IX.—FINANCE AND CIVIL SERVICE REFORM.
With the election of 1876 and the inauguration of President Hayes, March 4, 1877, the Period of Reconstruction may be said to have closed. The last formal act of that period was the withdrawal of the national troops from the South by President Hayes soon after his inauguration. During the last two decades the "Southern Question," while it has been occasionally prominent in political discussions,—especially in connection with the Lodge Federal Elections Bill, 1889-91, has, nevertheless, occupied a subordinate place in public interest and attention. As an issue in serious political discussions and party divisions the question has disappeared.
In addition to the subject of the Tariff, considered in the previous section, public attention has been directed chiefly, during the last quarter of a century, to the two great subjects, Finance and Civil Service Reform.
The Financial question has been like that of the Tariff,—it has been almost a constant factor in political controversies since the organization of the Government.
The financial measures of Hamilton were the chief subject of political controversy under our first administration, and they formed the basis of division for the first political parties under the Constitution. The funding of the Revolutionary debt, its payment dollar for dollar without discrimination between the holders of the public securities, the assumption of the State debts by the National Government, and the establishment of the First United States Bank, these measures of Hamilton were all stoutly combated by his opponents, but they were all carried to a successful conclusion. It was the discussion on the establishment of the First United States Bank that brought from Hamilton and Jefferson their differing constructions of the Constitution. In his argument to Washington in favor of the Bank, Hamilton presented his famous theory of implied powers, while Jefferson contended that the Constitution should be strictly construed, and that the "sweeping clause"—"words subsidiary to limited powers"—should not be so construed as to give unlimited powers. Madison and Giles in the House presented notable arguments in support of the Jeffersonian view. For twenty years after 1791 our financial questions were chiefly questions of administration, not of legislation. In 1811 the attempt to recharter the First United States Bank was defeated in the Senate by the casting vote of Vice-President Clinton. The financial embarrassments of the war of 1812, however, led to the establishment, in 1812, of the second United States Bank,—by a law very similar in its provisions to the act creating the First Bank in 1791. The bill chartering the Second United States Bank was signed by Madison, who had strenuously opposed the charter of the First Bank. The financial difficulties in which the war had involved his administration had convinced Madison that such an institution as the Bank was a "necessary and proper" means of carrying on the fiscal affairs of the Government. The Second Bank was, however, opposed on constitutional grounds, as the First had been; but in 1819 in the famous case of McCulloch vs. Maryland, the Supreme Court sustained its constitutionality, Chief-Justice Marshall rendering the decision. The Court held, in this notable decision, that the Federal Government was a government of limited powers, and these powers are not to be transcended; but wherein a power is specifically conferred Congress might exercise a sovereign and unlimited discretion as to the means necessary in carrying that power into operation.
The next important chapter in our financial history is the war upon the Second United States Bank begun and conducted to a finish by President Jackson. A bill rechartering the Bank was passed by Congress in 1832, four years before its charter expired. Jackson vetoed this bill, chiefly on constitutional grounds, in the face of Marshall's decision of 1819. The political literature of Jackson's two administrations is full of the Bank controversy, and this literature contains contributions from Webster, Clay, Calhoun, Benton, and other of the ablest public men of the day. No subject of public discussion in that day more completely absorbed the attention of the people.
On these important subjects, which engaged public attention during the first half-century of our national history, there may be found many valuable speeches. These, however, are largely of a Constitutional character. It has been since the opening of our civil war that our financial discussions have assumed their greatest interest and importance. We can attempt here only a meagre outline of the financial history of the last thirty years,—a history which suggests an almost continuous financial struggle and debate.
Leaving on one side the questions of taxation and banking, the financial discussion has presented itself under two aspects,—the issue and redemption of Government paper currency, and the Government policy toward silver coinage. The issue, the funding, and the payment of Government bonds have been incidentally connected with these questions.
The first "legal-tender" Act was approved February 25, 1862. Mr. Blaine says of this Act that it was "the most momentous financial step ever taken by Congress," and it was a step concerning which there has ever since been the most pronounced difference of opinion. The Act provided for the issue of $150,000,000 non-interest-bearing notes, payable to bearer, in denominations of not less than $5, and legal tender in payment of all debts, public and private, except duties on imports and interest on the public debt. These notes were made exchangeable for 6 per cent. bonds and receivable for loans that might thereafter be made by the Government. Supplementary acts of July 11, 1862, and January 17, 1863, authorized additional issues of $150,000,000 each, in denominations of not less than one dollar, and the time in which to exchange the notes for bonds was limited to July 1, 1863. It was under these Acts that the legal-tender notes known as "greenbacks," now outstanding, were issued.
The retirement of the greenbacks was begun soon after the war. On April 12, 1866, an Act authorized the Secretary of the Treasury to retire and cancel not more than $10,000,000 of these notes within six months of the passage of the Act, and $4,000,000 per month thereafter. This policy of contraction was carried out by Secretary McCulloch, who urged still more rapid contraction; but the policy was resisted by a large influence in the country, and on February 4, 1868, an Act of Congress suspending the authority of the Secretary of the Treasury to retire and cancel United States notes, became a law without the signature of the President.
On March 18, 1869, an "Act to strengthen the public credit" was passed, which declared that the "greenbacks" were redeemable in coin. This Act concluded as follows: "And the United States also solemnly pledges its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin."
On January 14, 1875, the "Resumption Act" was passed. It declared that "on and after January 1, 1879, the Secretary of the Treasury shall redeem in coin the United States legal-tender notes then outstanding, on their presentation for redemption at the office of the Assistant Treasurer of the United States in the city of New York, in sums of not less than fifty dollars." The same Act provided that while the legal-tender notes outstanding remained in excess of $300,000,000, the Secretary of the Treasury should redeem such notes to the amount of 80 per cent. of the increase in National Bank notes issued.
On May 31, 1878, an Act was passed forbidding the further retirement of United States legal-tender notes, and providing that "when any of said notes may be redeemed or be received into the Treasury under any law from any source whatever and shall belong to the United States, they shall not be retired, cancelled, or destroyed, but they shall be re-issued and paid out again and kept in circulation." When this Act was passed there were $346,681,016 of United States notes outstanding, and there has been no change in the amount since.
As to the silver policy of the Government since the war it is expected that the purport of certain important acts of legislation should be understood by all who would have an intelligent conception of our financial controversies.
The Act of February 12, 1873, suspended the coinage of the standard silver dollar of 412 and 1/2 grains. This Act authorized the coinage of the trade dollar of 420 grains, making it a legal tender for $5. This is the Act which has been called the "crime of 1873," on which tomes of controversy have been called forth. It is discussed at some length in the speech of Mr. Morrill, found in our text.
On February 28, 1878, the Bland-Allison Act was passed over the veto of President Hayes. A bill providing for the free and unlimited coinage of silver, of 412 and 1/2 grains to the dollar, had passed the House in November, 1877, under a suspension of the rules. At this time the bullion in the silver dollar was worth about 92 cents. When the Bland free-coinage Act came to the Senate, it was amended there on report of Senator Allison, of Iowa, Chairman of the Finance Committee of the Senate, by a provision that the Government should purchase from $2,000,000 to $4,000,000 worth of silver bullion for coinage into dollars. Holders of the coin were authorized to deposit the same with the United States Treasurer and to receive therefor certificates of deposit, known as silver certificates. These certificates are not legal tender, although receivable for customs, taxes, and all public dues, and are redeemable only in silver. This Act called forth an exhaustive and able debate. Senator Morrill, of Vermont, opened the debate in opposition to silver coinage. Senator Beck, of Kentucky, was one of the ablest advocates of silver coinage, while Mr. Blaine made a notable contribution to the debate, in which he favored the unlimited coinage of a silver dollar of 425 grains. Preceding the Congressional action there had been much public discussion on the subject throughout the country. A Monetary Commission had been organized, by joint resolution of August 15, 1875, for the purpose of making an examination into the silver question. This Commission made an exhaustive report to Congress on March 2, 1877, the majority of the Commission recommending the resumption of silver coinage. Also, previous to the discussion of the Bland-Allison Act in the Senate, the celebrated Matthews Resolution was passed by that body. This asserted that "all bonds of the United States are payable in silver dollars of 412 and 1/2 grains, and that to restore such dollars as a full legal tender for that purpose, is not in violation of public faith or the rights of the creditors." The de-bate on this resolution was a notable one. It was chiefly under these aspects that the financial question was discussed in the years 1877-1878.
The Bland-Allison Act was in operation from 1878 to 1890, during which time $2,000,000 in silver were coined per month, the minimum amount authorized by law. On July 14, 1890, the so-called Sherman Act stopped the coinage of silver dollars and provided for the purchase of silver bullion to the amount of 4,500,000 ounces per month. Against this bullion Treasury notes were to be issued, redeemable in gold or silver coin at the option of the Secretary of the Treasury. These notes were made a legal tender in payment of all debts, public and private, and receivable for all customs, taxes, and all public dues. It was also declared in this Act to be the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as may be provided by law. On account of this language in the law the Secretary of the Treasury under Mr. Cleveland has not deemed it advisable to exercise the discretion which the law gives him to redeem these notes in silver, and these new Treasury notes have been treated as gold obligations. By November 1, 1893, when the silver purchase clause of the Act of July 14, 1890, was repealed, Treasury notes to the amount of $155,000,000 had been issued, though some of these have since been exchanged for silver dollars at the option of the holders. It has been by these Treasury notes and the outstanding greenbacks that gold has been withdrawn from the Treasury, thus depleting the gold reserve and making bond issues necessary. It has been deemed advisable by successive administrations of the Treasury Department to maintain a gold reserve of $100,000,000 against the $346,681,000 outstanding greenbacks, though no law requires that such a reserve should be maintained further than that the Act of March 18, 1869, pledges the faith of the United States that its outstanding notes should be redeemed in coin.
The repeal of the silver purchase clause of the Sherman Act was accomplished in a special session of Congress, November 1, 1893. Since this repeal, the silver policy of the Government has been as it was before the Bland-Allison Act of 1878, which involves a complete suspension of silver coinage. The Acts of 1878 and of 1890 were compromise measures, agreed to by the opponents of silver coinage in order to prevent the passage of a bill providing for full unlimited coinage of silver at the ratio of 16 to 1. Speaking in his Recollections of the situation in 1890, Senator Sherman says: "The situation at that time was critical. A large majority of the Senate favored free silver, and it was feared that the small majority against it in the other House might yield and agree to it. The silence of the President on the matter gave rise to an apprehension that if a free coinage bill should pass both Houses he would not feel at liberty to veto it. Some action had to be taken to prevent a return to free silver coinage, and the measure evolved was the best obtainable. I voted for it, but the day it became a law I was ready to repeal it, if repeal could be had without substituting in its place absolute free coinage."
Since 1893 the contention has been carried on by the silver men in a public agitation in favor of free silver coinage, without compromise or international agreement, and this year (1896), by our form of political referendum, the question has been referred to the people for decision.
We have attempted to include four representative orations on this complex subject, from four of our most prominent public men. The literature of the subject is unlimited. Mr. Morrill is a representative advocate of the gold standard. In the same discussion Mr. Blaine offers a compromise position. Senator Sherman is an international bimetallist and a pronounced opponent of independent silver coinage. He has given much attention—probably no one has given more—to financial questions during a long public life. Senator Jones is recognized as one of the ablest advocates and one of the deepest students of monetary problems on the free silver side of the controversy. The extracts from these speeches will indicate the merits of the long debate on silver coinage,—the greatest question in our financial history in a quarter of a century.
The reform of the Civil Service has been a subject of public attention especially since 1867. The public service of the United States is divided into three branches, the civil, military, and naval. By the civil service we mean that which is neither military nor naval, and it comprises all the offices by which the civil administration is carried on. The struggle for Civil Service Reform has been an effort to substitute what is known as the "Merit System" for what is known as the "Spoils System"; to require that appointment to public office should depend, not upon the applicant's having rendered a party service, but upon his fitness to render a public service. It would seem that the establishment in public practice of so obvious a principle should require no contest or agitation; and that the civil service should ever have been perverted and that a long struggle should be necessary to reform it, are to be explained only in connection with a modern party organization and a party machinery and usage which were entirely unforeseen by the framers of the Constitution. The practice of the early administrations was reasonable and natural. Washington required of applicants for places in the civil service proofs of ability, integrity, and fitness. "Beyond this," he said, "nothing with me is necessary or will be of any avail." Washington did not dream that party service should be considered as a reason for a public appointment. John Adams followed the example of Washington. Jefferson came into power at the head of a victorious party which had displaced its opponent after a bitter struggle. The pressure for places was strong, but Jefferson resisted it, and he declared in a famous utterance that "the only questions concerning a candidate shall be, Is he honest? is he capable? is he faithful to the Constitution?" Madison, Monroe, and John Quincy Adams followed in the same practice so faithfully that a joint Congressional Committee was led to say in 1868 that, having consulted all accessible means of information, they had not learned of a single removal of a subordinate officer except for cause, from the beginning of Washington's administration to the close of that of John Quincy Adams.
The change came in 1829 with the accession of Jackson. The Spoils System was formally proclaimed in 1832. In that year Martin Van Buren was nominated Minister to England, and, in advocating his confirmation, Senator Marcy, of New York, first used the famous phrase in reference to the public officers, "To the victors belong the spoils of the enemy."
Since then every administration has succumbed, in whole or in part, to the Spoils System. The movement for the reform of the civil service began in 1867-68, in the 39th and 40th Congresses in investigations and reports of a Joint Committee on Retrenchment. The reports were made and the movement led by Hon. Thomas A. Jenckes, a member of the House from Rhode Island. These reports contained a mass of valuable information upon the evils of the spoils service. In 1871 an Act, a section of an appropriation bill, was passed authorizing the President to prescribe rules for admission to the civil service, to appoint suitable persons to make inquiries and to establish regulations for the conduct of appointees. Mr. George William Curtis was at the head of the Civil Service Commission appointed by General Grant under this Act, and on December 18, 1871, the Commission made a notable report, written by Mr. Curtis, on the evils of the present system and the need of reform. In April, 1872, a set of rules was promulgated by the Commission regulating appointments. These rules were suspended in March, 1875, by President Grant although personally friendly to the reform, because Congress had refused appropriations for the expenses of the Commission. Appeal was made to the people through the usual agencies of education and agitation. President Hayes revised the Civil Service Rules, and Mr. Schurz, Secretary of the Interior, made notable application of the principle of the reform in his department. President Garfield recognized the need of reform, though he asserted that it could be brought about only through Congressional action. Garfield's assassination by a disappointed placeman added to the public demand for reform, and on January, 18, 1883, the Pendleton Civil Service Law was passed. This Act, which had been pending in the Senate since 1880, provided for open competitive examinations for admission to the public service in Washington and in all custom-houses and post-offices where the official force numbered as many as fifty; for the appointment of a Civil Service Commission of three members, not more than two of whom shall be of the same political party; and for the apportionment of appointments according to the population of the States. Provision was made for a period of probation before permanent appointment should be made, and no recommendations from a Senator or member of Congress, except as to the character or residence of the applicant, should be received or considered by any person making an appointment or examination. The Act prohibited political assessments in a provision that "no person shall, in any room occupied in the discharge of official duties by an officer or employee of the United States, solicit in any manner whatever any contribution of money or anything of value, for any political purpose whatever."
The Pendleton Act was a landmark in the history of the reform and indicated its certain triumph. The Act was faithfully executed by President Arthur in the appointment of a Commission friendly to the cause, and under the Act the Civil Service Rules have since been extended by Presidents Harrison and Cleveland until the operations of the reform embrace the greater part of the service, including fully 85,000 appointments. It is not probable that the nation will ever again return to the feudalism of the Spoils System.
No two men have done more for the cause of Civil Service Reform than George William Curtis and Carl Schurz. When Mr. Curtis died, in 1892, the presidency of the Civil Service Reform League, so long held by him, worthily devolved upon Mr. Schurz. It may be said that in the last twenty-five years of Mr. Curtis' life is written the history of this reform. His orations on the subject have enriched our political literature and they hold up before the young men of America the noblest ideals of American citizenship. He gave unselfishly of his time and of his exalted talents to this cause, and his services deserve from his countrymen the reward due to high and devoted patriotism. Refusing high and honorable appointments which were held out to him, he preferred to serve his country by doing what he could to put her public service upon a worthy plane. The oration from Mr. Curtis included in our text is one among many of his worthy productions.
J. A. W. [ [!-- H2 anchor --] ]