Reminiscences of Sixty Years in Public Affairs, Vol. 2

by George S. Boutwell

Thus was General Grant, at an early moment, and upon his own judgment, brought into full accord with the Republican Party upon the two debatable and most earnestly debated questions during Mr. Lincoln's administration—the prosecution of the war and the abolition of slavery.

And thus it is apparent that in 1868 he was in a condition, as to all matters of opinion, to accept a nomination at the hands of the Republican Party; and it is equally apparent that he was separated from the Democratic Party by a chasm wide, deep, and impassable. It is, however, true that General Grant's feelings were not intense, and in the expression of his opinions his tone was mild and his manner gentle. It often happened, also, that he did not undertake to controvert opinions and expressions with which he had no sympathy. This peculiarity may at times have led to a misunderstanding, or to a misinterpretation of his views. Upon this basis of his early impressions, and matured opinions his administrative policy was constructed.

When he became President, there was a body of American citizens, not inconsiderable in numbers, who doubted the ability of the Government to pay the war debt; there were others who advocated payment in greenbacks, or the substitution of a note not bearing interest for a bond that bore interest; and there were yet others who denied the validity of the existing obligations. All these classes, whether they were dishonest or only misled, were alike rebuked in his inaugural address. These were his words: "A great debt has been contracted in securing to us and to our posterity the Union. The payment of this debt, principal and interest, as well as the return to a specie basis, as soon as it can be accomplished without material detriment to the debtor class, or to the country at large, must be provided for. . . . To protect the national honor, every dollar of Government indebtedness should be paid in gold, unless otherwise expressly stipulated in the contract. . . .

"Let it be understood that no repudiator of one farthing of our public debt will be trusted in public place, and it will go far toward strengthening a credit which ought to be the best in the world, and will ultimately enable us to replace the debt with bonds bearing less interest than we now pay."

In the same address he asserted the ability of the country to pay the debt within the period of twenty-five years, and he also declared his purpose to secure a faithful collection of the public revenues. At the close of his administration of eight years one fifth part of the public debt had been paid, and if the system of taxation that existed in 1869 had been continued the debt would have been extinguished in less than a quarter of a century from the year 1869. In his administration, however, the crisis was passed. The ability and the disposition of the country were made so conspicuous that all honest doubts were removed, and the repudiators were shamed into silence. The redemption of the debt by the purchase of bonds in the open market strengthened the public credit, and laid a foundation for the resumption of specie payments.

General Grant's inaugural address was followed by the passage of the act of March 18, 1869, entitled "An act to strengthen the public credit." This act was a pledge to the world that the debts of the United States, unless there were in the obligations express stipulations to the contrary, would be paid in coin.

In accordance with the report of the Secretary of the Treasury, President Grant, in his annual message of December, 1869, recommended the passage of an act authorizing the funding of the public debt at a lower rate of interest.

Following this recommendation, the bill for refunding the public debt, prepared by the Secretary of the Treasury, was enacted and approved July 14, 1870.

By this act the Secretary of the Treasury was authorized to issue bonds to the amount of $200,000,000 bearing interest at the rate of 5 per cent, $300,000,000 bearing interest at the rate of 4½ per cent, and $1,000,000,000 bearing interest at the rate of 4 per cent.

Under this act, and the amendments thereto, the debt has been refunded from time to time until the average rate of interest does not now exceed 3½ per cent. Although these two important measures of administration were not prepared by General Grant, they were but the execution of his policy set forth in his inaugural address.