Who can doubt that if he had availed himself of the power given him to refund the interest-bearing notes and certificates of the United States into bonds bearing a low rate of interest, leaving the United States notes bearing no interest to circulate as money, he would have saved the government hundreds of millions of dollars? If irredeemable notes were a national dishonor, why did he not urge their redemption in coin at some fixed period and then reissue them, and maintain their redemption by a reserve in coin?
The act of February 25, 1862, under which the original United States notes were issued, provided that:
"Such United States notes shall be received the same as coin, at their par value, in payment for any loans that may be hereafter sold or negotiated by the Secretary of the Treasury, and may be reissued from time to time as the exigencies of the public interest shall require."
This provision would have maintained the parity of United States notes at par with bonds, but under the pressure of war it was deemed best by Congress, upon the recommendation of Secretary Chase, to take from the holder of United States notes the right to present them in payment for bonds after the first day of July, 1863. If this privilege, conferred originally upon United States notes, had been renewed in 1866, with the right of reissue, bonds and notes would together have advanced to par in coin. But this is what the contractionists especially opposed. They demanded the cancellation of the notes when presented, a contraction of the currency when offering our bonds. It is easy now to perceive that a conservative use of United States notes, convertible into four per cent. bonds, would have steadily advanced both notes and bonds to par in coin. But the equally erroneous opposing opinions of contractionists and expansionists delayed for many years the coming of coin resumption upon a fixed quantity of United States notes.
Among the acts of this Congress of chief importance is the act approved July 13, 1866, to reduce taxes and provide internal revenue. The passage of such an act required much labor in both Houses, but especially so in the House of Representatives, where tax bills must originate. It was a compromise measure, and, unlike previous acts, did not reach out for new objects of taxation, but selected such articles as could bear it best, and on some of these the tax was increased. A great number of articles that enter into the common consumption of the people and are classed as necessities of life were relieved from taxation. The general purpose of the bill was in time to concentrate internal taxes on such articles as spirits, tobacco and beer. The tax on incomes was continued but limited to the 30th of June, 1870. I have already stated the marked development of internal taxation, and this measure was one of the most important in the series to produce great revenue at the least cost, and of the lightest burden to the taxpayer.
Soon after the passage of the act, approved April 12, 1866, to contract the currency, I introduced a bill, "To reduce the rate of interest on the national debt and for funding the same." In view of the passage of that act I did not expect that a funding bill would meet with success, but considered it my duty to present one, and on the 22nd of May, 1866, made a speech in support of it. The bill provided for the voluntary exchange of any of the outstanding obligations of the United States for a bond running thirty years, but redeemable at the pleasure of the United States after ten years from date, bearing interest at the rate of five per cent., payable annually. On reading that speech now I find that, though I was much more confident than others of converting our maturing securities into five per cent. bonds, the general opinion then prevailing, and acted upon by the Secretary of the Treasury, was to issue six per cent. bonds as already stated. I soon found that it was idle to press the funding bill upon Congress, when it was so much occupied with reconstruction and with Andrew Johnson. The refunding and many other measures had to be postponed until a new administration came into power. Congress had unfortunately authorized the issue of six per cent. bonds for accruing liabilities, and thus postponed refunding at a lower rate of interest.
The long and exciting session of Congress that ended on the 28th day of July, 1866, left me in feeble strength and much discouraged with the state of affairs. I had arranged with General Sherman to accompany him in an official inspection of army posts on the western plains, but did not feel at liberty to leave Washington until Congress adjourned. The letter I wrote him on the 8th of July expresses my feelings as to the political situation at that time:
"United States Senate Chamber,} "Washington, July 8, 1866. } "Dear Brother:—It is now wise for you to avoid all expressions of political opinion. Congress and the President are now drifting from each other into open warfare. Congress is not weak in what it has done, but in what it has failed to do. It has adopted no unwise or extreme measures. The civil rights bill and constitutional amendments can be defended as reasonable, moderate, and in harmony with Johnson's old position and yours. As Congress has thus far failed to provide measures to allow legal Senators and Representatives to take their seats, it has failed in a plain duty. This is its weakness, but even in this it will have the sympathy of the most of the soldiers, and the people who are not too eager to secure rebel political power. As to the President, he is becoming Tylerized. He was elected by the Union party for his openly expressed radical sentiments, and now he seeks to rend to pieces this party. There is a sentiment among the people that this is dishonor. It looks so to me. What Johnson is, is from and by the Union party. He now deserts it and betrays it. He may varnish it up, but, after all, he must admit that he disappoints the reasonable expectations of those who intrusted him with power. He may, by a coalition with copperheads and rebels, succeed, but the simple fact that nine- tenths of them who voted for him do not agree with him, and that he only controls the other tenth by power intrusted to him by the Union party, will damn him forever. Besides, he is insincere; he has deceived and misled his best friends. I know he led many to believe he would agree to the civil rights bill, and nearly all who conversed with him until within a few days believed he would acquiesce in the amendments, and even aid in securing their adoption. I almost fear he contemplates civil war. Under those circumstances you, Grant and Thomas ought to be clear of political complications. As for myself, I intend to stick to finance, but wherever I can I will moderate the actions of the Union party, and favor conciliation and restoration.
"Affectionately yours,
"John Sherman."
After the adjournment I proceeded to St. Louis, and with General Sherman and two staff officers, went by rail to Omaha. This handsome city had made great progress since my former visit. We then went by the Central Pacific railroad to Fort Kearney, as far as the rails were then laid. There our little party started through the Indian Territory, riding in light wagons with canvas covers, each drawn by two good army mules, escorted by a squad of mounted soldiers. We traveled about thirty miles a day, camping at night, sleeping in our wagons, turned into ambulances, the soldiers under shelter tents on blankets and the horses parked near by. The camp was guarded by sentinels at night, and the troopers lay with their guns close at hand. Almost every day we met Indians, but none that appeared to be hostile. In this way we traveled to Fort Laramie. The country traversed was an unbroken wilderness, in a state of nature, but singularly beautiful as a landscape. It was an open prairie, traversed by what was called the North Platte River, with scarcely water enough in it to be called a creek, with rolling hills on either side, and above, a clear sky, and air pure and bracing. It was the first time I had been so far out on the plains, and I enjoyed it beyond expression. I was soon able to eat my full share of the plain fare of bread and meat, and wanted more.