I believe that the investigation, while it led to no important measure, had a good effect, not only in Danville, but throughout the south. The problem of the two races living together in the same community with equal political rights is a difficult one, and has come to be regarded by men of all parties as one that can only be settled by each state or community for itself. It is impossible for a government like ours, with limited powers, to undertake the protection of life and property in any of the states except where resistance is made to national authority. All the signs indicate that a better feeling now exists between the two races, and their common interests will lead both to divide on questions of public policy, without regard to race or color.
Among the bills passed on this Congress was one introduced by Mr. Blair, of New Hampshire, and chiefly advocated by him, to aid in the establishment and temporary support of common schools. It provided for the appropriation of $120,000,000 to be distributed among the states upon the basis of illiteracy, $15,000,000 for the current fiscal year, and a smaller sum each year for fifteen years, until the total sum was exhausted. The apportionment proposed would have given to the southern states $11,318,394 out of the $15,000,000. The money was not to be disbursed by the United States, but was to be placed in the hands of state authorities. The object designed of diminishing illiteracy in the south, especially among the freedmen, was no doubt a laudable one, but the measure proposed was so radical and burdensome, and so unequal in its apportionment among the states, that I assumed it would be defeated, but it passed the Senate by a large majority. The advocates of a strict construction of the constitution voted for it in spite of their theories. The bill, however, was defeated in the House of Representatives.
An interesting debate arose between Mr. Beck and myself, during this session, upon the question of the sinking fund, which he seemed to regard as a part of the public debt. It is, in fact, only a treasury statement of the debt to be paid each year, and the amount actually paid. In 1862, when the war was flagrant, Congress provided that one per cent. of the principal of the public debt should be paid each year as a "sinking fund." While the United States was borrowing large sums and issuing its bonds, it was folly to pay outstanding bonds, and this was not done until 1868, when the treasury was receiving more money than it disbursed. In the meantime, the treasury charged to the "sinking fund," annually, the sum of one per cent. of the amount of outstanding securities of the United States. When the receipts exceeded expenditures, so much of the balance on hand as was not needed was applied to the purchase of bonds, and such bonds were canceled and the amount paid was placed to the credit of this fund. In the general prosperity that followed, and until 1873, the sums thus credited increased so that the amount of bonds paid was equal to, if not in excess of, the annual charge against that fund, and the amount charged against it prior to 1868. When the financial panic of 1873 occurred, the revenues fell off so that they were insufficient to meet current expenditures. This prevented any credits to the sinking fund until 1878, when the pendulum swung the other way, and the fund was rapidly diminished by the bonds purchased from the surplus revenue, and credited to the fund, so that when Mr. Beck interrogated me I was able to say that the sinking fund had to its credit a considerable sum; in other words, the United States had paid its debt more rapidly than it had agreed to pay it. The term "sinking fund," as applied to the national accounts, is a misleading phrase. It is a mere statement whether we have or have not paid one per centum of the public debt each year. There is no actual fund of the kind in existence for national purposes.
Another financial question was presented at this session and before and since. The national banking act, when it passed in 1863, provided that the circulating notes of national banks should be issued for only ninety per cent. of the amount of United States bonds deposited in the treasury for their security. At that time bonds were worth in the market about fifty per cent. in coin, or par in United States notes. Soon after the war, bonds advanced far above par in coin and have been worth thirty per cent. premium. Yet, in spite of this, Congress has repeatedly refused to allow notes to be issued by national banks, to the par value of bonds deposited on security, thus limiting the amount of bank notes unreasonably. I introduced a bill early at this session to correct this. It passed the Senate, but was ignored in the House. The same result has happened at nearly every Congress since, even when the bonds were so high as to deter the issue of bank notes when they were greatly needed.
During this session a delicate question arose whether a Senator could refuse to vote when his name was called, and he was present in the Senate. The Senate being so closely divided a few Senators might, by refusing to answer to their names, suspend the business of the Senate when a quorum was present. Mr. Bayard and myself agreed that such a practice would be a breach of public duty, which the Senate might punish. Senators may retire from the Chamber, but the Senate can compel their attendance. If a case should arise where a Senator, being present, and not paired, should, without good reason, refuse to vote, he should be censured. The increase in the number of Senators makes this question one of importance, but I hope the time will never come when it practically shall arise.
The Senate is properly a very conservative body, and never yields a custom until it is demonstrated to be an abuse. The committee on appropriations is a very important one. It is always composed of experienced Senators, who are careful in making appropriations, but there are appropriations which ought not to be referred to them. Their chief duty is performed in the closing days of the session, when all business is hurried, and they have little time to enter into details. They are entirely familiar with the great appropriations for the support of the government, and can best judge in respect to them, but there are other appropriations which ought to be passed upon by committees specially appointed for specific duties, like that of the District of Columbia. No reason can be given why these appropriations should not be acted upon by such committees. It is true that the appropriation committee ought to simply report such sums as are necessary to carry into execution existing laws. That is their function, according to the rules, and that function they can perform very well in regard to such expenditures; but the expenditures of the government for the District, rivers and harbors, fortifications, pensions, and certain other objects, are not defined or regulated by law. In the case of the District of Columbia, a few officers named in the appropriation bill are provided for by law, but the great body of the expenditures is for streets, alleys and public improvement, nine-tenths of all the appropriations made for the District being, in their nature, new items not fixed by existing law.
On the 6th of May, 1884, the country was startled by the failure of the Marine National Bank of New York, an institution that had been in high credit and standing. The circumstances connected with the failure excited a great deal of interest and profound surprise. Immediately in connection with the failure of this bank the banking firm of Grant & Ward, in the city of New York, failed for a large amount. Their business was complicated with that of the Marine National Bank, and disclosures were made which not only aroused indignation but almost created a panic in the city of New York.
Almost contemporaneous with this the insolvency of the Second National Bank of New York, for a very large sum, became public, and the alleged gross misconduct of the president of that bank, John C. Eno, became a matter of public notoriety. Steps were taken by the officers and stockholders of the bank, including the father of the president, to relieve it from bankruptcy.
Also, and in connection with the failure of the Marine National Bank, there were disclosed financial operations of a strange and extraordinary character of the president of that bank, James D. Fish. All these events coming together caused much excitement and disturbance in New York. They led to a great fall of securities, to a want of confidence, and to a general run, as it is called, upon banks and banking institutions, including the savings banks. It appeared as if there were to be a general panic, a financial revulsion, and wide-reaching distress.
At that time also, and in connection with the other events, came the temporary suspension of the Metropolitan National Bank, one of the oldest, largest, and in former times considered among the best, of all the banks in the city of New York. This was partly caused by rumors and stories of large railroad operations and indebtedness of Mr. Seney, the president of the bank, which resulted in a gradual drawing upon the bank.