Twenty Years of Congress, Volume 2 / From Lincoln to Garfield, with a Review of the Events Which Led to the Political Revolution of 1860

by James Gillespie Blaine

The Forty-third Congress met in a period of discouragement and disaster. The financial panic which swept over New York in the preceding September (1873) was followed by deep depression throughout the country. Wrecks of business enterprises were everywhere visible, the financial markets of the world were disturbed and alarmed, doubt and hesitation filled the minds of senators and representatives. A black flag seemed to overhand the finances of the Government as well as of individuals. Plans for funding the public debt were checked, the movement for resumption was weakened. The situation gave fresh arguments to the champions of the fiat dollar. It affected commerce and diminished the revenue by arresting production and by reducing imports. The division of opinion among senators and representatives was very pronounced, as was shown in the bills introduced, in the amendments submitted, and still more significantly in the debates upon the President's message. The first definite action was upon a currency bill introduced in the Senate. As reported from the Finance Committee, the first section fixed the maximum limit of United-States notes at $382,000,000. The limit was raised to $400,000,000 on motion of Mr. Wright of Iowa, and the Senate refused to allow any clause for future reduction. This was $44,000,000 beyond the amount of legal-tender notes then in circulation. An enlargement of the circulation of the National banks was made at the same time, by which in connection with the greenbacks there might be an addition of $100,000,000 to the paper currency of the country. The two Houses differed as to details, but soon agreed upon a bill containing the general provisions proposed in the Senate.

This action of Congress followed an earnest popular demand, resulting from the distrust which had become so general in consequence of the panic. A large proportion of the business men, especially in the West and South-West, believed that an increased circulation of notes would bring great relief. At the beginning of the session of Congress, President Grant had clearly intimated that he had come to the same conclusion. He said in his annual message: "In view of the great actual contraction that has taken place in the currency, and the comparative contraction continuously going on, due to the increase of manufactures and all the industries, I do not believe there is too much of it now for the dullest period of the year. Indeed, if clearing-houses should be established, thus forcing redemption, it is a question for your consideration whether banking should not be made free, retaining all the safeguards now required to secure bill-holders." But nearly five months had elapsed since the President had expressed these views, and during that time he had come to more conservative conclusions, and he now vetoed the bill, which did not seem so radical in its provisions as his own recommendation had been. To make National banking free before compelling the banks to redeem their notes in coin, would have proved a measureless inflation, and the President wisely receded from the position assumed in his annual message.

An important Act, changing the Customs laws, was reported from the Committee on Ways and Means by Mr. Ellis H. Roberts, who had made the investigation which led to it with great care and sagacity. It received the assent of both branches, though some amendments were added to it in the Senate. It was radical in its nature. It changed methods which had prevailed from the foundation of the Government, and it has withstood all criticism since its enactment. Instead of moieties and perquisites theretofore allowed to customs officers in the chief cities for the detection of frauds upon the revenue, specific salaries were established; and the modes of procedure against violators of the law were more clearly defined, and made more efficient.

The various propositions in this Congress fairly illustrate the conflicting views on financial matters held among the people. The business depression continued. The country looked to Congress for relief, and yet did not agree upon any measures of relief. The party in the majority was held responsible for the condition of industry and trade, and the elections in the autumn of 1874 showed how wide-spread and intense was the dissatisfaction with the existing order of things. The very freedom and breadth of discussion which were essential to secure unity of action were taken as ground of censure, and the failure to provide for a return to specie payment was brought as an indictment against the majority in Congress by those who had shown the least faith in the National credit and the least regard for the National honor.

For the first time since the organization of the Republican party and its accession to power in the Union, an opposition majority was elected to the House of Representatives. The Republican leaders took warning, and agreed that before losing control of the lower House they would secure the passage of an Act for the resumption of specie payment. President Grant and Secretary Bristow were earnest in recommending a measure of that character. Personal conferences to compare views, to consolidate Republican opinion, and to induce harmony of action were held early in the second session of the Forty-third Congress. Concessions were made, a middle ground was secured, and a measure was finally perfected. The long discussion had demonstrated the difficulties of the situation. But public necessity and party interest combined to induce a sacrifice of financial theories in order that practical results might be achieved.

The bill reported to the Senate by Mr. Sherman on the 21st of December (1874) embodied the conclusions which had been reached in private conference. The next day he gave notice that he would press it to an immediate vote. Mr. Thurman and Mr. Schurz spoke of it as a party measure agreed upon in caucus. The former argued at some length against the bill. The latter stated that "with the present volume of currency it is impossible to resume and maintain redemption," and he sought unsuccessfully to secure the cancellation of legal-tender notes at the rate of $2,000,000 per month. Mr. Bayard charged that the bill was rather adverse than favorable to resumption. The Senate passed the bill on the same day by a vote of 32 to 14. Not a single Democratic member of the Senate supported it. The negative vote was Democratic, with the exception of Sprague of Rhode Island and Tipton of Nebraska.

The House did not consider the bill until the 7th of January, directly after the holidays. It was then passed by 125 ayes to 106 noes, a much closer vote than had been anticipated. The Democrats were unanimous against it, and were strengthened by the accession of some twenty Republicans. These were of two classes. Judge Kelley stood as the representative of one, deeming it unwise and premature to force specie payment at that time; the other class was represented by Mr. Dawes and the Messrs. Hoar of Massachusetts, General Hawley of Connecticut, and some others from New England, who thought the measure that came from the Senate was incomplete, in that it did not provide for specie payment soon enough, or take means sufficiently energetic to secure it at the date named. With these exceptions the Act was a Republican measure, unanimously opposed by the Democratic party.

In approving the Act President Grant took the somewhat unusual step of sending to the Senate a special message. While declaring the measure a subject of congratulation, he suggested further legislation to make it more effective. His recommendations included first an increase of the revenue; second the redemption of legal-tender notes in coin, reckoned at a premium of ten per cent in the beginning and gradually diminishing until the date named in the Act for resumption; third an addition to the facilities for coinage, in one or more of the Western cities, so as to save to the miner the cost of transporting bullion to the principal mint at Philadelphia. Congress responded only to the first of the President's recommendations.

The policy of increasing the revenue became the subject of earnest discussion for the remainder of the Forty-third Congress. The rapid repeal of taxes, in which each session of Congress had vied with the one preceding it for a series of years, had produced its legitimate result in an impending deficiency in the Treasury. This was now remedied by the Act approved March 3, 1875, to protect the sinking-fund and provide for the exigencies of the Government. This Act repealed the provision for a reduction of ten per cent in certain customs duties under the Act of June 6, 1872, which had really been passed without full consideration or due appreciation of its probably effect. The Act also increased the duties on sugars and certain other articles, raised the tax on spirits from 70 to 90 cents a gallon, and on tobacco from 20 to 24 cents per pound, and modified in many respects the regulations concerning the collection of revenue from these products.

Such was the action as originally devised for resumption of specie payment. The most remarkable feature of the bill to that end was the promptness with which it was passed, after the long period of preparatory debate in both Houses of Congress on the subject. Nearly ten years had elapsed since the war closed, and although the subject was one which constantly engaged the attention of financiers and to a large extent enlisted the interest of the public, it had never been framed into a practical legislative measure. It had now been accomplished, as might well be said, in a day. The pressure upon the Republicans, caused by the Democratic victory of the preceding autumn, was very great. The Democratic senators and representatives, though recording themselves unanimously in opposition to the measure, were not willing to risk its defeat by the parliamentary strategy of delay, as they might easily have done. Their party leaders had no faith in the measure, but they knew how troublesome was the subject; they knew that it had proved the stumbling-block in the Republican policy for years, and they were more than willing that it should be taken out of the way on the eve of their accession to the control of the House of Representatives. If the Act should prove to be successful their hostility to it might be forgotten and they could well arraign their opponents for so long neglecting to enact it. If on the other hand it should prove unsuccessful, it would remain a standing reproach to the financial policy of the Republican party. Benefits as they well knew are soon forgotten, while injuries are tenaciously remembered; and this they believed was as true of parties as of persons. In short, as the leaders of the Democracy viewed it, the Resumption Act, passed over their combined vote, could do them no harm, while the chances were that it would inure to their advantage.