This resolution was the foundation of the act "to strengthen the public credit," the first act subsequently adopted in General Grant's administration. Neither this nor any other financial measure was pressed to a conclusion, as we knew that any measure that would be sanctioned by Congress would probably be vetoed by the President. This, however, did not stop the almost continuous financial debate which extended to the currency, banking, funding and taxation. The drift of opinion was in favor of resumption without contraction, and funding at low rates of interest on a coin basis. The wide breach between Congress and the President paralyzed legislation. But one vital question had been settled, that no further contraction of the currency should occur; and it was well settled, though not embodied in law, that no question would be made as to the payment of bonds in coin.
While Congress was drifting to a sound financial policy, the President and his Secretary of the Treasury were widely divergent, the former in favor of repudiation, and the latter in favor of paying and canceling all United States notes.
President Johnson, in his last annual message to Congress, on the 9th of December, 1868, substantially recommended a repudiation of the bonds of the United States, as follows:
"Upon this statement of facts it would seem but just and equitable that the six per cent. interest now paid by the government should be applied to the reduction of the principal in semi-annual installments, which in sixteen years and eight months would liquidate the entire national debt. Six per cent. in gold would, at present rates, be equal to nine per cent. in currency, and equivalent to the payment of the debt one and half times in a fraction less than seventeen years. This, in connection with the other advantages derived from their investment, would afford to the public creditors a fair and liberal compensation for the use of their capital, and with this they should be satisfied. The lessons of the past admonish the lender that it is not well to be over anxious in exacting from the borrower rigid compliance with the letter of the bond."
While the President wished to apply the interest on the United States bonds to the redemption of the principal, the Secretary of the Treasury was pressing for the restoration of the specie standard. I quote from his report to Congress, made on the same day the message of the President was sent us:
"The first and most important of these measures are those which shall bring about, without unnecessary delay, the restoration of the specie standard. The financial difficulties under which the country is laboring may be traced directly to the issue, and continuance in circulation, of irredeemable promises as lawful money. The country will not be really and reliably prosperous until there is a return to specie payments. The question of a solvent, convertible currency, underlies all the other financial and economical questions. It is, in fact, a fundamental question; and until it is settled, and settled in accordance with the teachings of experience, all attempts in other financial and economical reforms will either fail absolutely, or be but partially successful. A sound economy is the lifeblood of a commercial nation. If this is debased the whole current of its commercial life must be disordered and irregular. The starting point in reformatory legislation must be here. Our debased currency must be retired or raised to the par of specie, or cease to be lawful money, before substantial progress can be made with other reforms."
Under these circumstances, it was manifest that no wise financial legislation could be secured until General Grant should become President of the United States.
The Republican national convention met at the city of Chicago, on the 20th of May, 1868. It declared its approval of the reconstruction policy of Congress, denounced all forms of repudiation as a national crime, and pledged the national good faith to all creditors at home and abroad, to pay all public indebtedness, not only according to the letter, but the spirit, of the law. It favored the extension of the national debt over a fair period for redemption, and the reduction of the rate of interest whenever it could be honestly made. It arraigned, with severity, the treachery of Andrew Johnson, and deplored the tragic death of Abraham Lincoln. The entire resolutions were temperate in tone; they embodied the recognized policy of the Republican party, and made no issue on which Republicans were divided.
The real issue was not one of measures, but of men. The nomination of General Grant for President, and Schuyler Colfax for Vice President, upon the basis of reconstruction by loyal men, was antagonized by the nomination, by the Democratic convention, of Horatio Seymour for President, and Francis P. Blair for Vice President, upon the basis of universal amnesty, and immediate restoration to power, in the states lately in rebellion, of the men who had waged war against the government.
In this contest, Grant was the representative Union soldier of the war, and Seymour was the special representative of the opponents in the north to the war. Grant received 197 electoral votes, and Seymour 72.