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the Democrats to carry the State tickets in Pennsylvania and Indiana.
In the latter State Mr. Hendricks was nominated for Governor, with
the hope that his personal popularity might secure the success of the
ticket, but he was beaten. As a last resort, Mr. Seymour followed the
example of Mr. Douglas in 1860, and made an electioneering tour
through Western New York, Ohio, Illinois, and Pennsylvania. He
spoke once, and sometimes twice, daily, and only ended his tour on
the eve of the elections. As he was a versatile and brilliant orator,
seductive in appeal, and able and earnest in urging a bad cause, the
Democrats indulged the hope that he might be able to reverse the
results of the October elections and secure the electoral votes of Penn-
sylvania, Ohio, Indiana, and Illinois. In all these States the Repub-
licans had majorities so low as to approach the danger line. In In-
diana Conrad Baker's majority over Hendricks was only 961. Phila-
delphia gave a small Democratic majority, and in the State, which
was expected to give 20,000, there was a meager Republican major-
ity of about 10,000. In Ohio also there was a marked decrease in
the Republican strength, and altogether the case was not so hopeless
for Seymour and Blair as it had seemed earlier in the canvass. The
unexpected hopefulness of the outlook for the Democrats not only
aroused the Republicans, but the business interests of the country to
the dangers of the situation. The triumph of the Greenback party,
merely because there was a strong prejudice against negro suffrage,
could not fail to prove a disaster, not only to the restoration of the
South, but to the business prosperity of the North. A movement of
the business men to defeat the Democrats was made in the closing


weeks of the campaign that averted the danger and gave the Repub-
licans an overwhelming triumph.

In 1868 the Republicans carried twenty-six States for Grant and
Colfax, and the Democrats secured the electoral vote of seven States
for Seymour and Blair. Georgia would have increased the Demo-
cratic States to eight, but the vote of that State was treated as was
the vote of Missouri in 1820. If there had been a solid South in 1868,
as there has been since 1876, Mr. Seymour would have had a majority
in the Electoral College. Grant and Colfax received 214 electoral
votes and Seymour and Blair 80. In the Republican column were all
the Southern States except Virginia, Mississippi, and Texas, which
did not vote; Georgia, the vote of which was not counted; Louisiana,
which was carried by the Democrats by intimidation and fraud; and
Delaware, Maryland, and Kentucky. In the Democratic column, by a
reaction that unfortunately does not stand by itself in American
politics, were the three States of New York, New Jersey, and Oregon.
Two of these, New York and New Jersey, gave Mr. Seymour one-half
of his electoral vote. New Jersey always has been an uncertain State.
It voted for McClellan in 1864, for Grant in 1872, and for Tilden in
1876 side by side with New York. The defection of New York was
owing to the immense Democratic vote of New York City. No other
part of the country had so great a stake in Republican success as the
metropolis, but the Tammany vote in national contests is always cast
regardless of local interests. This can be explained only by the char-
acter of the population foreign by birth, un-American in sympathy,
and easily controlled by the political leaders. Mr. Seymour was very
popular in 1868 with the element that had resisted the draft in 1863.
It was this element that gave him the electoral vote of the State, be-
cause he had resisted the war, against the great soldier who had
achieved the triumph of the Republic.

Although the vote of Louisiana was counted in the joint convention
of the two Houses, both branches of Congress being Republican, it
was known at the time that the returns were fraudulent, and that the
elections had been conducted with intimidation and violence. Sey-
mour's alleged majority of 47,000 was greater than the entire Demo-
cratic vote of the State. The vote claimed for Seymour was 80,225
that allotted to Grant 33,263. In 1860 the combined Democratic vote
for Breckinridge and Douglas was 30,306 the vote for Bell 50,510
making a total of 80,816. Notwithstanding the fact that the white
vote of Louisiana was not so great by many thousands in 1868 as in
1860, Mr. Seymour was given a reputed vote of only a few hundreds
591, to be exact short of the whole vote of the State before the war.
In 1867 the registered vote was 45,109. The seven electoral votes of


Louisiana could do Mr. Seymour no good, and they could do General
Grant no harm. There was as yet no official evidence of the intimida-
tion and outrages in the State, and so it was agreed to receive and
count the returns. But subsequent investigations show a worse con-
dition than was even suspected. " From these investigations/' it was
said in an official report after the inquiry ordered by Congress, " it
appears that over two thousand persons were killed, wounded, and
otherwise injured in that State within a few weeks of the Presidential
election of 1868; that half the State was overrun by violence, midnight
raids, secret murders, and open riots, which kept the people in con-
stant terror, until the Republicans surrendered all claims, and then
the election was carried by the Democracy." Although Louisiana
had resumed her place in the Union only a few months before, we al-
ready hear of the Ku-Klux conspiracy that kept the South in a con-
dition of anarchy for many years, and that made the work of restora-
tion so difficult. The effort of 1865 to make the Southern States Slave
States once more had been thwarted, but Louisiana now set an ex-
ample of fraud and force that kept the South in a condition of dis-
order until the frenzy had spent itself. Before General Grant was in-
augurated President of the United States the last of the Constitu-
tional Amendments was adopted the Fifteenth. It is very brief, but
very comprehensive:

The right of citizens of the United States to vote shall not be denied or abridged by the
United States or by any State on account of race, color, or previous condition of servitude.

It took its place in the organic law as the final pledge of the Ameri-
can people to the oppressed race. This was a step far in advance of
the declaration of the Chicago platform, but it was an act of necessity
as well as of justice. It was opposed by the Democrats, as the two
previous amendments had been, but the opposition was not so strenu-
ous or so bitter. In the debate in the Senate Garrett Davis, of Ken-
tucky, charged that it was intended by the Republican party to per-
petuate its own power. To this Mr. Wilson, of Massachusetts, made
an effective reply. " The Senator from Kentucky know r s and I know,"
Mr. Wilson said, " that this whole struggle to give equal rights and
equal privileges to all citizens of the United States has been an un-
popular one; that we have been forced to struggle against passion
and prejudice engendered by generations of wrong and oppression;
that we have been compelled to struggle against great interests and
powerful political organizations. I say to the Senator from Ken-
tucky that the struggle of the last years to give freedom to four
and a half millions of men w r ho were held in slavery, to make them
citizens of the United States, to clothe them with the right of suffrage,
to give them the privilege of being voted for, to make them in all re-


spects equal to the white citizens of the United States, has cost the
Ixepubliean party a quarter of a million votes."

The morning of March 4, 1869, opened with a pouring rain, but
before the time arrived for the inaugural procession to begin its
inarch to the Capitol the clouds parted and the sun shone in all its
splendor. One feature of these quadrennial pageants was missing
the presence of the retiring President at the right side of the Presi-
dent-elect. The failure to perform his share in the official etiquette,
that usage had given the force of an unwritten law, was an involun-
tary but a fitting close to Johnson's turbulent and discredited ad-
ministration. In only two previous instances had there been a similar
failure to observe the etiquette of the occasion when John Adams
hastily left Washington to avoid meeting Thomas Jefferson, and when
John Quincy Adams refrained from escorting Andrew Jackson to the
Senate Chamber. In this case, however, Johnson was not to blame
for the apparent discourtesy to the President-elect. Grant's dislike of
him was so great, because of Johnson's effort to place him in a false
position in connection with the removal of Secretary Stanton, that
lie was unwilling to ride to the Capitol in the same carriage with his
predecessor. Johnson left the Capitol at noon, w r here it was said he
had been detained signing bills, and Grant drove unaccompanied,
except by his private secretary. The procession was unusually im-
posing. The colored military turned out in force. The streets and
grounds leading to the east front of the Capitol were densely crowded.
Never before, not even in war times, was Washington so full of
strangers. No unusual incidents attended the ceremony, and no un-
toward event marred the occasion. In the evening the inaugural ball
was given in the new wing of the Treasury Department, but the
White House was in the hands of the upholsterers, and it was not oc-
cupied by the President's family for some days after the inaugura-

An era of peace had set in, that, through many vicissitudes, was to
end in perfect reconciliation between North and South before the close
of the century.



War Finance and Currency The Demand Notes Suspension of
Specie Payments Measures of Relief The Legal Tenders El-
bridge G. Spaulding The Democratic Contention Republicans
Opposed to the Measure Popularity of the Greenbacks Value
of the Legal Tender Notes to the Government Fluctuations in
Gold The National Banking System Constitutionality of the
Legal Tender Acts Payment of the National Debt in Coin Sec-
retary McCulloch Secretary Boutwell Efforts at Funding the
National Debt Panic of 1873 The Greenback Craze Failure
of Congress to Afford Relief Election of a Democratic House of
Representatives The Resumption Act of 1875 Demonetization
of Silver.

ET it be understood," said President Grant in his Inaugu-
ral Address, " that no repudiator of one farthing of our
public debt will be trusted in public place, and it will go
far to strengthen our public credit, which ought to be the
best in the world."

It was inevitable that after four years of civil war, followed by four
years of conflict between the Congress and the Administration, the
national finances and currency should be deranged and the public
credit impaired. The national loans had followed each other rapidly.
Bonds were issued in vast amounts and bearing high rates of interest.
Paper currency, practically irredeemable, had become a necessity,
and it was, in fact, the only currency of the people when General
Grant succeeded Andrew Johnson as President of the United States.
Secretary Chase, when he recommended the first issues of Treasury
notes, was hopeful that the integrity of such issues might be main-
tained. " But the greatest care will be requisite," he said, " to pre-
vent the degradation of such issues into an irredeemable paper cur-
rency, than which no more certainly fatal expedient for impoverish-
ing the masses and discrediting the government of any country can
well be devised."

The first issue of non-interest-bearing Treasury notes was for fifty
millions of dollars. They were called " demand notes," because they
were payable on demand. Although these notes were as good as gold,
and were maintained at par throughout the entire period of gold flue-


tuations, it was with difficulty that the issue was floated. In fact, not
more than two-thirds of the fifty millions were actually issued. Some
of the railroads at first declined to accept them for fares and freight.
One of the clerks of the Treasury Department, Mr. J. W. Schuckers,
afterward Chase's biographer, had difficulty in paying his hotel bill
with them at one of the prominent Philadelphia hotels. A New York
bank refused to receive a large sum in " demand notes," except as a
special deposit, and thus unwittingly gave the depositor the benefit
of their appreciation, which kept pace with gold. All this is not sur-
prising when it is remembered that when Secretary Chase began his
financial operations the Government of the United States was utterly
without credit. When the Secretary of the Treasury went to New
York in 18(51 to get his first loan, the London Times said he had " co-
erced |50,000,000 from the banks, but he would not fare so well at the
London Exchange." The London Economist was confident that the
United States could not float any of their loans, " for Europe won't
lend them; America cannot." " No pressure," said the Times, at a
later period, " that ever threatened is equal to that which now hangs
over the United States; and it may safely be said that if, in future
generations, they faithfully meet their liabilities, they will fairly earn
a fame which will shine throughout the world."

It was this fame the Republican party was determined that the
United States should earn when it nominated and elected General
Grant. The Government had shown its capacity to borrow; now it was
to show its capacity to pay. Not only the loans, but the issues of Treas-
ury notes not payable on demand, in the mean time, had reached
colossal proportions. It is not the purpose of this chapter to follow
these operations in detail. The effort to maintain the specie standard
had come to an end as early as December 30, 1861, when the New
York banks suspended. It would be scarcely true to say that their
example was followed by the country banks. Most of these had ceased
to pay specie long before. Indeed, many of them had not resumed
specie payments after the panic of 1857. The suspension of the New
York banks touched the public credit more nearly than it was felt in
its effects upon the banking system of the country, as it was then
conducted. For many years the Government had paid coin over its
counters. The demand notes had a coin basis. When these were
presented for redemption the Treasury would soon be drained of its
coin. For ten years before the war we had been sending the imperish-
able product of our mines abroad, and receiving in return perishable
products from Europe, because we could buy foreign fabrics cheaper
than we could make domestic goods. We were a nation of spend-
thrifts under the long epoch of Democratic rule, and when we came


to measure ourselves by the world's standard we found we had parted
with our patrimony. It had become impossible for the Treasury
longer to pay specie. The world's treasures were not for us. Con-
federate bonds were taken in Europe at better prices, and in larger
amounts, than the bonds of the United States. Our greatest enemy
was the money power of Europe, with the Rothschilds in the lead.
Mr. Chase's demand notes became, for the time being, so far as the
discredited banks were concerned, as discredited as their own notes.
There was only one way out of the difficulty Treasury notes that
could be made to pass as currency, and plenty of them.

As usually happens when a great measure of public relief is under
consideration at Washington, there were two plans. One was the
plan of the Administration, as represented by the Treasury Depart-
ment ; the other was the plan of Congress, as represented by the House
Committee on Ways and Means. Secretary Chase favored a Banking
Association. The Committee on Ways and Means proposed the issue
of United States notes, to be receivable in payment of Government
duesofever3 T kind,andto be a legal tender in payment of all debts, both
public and private. In the end both plans were adopted, Mr. Chase's
plan taking shape in the system of national banks which still exists,
and the other plan being formulated in the Legal Tender bill, reported
to the House of Representatives from the Committee on Ways and
Means by E. G. Spaulding, January 22, 1862.

The paternity of the legal tender plan is usually attributed to
Thaddeus Stevens, because at the time he was Chairman of Ways
and Means, but Mr. Spaulding is entitled to rank as the author of
the measure. Elbridge G. Spaulding had served a term in Congress as
early as 1849-51. He was afterward State Treasurer of New York, a
member of the Canal Board of that State, and president of the Farm-
ers' and Mechanics' Bank of Genesee, at Buffalo. He was again
elected to the 36th Congress, and was serving on the Committee on
Ways and Means in the 37th Congress because of his recognized finan-
cial ability. He introduced the original Legal Tender bill into the
House December 30, 1861, the day the New York banks suspended.
Mr. Spaulding made a very able speech in behalf of the measure a
measure of necessity, not of choice, a measure that the Constitution
justified in the emergency, and he declared that by this plan " the
Government will be able to get along with its immediate and pressing
necessities without being obliged to force its bonds on the market at
ruinous rates of discount; the people under heavy taxation will be
shielded against high rates of interest, and capitalists will be afforded
fair compensation for the use of their money during the pending
struggle for national existence." One of the most determined op-


poueuts of the measure was Mr. Pendletou, of Ohio. In arguing
against the legal tender feature of the bill he said, " The feature of
this bill which first strikes every thinking man, even in these days of
novelties, is the proposition that these notes shall be made a legal
tender in discharge of all pecuniary obligations, as well as those
which have accrued in virtue of contracts already made as those
which shall hereafter be made. Do gentlemen appreciate the full im-
port and meaning of that clause? Do they realize the full extent to
which it will carry them? Every contract for the payment of gold and
silver coin, every promissory note, every bill of exchange, every lease
reserving rent, every loan of money reserving interest, every bond
issued by this Government, is a contract to which the faith of the
obligor is pledged, that the amount, whether rent, interest, or prin-
cipal, shall be paid in the gold and silver coin of the country."

Six years later he was a candidate for President of the United
States on the opposite ground that the principal and interest of United
States bonds should be paid in greenbacks. When legal tender notes
were necessary to save the Union Mr. Pendleton wanted only gold
and silver; \vhen the country needed a specie basis to assure its pros-
perity he wanted greenbacks.

The Democratic contention both in the House and Senate while the
bill was before Congress was that it was a departure from the obliga-
tion to pay intrinsic value. " If you violate that by this bill, w r hich
you certainly do," Mr. J. A. Bayard, of Delaware, declared, in an em-
phatic interrogatory, " how can you expect that the faith of the com-
munity will be given to the law which you now pass, in which you
say that you will pay hereafter the interest on your debt in coin?
Why should they give credit to that declaration? If you can violate
the Constitution of the United States, in the face of your oaths, in the
face of its palpable provision, what security do you offer to the lender
of money? " The Senate had wisely amended the bill, as it passed
the House, providing for the payment of the interest on the national
debt in coin. It was this provision that the Democrats declared
could not be maintained, and that they afterward attempted to

That a measure at once so necessary and so dangerous should meet
with Republican opposition was to be expected. None was more re-
luctant to accept it than the Secretary of the Treasury. Indeed his
reluctance at one time threatened its defeat. At last he was com-
pelled to come out openly in favor of the bill. " It is true," Mr. Chase
wrote to Mr. Spaulding, " I came with reluctance to the conclusion
that the legal tender clause is a necessity, but I came to it decidedly
and I supported it earnestly. I do not hesitate when I have made up


1113- mind, however much regret I may feel over the necessity of the
conclusion to which I came. . . . Immediate action is of great im-
portance. The Treasury is nearly empty. I have been obliged to
draw for the last installment of the November loan; so soon as it is
paid, I fear the banks generally will refuse to receive the United
States notes. You will see the necessity of urging the bill through
without delay.''

Some of the ablest Republicans in the House voted against the bill.
Among them were Valentine B. Horton, of Ohio; Justin S. Morrill,
of Vermont; Roscoe Conkliug, F. A. Colliding, and Theodore M. Pom-
ero}% of New York; Albert G. Porter, of Indiana; Owen Lovejoy, of
Illinois; William H. Wadsworth, of Kentucky; Benjamin F. Thomas,
of Massachusetts, and Edward H. Rollins, of New Hampshire. Sen-
ator Surnner, apt as he was to be ahead of his party on all questions
affecting slavery, was even more reluctant than Secretary Chase to
consent " to incur all the unquestionable evils of inconvertible paper,
forced into circulation by act of Congress, to suffer the stain upon
our national faith, to bear the stigma of a seeming repudiation, to
lose for the present that credit which in itself is a treasury, and to
teach debtors everywhere that contracts may be varied at the will
of the stronger." The actual condition, however, compelled him to
consent, " reluctant!}', painfully," but he declared that he could not
" give such a vote without warning the Government against the dan-
ger of such an experiment. The medicine of the Constitution must
not become its daily bread." The vote in the Senate against the legal
tender feature included Anthony, of Rhode Island; Collamer and
Foot, of Vermont; Fessenden, of Maine; King, of New York; Cowan,
of Pennsylvania; Foster, of Connecticut, and Willey, of Virginia. On
the final passage three Republicans Collamer, Cowan, and King
and four Democrats voted against the bill.

The United States legal tender notes, popularly called the " green-
backs," proved unexpectedly popular. Besides the issue of one hun-
dred and fifty millions under the act of February 25, 1862, two other
acts authorizing additional issues were passed July 11, 1862, and
March 3, 1863, the entire amount of currency thus created reaching
four hundred and fifty millions. Even this vast amount was after-
ward increased, including Treasury notes under the act of March 3,
1863, and March 3 and June 3, 1864. The legal tenders, outstanding
June 30, 1864, amounted to a total of $600,431,119, of which $780,990
were demand notes; $431,178,670 were legal tender notes proper, $15,-
000,000 were three-years' six per cent, compound (currency) interest-
bearing notes; $44,520,000 were one-year five per cent, (currency)
notes; and $108,951,450 were two-years' five per cent, (currency) notes.
The public debt was $1,740,489 49.


It must be admitted that the immense issues of Treasury and legal
tender notes increased the public debt more rapidly than would have
been the case had it been possible to conduct the war on a coin basis,
but on the other hand these extensive issues enabled the Government
to " float " its bonds successfully, and kept the aggregate of the debt
far below what it would have been if the notes of the banks had been
used instead of this national currency. The legal tender feature was
not only justified by political and military necessity, but it enabled
the American people to pluck the flower, safety, from the nettle, dan-
ger. Without it the Government notes w r ould have been no better
than the notes of the suspended banks. Indeed, without it the banks
would have rejected and discredited the " greenbacks," the large
Democratic element hostile to the war would have combined to refuse
them, and the national credit would have been utterly and hope-
lessly ruined. It quickly proved not only a measure of relief for the
Government, but the source of prosperity for the country in the midst

Online LibraryGeorge Oberkirsh SeilhamerHistory of the Republican party (Volume 1) → online text (page 28 of 61)