No further action was taken by the committee on banking and currency.
Subsequently I wrote Mr. Ewing the following letter:
"May 21, 1878.
"Dear Sir:--I notice the crazy barkings of Buell in the "Post"
about the syndicate, and favors granted to it by me.
"I wish to say to you that nothing would please me better than to have the banking and currency committee examine into this matter, and I am quite sure you will be gratified that the result will be to my credit.
"I have no desire to dignify this by asking an investigation, but only to say to you privately, as a personal friend, that I court, rather than fear, such an inquiry.
"Very truly yours, "John Sherman.
"Hon. Thomas Ewing, House of Representatives."
It was at this time that it was alleged that Mr. Tappan, a New York bank president, said that he would pay $50,000 to stand at the head of the line when the government began to pay out gold; that he could put in $29,000,000 United States notes held by the New York banks and break the government and take out all the gold. It was said that Mr. Coe, a prominent banker in New York, was asked his opinion whether I could resume, and that he said: "Well, yes, I would let the government resume, but it must sell a certain number of bonds to the banks at such a figure." Sensational reports were sent out from Washington to discredit the contract lately made with the syndicate. It was reported that the terms were concealed, that only ten millions were contracted for, part of which it might be necessary to take back, and that the banking and currency committee had summoned me to explain the contract. So far from being true the contract itself was printed in all the papers and the utmost publicity was given to every step taken.
I had a very friendly acquaintance with Peter Cooper, for whom I had the highest respect, but he had fallen into the general ideas of the greenbackers. When in New York, early in April, I called upon him and had a pleasant interview. Soon after I received from him the following letter:
"New York, April 18, 1878.
"Hon. John Sherman, Secretary of the Treasury.
"Dear Sir:--In the brief interview which you did me the honor to give me at my house a few days ago, I was impressed with your desire to give all the information that would throw light upon the financial policy of the government, and on the department of which you are the executive head.
"But we had not the time to discuss fully some of those practical questions that involve this financial policy, and I therefore now take the liberty, in a more deliberate manner, to ask of you an answer to questions, which might throw light upon the public mind on these great interests, and allay the anxiety which pervades the hearts of our people in reference to their future prospects of business and employment, and show more clearly how the present policy of the government in enforcing "specie payments" by law and carrying out the "resumption act," could be attended with any _wholesome results to the financial interests_ of this country both in the present and in the future.
"First. Can you resume in the presence of $645,000,000 of legal tender and bank notes with what gold and silver you may have at your command, without an actual shrinkage of this currency, either on the part of the government or of the banks?
"Second. Can "resumption" be maintained after the law has placed a premium on coin, and virtually demonetized the paper, by rendering its convertibility compulsory? In other words, can the present "par value" of paper and coin be taken as an index that after the law has thrown its whole weight in favor of coin, by making the paper "convertible," the present equilibrium between the two can still be maintained?
"Third. In connection with the fact that by purely commercial laws, we have already arrived at specie payments, or the par between coin and paper money, what good will it do to thrust the further power of the law on the side of coin? How can we avoid placing the paper at the mercy of those who will have control of the coin --especially the paper of the national banks, whose chief credit will consist in maintaining "specie payments?"
"Fourth. After "resumption," how much money will the people have with which to transact business, employ labor, enter into new enterprises, and use "cash payments" instead of "inflating credit"
to a ruinous degree, as in times past, under the system of specie payments, and convertibility by law?
"Fifth. It being the duty of Congress to make the necessary and proper laws for carrying into execution a system of money, weights and measures as the only means to regulate commerce with foreign nations and among the several states, to provide as far as possible an "unfluctuating currency," a steady measure of prices, how can you prevent great and disastrous fluctuations in our "convertible money" and coin, arising out of the great demands for gold and silver that may, at any time, be made upon us from the commercial relations of this country with Europe over which the government can have no direct control? With great respect I remain,
"Your obedient servant, "Peter Cooper."
I made the following reply:
"Dear Sir:--Your letter of the 18th inst. is received. The questions you ask me have been, in the main, answered to the committees of the two Houses, and I might, perhaps, best reply to your letter by sending these doc.u.ments, printed by the order of the respective Houses; but my sincere respect for you, and desire to allay any doubts you may entertain of the success of the present plan of resumption, induce me to answer your letter as fully as my time will allow.
"As to your first question:
"Can you resume in the presence of $645,000,000 of legal tender and bank notes, with what gold and silver you may have at your command, without an actual shrinkage of this currency, either on the part of the government or of the banks?"
"You must bear in mind that the aggregate amount of legal tender notes and bank notes stated by you, may be gradually diminished, so far as the legal tenders are concerned, to $300,000,000, and by the banks to such sum as they find can be maintained at par with United States notes. But, a.s.suming that the aggregate should be about the present amount, and remembering always that the bank notes can be redeemed in legal tender notes, and are not required to be redeemed in coin, I do express the opinion that resumption in a country like ours can be maintained in the presence of the existing volume of circulation; but if this should prove to be too great, the reduction will be gradually of the bank notes, or, if Congress so direct, of the legal tender notes.
"As to your second question:
"Can resumption be maintained after the law has placed a premium on coin and virtually demonetized the paper, by rendering its _convertibility compulsory?_ In other words, can the par value of paper and coin be taken as an index that after the law has thrown its whole weight in favor of coin, by making paper convertible, the present equilibrium between the two can still be maintained?"
"I respectfully deny that the law places a premium on coin. One- half of this circulation is not redeemable in coin at all, but in legal tenders; nor does the law fix a premium on coin as against legal tenders, but simply requires an equality. Its convertibility is not compulsory. It is upon the demand of the holder. The holder is as likely to deposit the coin, if he has it, as to deposit the notes for coin. The currency would rest upon the presumption that all paper money rests upon, that its use and convenience and convertibility will always keep it at par with coin.
"To your third question:
"In connection with the fact that, by purely commercial laws, we have already arrived at specie payments, or the par between coin and paper money, what good will it do the thrust the further power of the law on the side of coin? How can we avoid placing the paper at the mercy of those who will have control of the coin--especially the paper of the national banks, whose chief credit will consist in maintaining specie payments?"
"I have simply to say that we have only arrived at our present position approaching specie payments by the acc.u.mulation of coin in the treasury and by the gradual and slow reduction of the volume of notes; and the very measures which have enabled us to reach so near the specie standard, are necessary to be continued to enable us to maintain resumption. If resumption is desirable, it cannot be maintained by a repeal of the law, which requires resumption and grants the necessary powers to prepare for it and to maintain it.
"As to your fourth question:
"After resumption, how much money will the people have with which to transact business, employ labor, enter into new enterprises, and use cash payments instead of inflating credit to a ruinous degree, as in times past under the system of specie payments, and convertibility by law?"
"It is answered, I think, by what I have said in reply to your first question. We will have the United States notes, the bank notes, and coin certificates, both gold and silver, together with the gold and silver itself, all in circulation. The actual amount of currency in circulation, I think, will be as large in specie times as now, and its equality and convertibility will rather increase than prevent the circulation of either. The depreciation of paper money is not necessarily caused solely by its excess, but by the uncertainty of its value and confidence in its redemption.
"In reply to your fifth question:
"It being the duty of Congress to make the necessary and proper laws for carrying into execution a system of money, weights and measures, as the only means to regulate commerce with foreign nations and among the several states, to provide as far as possible an unfluctuating currency, a steady measure of prices, how can you prevent great and disastrous fluctuations in our convertible money and coin, arising out of the great demands for gold and silver that may at any time be made upon us from the commercial relations of the country with Europe, over which the government can have no direct control?"
"I have only to say that it is undoubtedly the duty of Congress to provide for the possible contingencies that would make it necessary to suspend specie payments, though, as the circ.u.mstances which would compel suspension are necessarily unforeseen, unknown, difficult to be defined or to be provided for, I am not sure but it is better to leave the question of suspension to the necessities of the case rather than to legislation which must be founded upon uncertainty. When the treasury is actually unable to redeem its notes in coin, suspension comes necessarily, but resumption would come again from the absolute necessity of currency for our daily wants, and Congress could provide better in view of the actual facts than antic.i.p.ated facts.
"I think the real difficulty that has stood in the way of resumption is the nightmare of things that have existence only in the brain, and not in fact. We can only deal with the current course of events based upon probabilities, and cannot provide for unforeseen contingencies.
"It is my earnest hope that you and gentlemen like you, who I know are sincere in your convictions, may see your way to trust to the policy that is now entered upon, which seeks to provide as much paper currency as can be maintained at par in coin, and to secure its active circulation in aid of industry and enterprise.
"I am, with great respect, "John Sherman."
On the 13th of May, 1878, the charges against me a.s.sumed a different form, by the adoption, in the House of Representatives, of a preamble and resolutions offered by Clarkson N. Potter, of New York. Among the recitals of this resolution was a charge that James E. Anderson and D. A. Weber, supervisors of registration of the parishes of East and West Feliciana, falsely protested that the election in such precincts had not been fair and free, and that the returning board thereupon falsely and fraudulently excluded the vote of said precincts, and the choice of the people was annulled and reversed, and that such action of said Weber and Anderson was induced or encouraged by a.s.surances from me. The charge was based upon the following letter, alleged to have been written by me:
"New Orleans, November 20, 1876.
"Messrs. D. A. Weber and James E. Anderson.
"Gentlemen:--Your note of even date has just been received. Neither Mr. Hayes, myself, the gentlemen who accompany me, or the country at large, can ever forget the obligations under which you will have placed us should you stand firm in the position you have taken.
From a long and intimate acquaintance with Governor Hayes, I am justified in a.s.suming the responsibility for promises made, and will guarantee that you will be provided for as soon after the 4th of March as may be practicable, and in such manner as will enable you both to leave Louisiana, should you deem it necessary.
"Very truly yours, "John Sherman."
The charge was without any foundation whatever, and excited my resentment. On the 20th of May I wrote Mr. Potter the following letter:
"May 20, 1878.
"Hon. Clarkson N. Potter, House of Representatives.
"Sir:--I observe that the resolution of the House, under which your committee is organized, singles me out personally by name from among twenty or more gentlemen who were present, at the request of President Grant, or the chairman of the Democratic national committee, to attend and witness the action of the returning board upon the presidential election returns in the State of Louisiana in 1876, and, in substance, charges that at that election in East Feliciana parish the Republican vote was withheld and not cast, in pursuance and execution of a conspiracy by such voters, that in furtherance of such conspiracy, James E. Anderson, supervisor of registration in that parish, and D. A. Weber, supervisor of registration in West Feliciana parish, falsely protested that such election in such parishes had not been free and fair, and that, therefore, the returning board of said state falsely and fraudulently excluded votes of such precincts, and "by means thereof, and of other false and fraudulent action of said returning board, the choice of the people of the state was annulled and reversed, and that such action by the said Weber and Anderson was induced or encouraged by the a.s.surances of Hon. John Sherman, now Secretary of the Treasury."
"This resolution requires you to investigate these allegations, and upon the result of these depends the accusations against me.
"First. That there was a conspiracy among the voters to withhold and not cast the votes, with a view to make a false charge on the election.
"Second. That in point of fact there was a free and fair election in East and West Feliciana, which was falsely protested and returned by said Anderson and Weber, by which the votes of those parishes were falsely and fraudulently excluded by the returning board.