Reminiscences of Sixty Years in Public Affairs, Vol. 2

by George S. Boutwell

When I entered the Treasury Department in March, there had not been sales of gold nor purchases of bonds by the Treasury Department as a policy, and but few transactions on either side had been made by my predecessors in office. As early as the 12th day of May I commenced the purchase of bonds for the sinking fund and for the reduction of the interest-bearing public debt. The total purchases during the year 1869 amounted to something more than $88,000,000, for which there was paid in currency $102,000,000 and a margin over. At that time, the customs receipts were in gold exclusively, and the purchase of bonds could only be made by a sale of gold or by a direct purchase of bonds to be paid for in gold. Suggestions were made by bankers and others in the city of New York, and perhaps elsewhere, that the purchase of bonds should be made in gold. This suggestion was not acceptable to me, and upon the ground that the sale of gold would be limited to those who had bonds, or who could procure bonds, for the payment of gold. From the 29th of April, when the first sale of gold was made, until the 31st day of December, the sales amounted to something more than $53,000,000, and the proceeds to something over $70,000,000. The difference in the amount realized from the sale of gold and the amount paid for bonds purchased was met by the excess of receipts over the expenditures of the Government during that period.

As having some connection, and perhaps an important connection, with what is to be said hereafter touching General Grant's action in the days of September, when the speculation was going on, I think it proper to make a statement of my relations to the President. I had declined the office of Secretary of the Treasury, and on the morning of my nomination to the Senate I wrote a letter to Mr. Washburne, through whom the invitation of the President that I should accept the office was made, requesting him and urging him to say to the President that I was unwilling to accept the place. My nomination was sent to the Senate and confirmed, and as there seemed to be no alternative for me, I entered upon the duties of the office. Due in part to these circumstances, as I think, the President accepted the idea that the management of the Treasury Department was in my hands, and from first to last, during the four years that I was in his Cabinet, his acts and his conversation proceeded upon that idea. Moreover, he was influenced by a military view that an officer who was charged with the conduct of a business, or of a undertaking, should be left free to act, that he should be made responsible, and that, in case of failure, the consequences should rest upon him. It happened, and as a plan on my part, that neither the President nor the Cabinet was made responsible for what was done in the Treasury Department. Hence it was that I presented to the Cabinet but two questions. One of these was of no considerable consequence. The other related to the political effect that might follow a loan that I contemplated making upon certain terms in the year 1872, when the Presidential contest was pending. In the line of these views, it happened that I announced my purpose to purchase bonds in May, 1869, without conference either with the Cabinet or with the President. When the announcement was made, there was a slight advance in bonds. In order that the business interests of the country might not be influenced by an apprehension that changes might take place in the policy of the Department, I announced (as stated in Chapter XXXIII) at the beginning of each month the sales of gold and the purchases of bonds that were to be made during the coming month. Those announcements were sent out on the evening of Sunday, either the last Sunday of the closing month or the first Sunday of the opening month. The despatches were written by myself Sunday evening, and sent to the Assistant Treasurer at New York. A copy was given to the agent of the Associated Press, that the public might be informed in the morning of the policy for the ensuing month, and that there should be no opportunity for speculation by persons who might obtain information in advance of the general public. Unhappily, this policy was made the basis of the proceedings in New York which culminated in "Black Friday." The parties interested—I do not call them conspirators—assumed that for thirty days the policy of the department as to the sale of gold and the purchase of bonds would remain unchanged, and on that basis they proceeded to make arrangements for the advance in gold. Not satisfied with that policy, which was designed to save the business community from unnecessary apprehensions, an attempt was made to induce me to make an announcement for two or three months. Such suggestions were made in letters that I received from interested parties in the city of New York.

Speculation in gold was not all on one side. There were speculators who were anxious to break down the price of gold, and between the lines I could read the condition of the respective parties from whom I received letters. Under date of September 23, I received a letter from a prominent house in New York in which the writer said: "I am actuated to again portray to you the state of financial affairs as they now exist in this city. The speculative advance in gold has brought legitimate business almost to a standstill, owing to the apprehension of a corner, which from appearances may appear at any moment."

It did not follow that the writer of the letter was "short on gold," as the phrase is. I had, however, in my possession at the time a list of persons in New York who were supposed to be contestants, some for an advance in gold and others for a fall. The writer of the letter was among those whose names had been given to me as speculators for a fall in gold. In this connection I may say that it was no part of my policy to regulate affairs in Wall Street or State Street or Lombard Street. Until it became apparent that the operations in New York affected largely and seriously the business interests of the country, and until it became apparent that the Treasury receipts were diminished by the panic that had taken possession of the public, I refrained from any interference with those who were engaged either in forcing up or forcing down the price of gold.

Under date of the 24th day of September, I received a letter from my special and trusted correspondent in the city of New York in which I find this statement: "This has been the most dreadful day I have ever seen in this city. While gold was jumping from forty-three to sixty- one the excitement was painful. Old, conservative merchants looked aghast, nobody was in their offices, and the agony depicted on the faces of men who crowded the streets made one feel as if Gettysburg had been lost and that the rebels were marching down Broadway. Friends of the Administration openly stated that the President or yourself must have given these men to feel that you would not interfere with them or they would never dare to rush gold up so rapidly. In truth, many parties of real responsibility and friends of the Government openly declared that somebody in Washington must be in this combination."

The last sentence in this quotation unfolds the policy which had guided Gould and Fisk and their associates from April to the culmination of their undertaking, the 24th day of September. As far as I know, the effort had been directed chiefly to the support of a false theory that the President was opposed to the sale of gold, especially during the autumn months, when a large amount of currency is required, or in those days was supposed to be required, for "the moving," as it was called, of the produce of the West to the sea coast for shipment to Europe. They even went so far as to allege that the President had ordered the Secretary of the Treasury to suspend the sale of gold during the month of September, for which there was no foundation whatever. Indeed, up to the 22d of September, when I introduced the subject of the price of gold to the President, he had neither said nor done anything, except to write a letter from New York City under date of September 12, 1869, in the following words:

NEW YORK CITY, September 12, 1869.

DEAR SIR: I leave here for western Pennsylvania to-morrow morning and will not reach Washington before the middle or last of next week. Had I known before making my arrangements for starting that you would be in this city early this week, I would have remained to meet you. I am satisfied that on your arrival you will be met by the bulls and bears of Wall Street, and probably by merchants, too, to induce you to sell gold, or pay the November interest in advance, on the one side, and to hold fast on the other. The fact is, a desperate struggle is now taking place, and each party wants the Government to help him out. I write this letter to advise you of what I think you may expect, to put you on your guard.

I think, from the lights before me, I would move on without change until the present struggle is over. If you want to write me this week, my address will be Washington, Pennsylvania. I would like to hear your experience with the factions, at all events, if they give you time to write. No doubt you will have a better chance to judge than I, for I have avoided general discussion on the subject.

Yours truly,
U. S. GRANT.