I also wrote the following letter to Senator A. B. Cole, of
Portsmouth, in reply to a similar offer:
"Washington, D. C., November 11, 1879. "My Dear Sir:—Your very kind letter of the 10th inst. is received. I thank you again for your offer to support me for the Senate, but you will have seen from the letter I wrote to Colonel Dayton, that I have determined, under the circumstances stated therein, not to be a candidate, so that members may feel entirely free to follow their judgment in the selection of the Senator. I must be impartial between the several candidates.
"I thank you also for what you say about the nomination for the presidency. Such a nomination would be a very exalted honor, so much so that I ought not to do anything to promote or to defeat it. I would be very glad to get the hearty cordial support of the Ohio delegation, and that being granted I am perfectly willing to abide the decision of the national convention, and will be ready to support anyone who is nominated.
"I should be glad to see your son, and hope you will give him a letter of introduction to me.
"Very truly yours,
"John Sherman.
"Hon. A. B. Cole, Portsmouth, Ohio."
Cornell was elected Governor of New York, and with him a Republican legislature. The elections generally that fall were in favor of the Republican party, but, as both Houses of the 46th Congress were Democratic, President Hayes had to conduct executive business with a Congress not in political harmony with him until the 4th of March, 1881, when the term of Congress and of the President expired. I feel bound to say that no merely obstructive financial measures were adopted during that Congress.
The message of the President, communicated to Congress on the 1st of December, 1879, dealt with the usual topics of such a document; but, instead of commencing with our foreign relations as usual, he began by congratulating Congress on the successful execution of the resumption act and the funding of all the public debt redeemable, into bonds bearing a lower rate of interest. He recommended the suspension of the coinage of the silver dollar, and the retirement from circulation of United States notes with the capacity of legal tender. He held that the issue of such notes during the Civil War was not authorized except as a means of rescuing the country from imminent peril, and the protracted use of them as money was not contemplated by the framers of the law. While I did not concur in all the views stated by the President, especially as to the policy of retiring United States notes then in circulation, yet his general conclusions in favor of the coin standard were, in my view, sound and just. I was very willing to hold on to the progress made in making United States notes equivalent to coin rather than to attempt to secure their retirement from circulation.
In the report made by me as Secretary of the Treasury I stated my opinion that the existing law was ample to enable the department to maintain resumption upon the volume of United States notes then outstanding; but added, that in view of the large inflow of gold into the country, and the high price of public securities, it would seem to be a favorable time to invest a portion of the sinking fund in United States notes to be retired and canceled, and in this way gradually to reduce the maximum of such notes to the sum of $300,000,000, the amount named in the resumption act.
I would not make such a recommendation now, as I am convinced that United States notes based on coin in the treasury are the best form of currency yet devised, and that the volume might be gradually increased as the volume of business increases. Since resumption such notes have been maintained at par with coin by holding in the treasury coin to the amount of thirty per cent. of the notes outstanding. This coin, lying idle and yielding no interest, costs the government the interest on an equal amount of bonds, or a fraction over one per cent. on the sum of United States notes in circulation. These notes are a part of the debt of the United States, and if redeemed, must be paid by the issue of $346,000,000 of bonds. I see no reason why the people of the United States should not have the benefit of this cheap loan rather than the national banks, and there are many reasons why the issue of a like amount of notes by national banks cannot fill the place or perform the functions of United States notes. The issue of bank notes would be governed by the opinions and interest of the banks, and the amount could be increased or diminished according to their interests and without regard to the public good. As an auxiliary and supplement to United States notes, bank notes may be issued as now when amply secured by United States bonds, but it would be a dangerous experiment to confine our paper money to bank notes alone, the amount of which would depend upon the interest, hopes and fears of corporations which would be guided alone by the supposed interests of their stockholders.
There is another objection to a sole dependence on bank notes as currency: They cannot be made a legal tender either by the states or the United States, while it is settled by the Supreme Court that notes of the United States may be made a legal tender, a function that ought to belong to money.