The canvass in Ohio was then progressing for the election of a President and Members of Congress, in which I was expected, as usual, to take a part. The strange anomaly of Horace Greeley running on a Democratic ticket was enough in itself to excite opposition, especially in the southern states. The result was that General Grant, in November, 1872, was elected President by 31 states with 286 electoral votes. Greeley died after the election, and before the electors voted, so that no electoral vote was counted for him. If he had lived he would probably have received 60 electoral votes.
CHAPTER XXIV. THE PANIC OF 1873 AND ITS RESULTS. Failure of Jay Cooke and Co.—Wild Schemes "for the Relief of the People"—Congress Called Upon for Help—Finance Committee's Report for the Redemption of United States Notes in Coin—Extracts from My Speech in Favor of the Report—Bill to Fix the Amount of United States Notes—Finally Passed by the Senate and House—Vetoed by President Grant and Failure to Pass Over His Objection—General Effect Throughout the Country of the Struggle for Resumption— Imperative Necessity for Providing Some Measure of Relief.
During the first four years of General Grant's administration the financial condition of the United States was eminently prosperous. The total reduction of the national debt, from the 1st of March, 1869, to the 1st of November, 1873, was $383,629,783, the annual saving of interest resulting therefrom being $27,432,932. During this period the value of United States notes compared with coin steadily increased. The funding of the six per cent. bonds into five per cent. bonds, under the refunding act, continued at the rate of about $85,000,000 a year. The credit of the United States steadily advanced during this period, so that the Secretary of the Treasury, in his report of 1873, stated that it had not stood higher since the close of the Rebellion than it did at that time. This improvement of the public credit was accompanied with a large reduction of internal taxes and duties on imported goods. The business of the country was prosperous, the increase and extension of railroads and the development of new industries was marked, indicating great prosperity.
All this was subsequently changed by the happening of a panic in September, 1873. The cause of this was attributed to over-trading, to the expansion of credits, and to rash investment made in advance of public needs. This panic commenced by the failure of Jay Cooke & Co., of Philadelphia, an enterprising firm of high standing, then engaged in selling the bonds of the Northern Pacific Railroad Company. I was engaged at that time, with a committee of the Senate, of which William Windom was chairman, in examining many plans of public improvements, especially in the increase of facilities for water transportation at the mouth of the Mississippi river, and at the great lakes on our northern boundary, improvements since then made with great benefit to the commerce of the United States. Roscoe Conkling, of New York, was a member of that committee. We were at Buffalo when the failure of Cooke & Co. was announced. We all felt that for the present, at least, our duties as a committee were at an end. The panic spread so that in a month all industries were in a measure suspended. The wildest schemes for relief were proposed, in and out of Congress. The panic spread to the banks, which were compelled in self-defense to call in their loans, to withhold their circulating notes, and contract their business. As usual on the happening of such a panic, an appeal was made to the treasury for relief, a demand was made for an increase in the volume of the United States notes, and that the Secretary of the Treasury should use the money of the government to buy exchange.
The New York Produce Exchange applied to the Secretary of the
Treasury on the 29th of September, 1873, in resolutions, as follows:
"Whereas, The critical condition of the commercial interests of the country requires immediate relief by the removal of the block in negotiating foreign exchange; therefore be it
"Resolved, That we respectfully suggest to the Secretary of the Treasury the following plans for relief in this extraordinary emergency:
"First, That currency be immediately issued to banks or bankers, upon satisfactory evidence that gold has been placed upon special deposit in the Bank of England, by their correspondents in London, to the credit of the United States, to be used solely in purchasing commercial bills of exchange.
"Second, That the President of the United States and the Secretary of the Treasury are respectfully requested to order the immediate prepayment of the outstanding loan of the United States due January 1, 1874."
This request had, as a matter of course, to be denied. But the secretary did purchase $13,000,000 of bonds for the sinking fund, to the full extent the condition of the treasury allowed. It is difficult to realize or to convey by description the wild ideas developed by such a panic. The government for the time being is expected to provide a remedy for a condition it did not create, but, instead of aiding, the government is most likely to need aid. The revenues from importations fell off and the value of United States notes declined.