the case before the President and Cabinet. Upon their advice the negotiations were suspended.
Governor Fish on more than one occasion complained that the Cabinet were as ignorant of the proceedings and purposes of the Treasury as was the outside world. His complaints were well founded. Much of the business aside from routine matters was secret. For example my orders for the sale of gold and the purchase of bonds were never issued at any other time than Sunday evening, and then always by myself. The orders were sent to the Sub-Treasurer at New York, and given to the Associated Press at the same time. Consequently, on Monday morning all the country was informed, and under such circumstances that the chance of some to speculate upon the ignorance of others were reduced to the minimum. Moreover, the members of the Cabinet might divide. I should then be compelled to act upon my own judgment, and against the views of some of my associates. Again, if I had the support of the President and Cabinet, I could not have used the fact as an excuse for myself. The public knew no one but the Secretary. I chose to act upon my own judgment knowing that there was no one else to share the responsibility in case of failure.
In my report to Congress, in December, 1869, I set forth a system for refunding the Public Debt. I had unfolded the scheme in a speech in the House of Representatives, July 1868. I had already taken two steps preparatory to the undertaking. First, in May, 1869, I established the Sinking Fund under the Act of February 25, 1862. Second, by the purchase of bonds the world had assurance that the debt would be paid. The effect of these two measures was seen in the increasing market value of the bonds. In other words the credit of the country was improving. When the President was preparing his message of December, 1869, he called upon me for my views in regard to the Treasury, and I furnished him with a synopsis of my plan which he embodied in his message. I retained a copy of the synopsis and that copy is in the hands of my daughter. Simultaneously I prepared a bill upon the basis of the report and caused the same to be printed upon the Treasury press. Upon an examination of the papers on file in the archives of the Senate I find that cuttings from my printed bill form a part of the bill which was printed by the Finance Committee of the Senate of which Senator Sherman was chairman. The bill was changed in details but not in principle. The loan was in three parts as my bill was prepared. A portion at 5 per cent, a portion at 4½ per cent, and a third portion at 4 per cent. The division was retained in the statute, but the amount of the loan at each of the several rates was changed. By my bill the interest could be made payable in Europe. This feature was stricken out by the committees in the House or the Senate. This change I overcame or avoided ultimately by a rule of the department by which interest on registered bonds could be made payable in checks of the Treasurer. These checks are now sent to all parts of the world and through the banking facilities they are everywhere as good as gold, subject only to the natural rates of exchange between different countries. Since that time railroad companies and other business corporations have accepted the system. My plan of making the interest on the bonds payable in Europe was rejected under the lead of gentlemen who thought it involved some sort of national degradation. My object was to make the loan more negotiable in Europe and thus to extend the demand, and consequently, to increase the value of our securities.
The records of the Treasury Department show that on the 23rd day of December, 1869, I sent to General Schenck of the House, a draught of a bill for refunding the Public Debt. The same records show that on the 19th of January, 1870, I sent to Senator Sherman eight copies of a bill. These bills were framed in conformity to the plan marked out in my report of December, 1869. Previous to the preparation of that report I had not any conference with any member of Congress nor with any other person in regard to the details of the scheme.
On the 12th of July, 1870, Mr. Sumner introduced a bill for refunding the Pubic Debt (Sen. S. 80). As might have been expected it was not a practical measure, and on the 3rd day of the following February Mr. Sherman reported the bill of Mr. Sumner in a new draught. A single copy of that bill is on file in the office of the secretary of the Senate, and no other copy can be found.
This bill conforms to my report, and upon my recollection it is the bill as prepared by me. The division of the loan conforms to my recommendation in the report, and it provides that the interest may be made payable abroad. Subsequently these provisions were changed. General Schenck had then recently returned from Europe and he was of the opinion that the loan could all be negotiated at four or four and one half per cent and it was this opinion on his part which led to delays. The bill was not passed till July, 1870, at the very moment when the Franco-Prussian War opened. Had the bill been passed in March, quite large negotiations could have been made in April of that year. But the sale of the new five per cent bonds was an undertaking of great difficulty. It is now impossible to realize that a six per cent bond was not worth par in 1869-'70. At that time the leading bankers of the world were unwilling to engage in the undertaking. The Rothschilds and Barings stood aloof. The Amsterdam bankers wrote letters of inquiry, but they did nothing more. Mr. Morton, of the firm of Morton, Bliss & Co., New York, was inclined to engage in the business, but his partner, Mr. Bliss was doubtful of the success of the scheme, and they therefore stood aside when the first negotiations were attempted. Finally an arrangement was made with Jay Cooke & Co., by which they advertised what was called a popular loan, asking for a subscription to the five per cent bonds.
Subsequently I advised Congress to issue four per cent fifty year bonds as a basis of the banking system, coupled with an offer to the existing banks of a preference, but in case any bank should refuse to exchange the bonds then held by such bank, its charter after one year should be annulled and its banking privileges should be open to any other association that would purchase the four per cent bonds. This proposition aroused the hostility of the national banks and forthwith the city was invaded by bank officers and agents who succeeded in defeating the bill.
I had early foreseen that the Public Debt could be paid without much delay, and without a system of oppressive taxation. In July, 1863, in the introduction to my volume on the tax system of the country, I had predicted that the revenues would be equal to the payment of interest on a debt twice as large as the Public Debt then was, together with large annual payments of principal. I predicted also that these payments would menace the national banking system. My scheme looked for the perpetuation of that system for fifty years at least. The banks looked upon the scheme as a hostile project and they were therefore led to defeat a measure which in fact was liberal in the extreme. At that time the capital of all the national banks was limited to three hundred million dollars. Thus did the banks defeat a measure which was designed to secure their perpetuity and calculated to promote their financial interests. They acted upon the idea that the credit of the country could never be so far advanced that a four per cent bond would be worth par.
The success of the five per cent loan of 1871, of which I give a full account elsewhere, should have ended the contest in regard to the credit of the United States. A five per cent bond had been sold at par in the London market. The principal of the Public Debt was undergoing a monthly reduction and the gain in the interest account was sufficient to guarantee the payment of the principal in half a century. From that time forward, the leading bankers of Europe and American were ready to co-operate in placing the remaining five per cents, and then the four and a half and four per cents.
From that time forward the credit of the Government has been improving constantly. It was no longer difficult to borrow money at the rate of five per cent, and with the adjustment of our controversy with Great Britain there remained no reason to question the rapid progress of the United States in wealth and population. Indeed, it was then entirely feasible for the Government to have resumed specie payments, as any demand upon the Treasury for gold could have been met with proceeds of bonds sold in Europe. It was my opinion, however, that it would be wiser to delay resumption until the balance of trade should be so much in our favor that specie payments could be maintained by our own resources. And this was accomplished in less than six years. It is with a state as it is with an individual. With an established credit, or with a credit improving constantly and an income in excess of expenditures, there is no difficulty in meeting all liabilities as they mature. Such was the condition of the Treasury when I left it in March, 1873. In March, 1869, the Government was paying interest, measured at the gold value of its securities at the rate of seven per cent. In 1873 the rate was five per cent or less. In that time the net Public Debt had been reduced in the sum of three hundred and sixty- four million dollars, and the interest account had been reduced about thirty million dollars.
When I was engaged in placing bonds in Europe, a discussion arose among bankers in regard to the conflict of statements as to the amount of the Public Debt. By the reports of the Treasurer, which were the basis of the monthly statements, the debt was represented by the securities actually issued after deducting those which had been redeemed. By the report from the Registrar's Office which once each year corresponded in time to the monthly report, the balance was widely different. These facts impaired our standing financially. Upon the register's books the Government was charged with every issue that passed out of his office, and it was days, usually, and not infrequently it was weeks, before the securities passed from the Treasury into the hands of creditors or purchasers of securities. On the other hand the Treasurer would be entitled to credit for redemptions made days or weeks before the evidence of such payments would appear on the register's books. An analogous fact exists in the discrepancy between a depositor's account with his bank and the account at the bank as long as there are outstanding checks. The books would not agree and yet each might be accurate. As it was a necessity of the situation that the business of the Treasury should proceed day by day without interruption and it was difficult to explain the discrepancy to the many inquirers, I ordered Mr. Allison, the register, to accept for his annual reports the statement of the Treasurer, as his statements conformed to the existing facts on the days when the statements were made. The register protested that the order was not justified by the law, and that was the truth although there was no law forbidding such an act. The transaction, including my order, was brought before a committee of the House of Representatives, but as far as I know, the question of the legality of the proceedings, was not canvassed, or if attention was directed to the subject the committee may have treated it as an act in the public interest and from which no injury had arisen. Upon these facts, Senator Henry G. Davis, of West Virginia, made the charge that the books of the Treasury had been altered by my direction and that it was possible that some great fraud had been perpetrated which might be discovered if a committee were appointed to investigate the Treasury. A committee was granted, of which Senator Davis was a member. The investigation was a failure from his standpoint. Indeed, the alteration of the books of the Treasury would required the collusive co-operation of many persons, and evidence of the fact of the alteration would, of necessity, become known to hundreds of clerks.
Mr. Davis and some other Democrats implicated me in an analogous matter which they tried to understand but did not. The Loan Accounts of the Treasury Department showed that the payments on the Public Debt exceeded the receipts from loans in the enormous sum of one hundred and sixteen million dollars. I appointed a committee of clerks to examine the account in detail for the purpose of ascertaining whether the discrepancy was real or only apparent. The fact of the discrepancy was reported to Congress and the progress made in the investigation was noted in the appendix to the Annual Reports. It is probable, however, that these reports were never seen by Mr. Davis, and hence his suspicion that an investigation into the accuracy of the Treasury accounts would show an alteration of Treasury books, and of course, for some improper purpose.
The error began in Mr. Hamilton's time, and in consequence of the assumption of the State debts. Bonds were issued for those debts but there were no receipts paid into the Treasury, and consequently the debit side of the account was a blank. When the bonds were paid the payment became a credit on the loan account. In after times bonds were issued and sold below par. The account was charged with the receipts and upon payment the loan account was credited with the full amount paid. In some cases the discrepancy was augmented by the purchase of bonds and the payment of a premium, as was done in the second term of General Jackson. The investigation showed that the discrepancy was only apparent, and the criticisms and complaints ceased.
During my administration of the Treasury Department, the government of the Territory of Alaska was in my hands. The legislation of Congress was brief and indefinite and the only officers were collectors of customs, treasury agents and the revenue cutter officials. The principal topics of thought were the exclusion of liquors and firearms and the protection of the fur seal fishery. During the session of the Forty-first Congress a bill was passed which required the Secretary to lease the seal fishery to the best bidder, with a preference to the company which was then engaged in the fishery. On the question of the nature of the preference I took the opinion of the Attorney-General in advance of the contract. At that time I was opposed to any system of leasing and I so advised the House of Representatives in a report upon the subject. Congress, however, adopted the system of leasing and upon experience that system was shown to be more advantageous to the country. The value of the fur seal fishery depends upon the market for the dressed furs, and the value of the dressed furs depends upon the fashions, and the fashions are manipulated by the producers of the varied competing goods. The Government could never engage in the business of promoting fashions and training the markets. Fur seal skins have only a moderate commercial value when the fashion is not with them.
The question of the claim on Behring Sea was not then much considered. By the law of nations it is difficult to maintain the position that that vast body of salt water can be treated as a closed sea, but there are peculiarities which distinguish it from other bodies of water as the Mediterranean Sea and the Gulf of Mexico, which are partially enclosed.
Russia for a long time was the possessor of the adjacent mainland and of the islands which mark the limits and in a degree enclose the sea. That country claimed jurisdiction over the water. That claim was known and its validity was not disputed seriously. By the treaty Russia ceded about one half of the sea to the United States. Russia and the United States are the countries directly interested. England has no territorial rights and therefore she has no interest that is not common to other nations. The United States and Russia are interested in the seal fishery which can be preserved only by the protection of the animals in Behring Sea. It may be claimed fairly that Russia and the United State have property in these animals due to the fact that they gather upon the territory of the countries at certain seasons of the year. At other seasons they roam over the water as other animals roam over the land. They are, at least, partially domesticated. They are accustomed to the presence of the inhabitants of the islands which they occupy as breeding grounds and which they visit annually. Moreover, England has an interest in the preservation of the fishery. The skins are dressed in London, and thus far no one has been found, either in Europe or in the United States, who can compete with the London workmen. For the purpose of protecting and preserving the seal fishery, Behring Sea ought to be treated as a closed sea. For general commercial purposes it may be used as other parts of the ocean are used.
At a time, while I was Secretary of the Treasury, when I was detained at my lodgings by a slight illness, I received a visit from William E. Dodge a New York merchant and an importer of tin, whom I had known some years before when I was a member of Congress. He said that he had called to see me in regard to charges against his house preferred by the revenue officers relating to the importation of tin. I said, what was true, that I had not heard of the charges and that I had never suspected his house of any wrong-doing in their business. His statement in reply was a great surprise to me. He said that if there was anything which appeared to be wrong, or that was in fact a violation of law, the error or wrong was unintentional—that he and his partners intended to act always in good faith. He then stated that the claim amounted to more than two hundred thousand dollars, and he proposed then and there to pay the amount claimed, coupled, however, with the condition that the payment should be kept secret. I replied that I could not take the money upon such terms and that secrecy was impossible. Upon his statement there were three persons besides ourselves who had knowledge of the existence of the charges and the payment of money must come to the knowledge of the Treasury officials. I then said:
"Mr. Dodge, you cannot afford to pay this money. If you are innocent you should contest the matter in the courts, and if you convince the judge, even if you are technically wrong, that there was no intent to defraud the Government the Secretary can remit all the penalty, leaving you to pay the duty." His counsel, if they were competent, must have given him similar advice and yet he paid voluntarily, about two hundred and seventy-six thousand dollars to the officials in New York, of which he and his friends proceeded to complain. There was a suit, but it was the duty of the firm to contest the claim of the Government, if they had a defence. And if they had had a defence they were in no danger even if they had violated the law ignorantly, for no Secretary would have allowed honest men to suffer for an ignorant violation of the revenue laws. Senator Edmunds placed upon the records of the Senate a full statement of the case.
Of the many measures of my administration of the Treasury Department, the Mint Bill of 1873 is the only one which has been made a party issue, and which has entered permanently into the policy of the country.
In the month of March, in the year 1869, I came to the head of the Treasury Department. At an early day my attention was directed to the disordered condition of the mint service, which was then, as it ever had been, without a responsible head. The proceedings at the mints were unsystematic, and I resolved upon an attempt to codify the laws and to place the administration in the hands of a recognized, responsible officer. President Grant appointed John Jay Knox comptroller of the currency. For many years Mr. Knox had held the office of deputy comptroller. He had been a careful, constant student, and he was already a recognized authority in financial matters.
I appointed Mr. Knox commissioner to codify the mint laws and to suggest alterations. He was assisted by Dr. Linderman, then an eminent expert in the theory and practice of coinage, by Mr. Patterson, superintendent of the mint at Philadelphia, and by others.
When the codification of the laws relating to the mint service had been completed the statute, as passed, contained seventy-one sections, including a number of new provisions. The political and personal controversy of twenty years and more was directed to a single section, which was in these words: "No coins, either of gold, silver, or minor coinage, shall hereafter be issued from the mints other than those of the denominations, standards and weights herein set forth." The coinage of the silver dollar piece was discontinued in the bill as prepared by the commissioners and the purpose to discontinue its coinage was thus announced in the report that was made to Congress:
"The coinage of the silver dollar piece, the history of which is here given, is discontinued in the proposed bill. . . . The present gold dollar piece is made the dollar unit in the proposed bill, and the silver piece is discontinued."
In 1873 I had come to believe that it was wise for every nation to recognize, establish, and maintain the gold standard. I was of the opinion then, as I am of the opinion now, that nations cannot escape from the gold standard in all inter-state transactions. The value of every article is resolved finally by the ascertainment of its value in gold. Silver or paper may be used for domestic purposes, but the value of that silver or paper is determined by its value in gold.
In America, as in England, all the attempts to fix a ratio between gold and silver coins and to maintain that ratio in business had failed, and hence it was that I determined to abandon the idea of a double standard, reserving in mind, however, the possibility that an agreement by commercial countries might overcome the difficulty. That possibility has now disappeared. The history of the United States is an instructive history. The coin ratio between gold and silver was fixed in Mr. Hamilton's time and with the concurrence of Mr. Jefferson.
In 1870 silver was at a premium upon the legal ratio between gold and silver coins, and such had been the fact from the year 1837, and probably from the year 1792. Indeed, there has never been a day, from the organization of the government, when the actual standard was silver. Until the act of 1878 was passed, silver coins had had no appreciable influence upon the volume of currency or the business of the country. The total coinage of silver dollars had been 8,000,000 pieces only. The coinage was suspended in 1805 or 1806, and the silver dollars had been exported or they had disappeared in melting pots. Such was the commercial demand for American silver coins that in 1853 Congress authorized the debasement of the subsidiary silver coins as the only means of securing their circulation.
It is quite doubtful whether in the year 1860 there was a person living who had seen an American silver dollar doing duty in the channels of trade. From 1806 to 1873 the business standard of the country was the gold standard. Silver had been recognized in the Coinage Act, but practically it had not played any part in the financial policy or fortunes of the country.
The choice of gold as the standard was not due to hostility to silver or to the silver mining interests, but to the well grounded opinion that gold was a universal currency, while in some countries, as in England and Germany, silver coins were not a debt-paying currency.
These—within the limits of a statement—are the reasons for the demonetization of the silver dollar and the adoption of the single gold standard. The measure was in accord with my policy, and it was in accord with the unbiased judgment of the commission.
It is a singular instance in legislative proceedings that a measure that had no active support and that was free from opposition at its enactment should be assailed vigorously after the lapse of years and through a long period of time. The measure was soon followed by the depreciation of silver and coincident with that change came the attacks upon the Mint Bill, and the denunciation of the "Crime of 1873."
The charges were two:
First: The authors of the change had been corrupted by English gold through one Ernest Seyd, a writer on economic topics. It was alleged that Seyd came to this country at the time when the measure was under consideration. Seyd was not living when the charges were made, but the fact of a visit to this country was denied by his son. Hon. Samuel Hooper was chairman of the Committee on Coinage. In the search for information Mr. Hooper invited Mr. Seyd to give him his opinion. Seyd was a writer, a man of good reputation, and a bimetallist. In a letter to Mr. Hooper, which is still in existence, and which is printed in theCongressional Record,Seyd condemned the demonetization of the silver dollar. His letter was dated at London, February 17, 1872.
The second charge was secrecy. The answer to this charge was to be found in historical facts.
The evidence is this: Mr. Knox's report contained two specific statements that it was a purpose of the bill to prohibit the coinage of the silver dollar; the report of the Secretary of the Treasury for the year 1872 made a specific recommendation to that effect; the bill was printed six times; it was considered in each House during the Forty-first and Forty-second Congresses; the precise question in controversy was the subject of discussion, and two years and ten months were given to the consideration of the bill.
The bill was discussed in the House of Representatives. Mr. Reed has stated that the report of the debate covers one hundred and ninety-six columns of theCongressional Record. Senator Jones, in his report of 1876, as chairman of the Silver Commission, refers to the debate in these words: "In the brief discussion on the bill in the House of Representatives, the principal reason assigned in favor of those sections which interdicted the future coinage of the silver dollar was that its value was three per cent greater than the value of the gold dollar." Thus Senator Jones admits that the debate in the House of Representatives was upon the question of the abolition of the silver dollar, and he recognizes his knowledge of the fact of the debate.
Finally the bill passed the Senate without one dissenting vote.
The downfall of silver has not been due to any legislation in America or Europe, nor to any decrees or despotic policy in Asia, but to the inventive faculties of one Charles Burleigh, of Fitchburg, Massachusetts, the inventor of the power drill.
If through him many silver mines have been rendered valueless, so it is to him that the world is indebted for a new application of force by which mountains are penetrated and mining in all its forms is carried on at one fourth part of the former cost. Every step in civilization, every advance movement that we call progress, is a peril to many and a ruin to some. By one stroke of genius, and limiting our thoughts to one only of its many consequences we may say that Burleigh has made gold so abundant and cheap that all substitutes for a currency from wampum to silver must soon disappear.
There is historical evidence tending to show that the representatives of the silver mining interest had sufficient and worthy reasons for assenting to the suspension of the silver dollar. In 1872 silver was at a slight premium as compared with gold. Therefore the privilege of coinage of the dollar was of no advantage to the owners of bullion.
The Mint Bill had a new and attractive feature. It provided for the coinage of a dollar that was to contain 420 grains of standard silver, and was to be known as the trade dollar.
This passage may be found in my report to Congress for the year 1872:
"Therefore, in renewing the recommendations heretofore made for the passage of the Mint Bill, I suggest such alterations as will prohibit the coinage of silver for circulation in this country, but that authority be given for the coinage of a silver dollar that shall be as valuable as the Mexican dollar and to be furnished at its actual cost."
The dollar was coined and it was known as the Trade Dollar. It contained 420 grains of standard silver.
The Mexican dollar which contained about 416 grains, was then sold at a premium, and it was used extensively in the China and India trade.
It was my expectation and the expectation of all concerned, that the trade dollar, from its added value, would take the place of the Mexican dollar in the immense trade of the East. My own confidence was great. Indeed, the thought of failure never occurred to me. Unfortunately, the stolidity of the Chinese and the force of habit among that people were not considered by us. From long use they had become accustomed to the Mexican dollar. They refused our trade dollar, notwithstanding its greater weight.
We coined and put into circulation, at home and abroad, about 36,000,000 pieces, many of which were afterwards recoined as legal tender dollars under a special act of Congress.
With the failure of that undertaking came the crusade against the act of 1873. Whether the two events sustained to each other the relation of cause and effect, I cannot say.
The suggestion that Senator Stewart of Nevada was assenting to the demonetization of the silver dollar derives support from the fact that, in the month of February, 1874, he indorsed the gold standard in two speeches, delivered, respectively, on the 11th and 20th days of that month. On the 11th he said: "I want the standard gold, and no paper money not redeemable in gold." On the 20th he added: "Gold is the universal standard of the world. Everybody knows what a dollar in gold is worth."
It is certain that in the month of February, 1874, when the contents of the Mint Bill were in the public statutes, the demonetization of the silver dollar, and the recognition of the gold dollar as the unit of value, had not affected the judgment nor disturbed the sensibilities of the advocates of silver.
I dismiss this branch of the subject with the observation that the act of 1873 placed the United States in a commanding position in regard to the use of silver. If that metal had continued to maintain its supremacy upon the ratio then established between gold and silver coin, there could have arisen no demand for the coinage of silver. If, on the other hand, silver should depreciate, the government might, at its pleasure, use, or it might decline to use, that metal as coin.
I now pass to a part of the history of the controversy not heretofore considered in public discussions, from which it will appear that the trusted representatives of the silver interest put aside the most inviting opportunity, if not the only opportunity, for the adoption of the bimetallic system by the commercial nations of the world.
The act of 1873 prepared the way for the use of silver by the commercial nations of the world, upon an agreed ratio with gold, if indeed, the possibility of such an arrangement ever existed. We were upon a gold basis; the balance of trade, by groups of years, was in our favor; we had a gold revenue from customs of about $200,000,000, and the excess of Treasury receipts over expenditures was nearly $100,000,000 a year.
If we had chosen to accumulate gold and postpone payments upon thePublic Debt, we could have brought the nations of the earth to our feet.
It was under circumstances thus favorable for negotiations for the use of silver that the Silver Commission of 1876 was constituted, and authorized, among other things, to inquire "into the policy of the restoration of the double standard in this country, and if restored, what the legal relation between the two coins of silver and gold, should be."
This authority opened a way for the introduction of a policy on the part of the United States looking to an arrangement for the use of silver by the states of Europe, and on that authority the commission dealt with the project of an international bimetallic system.
The commission consisted of eight persons. Senator Jones was the chairman, and Mr. Bland, of Missouri, was an influential member. It was my fortune to be of the commission and it was my fortune also to be alone in opinion upon the main questions that were treated in the reports.
The majority of the commission consisted of Messrs. Jones, Bogy, Willard, Bland and Groesbeck. They favored the remonetization of the silver dollar, and that without delay.
Of the points made in their report, I mention these. They said: "The supply of gold is diminishing, being now but little more than one half what it was in 1852, and is always so fitful and irregular from the method of its production that it is ill-suited to be a sole measure of value."
This statement as a statement of an existing fact was wide of the truth, and as a prophecy it was as fallacious as are the prophecies which predict the destruction of the world. From 1851 to 1855 the annual gold product of the world was 6,410,324 ounces. From 1876 to 1880 the annual gold product of the world was 5,543,110 ounces. The gold product of the latter period was eighty-six per cent of the gold product of the former period.
Far wide of the truth were the predictions of the majority in regard to the future product of gold. For the year 1894 the product was 8,737,788 ounces, or about thirty-seven per cent over the product of 1851-'55.
They, the majority, said: "No increase in the yield of silver in the immediate future seems upon the whole to be probable." The commission said further: "The exchanges of the world, and especially of this country, are continually and largely increasing; while the supplies of both the precious metals, taken together, if not diminishing, are at least stationary, and the supply of gold, taken by itself, is falling off."
Each of these two statements in regard to the precious metals was a serious error, and in their controlling influence upon the judgment of the commission they were fatal errors.
The gold product of the world in 1876 was 5,016,488 ounces. In 1894 the product had risen to 8,737,788 ounces, a gain of more than seventy-four per cent in the short period of eighteen years.
In 1876 the product of silver was 67,753,125 ounces, and in 1894 it was 167,752,561 ounces, a gain of about 147 per cent in eighteen years.
Upon these errors the majority of the commission based a policy by which the only opportunity that the country ever had for the establishment of a bimetallic system which should include the commercial nations of Europe, was put aside and forever lost.
If, in 1876, I had anticipated the immense increase in the product of silver, I might have hesitated, but in the view that I was then able to command I had great confidence that a bimetallic arrangement might be secured.
The majority of the commission favored bimetallism but they demanded, first, the remonetization of the silver dollar. On the other hand, I claimed that all thought of the further use of silver should be postponed until the attempt to secure the co-operation of other countries had been tried faithfully.
The policy of the majority of the commission prevailed, and it was consummated by the Statute of 1878, which was passed over the veto of President Hayes, and which authorized the coinage of the silver dollar.
When we had accepted silver, when we had abandoned the vantage ground that we had occupied, it was in vain that we solicited the co-operation of England, France and Germany. The adoption by the United States of a silver-using policy led the statesmen of those countries to anticipate the more extended and continuous use of silver leaving to them a monopoly of gold, while we should sink financially to the level of the degraded states of the world. That catastrophe we have escaped after an experience of twenty-five years, and then only by the combined efforts of the two great political parties.
I submit brief extracts from the report of the majority of the commission and from my individual report of 1876, that our relative positions may be understood.
The commission said: "We believe that the remonetization of silver in this country will have a powerful influence in preventing, and probably will prevent, the demonetization of silver in France and in other European countries in which the double standard is still legally and theoretically maintained."
Again the majority said: "It may be added that a legislative remonetization on the relation to gold of 15.5 to 1 accomplishes without delay all the objects of the proposition for an international conference, which is urged from various quarters."
That I may place myself where I stood in 1876 I present brief extracts from my report of that year.
First I said: "There can be but one standard of value in any country at the same time, and a successful use of gold and silver simultaneously can be effected only by their consolidation upon an agreed ratio of value, and by the concurrence of the commercial nations of the world.
"The undersigned is also of opinion that it is expedient for this Government to extend an invitation to the commercial nations of the world to join in convention for the purpose of considering whether it is wise to provide by treaties and concurrent legislation for the use of both silver and gold in all such nations upon a fixed relative valuation of the two metals; and, finally, that until such an agreement between this Government and other commercial nations can be effected, the United States should pursue the existing policy in regard to the resumption of specie payments."
Further I said: "It is to be apprehended that the remonetization of silver by the United States at the present time would be followed by such a depreciation in its value as to furnish a reason against the adoption of the plan by the rest of the world, and that an independent movement on our part would increase the difficulties rather than diminish them."
These extracts shall suffice. I now repeat the assertion with which I introduced this topic, viz.: That in 1876 the majority of the Silver Commission put aside the most favorable opportunity, indeed the only opportunity, that the country has ever had for the organization of a universal system of bimetallism.