"I may go to Washington before long to look after my personal affairs. If I do not, I hope to have some other opportunity of seeing you.
"Very truly yours, "J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
I received a letter from a Mr. Hudson, of Detroit, which expressed a fear that General Garfield was in serious danger of a.s.sa.s.sination, giving particulars. I sent it at once to Garfield, and received from him the following answer, very significant in view of the tragedy that occurred the following summer:
"Mentor, O., November 16, 1880.
"My Dear Sir:--The letter of Mr. Hudson, of Detroit, with your indors.e.m.e.nt, came duly to hand. I do not think there is any serious danger in the direction to which he refers, though I am receiving what I suppose to be the usual number of threatening letters on that subject. a.s.sa.s.sination can no more be guarded against than death by lightning; and it is not best to worry about either. I expect to go to Washington before long to close up some household affairs, and I shall hope to see you.
"With kind regard, I am, very truly yours, "J. A. Garfield.
"Hon. John Sherman, Washington, D. C."
Immediately after the election of General Garfield, and until the 18th of December, there was a continuous discussion as to who should be the successor to Senator Thurman. This was the senatorship to which Garfield had been elected and now declined to fill. I received many letters from members of the legislature expressing their wish that I should be restored to the Senate, and offering to vote for me. They generally a.s.sumed that I would have the choice between remaining in the treasury department under President Garfield and becoming a candidate for the Senate. Among the letters received by me was one from Mr. Thorpe, a member from Ashtabula county, Ohio, and a personal friend. I thought it right to tell him frankly the dilemma in which I was placed by the discussion in the papers.
This letter expressed my feelings in regard to the matter and I therefore insert it:
"Washington, D. C., November 15, 1880.
"My Dear Sir:--Your letter of the 11th relieves me from some embarra.s.sment. I am very thankful to you for the tender of your services and continued hearty friendship. I will avail myself of it to tell you confidentially the difficulty under which I labor.
"The letter to Dalzell was not intended for publication, but was simply a hurried reply to one of two or three long letters received from him. Still the letter stated in substance my feeling, and he probably intended no wrong but rather thought he would benefit me.
Both before and since, I have been overwhelmed with letters remonstrating against my leaving my present position, as if I had any choice.
"As a matter of course, General Garfield must decide this without haste and free from all embarra.s.sment, but in the meantime I am at a loss what to do. I cannot properly say to my correspondents that I would stay in the treasury if invited to do so, nor can I ask gentlemen to commit themselves until they know definitely what I wish. I cannot afford to be a candidate unless I expect to succeed.
I believe, from information already received, that I can succeed, but only after a struggle that is distasteful to me, and which I cannot well afford. I can only act upon the a.s.sumption that General Garfield will desire to make an entire change in his cabinet, and upon that basis I would gladly return to the Senate as the only position I could hold, or, if there was any doubt about election, I would cheerfully and without discontent retire from public life.
I have now at least a dozen unanswered letters on my table from members of the legislature, tendering their services, and stating that I ought to explicitly inform them my wishes, most of them a.s.suming that I have a choice. I intend to answer them generally that, if elected, I would consider it the highest honor and I would then accept and serve. So I say to you: If I enter the canva.s.s I must depend upon my friends without being able to aid them actively, and with every advantage in the possession of Foster.
Such a contest, I see, will open up trouble enough in the politics of Ohio, whatever may be the result. With this explicit statement you will understand best how to proceed. I would regard the support of Senator Perkins as of the utmost importance. After awhile I can give you the names of a score at least of others who avow their preference for me.
"Very truly yours, "John Sherman.
"Hon. F. Thorpe, Geneva, O."
The letter to Dalzell referred to was hastily and carelessly written, without any expectation of its publication. It was as follows:
"To Hon. J. M. Dalzell, Caldwell, Ohio.
"My Dear Sir:--Your kind note of the 4th is received, for which please accept my thanks. I prefer to do precisely what you recommend, await the judgment of the general a.s.sembly of Ohio, unbiased by any expression of my wish in the matter referred to. I do not know what is the desire of General Garfield, but I can see that my election might relieve him from embarra.s.sment and free to do as he thinks best in the formation of his cabinet. Again thanking you for your kind offer, I am very truly yours,
"John Sherman."
The papers, while taking sides between Foster and myself, exaggerated the danger and importance of the contest and thus unduly excited the public mind, for either of us would have cheerfully acquiesced in the decision of the general a.s.sembly. Strong appeals were made to Foster to withdraw, especially after it was known that I would not be Secretary of the Treasury in the incoming administration.
No such appeals came to me, nor did I take any part in the controversy, but maintained throughout the position taken in my letter to Mr.
Thorpe.
In November, 1880, I was engaged in the preparation of my annual report sent to Congress December 6. The ordinary receipts for the fiscal year ending June 30, 1880, were $333,526,610.98. The total ordinary expenditures were $267,642,957.78, leaving a surplus revenue of $65,883,653.20, which, with an amount drawn from cash balance in treasury, of $8,084,434.21, made a surplus of $73,968,087.41, which sum was applied to the reduction of the public debt. The sinking fund for this year was $37,931,643.55, which, deducted from the amount applied to the redemption of bonds, left an excess of $35,972,973.86 over the amount actually required for the year.
Compared with the previous fiscal year, the receipts for 1880 increased $62,629,438.23. The increase of expenditures over the previous year was $25,190,360.48. I estimated that the receipts over expenditures for the fiscal year ending June 30, 1881, would be $50,198,115.52.
During the period from 1874 to 1879 the United States had failed to pay on the public debt $87,317,569.21, that being the deficiency of the sum fixed by law to be paid during those years for sinking fund. Deducting from this sum the amount paid in excess for the fiscal year 1880, there was a balance still due on account of the sinking fund of about $50,000,000. This would be met by the estimated surplus of receipts over expenditures during the fiscal year, 1881, thus making good the whole amount of the sinking fund as required by law.
The estimated revenue over expenditures for the fiscal year ending June 30, 1862, including the sinking fund, was $48,000,000.
Upon this favorable statement I recommended to Congress that instead of applying this surplus revenue, accruing after the current fiscal year, to the extinction of the debt, taxes be repealed or modified to the extent of such surplus. A large portion of the surplus of revenue over expenditures was caused by the reduction of the rate of interest and the payment on the princ.i.p.al of the public debt.
The reduction of annual interest caused by the refunding since March 1, 1877, was $14,290,453.50, and the saving of annual interest resulting from the payment of the princ.i.p.al of the public debt since that date was $6,144,737.50. The interest was likely to be still further reduced during the following year, to an amount estimated at $12,000,000, by the funding of the bonds. To the extent of this annual saving, amounting to $32,000,000, the public expenditures would be permanently diminished.
In view of this statement, I recommended that all taxes imposed by the internal revenue laws, other than those on bank circulation and on spirits, tobacco and beer, be repealed. I urged that the tax on state banks should be maintained, not for purposes of revenue, but as a check upon the renewal of a system of local state paper money, which, as it would be issued under varying state laws, would necessarily differ as to conditions, terms and security, and could not, from its diversity, be guarded against counterfeiting, and would, at best, have but a limited circulation.
The public debt which became redeemable on and after the 1st of July, 1881, amounted to $687,350,000. I recommended that to redeem these bonds there should be issued treasury notes running from one to ten years, which could be paid off by the application of the sinking fund as they matured. Such treasury notes would have formed a popular security always available to the holder as they could have been readily converted into money when needed for other investment or business. They would have been in such form and denominations as to furnish a convenient investment for the small savings of the people, and fill the place designed by the ten dollar refunding certificates authorized by the act of February 26, 1879.
I stated my belief that with the then state of the money market a sufficient amount of treasury notes, bearing an annual interest of three per cent., could be sold to meet a considerable portion of the maturing bonds.
Congress did not pa.s.s such a law as I recommended, but the plan adopted and executed by my successor, Mr. Windom, was the best that could have been devised under existing law, resulting in a very large reduction of the amount paid for interest yearly. He allowed the holders of the maturing bonds to retain them at the pleasure of the government, with interest at the rate of three and a half per cent.
I recited the action of the department under the resumption act, but this has already been fully described by me. In respect to the United States notes I said:
"United States notes are now, in form, security, and convenience, the best circulating medium known. The objection is made that they are issued by the government, and that it is not the business of the government to furnish paper money, but only to coin money.
The answer is, that the government had to borrow money, and is still in debt. The United States note, to the extent that it is willingly taken by the people, and can, beyond question, be maintained at par in coin, is the least burdensome form of debt. The loss of interest in maintaining the resumption fund, and the cost of printing and engraving the present amount of United States notes, is less than one-half the interest on an equal sum of four per cent. bonds.
The public thus saves over seven million dollars of annual interest, and secures a safe and convenient medium of exchange, and has the a.s.surance that a sufficient reserve in coin will be retained in the treasury beyond the temptation of diminution, such as always attends reserves held by banks."
I expressed the opinion that the existing system of currency, the substantial features of which were a limited amount of United States notes (with or without the legal tender quality), promptly redeemable in coin, with ample reserves in coin and power if necessary to purchase coin with bonds, supplemented by the circulating notes of national banks issued upon conditions that would guarantee their absolute security and prompt redemption, all based on coin of equal value, and generally distributed throughout the country, was the best system ever devised, and more free from objection than any other, combining the only safe standard with convenience for circulation and security and equality of value.
After a statement of the amount of standard silver dollars issued under existing law, I described the measures adopted to facilitate the general distribution and circulation of those coins, and the great expense incurred by the United States in transporting them.
With all these efforts it was found difficult to maintain in circulation more than thirty-five per cent. of the amount then coined. While, at special seasons of the year and for special purposes, this coin was in demand, mainly in the south, it returned to the treasury, and its reissue involved an expense for transportation at an average rate of one-third of one per cent. each time. Unlike gold coin or United States notes, it did not, to the same extent, form a part of the permanent circulation, everywhere acceptable, and, when flowing into the treasury, easily paid out with little or no cost of transportation. At a later period, when the amount of silver dollars had largely increased, the department was never able to maintain in circulation more then $60,000,000.
For the reasons stated I earnestly recommended that the further compulsory coinage of the silver dollar be suspended, or, as an alternative, that the number of grains of silver in the dollar be increased so as to make it equal in market value to the gold dollar, and that its coinage be left as other coinage to the Secretary of the Treasury, or the Director of the Mint, to depend upon the demand for it by the public for convenient circulation. After a statement of the great cost of the coinage of these dollars, I recommended that Congress confine its action to the suspension of the coinage of the silver dollar, and await negotiations with foreign powers for the adoption of an international ratio. I expressed the conviction that it was for the interest of the United States, as the chief producer of silver, to recognize the great change that had occurred in the relative market value of silver and gold in the chief marts of the world, to adopt a ratio for coinage based upon market value, and to conform all existing coinage to that ratio, while maintaining the gold eagle of our coinage at its present weight and fineness.
I called attention, also, to the tariff as it then existed. It was a compilation of laws pa.s.sed during many succeeding years, and to meet the necessities of the government from time to time. These laws furnished the greater part of our revenue, and incidentally protected and diversified home manufactures. The general principle upon which they were founded was believed to be salutary. No marked or sudden change, which would tend to destroy or injure domestic industries built up upon faith in the stability of existing laws, should be made in them. I recommended that _ad valorem_ duties should be converted into specific duties as far as practicable, and that articles which did not compete with domestic industries, and yielded but a small amount of revenue, should be added to the free list. I urged the importance of stability in the rates imposed on spirits, tobacco and fermented liquors. These articles were regarded by all governments as proper subjects of taxation. Any reduction in the rates imposed a heavy loss to the owner of the stock on hand, while an increase operated as a bounty to such owner.
During that year, the excess of exports over imports amounted to $167,683,912. The aggregate exports amounted to $835,638,658, an increase over the previous year of $125,199,217.
The usual statement of the operations of the different bureaus of the department was made, and, in closing my last annual report as Secretary of the Treasury, I said:
"The secretary takes pleasure in bearing testimony to the general fidelity and ability of the officers and employees of this department.
As a rule they have, by experience and attention to duty, become almost indispensable to the public service. The larger portion of them have been in the department more than ten years, and several have risen by their efficiency from the lowest-grade clerks to high positions. In some cases their duties are technical and difficult, requiring the utmost accuracy; in others, they must be trusted with great sums, where the slightest ground for suspicion would involve their ruin; in others, they must act judicially upon legal questions affecting large private and public interests, as to which their decisions are practically final. It is a just subject of congratulation that, during the last year, there has been among these officers no instance of fraud, defalcation, or gross neglect of duty. The department is a well organized and well conducted business office, depending mainly for its success upon the integrity and fidelity of the heads of bureaus and chiefs of division. The secretary has, therefore, deemed it both wise and just to retain and reward the services of tried and faithful officers and clerks.
"During the last twenty years the business of this department has been greatly increased, and its efficiency and stability greatly improved. This improvement is due to the continuance during that period of the same general policy and the consequent absence of sweeping changes in the public service; to the fostering of merit by the retention and promotion of trained and capable men; and to the growth of the wholesome conviction in all quarters that training, no less than intelligence, is indispensable to good service. Great harm would come to the public interests should the fruits of this experience be lost, by whatever means the loss occurred. To protect not only the public service, but the people, from such a disaster, the secretary renews the recommendation made in a former report, that provision be made for a tenure of office for a fixed period, for removal only for cause, and for some increase of pay for long and faithful service."
The chief measure of importance, aside from the current appropriation bills, acted upon during that session of Congress was a bill to facilitate the refunding of the national debt. It was pending without action during the two preceding sessions, but was taken up in the early part of the third session. As the bill was originally reported, by Mr. Fernando Wood, from the committee of ways and means of the House of Representatives, it provided that in lieu of the bonds authorized by the refunding act of July 14, 1870, bearing five, four and a half, and four per cent. interest, bonds bearing interest at the rate of three and a half per cent. to the amount of $500,000,000, redeemable at the pleasure of the United States, and also notes to the amount of $200,000,000, bearing interest at the rate of three and a half per cent., redeemable at the pleasure of the United States after two years and payable in ten years, be issued.
The Secretary of the Treasury was authorized to issue any of these bonds or notes for any of the bonds of the United States, as they became redeemable, par for par. The bill further provided that the three and a half per cents. should be the only bonds receivable as security for national bank circulation.
Had this bill pa.s.sed, as introduced, any time before the 4th of March, 1881, it would have saved the United States enormous sums of money and would have greatly strengthened the public credit. It was in harmony with the recommendations made by the President and myself in our annual reports. It was called up in the House of Representatives for definite action on the 14th of December, 1880, when those reports were before them. Instead of this action amendments of the wildest character were offered, and the committee which reported the bill acquiesced in radical changes, which made the execution of the law, if pa.s.sed, practically impossible. The rate of interest was reduced to three per cent., and a provision made that no bonds should be taken as security for bank circulation except the three per cent. bonds provided for by that bill.
Discussion was continued in the House and radical amendments were made until the 19th of January, 1881, when the bill, greatly changed, pa.s.sed the House of Representatives. It was taken up in the Senate on the 15th of February. Mr. Bayard made a very fair statement of the terms and objects of the bill in an elaborate speech, from which I quote the following paragraphs:
"In little more than sixty days from this date a loan of the United States, bearing five per cent. interest, and amounting to $469,651,050, will, at the option of the government, become payable. On the 30th day of June next, two other loans, each bearing six per cent., the first for $145,786,500, and the other $57,787,250, will also mature at the option of the government. These facts are stated in the last report of the Secretary of the Treasury, and will be found on page ten of his report of last December. He has informed us that the surplus revenue accruing prior to the 1st of July, 1881, will amount to about fifty million dollars, and can and will be applied in part to the extinguishment of that debt. Bonds maturing on the 31st of December last were paid out of the accruing revenues.
So that there will remain the sum of $637,350,000, to be provided for and funded at the option of the government, at such rate of interest as may be deemed advisable by Congress and can practicably be obtained.
"The sums that we are dealing with are enormous, affecting the welfare of every branch of our country"s industry and of our entire people. The opportunity for reducing the rate of interest upon this enormous sum, and, not only that, but of placing the national debt more under the control of the government in regard to future payments, is now before us. The opportunity for doing this upon favorable terms should not be lost, and the only question before us, as legislators, is how we can best and most practically take advantage of the hour."
The bill as modified by the committee of the Senate would have enabled the treasury department to enter at once on the refunding of the public debt, and, in the then state of the money market, there would have been no doubt of the ready sale of the bonds and notes provided for and the redemption of the five and six per cent.
bonds outstanding. The Senate, however, after long debates, disagreed to the amendments of the committee, and in substance pa.s.sed the bill as it came from the House. The few amendments made were agreed to by the House, and the bill pa.s.sed and was sent to the President on the 1st of March. On the 3rd of March it was returned by the President with a statement of his objections to its pa.s.sage. These were based chiefly on the provision which required the banks to deposit in the treasury, as security for their circulating notes, bonds bearing three per cent. interest, which, in his judgment, was an insufficient security. His message was as follows:
"To the House of Representatives:--Having considered the bill ent.i.tled "An act to facilitate the refunding of the national debt,"
I am constrained to return it to the House of Representatives, in which it originated, with the following statement of my objections to its pa.s.sage.