GENERAL GRANT’S SERVICE TO SOUND MONEY
THUS matters stood up to the inauguration of President Grant. Early in his term was passed the “act to strengthen the public credit,” with its courageous declarations that “the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all obligations of the United States not bearing interest, known as United States notes, and of all interest-bearing obligations of the United States.” The final clause was subject to a few proper exceptions; but coin was then held to mean gold, and the Government thus stood committed to establish its monetary system, as well as to discharge its debts, upon the basis of other advanced nations. General Grant as President brought to the solution of financial problems much of that grim, hard sense which served him so well in the field. In his annual message of 1869 he urged resumption of gold payments, but added:
BY INFLATION YOU WILL BURST
UNCLE SAM: “You stupid Money-Bag there is just so much Money in you; and you can not make it any more by blowing yourself up!”
LET WELL ENOUGH ALONE, AND DON’T MAKE IT WORSE
Money is tight, but let it recover itself naturally, and then it will stand on a Sounder Basis.
Stimulants or Inflation only bring final collapse.
FROM CARTOONS BY THOMAS NAST IN “HARPER’S WEEKLY,” DECEMBER 20, 1873
“Immediate resumption, if practicable, would not be desirable. It would compel the debtor class to pay, beyond their contracts, the premium on gold at the date of their purchase, and would bring bankruptcy and ruin to thousands.”
RESUMPTION (?)
UNCLE SAM: “There is no circulation in that leg, and it’s swelling every day more and more. Mortification will set in, and I am sure my other leg will be affected. Now Dr. SHERMAN, something must be done, and quick, too.”
FROM A CARTOON BY THOMAS NAST IN “HARPER’S WEEKLY,” NOVEMBER 29, 1879
But Grant, like other Republican Presidents, set his face like a flint against further inflation. When he received from a Congress controlled by his own party the so-called “Inflation Bill” of 1874, authorizing the increase of the volume of greenbacks to $400,000,000, he promptly returned it with his veto. John Sherman, a leading member of the Senate Committee on Finance, who had been unwilling to follow McCulloch in 1865, became convinced by 1873 that the time had come for setting a definite date for specie resumption. His method was not to retire the greenbacks, but to provide a gold fund for their current redemption. It was not until the crushing Republican defeat in the Congressional elections of 1874, however, that the party was ready for action. In the short session of December a special committee of Republican senators was appointed, from whose labors emerged the Resumption Act of January 14, 1875. It was a vague and evasive measure, purposely avoiding questions upon which there were wide differences of opinion; but it contained the one salient declaration that “on and after the first day of January, 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.” It also placed power in the hands of the Secretary of the Treasury to prepare and provide for resumption.