iiiiii
PRESIDENTIAL PROBLEMS
BY
GROVER CLEVELAND
NEW YORK
THE CENTURY CO.
1904
iv
Copyright, 1904, by The Century Co.
Copyright, 1900, 1901, by
Grover Cleveland
Copyright, 1904, by
The S. S. McClure Co.
Copyright, 1904, by
The Curtis Publishing Company
Published October, 1904
The De Vinne Press
v
Copyright, 1900, 1901, by
Grover Cleveland
Copyright, 1904, by
The S. S. McClure Co.
Copyright, 1904, by
The Curtis Publishing Company
Published October, 1904
The De Vinne Press
v
PUBLISHER’S NOTE
Of the four essays comprised in this volume, two were originally delivered as addresses at Princeton University. The other two appeared first in the magazines.All have now been revised thoroughly by Mr. Cleveland, in preparation for their appearance in book form. vivii
| CHAPTER | PAGE | |
| I | The Independence of the Executive | 3 |
| II | The Government in the Chicago Strike of 1894 | 79 |
| III | The Bond Issues | 121 |
| IV | The Venezuelan Boundary Controversy | 173 |
ix
PREFACE
In considering the propriety of publishing this book, the fact has not been overlooked that the push and activity of our people’s life lead them more often to the anticipation of new happenings than to a review of events which have already become a part of the nation’s history. This condition is so naturally the result of an immense development of American enterprise that it should not occasion astonishment, and perhaps should not be greatly deprecated, so long as a mad rush for wealth and individual advantage does not stifle our good citizenship nor weaken the patriotic sentiment which values the integrity of our Government and the success of its mission immeasurably above all other worldly possessions.The belief that, notwithstanding the overweening desire among our people for personal xand selfish rewards of effort, there still exists, underneath it all, a sedate and unimpaired interest in the things that illustrate the design, the traditions, and the power of our Government, has induced me to present in this volume the details of certain incidents of national administration concerning which I have the knowledge of a prominent participant.
These incidents brought as separate topics to the foreground of agitation and discussion the relations between the Chief Executive and the Senate in making appointments to office, the vindication and enforcement of the Monroe Doctrine, the protection of the soundness and integrity of our finances and currency, and the right of the general Government to overcome all obstructions to the exercise of its functions in every part of our national domain.
Those of our people whose interest in the general features of the incidents referred to was actively aroused at the time of their occurrence will perhaps find the following pages of some value for reference or as a means of more complete information. xi
I shall do no more in advocacy of the merits of this book than to say that as a narrative of facts it has been prepared with great care, and that I believe it to be complete and accurate in every essential detail.
THE INDEPENDENCE OF THE EXECUTIVE
I
In dealing with “The Independence of the Executive,” I shall refer first of all to the conditions in which the Presidency of the United States had its origin, and shall afterward relate an incident within my own experience involving the preservation and vindication of an independent function of this high office.When our original thirteen States, actuated by “a decent respect for the opinions of mankind,” presented to the world the causes which impelled them to separate from the mother country and to cast off all allegiance to the Crown of England, they gave prominence to the declaration that “the history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute tyranny 4over these States.” This was followed by an indictment containing not less than eighteen counts or accusations, all leveled at the King and the King alone. These were closed or clenched by this asseveration: “A Prince whose character is thus marked by every act which may define a tyrant is unfit to be the ruler of a free people.” In this arraignment the English Parliament was barely mentioned, and then only as “others,” with whom the King had conspired by “giving his assent to their act of pretended legislation,” and thus giving operative force to some of the outrages which had been put upon the colonies.
It is thus apparent that in the indictment presented by the thirteen colonies they charged the King, who in this connection may properly be considered as the Chief Executive of Great Britain, with the crimes and offenses which were their justification for the following solemn and impressive decree:
We, therefore, the Representatives of the United States of America, in General Congress assembled, appealing to the Supreme Judge of the World for the rectitude of our intentions, do, in the name and by the authority of the good People of these Colonies, solemnly publish and declare that these United Colonies are, and of right ought to be, free and independent 5States; that they are absolved from all allegiance to the British Crown, and that all political connection between them and the State of Great Britain is, and ought to be, totally dissolved; and that as free and independent States they have full power to levy war, conclude peace, contract alliances, establish commerce, and do all other acts and things which independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes, and our sacred honor.To this irrevocable predicament had the thirteen States or colonies been brought by their resistance to the oppressive exercise of executive power.
In these circumstances it should not surprise us to find that when, on the footing of the Declaration of Independence, the first scheme of government was adopted for the revolted States, it contained no provision for an executive officer to whom should be intrusted administrative power and duty. Those who had suffered and rebelled on account of the tyranny of an English King were evidently chary of subjecting themselves to the chance of a repetition of their woes through an abuse of the power that might necessarily devolve upon an American President. 6
Thus, under the Articles of Confederation, “The United States of America,” without an executive head as we understand the term, came to the light; and in its charter of existence it was declared that “the articles of this Confederation shall be inviolably observed by every State, and the Union shall be perpetual.”
Let us not harbor too low an opinion of the Confederation. Under its guidance and direction the war of the Revolution was fought to a successful result, and the people of the States which were parties to it became in fact free and independent. But the Articles of Confederation lacked the power to enforce the decree they contained of inviolable observance by every State; and the union, which under their sanction was to be permanent and lasting, early developed symptoms of inevitable decay.
It thus happened that within ten years after the date of the Articles of Confederation their deficiencies had become so manifest that representatives of the people were again assembled in convention to consider the situation and to devise a plan of government that would form “a more perfect union” in place of the crumbling structure which had so lately been proclaimed as perpetual.
The pressing necessity for such action cannot 7be more forcibly portrayed than was done by Mr. Madison when, in a letter written a short time before the convention, he declared:
Our situation is becoming every day more and more critical. No money comes into the Federal treasury; no respect is paid to the Federal authority; and people of reflection unanimously agree that the existing Confederacy is tottering to its foundation. Many individuals of weight, particularly in the Eastern district, are suspected of leaning towards monarchy. Other individuals predict a partition of the States into two or more confederacies.It was at this time universally conceded that if success was to follow the experiment of popular government among the new States, the creation of an Executive branch invested with power and responsibility would be an absolutely essential factor. Madison, in referring to the prospective work of the convention, said:
A national executive will also be necessary. I have scarcely ventured to form my own opinion yet, either of the manner in which it ought to be constituted, or of the authorities with which it ought to be clothed.We know that every plan of government proposed or presented to the convention embodied in some form as a prominent feature 8the establishment of an effective Executive; and I think it can be safely said that no subject was submitted which proved more perplexing and troublesome. We ought not to consider this as unnatural. Many members of the convention, while obliged to confess that the fears and prejudices that refused executive power to the Confederacy had led to the most unfortunate results, were still confronted with a remnant of those fears and prejudices, and were not yet altogether free from the suspicion that the specter of monarchy might be concealed behind every suggestion of executive force. Others less timid were nevertheless tremendously embarrassed by a lack of definite and clear conviction as to the manner of creating the new office and fixing its limitations. Still another difficulty, which seems to have been all-pervading and chronic in the convention, and which obstinately fastened itself to the discussion of the subject, was the jealousy and suspicion existing between the large and small States. I am afraid, also, that an unwillingness to trust too much to the people had its influence in preventing an easy solution of the executive problem. The first proposal made in the convention that the President should be elected by the people was accompanied by an apologetic 9statement by the member making the suggestion that he was almost unwilling to declare the mode of selection he preferred, “being apprehensive that it might appear chimerical.” Another favored the idea of popular election, but thought it “impracticable”; another was not clear that the people ought to act directly even in the choice of electors, being, as alleged, “too little informed of personal characters in large districts, and liable to deception”; and again, it was declared that “it would be as unnatural to refer the choice of a proper character for Chief Magistrate to the people as it would to refer a trial of colors to a blind man.”
A plan was first adopted by the convention which provided for the selection of the President by the Congress, or, as it was then called, by the National Legislature. Various other plans were proposed, but only to be summarily rejected in favor of that which the convention had apparently irrevocably decided upon. There were, however, among the members, some who, notwithstanding the action taken, lost no opportunity to advocate, with energy and sound reasons, the substitution of a mode of electing the President more in keeping with the character of the office and the genius of a popular government. This fortunate persistence 10resulted in the reopening of the subject and its reference, very late in the sessions of the convention, to a committee who reported in favor of a procedure for the choice of the Executive substantially identical with that now in force; and this was adopted by the convention almost unanimously.
This imperfect review of the incidents that led up to the establishment of the office of President, and its rescue from dangers which surrounded its beginning, if not otherwise useful, ought certainly to suggest congratulatory and grateful reflections. The proposition that the selection of a President should rest entirely with the Congress, which came so near adoption, must, I think, appear to us as something absolutely startling; and we may well be surprised that it was ever favorably considered by the convention.
In the scheme of our national Government the Presidency is preëminently the people’s office. Of course, all offices created by the Constitution, and all governmental agencies existing under its sanction, must be recognized, in a sense, as the offices and agencies of the people—considered either as an aggregation constituting the national body politic, or some of its divisions. When, however, I now speak of the 11Presidency as being preëminently the people’s office, I mean that it is especially the office related to the people as individuals, in no general, local, or other combination, but standing on the firm footing of manhood and American citizenship. The Congress may enact laws; but they are inert and vain without executive impulse. The Federal courts adjudicate upon the rights of the citizen when their aid is invoked. But under the constitutional mandate that the President “shall take care that the laws be faithfully executed,” every citizen, in the day or in the night, at home or abroad, is constantly within the protection and restraint of the Executive power—none so lowly as to be beneath its scrupulous care, and none so great and powerful as to be beyond its restraining force.
In view of this constant touch and the relationship thus existing between the citizen and the Executive, it would seem that these considerations alone supplied sufficient reason why his selection should rest upon the direct and independent expression of the people’s choice. This reason is reinforced by the fact that inasmuch as Senators are elected by the State legislatures, Representatives in Congress by the votes of districts or States, and judges are appointed by the President, it is only in the selection 12of the President that the body of the American people can by any possibility act together and directly in the equipment of their national Government. Without at least this much of participation in that equipment, we could hardly expect that a ruinous discontent and revolt could be long suppressed among a people who had been promised a popular and representative government.
I do not mean to be understood as conceding that the selection of a President through electors chosen by the people of the several States, according to our present plan, perfectly meets the case as I have stated it. On the contrary, it has always seemed to me that this plan is weakened by an unfortunate infirmity. Though the people in each State are permitted to vote directly for electors, who shall give voice to the popular preference of the State in the choice of President, the voters throughout the nation may be so distributed, and the majorities given for electors in the different States may be such, that a minority of all the voters in the land can determine, and in some cases actually have determined, who the President should be. I believe a way should be devised to prevent such a result.
It seems almost ungracious, however, to find 13fault with our present method of electing a President when we recall the alternative from which we escaped, through the final action of the convention which framed the Constitution.
It is nevertheless a curious fact that the plan at first adopted, vesting in Congress the presidential election, was utterly inconsistent with the opinion of those most prominent in the convention, as well as of all thoughtful and patriotic Americans who watched for a happy result from its deliberations, that the corner-stone of the new Government should be a distinct division of powers and functions among the Legislative, Executive, and Judicial branches, with the independence of each amply secured. Whatever may have been the real reasons for giving the choice of the President to Congress, I am sure those which were announced in the convention do not satisfy us in this day and generation that such an arrangement would have secured either the separateness or independence of the Executive department. I am glad to believe this to be so palpable as to make it unnecessary for me to suggest other objections, which might subject me to the suspicion of questioning the wisdom or invariably safe motives of Congress in this relation. It is much more agreeable to acknowledge gratefully that a 14danger was avoided, and a method finally adopted for the selection of the Executive head of the Government which was undoubtedly the best within the reach of the convention.
The Constitution formed by this convention has been justly extolled by informed and liberty-loving men throughout the world. The statesman who, above all his contemporaries of the past century, was best able to pass judgment on its merits formulated an unchallenged verdict when he declared that “the American Constitution is the most wonderful work ever struck off at a given time by the brain and purpose of man.”
We dwell with becoming pride upon the intellectual greatness of the men who composed the convention which created this Constitution. They were indeed great; but the happy result of their labor would not have been saved to us and to humanity if to intellectual greatness there had not been added patriotism, patience, and, last but by no means least, forbearing tact. To these traits are we especially indebted for the creation of an Executive department, limited against every possible danger of usurpation or tyranny, but, at the same time, strong and independent within its limitations.
The Constitution declares: “The executive 15power shall be vested in a President of the United States of America,” and this is followed by a recital of the specific and distinctly declared duties with which he is charged, and the powers with which he is invested. The members of the convention were not willing, however, that the executive power which they had vested in the President should be cramped and embarrassed by any implication that a specific statement of certain granted powers and duties excluded all other executive functions; nor were they apparently willing that the claim of such exclusion should have countenance in the strict meaning which might be given to the words “executive power.” Therefore we find that the Constitution supplements a recital of the specific powers and duties of the President with this impressive and conclusive additional requirement: “He shall take care that the laws be faithfully executed.” This I conceive to be equivalent to a grant of all the power necessary to the performance of his duty in the faithful execution of the laws.
The form of Constitution first proposed to the convention provided that the President elect, before entering upon the duties of his office, should take an oath, simply declaring: “I will faithfully execute the office of President of the 16United States.” To this brief and very general obligation there were added by the convention the following words: “and will to the best of my judgment and power preserve, protect, and defend the Constitution of the United States.” Finally, the “Committee on Style,” appointed by the convention, apparently to arrange the order of the provisions agreed upon, and to suggest the language in which they would be best expressed, reported in favor of an oath in these terms: “I will faithfully execute the office of President of the United States, and will to the best of my ability preserve, protect, and defend the Constitution of the United States”; and this form was adopted by the convention without discussion, and continues to this day as the form of obligation which binds the conscience of every incumbent of our Chief Magistracy.
It is therefore apparent that as the Constitution, in addition to its specification of especial duties and powers devolving upon the President, provides that “he shall take care that the laws be faithfully executed,” and as this was evidently intended as a general devolution of power and imposition of obligation in respect to any condition that might arise relating to the execution of the laws, so it is likewise apparent 17that the convention was not content to rest the sworn obligation of the President solely upon his covenant to “faithfully execute the office of President of the United States,” but added thereto the mandate that he should preserve, protect, and defend the Constitution, to the best of his judgment and power, or, as it was afterward expressed, to the best of his ability. Thus is our President solemnly required not only to exercise every power attached to his office, to the end that the laws may be faithfully executed, and not only to render obedience to the demands of the fundamental law and executive duty, but to exert all his official strength and authority for the preservation, protection, and defense of the Constitution.
I have thus far presented considerations which while they have to do with my topic are only preliminary to its more especial and distinct discussion. In furtherance of this discussion it now becomes necessary to quote from the Constitution the following clause found among its specification of presidential duty and authority:
And he shall nominate, and by and with the advice of the Senate shall appoint ambassadors, other public ministers and consuls, judges of the Supreme 18Court, and all other officers of the United States whose appointments are not herein otherwise provided for, and which shall be established by law.This clause was the subject of a prolonged and thorough debate in Congress which occurred in the year 1789 and during the first session of that body assembled under the new Constitution. 19
II
The question discussed involved distinctly and solely the independent power of the President under the Constitution to remove an officer appointed by him by and with the advice of the Senate. The discussion arose upon a bill then before the Congress, providing for the organization of the State Department, which contained a provision that the head of the department to be created should be removable from office by the President. This was opposed by a considerable number on the ground that as the Senate coöperated in the appointment, it should also be consulted in the matter of removal; it was urged by others that the power of removal in such cases was already vested in the President by the Constitution, and that the provision was therefore unnecessary; and it was also contended that the question whether the Constitution permitted such removal or not should be left untouched by legislative action, and be determined by the courts.Those insisting upon retaining in the bill the 20clause permitting removal by the President alone, claimed that such legislation would remove all doubt on the subject, though they asserted that the absolute investiture of all executive power in the President, reinforced by the constitutional command that he should take care that the laws be faithfully executed, justified their position that the power already existed, especially in the absence of any adverse expression in the Constitution. They also insisted that the removal of subordinate officers was an act so executive in its character, and so intimately related to the faithful execution of the laws, that it was clearly among the President’s constitutional prerogatives, and that if it was not sufficiently declared in the Constitution, the omission should be supplied by the legislation proposed.
In support of these positions it was said that the participation of the Senate in the removal of executive officers would be a dangerous step toward breaking down the partitions between the different departments of the Government which had been carefully erected, and were regarded by every statesman of that time as absolutely essential to our national existence; and stress was laid upon the unhappy condition that would arise in case a removal desired by the 21President should be refused by the Senate, and he thus should be left, still charged with the responsibility of the faithful execution of the laws, while deprived of the loyalty and constancy of his subordinates and assistants, who, if resentful of his efforts for their removal, would lack devotion to his work, and who, having learned to rely upon another branch of the Government for their retention, would be invited to defiant insubordination.
At the time of this discussion the proceedings of the Senate took place behind closed doors, and its debates were not published, but its determinations upon such questions as came before it were made public.
The proceedings of the other branch of the Congress, however, were open, and we are permitted through their publication to follow the very interesting discussion of the question referred to in the House of Representatives.
The membership of that body included a number of those who had been members of the Constitutional Convention, and who, fresh from its deliberations, were necessarily somewhat familiar with its purposes and intent. Mr. Madison was there, who had as much to do as any other man with the inauguration of the convention and its successful conclusion. He was not 22only especially prominent in its deliberations, but increased his familiarity with its pervading spirit and disposition by keeping a careful record of its proceedings. In speaking of his reasons for keeping this record he says:
The curiosity I had felt during my researches into the history of the most distinguished confederacies, particularly those of antiquity, and the deficiency I found in the means of satisfying it, more especially in what related to the process, the principles, the reasons and the anticipations which prevailed in the formation of them, determined me to preserve as far as I could an exact account of what might pass in the convention while executing its trust, with the magnitude of which I was duly impressed, as I was by the gratification promised to future curiosity, by an authentic exhibition of the objects, the opinions and the reasonings from which a new system of government was to receive its peculiar structure and organization. Nor was I unaware of the value of such a contribution to the fund of materials for the history of a Constitution on which would be staked the happiness of a people great in its infancy and possibly the cause of liberty throughout the world.This important debate also gains great significance from the fact that it occurred within two years after the completion of the Constitution, and before political rancor or the temptations of partizan zeal had intervened to vex our congressional counsels.
It must be conceded, I think, that all the 23accompanying circumstances gave tremendous weight and authority to this first legislative construction of the Constitution in the first session of the first House of Representatives, and that these circumstances fully warranted Mr. Madison’s declaration during the debate:
I feel the importance of the question, and know that our decision will involve the decision of all similar cases. The decision that is at this time made will become the permanent exposition of the Constitution, and on a permanent exposition of the Constitution will depend the genius and character of the whole Government.The discussion developed the fact that from the first a decided majority were of the opinion that the Executive should have power of independent removal, whether already derived from the Constitution or to be conferred by supplementary legislation. It will be recalled that the debate arose upon the clause in a pending bill providing that the officer therein named should “be removable by the President,” and that some of the members of the House, holding that such power of removal was plainly granted to the Constitution, insisted that it would be useless and improper to assume to confer it by legislative enactment. Though a motion to strike from the bill the clause objected to had 24been negatived by a large majority, it was afterward proposed, in deference to the opinions of those who suggested that the House should go no further than to give a legislative construction to the Constitution in favor of executive removal, that in lieu of the words contained in the bill, indicating a grant of the power, there should be inserted a provision for a new appointment in case of a vacancy occurring in the following manner:
Whenever the said principal officer shall be removed from office by the President of the United States, or in any other case of vacancy.This was universally acknowledged to be a distinct and unequivocal declaration that, under the Constitution, the right of removal was conferred upon the President; and those supporting that proposition voted in favor of the change, which was adopted by a decisive majority. The bill thus completed was sent to the Senate, where, if there was opposition to it on the ground that it contained a provision in derogation of senatorial right, it did not avail; for the bill was passed by that body, though grudgingly, and, as has been disclosed, only by the vote of the Vice-President, upon an equal division of the Senate. It may not be amiss to 25mention, as adding significance to the concurrence of the House and the Senate in the meaning and effect of the clause pertaining to removal as embodied in this bill, that during that same session two other bills creating the Treasury Department and the War Department, containing precisely the same provision, were passed by both Houses.
I hope I shall be deemed fully justified in detailing at some length the circumstances that led up to a legislative construction of the Constitution, as authoritative as any surroundings could possibly make it, in favor of the constitutional right of the President to remove Federal officials without the participation or interference of the Senate.
This was in 1789. In 1886, ninety-seven years afterward, this question was again raised in a sharp contention between the Senate and the President. In the meantime, as was quite natural perhaps, partizanship had grown more pronounced and bitter, and it was at that particular time by no means softened by the fact that the party that had become habituated to power by twenty-four years of substantial control of the Government, was obliged, on the 4th of March, 1885, to make way in the executive office for a President elected by the opposite 26party. He came into office fully pledged to the letter of Civil Service reform; and passing beyond the letter of the law on that subject, he had said:
There is a class of government positions which are not within the letter of the Civil Service statute, but which are so disconnected with the policy of an administration, that the removal therefrom of present incumbents, in my opinion, should not be made during the terms for which they were appointed, solely on partizan grounds, and for the purpose of putting in their places those who are in political accord with the appointing power.The meaning of this statement is, that while, among the officers not affected by the Civil Service law, there are those whose duties are so related to the enforcement of the political policy of an administration that they should be in full accord with it, there are others whose duties are not so related, and who simply perform executive work; and these, though beyond the protection of Civil Service legislation, should not be removed merely for the purpose of rewarding the party friends of the President, by putting them in the positions thus made vacant. An adherence to this rule, based upon the spirit instead of the letter of Civil Service reform, I believe established a precedent, which has 27since operated to check wholesale removals solely for political reasons.
The declaration which I have quoted was, however, immediately followed by an important qualification, in these terms:
But many men holding such positions have forfeited all just claim to retention, because they have used their places for party purposes, in disregard of their duty to the people; and because, instead of being decent public servants, they have proved themselves offensive partizans and unscrupulous manipulators of local party management.These pledges were not made without a full appreciation of the difficulties and perplexities that would follow in their train. It was anticipated that party associates would expect, notwithstanding Executive pledges made in advance, that there would be a speedy and liberal distribution among them of the offices from which they had been inexorably excluded for nearly a quarter of a century. It was plainly seen that many party friends would be disappointed, that personal friends would be alienated, and that the charge of ingratitude, the most distressing and painful of all accusations, would find abundant voice. Nor were the difficulties overlooked that would sometimes accompany a consistent and just attempt to determine 28the cases in which incumbents in office had forfeited their claim to retention. That such cases were numerous, no one with the slightest claim to sincerity could for a moment deny.
With all these things in full view, and with an alternative of escape in sight through an evasion of pledges, it was stubbornly determined by the new Executive that the practical enforcement of the principle involved was worth all the sacrifices which were anticipated. And while it was not expected that the Senate, which was the only stronghold left to the party politically opposed to the President, would contribute an ugly dispute to a situation already sufficiently troublesome, I am in a position to say that even such a contingency, if early made manifest, would have been contemplated with all possible fortitude.
The Tenure of Office act, it will be remembered, was passed in 1867 for the express purpose of preventing removals from office by President Johnson, between whom and the Congress a quarrel at that time raged, so bitter that it was regarded by sober and thoughtful men as a national affliction, if not a scandal.
An amusing story is told of a legislator who, endeavoring to persuade a friend and colleague to aid him in the passage of a certain measure 29in which he was personally interested, met the remark that his bill was unconstitutional with the exclamation, “What does the Constitution amount to between friends?” It would be unseemly to suggest that in the heat of strife the majority in Congress had deliberately determined to pass an unconstitutional law, but they evidently had reached the point where they considered that what seemed to them the public interest and safety justified them, whatever the risk might be, in setting aside the congressional construction given to the Constitution seventy-eight years before.
The law passed in 1867 was exceedingly radical, and in effect distinctly purported to confer upon the Senate the power of preventing the removal of officers without the consent of that body. It was provided that during a recess of the Senate an officer might be suspended only in case it was shown by evidence satisfactory to the President, that the incumbent was guilty of misconduct in office or crime, or when for any reason he should become incapable or legally disqualified to perform his duties; and that within twenty days after the beginning of the next session of the Senate, the President should report to that body such suspension, with the evidence and reasons for his action in the case, 30and the name of the person designated by the President to perform temporarily the duties of the office. Then follows this provision:
And if the Senate shall concur in such suspension and advise and consent to the removal of such officer, they shall so certify to the President, who may thereupon remove said officer, and by and with the advice and consent of the Senate appoint another person to such office. But if the Senate shall refuse to concur in such suspension, such officer so suspended shall forthwith resume the functions of his office.On the 5th of April, 1869, a month and a day after President Johnson was succeeded in the Presidency by General Grant, that part of the act of 1867 above referred to, having answered the purpose for which it was passed, was repealed, and other legislation was enacted in its place. It was provided in the new statute that the President might “in his discretion,” during the recess of that body, suspend officials until the end of the next session of the Senate, and designate suitable persons to perform the duties of such suspended officer in the meantime; and that such designated persons should be subject to removal in the discretion of the President by the designation of others. The following, in regard to the effect of such suspension, 31was inserted in lieu of the provision on that subject in the law of 1867 which I have quoted:
And it shall be the duty of the President within thirty days after the commencement of each session of the Senate, except for any office which in his opinion ought not to be filled, to nominate persons to fill all vacancies in office which existed at the meeting of the Senate, whether temporarily filled or not, and also in the place of all officers suspended; and if the Senate, during such session, shall refuse to advise and consent to an appointment in the place of any suspended officer, then, and not otherwise, the President shall nominate another person as soon as practicable to said session of the Senate for said office.This was the condition of the so-called tenure of office legislation when a Democratic President was inaugurated and placed in expected coöperation with a Republican majority in the Senate—well drilled, well organized, with partizanship enough at least to insure against indifference to party advantage, and perhaps with here and there a trace of post-election irritation.
Whatever may be said as to the constitutionality of the Tenure of Office laws of 1867 and 1869, certainly the latter statute did not seem, in outside appearance, to be charged with explosive material that endangered Executive prerogative. 32It grew out of a bill for the absolute and unconditional repeal of the law of 1867 relating to removals and suspensions. This bill originated in the House of Representatives, and passed that body so nearly unanimously that only sixteen votes were recorded against it. In the Senate, however, amendments were proposed, which being rejected by the House, a committee of conference was appointed to adjust, by compromise if possible, the controversy between the two bodies. This resulted in an agreement by the committee upon the provisions of the law of 1869, as a settlement of the difficulty. In the debate in the House of Representatives on the report of the committee, great uncertainty and differences of opinion were developed as to its meaning and effect. Even the House conferees differed in their explanation of it. Members were assured that the proposed modifications of the law of 1867, if adopted, would amount to its complete repeal; and it was also asserted with equal confidence that some of its objectionable limitations upon executive authority would still remain in force. In this state of confusion and doubt the House of Representatives, which a few days before had passed a measure for unconditional repeal, with only sixteen votes against it, adopted the report 33of the conference committee with sixty-seven votes in the negative.
So far as removals following suspensions are concerned, the language of the law of 1869 certainly seems to justify the understanding that in this particular it virtually repealed the existing statute.
The provision permitting the President to suspend only on certain specified grounds was so changed as to allow him to make such suspensions “in his discretion.” The requirements that the President should report to the Senate “the evidence and reasons for his action in the case,” and making the advice and consent of the Senate necessary to the removal of a suspended officer, were entirely eliminated; and in lieu of the provision in the law of 1867 that “if the Senate shall refuse to concur in such suspension, such officer so suspended shall forthwith resume the functions of his office,” the law of 1869, after requiring the President to send to the Senate nominations to fill the place of officers who had been “in his discretion” suspended, declared “that if the Senate, during such session, shall refuse to advise and consent to an appointment in the place of any suspended officer,”—that is, shall refuse to confirm the person appointed by the President in place 34of the officer suspended,—not that “such officer so suspended shall resume the functions of his office,” but that “then, and not otherwise, the President shall nominate another person as soon as practicable to said session of the Senate for said office.”
It seems to me that the gist of the whole matter is contained in a comparison of these two provisions. Under the law of 1867 the incumbent is only conditionally suspended, still having the right to resume his office in case the Senate refuses to concur in the suspension; but under the law of 1869 the Senate had no concern with the suspension of the incumbent, nor with the discretion vested in the President in reference thereto by the express language of the statute; and the suspended incumbent was beyond official resuscitation. Instead of the least intimation that in any event he might “resume the functions of his office,” as provided in the law of 1867, it is especially declared that in case the Senate shall refuse to advise and consent to the appointment of the particular person nominated by the President in place of the suspended official, he shall nominate another person to the Senate for such office. Thus the party suspended seems to be eliminated from consideration, the Senate is 35relegated to its constitutional rights of confirming or rejecting nominations as it sees fit, and the President is reinstated in his undoubted constitutional power of removal through the form of suspension.
In addition to what is apparent from a comparison of these two statutes, it may not be improper to glance at certain phases of executive and senatorial action since the passage of the law of 1869 as bearing upon the theory that, so far as it dealt with suspensions and their effect, if it did not amount to a repeal of the law of 1867, it at least extinguished all its harmful vitality as a limitation of executive prerogative. It has been stated, apparently by authority, that President Grant within seven weeks after his inauguration on the 4th of March, 1869, sent to the Senate six hundred and eighty cases of removals or suspensions, all of which I assume were entirely proper and justifiable. I cannot tell how many of the cases thus submitted to the Senate were suspensions, nor how many of them purported to be removals; nor do I know how many nominations of new officers accompanying them were confirmed. It appears that ninety-seven of them were withdrawn before they were acted upon by the Senate; and inasmuch as the law of 1867 was in force during 36four of the seven weeks within which these removals and suspensions were submitted, it is barely possible that these withdrawals were made during the four weeks when the law of 1867 was operative, to await a more convenient season under the law of 1869. Attention should be here called, however, to the dissatisfaction of President Grant, early in his incumbency, with the complexion of the situation, even under the repealing and amendatory law of 1869. In his first annual message to the Congress in December, 1869, he complained of that statute as “being inconsistent with a faithful and efficient administration of the Government,” and recommended its repeal. Perhaps he was led to apprehend that the Senate would claim under its provisions the power to prevent the President from putting out of office an undesirable official by suspension. This is indicated by the following sentence in his message: “What faith can an Executive put in officials forced upon him, and those, too, whom he has suspended for reason?” Or it may be possible that he did not then appreciate how accommodatingly the law might be construed or enforced when the President and Senate were in political accord. However these things may be, it is important 37to observe, in considering the light in which the law of 1869 came to be regarded by both the Executive and the Senate, that President Grant did not deem it necessary afterward to renew his recommendation for its repeal, and that at no time since its enactment has its existence been permitted to embarrass executive action prior to the inauguration of a President politically opposed to the majority in the Senate.
The review which I have thus made of the creation of our national Executive office, and of certain events and incidents which interpreted its powers and functions, leads me now to a detailed account of the incident mentioned by me at the beginning as related to the general subject under discussion and in which I was personally concerned. But before proceeding further, I desire to say that any allusion I may have made, or may hereafter make, recognizing the existence of partizanship in certain quarters does not arise from a spirit of complaint or condemnation. I intend no more by such allusions than to explain and illustrate the matters with which I have to deal by surrounding conditions and circumstances. I fully appreciate the fact that partizanship follows party organization, 38that it is apt to be unduly developed in all parties, and that it often hampers the best aspirations and purposes of public life; but I hope I have reached a condition when I can recall such adverse partizanship as may have entered into past conflicts and perplexities, without misleading irritation or prejudice. 39
III
Immediately after the change of administration in 1885, the pressure began for the ousting of Republican office-holders and the substitution of Democrats in their places. While I claim to have earned a position which entitles me to resent the accusation that I either openly or covertly favor swift official decapitation for partizan purposes, I have no sympathy with the intolerant people who, without the least appreciation of the meaning of party work and service, superciliously affect to despise all those who apply for office as they would those guilty of a flagrant misdemeanor. It will indeed be a happy day when the ascendancy of party principles, and the attainment of wholesome administration, will be universally regarded as sufficient rewards of individual and legitimate party service. Much has already been accomplished in the direction of closing the door of partizanship as an entrance to public employment; and though this branch of effort in the public interest may well be still 40further extended, such extension certainly should be supplemented by earnest and persuasive attempts to correct among our people long-cherished notions concerning the ends that should be sought through political activity, and by efforts to uproot pernicious and office-rewarding political methods. I am not sure that any satisfactory progress can be made toward these results, until our good men with unanimity cease regarding politics as necessarily debasing, and by active participation shall displace the selfish and unworthy who, when uninterrupted, control party operations. In the meantime, why should we indiscriminately hate those who seek office? They may not have entirely emancipated themselves from the belief that the offices should pass with party victory; but even if this is charged against them, it can surely be said that in all other respects they are in many instances as honest, as capable, and as intelligent as any of us. There may be reasons and considerations which properly defeat their aspirations, but their applications are not always disgraceful. I have an idea that sometimes the greatest difference between them and those who needlessly abuse them and gloat over their discomfiture, consists in the fact that the office-seekers desire office, and their critics, being 41more profitably employed, do not. I feel constrained to say this much by way of defending, or at least excusing, many belonging to a numerous contingent of citizens, who, after the 4th of March, 1885, made large drafts upon my time, vitality, and patience; and I feel bound to say that in view of their frequent disappointments, and the difficulty they found in appreciating the validity of the reasons given for refusing their applications, they accepted the situation with as much good nature and contentment as could possibly have been anticipated. It must be remembered that they and their party associates had been banished from Federal office-holding for twenty-four years.I have no disposition to evade the fact that suspensions of officials holding presidential commissions began promptly and were quite vigorously continued; but I confidently claim that every suspension made was with honest intent and, I believe, in accordance with the requirements of good administration and consistent with prior executive pledges. Some of these officials held by tenures unlimited as to their duration. Among these were certain internal-revenue officers who, it seemed to me, in analogy with others doing similar work but having a limited tenure, ought to consider a like 42limited period of incumbency their proper term of office; and there were also consular officials and others attached to the foreign service who, I believe it was then generally understood, should be politically in accord with the administration.
By far the greater number of suspensions, however, were made on account of gross and indecent partizan conduct on the part of the incumbents. The preceding presidential campaign, it will be recalled, was exceedingly bitter, and governmental officials then in place were apparently so confident of the continued supremacy of their party that some of them made no pretense of decent behavior. In numerous instances the post-offices were made headquarters for local party committees and organizations and the centers of partizan scheming. Party literature favorable to the postmasters’ party, that never passed regularly through the mails, was distributed through the post-offices as an item of party service, and matter of a political character, passing through the mails in the usual course and addressed to patrons belonging to the opposite party, was withheld; disgusting and irritating placards were prominently displayed in many post-offices, and the attention of Democratic inquirers for mail matter 43was tauntingly directed to them by the postmaster; and in various other ways postmasters and similar officials annoyed and vexed those holding opposite political opinions, who, in common with all having business at public offices, were entitled to considerate and obliging treatment. In some quarters official incumbents neglected public duty to do political work, and especially in Southern States they frequently were not only inordinately active in questionable political work, but sought to do party service by secret and sinister manipulation of colored voters, and by other practices inviting avoidable and dangerous collisions between the white and colored population.
I mention these things in order that what I shall say later may be better understood. I by no means attempt to describe all the wrongdoing which formed the basis of many of the suspensions of officials that followed the inauguration of the new administration. I merely mention some of the accusations which I recall as having been frequently made, by way of illustrating in a general way certain phases of pernicious partizanship that seemed to me to deserve prompt and decisive treatment. Some suspensions, however, were made on proof of downright official malfeasance. Complaints 44against office-holders based on personal transgression or partizan misconduct were usually made to the Executive and to the heads of departments by means of letters, ordinarily personal and confidential, and also often by means of verbal communications. Whatever papers, letters, or documents were received on the subject, either by the President or by any head of department, were, for convenience of reference, placed together on department files. These complaints were carefully examined; many were cast aside as frivolous or lacking support, while others, deemed of sufficient gravity and adequately established, resulted in the suspension of the accused officials.
Suspensions instead of immediate removals were resorted to, because under the law then existing it appeared to be the only way that during a recess of the Senate an offending official could be ousted from his office, and his successor installed pending his nomination to the Senate at its next session. Though, as we have already seen, the law permitted suspensions by the President “in his discretion,” I considered myself restrained by the pledges I had made from availing myself of the discretion thus granted without reasons, and felt bound to 45make suspensions of officials having a definite term to serve, only for adequate cause.
It will be observed further on that no resistance was then made to the laws pertaining to executive removals and suspensions, on the ground of their unconstitutionality; but I have never believed that either the law of 1867 or the law of 1869, when construed as permitting interference with the freedom of the President in making removals, would survive a judicial test of its constitutionality.
Within thirty days after the Senate met in December, 1885, the nominations of the persons who had been designated to succeed officials suspended during the vacation were sent to that body for confirmation, pursuant to existing statutes.
It was charged against me by the leader of the majority in the Senate that these nominations of every kind and description, representing the suspensions made within ten months succeeding the 4th of March, 1885, numbered six hundred and forty-three. I have not verified this statement, but I shall assume that it is correct. Among the officials suspended there were two hundred and seventy-eight postmasters, twenty-eight district attorneys, and 46twenty-four marshals, and among those who held offices with no specified term there were sixty-one internal-revenue officers and sixty-five consuls and other persons attached to the foreign service.
It was stated on the floor of the Senate, after it had been in session for three months, that of the nominations submitted to that body to fill the places of suspended officials fifteen had been confirmed and two rejected.
Quite early in the session frequent requests in writing began to issue from the different committees of the Senate to which these nominations were referred, directed to the heads of the several departments having supervision of the offices to which the nominations related, asking the reasons for the suspension of officers whose places it was proposed to fill by means of the nominations submitted, and for all papers on file in their departments which showed the reasons for such suspensions. These requests foreshadowed what the senatorial construction of the law of 1869 might be, and indicated that the Senate, notwithstanding constitutional limitations, and even in the face of the repeal of the statutory provision giving it the right to pass upon suspensions by the President, was still inclined to insist, directly 47or indirectly, upon that right. These requests, as I have said, emanated from committees of the Senate, and were addressed to the heads of departments. As long as such requests were made by committees I had no opportunity to discuss the questions growing out of such requests with the Senate itself, or to make known directly to that body the position on this subject which I felt bound to assert. Therefore the replies made to committees by the different heads of departments stated that by direction of the President they declined furnishing the reasons and papers so requested, on the ground that the public interest would not be thereby promoted, or on the ground that such reasons and papers related to a purely executive act. Whatever language was used in these replies, they conveyed the information that the President had directed a denial of the requests made, because in his opinion the Senate could have no proper concern with the information sought to be obtained.
It may not be amiss to mention here that while this was the position assumed by the Executive in relation to suspensions, all the information of any description in the possession of the Executive or in any of the departments, which would aid in determining the character 48and fitness of those nominated in place of suspended officials, was cheerfully and promptly furnished to the Senate or its committees when requested.
In considering the requests made for the transmission of the reasons for suspensions, and the papers relating thereto, I could not avoid the conviction that a compliance with such requests would be to that extent a failure to protect and defend the Constitution, as well as a wrong to the great office I held in trust for the people, and which I was bound to transmit unimpaired to my successors; nor could I be unmindful of a tendency in some quarters to encroach upon executive functions, or of the eagerness with which executive concession would be seized upon as establishing precedent.
The nominations sent to the Senate remained neglected in the committees to which they had been referred; the requests of the committees for reasons and papers touching suspensions were still refused, and it became daily more apparent that a sharp contest was impending. In this condition of affairs it was plainly intimated by members of the majority in the Senate that if all charges against suspended officials were abandoned and their suspensions based entirely upon the ground that the spoils belonged 49to the victors, confirmations would follow. This, of course, from my standpoint, would have been untruthful and dishonest; but the suggestion indicated that in the minds of some Senators, at least, there was a determination to gain a partizan advantage by discrediting the professions of the President, who, for the time, represented the party they opposed. This manifestly could be thoroughly done by inducing him to turn his back upon the pledges he had made, and to admit, for the sake of peace, that his action arose solely from a desire to put his party friends in place.
Up to this stage of the controversy, not one of the many requests made for the reasons of suspensions or for the papers relating to them had been sent from the Senate itself; nor had any of them been addressed to the President. It may seem not only strange that, in the existing circumstances, the Senate should have so long kept in the background, but more strange that the Executive, constituting a coördinate branch of the Government, and having such exclusive concern in the pending differences, should have been so completely ignored. I cannot think it uncharitable to suggest in explanation that as long as these requests and refusals were confined to Senate committees 50and heads of departments, a public communication stating the position of the President in the controversy would probably be avoided; and that, as was subsequently made more apparent, there was an intent, in addressing requests to the heads of departments, to lay a foundation for the contention that not only the Senate but its committees had a right to control these heads of departments as against the President in matters relating to executive duty.
On the 17th of July, 1885, during the recess of the Senate, one George M. Duskin was suspended from the office of District Attorney for the Southern District of Alabama, and John D. Burnett was designated as his successor. The latter at once took possession of the office, and entered upon the discharge of its duties; and on the 14th of December, 1885, the Senate having in the meantime convened in regular session, the nomination of Burnett was sent to that body for confirmation. This nomination, pursuant to the rules and customs of the Senate, was referred to its Committee on the Judiciary. On the 26th of December, that committee then having the nomination under consideration, one of its members addressed a communication to the Attorney-General of the United States, requesting him, “on behalf of the Committee on 51the Judiciary of the Senate and by its direction,” to send to such member of the committee all papers and information in the possession of the Department of Justice touching the nomination of Burnett, “also all papers and information touching the suspension and proposed removal from office of George M. Duskin.” On the 11th of January, 1886, the Attorney-General responded to this request in these terms:
The Attorney-General states that he sends herewith all papers, etc., touching the nomination referred to; and in reference to the papers touching the suspension of Duskin from office, he has as yet received no direction from the President in relation to their transmission.At this point it seems to have been decided for the first time that the Senate itself should enter upon the scene as interrogator. It was not determined, however, to invite the President to answer this new interrogator, either for the protection and defense of his high office or in self-vindication. It appears to have been also decided at this time to give another form to the effort the Senate itself was to undertake to secure the “papers and information” which its Committee had been unable to secure. In pursuance of this plan the following resolution 52was adopted by the Senate in executive session on the 25th of January, 1886:
Resolved, That the Attorney-General of the United States be, and he hereby is, directed to transmit to the Senate copies of all documents and papers that have been filed in the Department of Justice since the 1st day of January, a.d. 1885, in relation to the conduct of the office of District Attorney of the United States for the Southern District of Alabama.The language of this resolution is more adroit than ingenuous. While appearing reasonable and fair upon its face, and presenting no indication that it in any way related to a case of suspension, it quickly assumes its real complexion when examined in the light of its surroundings. The requests previously made on behalf of Senate committees had ripened into a “demand” by the Senate itself. Herein is found support for the suggestion I have made, that from the beginning there might have been an intent on the part of the Senate to claim that the heads of departments, who are members of the President’s Cabinet and his trusted associates and advisers, owed greater obedience to the Senate than to their executive chief in affairs which he and they regarded as exclusively within executive functions. As to the real meaning and purpose of the resolution, a glance 53at its accompanying conditions and the incidents preceding it makes manifest the insufficiency of its disguise. This resolution was adopted by the Senate in executive session, where the entire senatorial business done is the consideration of treaties and the confirmation of nominations for office. At the time of its adoption Duskin had been suspended for more than six months, his successor had for that length of time been in actual possession of the office, and this successor’s nomination was then before the Senate in executive session for confirmation. The demand was for copies of documents and papers in relation to the conduct of the office filed since January 1, 1885, thus covering a period of incumbency almost equally divided between the suspended officer and the person nominated to succeed him. The documents and papers demanded could not have been of any possible use to the Senate in executive session, except as they had a bearing either upon the suspension of the one or the nomination of the other. But as we have already seen, the Attorney-General had previously sent to a committee of the Senate all the papers he had in his custody in any way relating to the nomination and the fitness of the nominee, whether such papers had reference 54to the conduct of the office or otherwise. Excluding, therefore, such documents and papers embraced in the demand as related to the pending nomination, and which had already been transmitted, it was plain that there was nothing left with the Attorney-General that could be included in the demand of the Senate in its executive session except what had reference to the conduct of the previous incumbent and his suspension. It is important to recall in this connection the fact that this subtle demand of the Senate for papers relating “to the conduct of the office” followed closely upon a failure to obtain “all papers and information” touching said suspension, in response to a plain and blunt request specifying precisely what was desired. 55
IV
I have referred to these matters because it seems to me they indicate the animus and intent which characterized the first stages of a discussion that involved the rights and functions of the Executive branch of the Government. It was perfectly apparent that the issue was between the President and the Senate, and that the question constituting that issue was whether or not the Executive was invested with the right and power to suspend officials without the interference of the Senate or any accountability to that body for the reasons of his action. It was also manifest if it was desired to deal with this issue directly and fairly, disembarrassed by any finesse for position, it could at any time have been easily done, if only one of the many requests for reasons for suspensions, which were sent by committees of the Senate to heads of departments, had been sent by the Senate itself to the President.Within three days after the passage by the Senate, in executive session, of the resolution 56directing the Attorney-General to transmit to that body the documents and papers on file relating to the management and conduct of the office from which Mr. Duskin had been removed, and to which Mr. Burnett had been nominated, the Attorney-General replied thereto as follows:
In response to the said resolution, the President of the United States directs me to say that the papers that were in this department relating to the fitness of John D. Burnett, recently nominated to said office, having already been sent to the Senate Committee on the Judiciary, and the papers and documents which are mentioned in the said resolution, and still remaining in the custody of this department, having exclusive reference to the suspension by the President of George M. Duskin, the late incumbent of the office of District Attorney for the Southern District of Alabama, it is not considered that the public interests will be promoted by a compliance with said resolution and the transmission of the papers and documents therein mentioned to the Senate in executive session.This response of the Attorney-General was referred to the Senate Committee on the Judiciary. Early in February, 1886, a majority of the committee made a report to the Senate, in which it seems to have been claimed that all papers—whatever may be their personal, private, or confidential character—if placed on file, or, in other words, if deposited in the office 57of the head of a department, became thereupon official papers, and that the Senate had therefore a right to their transmittal when they had reference to the conduct of a suspended official, and when that body had under advisement the confirmation of his proposed successor. Much stress was laid upon the professions made by the President of his adherence to Civil Service reform methods, and it was broadly hinted that, in the face of six hundred and forty-three suspensions from office, these professions could hardly be sincere. Instances were cited in which papers and information had been demanded and furnished in previous administrations, and these were claimed to be precedents in favor of the position assumed by the majority of the committee. Almost at the outset of the report it was declared:
The important question, then, is whether it is within the constitutional competence of either House of Congress to have access to the official papers and documents in the various public offices of the United States, created by laws enacted by themselves.In conclusion, the majority recommended the adoption by the Senate of the following resolutions:
Resolved, That the Senate hereby expresses its condemnation of the refusal of the Attorney-General, under whatever influence, to send to the Senate 58copies of papers called for by its resolution of the 25th of January and set forth in the report of the Committee on the Judiciary, as in violation of his official duty and subversive of the fundamental principles of the Government, and of a good administration thereof.The first of these resolutions contains charges which, if true, should clearly furnish grounds 59for the impeachment of the Attorney-General—if not the President under whose “influence” he concededly refused to submit the papers demanded by the Senate. A public officer whose acts are “in violation of his official duty and subversive of the fundamental principles of the Government, and of a good administration thereof,” can scarcely add anything to his predicament of guilt.
Resolved, That it is under these circumstances the duty of the Senate to refuse its advice and consent to proposed removals of officers, the documents and papers in reference to the supposed official or personal misconduct of whom are withheld by the Executive or any head of a department when deemed necessary by the Senate and called for in considering the matter.
Resolved, That the provision of Section 1754 of the Revised Statutes, declaring that persons honorably discharged from the military or naval service by reason of disability resulting from wounds or sickness incurred in the line of duty shall be preferred for appointment to civil offices provided they are found to possess the business capacity necessary for the proper discharge of the duties of such offices, ought to be faithfully and fully put in execution, and that to remove or to propose to remove any such soldier whose faithfulness, competency, and character are above reproach, and to give place to another who has not rendered such service, is a violation of the spirit of the law and of the practical gratitude the people and the Government of the United States owe to the defenders of constitutional liberty and the integrity of the Government.
The second resolution has the merit of honesty in confessing that the intent and object of the demand upon the Attorney-General was to secure the demanded papers and documents for the purpose of passing upon the President’s reasons for suspension. Beyond this, the declaration it contains, that it was the “duty of the Senate to refuse its advice and consent to proposed removals of officers” when the papers and documents relating to their “supposed official or personal misconduct” were withheld, certainly obliged the Senate, if the resolution should be adopted, and if the good faith of that body in the controversy should be assumed, to reject or ignore all nominations made to succeed suspended officers unless the documents and papers upon which the suspension was based were furnished and the Senate was thus given an opportunity to review and reverse 60or confirm the President’s executive act, resting, by the very terms of existing law, “in his discretion.”
The third resolution is grandly phrased, and its sentiment is patriotic, noble, and inspiriting. Inasmuch, however, as the removal of veteran soldiers from office did not seem to assume any considerable prominence in the arraignment of the administration, the object of the resolution is slightly obscure, unless, as was not unusual in those days, the cause of the old soldier was impressed into the service of the controversy for purposes of general utility.
A minority report was subsequently submitted, signed by all the Democratic members of the committee, in which the allegations of the majority report were sharply controverted. It was therein positively asserted that no instance could be found in the practice of the Government whose similarity in its essential features entitled it to citation as an authoritative precedent; and that neither the Constitution nor the existing law afforded any justification for the action of the Senate in the promises.
These two reports, of course, furnished abundant points of controversy. About the time of their submission, moreover, another 61document was addressed to the Senate, which, whatever else may be said of it, seems to have contributed considerably to the spirit and animation of the discussion that ensued. This was a message from the President, in which his position concerning the matter in dispute was defined. In this communication the complete and absolute responsibility of the President for all suspensions and the fact that the Executive had been afforded no opportunity to speak for himself was stated in the following terms:
Though these suspensions are my executive acts based upon considerations addressed to me alone, and for which I am wholly responsible, I have had no invitation from the Senate to state the position which I have felt constrained to assume in relation to the same, or to interpret for myself my acts and motives in the premises. In this condition of affairs I have forborne addressing the Senate upon the subject, lest I might be accused of thrusting myself unbidden upon the attention of that body.This statement was accompanied by the expression of a hope that the misapprehension of the Executive position, indicated in the majority report just presented and published, might excuse his then submitting a communication. He commented upon the statement in the report that “the important question, then, is 62whether it is within the constitutional competence of either House of Congress to have access to the official papers and documents in the various public offices of the United States, created by laws enacted by themselves,” by suggesting that though public officials of the United States might be created by laws enacted by the two Houses of Congress, this fact did not necessarily subject their offices to congressional control, but, on the contrary, that “these instrumentalities were created for the benefit of the people, and to answer the general purposes of government under the Constitution and the laws; and that they are unencumbered by any lien in favor of either branch of Congress growing out of their construction, and unembarrassed by any obligation to the Senate as the price of their creation.” While not conceding that the Senate had in any case the right to review Executive action in suspending officials, the President disclaimed any intention to withhold official papers and documents when requested; and as to such papers and documents, he expressed his willingness, because they were official, to continue, as he had theretofore done in all cases, to lay them before the Senate without inquiry as to the use to be made of them, and relying upon the Senate for their legitimate 63utilization. The proposition was expressly denied, however, that papers and documents inherently private or confidential, addressed to the President or a head of department, having reference to an act so entirely executive in its nature as the suspension of an official, and which was by the Constitution as well as by existing law placed within the discretion of the President, were changed in their nature and instantly became official when placed for convenience or for other reasons in the custody of a public department. The contention of the President was thus stated:
There is no mysterious power of transmutation in departmental custody, nor is there magic in the undefined and sacred solemnity of departmental files. If the presence of these papers in the public office is a stumbling-block in the way of the performance of senatorial duty, it can be easily removed.The Senate’s purposes were characterized in the message as follows:
The requests and demands which by the score have for nearly three months been presented to the different departments of the Government, whatever may be their form, have but one complexion. They assume the right of the Senate to sit in judgment upon the exercise of my exclusive discretion and Executive function, for which I am solely responsible to 64the people from whom I have so lately received the sacred trust of office. My oath to support and defend the Constitution, my duty to the people who have chosen me to execute the powers of their great office and not relinquish them, and my duty to the chief magistracy which I must preserve unimpaired in all its dignity and vigor, compel me to refuse compliance with these demands.This was immediately supplemented by the following concession of the independent and unlimited power of the Senate in the matter of confirmation:
To the end that the service may be improved, the Senate is invited to the fullest scrutiny of the persons submitted to them for public office, in recognition of the constitutional power of that body to advise and consent to their appointment. I shall continue, as I have thus far done, to furnish, at the request of the confirming body, all the information I possess touching the fitness of the nominees placed before them for their action, both when they are proposed to fill vacancies and to take the place of suspended officials. Upon a refusal to confirm, I shall not assume the right to ask the reasons for the action of the Senate nor question its determination. I cannot think that anything more is required to secure worthy incumbents in public office than a careful and independent discharge of our respective duties within their well-defined limits.As it was hardly concealed that by no means the least important senatorial purpose in the 65pending controversy was to discredit the Civil Service reform pledges and professions of the Executive, this issue was thus distinctly invited at the close of the message:
Every pledge I have made by which I have placed a limitation upon my exercise of executive power has been faithfully redeemed. Of course the pretense is not put forth that no mistakes have been committed; but not a suspension has been made except it appeared to my satisfaction that the public welfare would be promoted thereby. Many applications for suspension have been denied, and an adherence to the rule laid down to govern my action as to such suspensions has caused much irritation and impatience on the part of those who have insisted upon more changes in the offices.The temper and disposition of the Senate may be correctly judged, I think, from the remarks made upon the presentation of this message by the chairman of the Committee on the Judiciary and the acknowledged leader of the majority. On a formal motion that the message be printed and lie upon the table, he moved as an amendment that it be referred to the committee of which he was chairman, and said:
The pledges I have made were made to the people, and to them I am responsible for the manner in which they have been redeemed. I am not responsible to the Senate, and I am unwilling to submit my actions and official conduct to them for judgment.
There are no grounds for an allegation that the fear of being found false to my professions influences me in declining to submit to the demands of the Senate. I have not constantly refused to suspend officials and thus incurred the displeasure of political friends, and yet wilfully broken faith with the people, for the sake of being false to them.
Neither the discontent of party friends nor the allurements, constantly offered, of confirmation of appointees conditioned upon the avowal that suspensions have been made on party grounds alone, nor the threat proposed in the resolutions now before the 66Senate that no confirmation will be made unless the demands of that body be complied with, are sufficient to discourage or deter me from following in the way which I am convinced leads to better government for the people.
I merely wish to remark, in moving to refer this document to the Committee on the Judiciary, that it very vividly brought to my mind the communications of King Charles I to the Parliament, telling them what, in conducting their affairs, they ought to do and ought not to do; and I think I am safe in saying that it is the first time in the history of the republican United States that any President of the United States has undertaken to interfere with the deliberations of either House of Congress on questions pending before them, otherwise than by messages on the state of the Union which the Constitution commands him to make from time to time. This message is devoted simply to a question for the Senate itself, in regard to itself, that it has under consideration. That is its singularity. I think it will 67strike reflecting people in this country as somewhat extraordinary—if in this day of reform anything at all can be thought extraordinary.King Charles I fared badly at the hands of the Parliament; but it was most reassuring to know that, after all said and done, the Senate of the United States was not a bloodthirsty body, and that the chairman of its Committee on the Judiciary was one of the most courteous and amiable of men—at least when outside of the Senate.
The debate upon the questions presented by the report and resolutions recommended by the majority of the committee, and by the minority report and the presidential message, occupied almost exclusively the sessions of the Senate for over two weeks. More than twenty-five Senators participated, and the discussion covered such a wide range of argument that all considerations relevant to the subject, and some not clearly related to it, seem to have been presented. At the close of the debate, the resolution condemning the Attorney-General for withholding the papers and documents which the Senate had demanded was passed by thirty-two votes in the affirmative and twenty-five in the negative; the next resolution, declaring it to be the duty of the Senate to refuse its advice 68and consent to proposed removals of officers when papers and documents in reference to their alleged misconduct were withheld, was adopted by a majority of only a single vote; and the proclamation contained in the third resolution, setting forth the obligations of the Government and its people to the veterans of the civil war, was unanimously approved, except for one dissenting voice.
The controversy thus closed arose from the professed anxiety of the majority in the Senate to guard the interests of an official who was suspended from office in July, 1885, and who was still claimed to be in a condition of suspension. In point of fact, however, that official’s term of office expired by limitation on the 20th of December, 1885—before the demand for papers and documents relating to his conduct in office was made, before the resolutions and reports of the Committee on the Judiciary were presented, and before the commencement of the long discussion in defense of the right of a suspended incumbent. This situation escaped notice in Executive quarters, because the appointee to succeed the suspended officer having been actually installed and in the discharge of the duties of the position for more than six months, and his nomination having been sent 69to the Senate very soon after the beginning of its session, the situation or duration of the former incumbent’s term was not kept in mind. The expiration of his term was, however, distinctly alleged in the Senate on the second day of the discussion, and by the first speaker in opposition to the majority report. The question of suspension or removal was therefore eliminated from the case and the discussion as related to the person suspended continued as a sort of post-mortem proceeding. Shortly after the resolutions of the committee were passed, the same person who superseded the suspended and defunct officer was again nominated to succeed him by reason of the expiration of his term; and this nomination was confirmed.
At last, after stormy weather, Duskin, the suspended, and Burnett, his successor, were at rest. The earnest contention that beat about their names ceased, and no shout of triumph disturbed the supervening quiet. 70
V
I have thus attempted, after fourteen years of absolute calm, to recount the prominent details of the strife; and I hope that interest in the subject is still sufficient to justify me in a further brief reference to some features of the dispute and certain incidents that followed it, which may aid to a better appreciation of its true character and motive.Of the elaborate speeches made in support of the resolutions and the committee’s majority report, seven dealt more or less prominently with the President’s Civil Service reform professions and his pledges against the removal of officials on purely partizan grounds. It seems to have been assumed that these pledges had been violated. At any rate, without any evidence worthy of the name, charges of such violation ranged all the way from genteel insinuation to savage accusation. Senators who would have stoutly refused to vote for the spoils system broadly intimated or openly declared that if suspensions had been made confessedly on 71partizan grounds they would have interposed no opposition. The majority seem to have especially admired and applauded the antics of one of their number, who, in intervals of lurid and indiscriminate vituperation, gleefully mingled ridicule for Civil Service reform with praise of the forbidding genius of partizan spoils. In view of these deliverances and as bearing upon their relevancy, as well as indicating their purpose, let me again suggest that the issue involved in the discussion as selected by the majority of the Committee on the Judiciary, and distinctly declared in their report, was whether, as a matter of right, or, as the report expresses it, as within “constitutional competence,” either House of Congress should “have access to the official papers and documents in the various public offices of the United States, created by laws enacted by themselves.” It will be readily seen that if the question was one of senatorial right, the President’s Civil Service reform pledges had no honest or legitimate place in the discussion.
The debate and the adoption of the resolutions reported by the committee caused no surrender of the Executive position. Nevertheless, confirmations of those nominated in place of suspended officers soon began, and I cannot 72recall any further embarrassment or difficulty on that score. I ought to add, however, that in many cases, at least, these confirmations were accompanied by reports from the committee to which they had been referred, stating that the late incumbent had been suspended for “political reasons,” or on account of “offensive partizanship,” or for a like reason, differently expressed, and that nothing was alleged against them affecting their personal character. If the terms thus used by the committee in designating causes for suspension mean that the persons suspended were guilty of offensive partizanship or political offenses, as distinguished from personal offenses and moral or official delinquencies, I am satisfied with the statement. And here it occurs to me to suggest that if offenses and moral or official delinquencies, not partizan in their nature, had existed, they would have been subjects for official inspection and report, and such reports, being official documents, would have been submitted to the committee or to the Senate, according to custom, and would have told their own story and excluded committee comment.
It is worth recalling, when referring to committee reports on nomination, that they belong to the executive business of the Senate, and are, 73therefore, among the secrets of that body. Those I have mentioned, nevertheless, were by special order made public, and published in the proceedings of the Senate in open session. This extraordinary, if not unprecedented, action, following long after the conclusion of the dispute, easily interprets its own intent, and removes all covering from a design to accomplish partizan advantage. The declaration of the resolutions that it was the duty of the Senate “to refuse its advice and consent to the proposed removal of officers” when the papers and documents relating to their supposed misconduct were withheld, was abandoned, and the irrevocable removal of such officers by confirmation of their successors was entered upon, with or without the much-desired papers and documents, and was supplemented by the publication of committee reports, from which the secrecy of the executive session had been removed, to the end that, pursuant to a fixed determination, an unfavorable senatorial interpretation might be publicly given to the President’s action in making suspensions.
I desire to call attention to one other incident connected with the occurrences already narrated. On the 14th of December, 1885,—prior to the first request or demand upon any 74executive department relating to suspensions, and of course before any controversy upon the subject arose,—a bill was introduced in the Senate by one of the most distinguished and able members of the majority in that body, and also a member of its Committee on the Judiciary, for the total and complete repeal of the law of 1869, which, it will be remembered, furnished the basis for the contention we have considered. This repealing bill was referred to the Senate Committee on the Judiciary, where it slumbered until the 21st of June, 1886,—nearly three months after the close of the contention,—when it was returned to the Senate with a favorable report, the chairman of the committee alone dissenting. When the bill was presented for discussion, the Senator who introduced it explained its object as follows:
This bill repeals what is left of what is called the Tenure of Office act, passed under the administration of Andrew Johnson, and as a part of the contest with that President. It leaves the law as it was from the beginning of the Government until that time, and it repeals the provision which authorizes the suspension of civil officers and requires the submission of that suspension to the Senate.On a later day, in discussing the bill, he said, after referring to the early date of its introduction: 75
It did not seem to me to be quite becoming to ask the Senate to deal with this general question while the question which arose between the President and the Senate as to the interpretation and administration of the existing law was pending. I thought as a party man that I had hardly the right to interfere with the matter which was under the special charge of my honorable friend from Vermont, by challenging a debate upon the general subject from a different point of view. This question has subsided and is past, and it seems to me now proper to ask the Senate to vote upon the question whether it will return to the ancient policy of the Government, to the rule of public conduct which existed from 1789 until 1867, and which has practically existed, notwithstanding the condition of the statute-book, since the accession to power of General Grant on the 4th of March, 1869.The personnel of the committee which reported favorably upon this repealing bill had not been changed since all the members of it politically affiliating with the majority in the Senate joined in recommending the accusatory report and resolutions, which, when adopted, after sharp and irritating discussion, caused the question between the President and the Senate, in the language of the introducer of the repealing bill, to “subside.”
This repealing act passed the Senate on the 17th of December, 1886, by thirty affirmative votes against twenty-two in the negative. A short time afterward it passed in the House of 76Representatives by a majority of one hundred and five.
Thus was an unpleasant controversy happily followed by an expurgation of the last pretense of statutory sanction to an encroachment upon constitutional Executive prerogatives, and thus was a time-honored interpretation of the Constitution restored to us. The President, freed from the Senate’s claim of tutelage, became again the independent agent of the people, representing a coördinate branch of their Government, charged with responsibilities which, under his oath, he ought not to avoid or divide with others, and invested with powers, not to be surrendered, but to be used, under the guidance of patriotic intention and an unclouded conscience. 77
78
79
THE GOVERNMENT IN THE CHICAGO STRIKE OF 1894
I
The President inaugurated on the fourth day of March, 1893, and those associated with him as Cabinet officials, encountered, during their term of executive duty, unusual and especially perplexing difficulties. The members of that administration who still survive, in recalling the events of this laborious service, cannot fail to fix upon the years 1894 and 1895 as the most troublous and anxious of their incumbency. During those years unhappy currency complications compelled executive resort to heroic treatment for the preservation of our nation’s financial integrity, and forced upon the administration a constant, unrelenting struggle for sound money; a long and persistent executive effort to accomplish beneficent and satisfactory tariff reform so nearly miscarried as to bring depression and disappointment 80to the verge of discouragement; and it was at the close of the year 1895 that executive insistence upon the Monroe Doctrine culminated in a situation that gave birth to solemn thoughts of war. Without attempting to complete the list of troubles and embarrassments that beset the administration during these luckless years, I have reserved for separate and more detailed treatment one of its incidents not yet mentioned, which immensely increased executive anxiety and foreboded the most calamitous and far-reaching consequences.In the last days of June, 1894, a very determined and ugly labor disturbance broke out in the city of Chicago. Almost in a night it grew to full proportions of malevolence and danger. Rioting and violence were its early accompaniments; and it spread so swiftly that within a few days it had reached nearly the entire Western and Southwestern sections of our country. Railroad transportation was especially involved in its attacks. The carriage of United States mails was interrupted, interstate commerce was obstructed, and railroad property was riotously destroyed.
This disturbance is often called “The Chicago Strike.” It is true that its beginning was in that city; and the headquarters of those who 81inaugurated it and directed its operations were located there; but the name thus given to it is an entire misnomer so far as it applies to the scope and reach of the trouble. Railroad operations were more or less affected in twenty-seven States and Territories; and in all these the interposition of the general Government was to a greater or less extent invoked.
This wide-spread trouble had its inception in a strike by the employees of the Pullman Palace Car Company, a corporation located and doing business at the town of Pullman, which is within the limits of the city of Chicago. This company was a manufacturing corporation—or at least it was not a railroad corporation. Its main object was the operation and running of sleeping- and parlor-cars upon railroads under written contracts; but its charter contemplated the manufacture of cars as well; and soon after its incorporation it began the manufacture of its own cars and, subsequently, the manufacture of cars for the general market.
The strike on the part of the employees of this company began on the eleventh day of May, 1894, and was provoked by a reduction of wages. 82
The American Railway Union was organized in the summer of 1893. It was professedly an association of all the different classes of railway employees. In its scope and intent it was the most compact and effective organization of the kind ever attempted. Its purpose was a thorough unification of defensive and offensive effort among railway employees under one central direction, and the creation of a combination embracing all such employees, which should make the grievances of any section of its membership a common cause. Those prominent in this project estimated that various other organizations of railroad employees then existing had a membership of 102,000 in the United States and neighboring countries; and they claimed that these brotherhoods, because of divided councils and for other reasons, were ineffective, and that nearly 1,000,000 railroad employees still remained unorganized.
The wonderful growth of this new combination is made apparent by the fact that between the month of August, 1893, and the time it became involved in the Pullman strike, in June, 1894, it had enrolled nearly 150,000 members.
The employees of the Pullman Palace Car Company could not on any reasonable and 83consistent theory be regarded as eligible to membership in an organization devoted to the interests of railway employees; and yet, during the months of March, April, and May, 1894, it appears that nearly 4000 of these employees were enrolled in the American Railway Union.
This, to say the least of it, was an exceedingly unfortunate proceeding, since it created a situation which implicated in a comparatively insignificant quarrel between the managers of an industrial establishment and their workmen the large army of the Railway Union. It was the membership of these workmen in the Railway Union, and the union’s consequent assumption of their quarrel, that gave it the proportions of a tremendous disturbance, paralyzing the most important business interests, obstructing the functions of the Government, and disturbing social peace and order....
No injury to the property of the Pullman Palace Car Company was done or attempted while the strike was confined to its employees; and during that time very little disorder of any kind occurred.
It so happened, however, that in June, 1894, after the strike at Pullman had continued for about one month, a regular stated convention 84of the American Railway Union was held in the city of Chicago, which was attended by delegates from local branches of the organization in different States, as well as by representatives of its members among the employees of the Pullman Palace Car Company. At this convention the trouble at Pullman was considered, and after earnest efforts on the part of the Railway Union to bring about a settlement, a resolution was, on the twenty-second day of June, passed by the convention, declaring that unless the Pullman Palace Car Company should adjust the grievances of its employees before noon of the twenty-sixth day of June, the members of the American Railway Union would, after that date, refuse to handle Pullman cars and equipment.
The twenty-sixth day of June arrived without any change in the attitude of the parties to the Pullman controversy; and thereupon the order made by the American Railway Union forbidding the handling of Pullman cars, became operative throughout its entire membership.
At this time the Pullman Palace Car Company was furnishing drawing-room and sleeping-car accommodations to the traveling public under contracts with numerous railway companies, 85and was covering by this service about one hundred and twenty-five thousand miles of railway, or approximately three fourths of all the railroad mileage of the country. The same railroad companies which had contracted to use these Pullman cars upon their lines had contracts with the United States Government for the carriage of mails, and were, of course, also largely engaged in interstate commerce. It need hardly be said that, of necessity, the trains on which the mails were carried and which served the purpose of interstate commerce were, very generally, those to which the Pullman cars were also attached.
The president of the Railway Union was one Eugene V. Debs. In a sworn statement afterward made he gave the following description of the results of the interference of the union in the Pullman dispute:
The employees, obedient to the order of the convention, at once, on the 26th, refused to haul Pullman cars. The switchmen, in the first place, refused to attach a Pullman car to a train, and that is where the trouble began; and then, when a switchman would be discharged for that, they would all simultaneously quit, as they had agreed to do. One department after another was involved until the Illinois Central was practically paralyzed, and the Rock Island and other roads in their turn. Up to the first 86day of July, or after the strike had been in progress five days, the railway managers, as we believe, were completely defeated. Their immediate resources were exhausted, their properties were paralyzed, and they were unable to operate their trains. Our men were intact at every point, firm, quiet, and yet determined, and no sign of violence or disorder anywhere. That was the condition on the thirtieth day of June and the first day of July.The officers of the Railway Union from their headquarters in the city of Chicago gave directions for the maintenance and management of the strike, which were quickly transmitted to distant railroad points and were there promptly executed. As early as the 28th of June, two days after the beginning of the strike ordered by the Railway Union at Chicago, information was received at Washington from the Post-Office Department that on the Southern Pacific System, between Portland and San Francisco, Ogden and San Francisco, and Los Angeles and San Francisco, the mails were completely obstructed, and that the strikers refused to permit trains to which Pullman cars were attached to run over the lines mentioned. Thereupon Attorney-General Olney immediately sent the following telegraphic despatch to the United States district attorneys in the State of California: 87
See that the passage of regular trains, carrying United States mails in the usual and ordinary way, as contemplated by the act of Congress and directed by the Postmaster-General, is not obstructed. Procure warrants or any other available process from United States courts against any and all persons engaged in such obstructions, and direct the marshal to execute the same by such number of deputies or such posse as may be necessary.On the same day, and during a number of days immediately following, complaints of a similar character, sometimes accompanied by charges of forcible seizure of trains and other violent disorders, poured in upon the Attorney-General from all parts of the West and Southwest. These complaints came from post-office officials, from United States marshals and district attorneys, from railroad managers, and from other officials and private citizens. In all cases of substantial representation of interference with the carriage of mails, a despatch identical with that already quoted was sent by the Attorney-General to the United States district attorneys in the disturbed localities; and this was supplemented, whenever necessary, by such other prompt action as the different emergencies required.
I shall not enter upon an enumeration of all 88the disorders and violence, the defiance of law and authority, and the obstructions of national functions and duties, which occurred in many localities as a consequence of this labor contention, thus tremendously reinforced and completely under way. It is my especial purpose to review the action taken by the Government for the maintenance of its own authority and the protection of the interests intrusted to its keeping, so far as they were endangered by this disturbance; and I do not intend to specifically deal with the incidents of the strike except in so far as a reference to them may be necessary to show conditions which not only justified but actually obliged the Government to resort to stern and unusual measures in the assertion of its prerogatives.
Inasmuch, therefore, as the city of Chicago was the birthplace of the disturbance and the home of its activities, and because it was the field of its most pronounced and malign manifestations, as well as the place of its final extinction, I shall meet the needs of my subject if I supplement what has been already said by a recital of events occurring at this central point. In doing this, I shall liberally embody documents, orders, instructions, and reports which I hope will not prove tiresome, since they 89supply the facts I desire to present, at first hand and more impressively than they could be presented by any words of mine.
Owing to the enforced relationship of Chicago to the strike which started within its borders, and because of its importance as a center of railway traffic, Government officials at Washington were not surprised by the early and persistent complaints of mail and interstate commerce obstructions which reached them from that city. It was from the first anticipated that this would be the seat of the most serious complications, and the place where the strong arm of the law would be most needed. In these circumstances it would have been a criminal neglect of duty if those charged with the protection of governmental agencies and the enforcement of orderly obedience and submission to Federal authority, had been remiss in preparations for any emergency in that quarter.
On the thirtieth day of June the district attorney at Chicago reported by telegraph that mail trains in the suburbs of Chicago were, on the previous night, stopped by strikers, that an engine had been cut off and disabled, and that conditions were growing more and more likely to culminate in the stoppage of all trains; and he recommended that the marshal be authorized 90to employ a force of special deputies who should be placed on trains to protect mails and detect the parties guilty of such interference. In reply to this despatch Attorney-General Olney on the same day authorized the marshal to employ additional deputies as suggested, and designated Edwin Walker, an able and prominent attorney in Chicago, as special counsel for the Government, to assist the district attorney in any legal proceedings that might be instituted. He also notified the district attorney of the steps thus taken, and enjoined upon him that “action ought to be prompt and vigorous,” and also directed him to confer with the special counsel who had been employed. In a letter of the same date addressed to this special counsel, the Attorney-General, in making suggestions concerning legal proceedings, wrote: “It has seemed to me that if the rights of the United States were vigorously asserted in Chicago, the origin and center of the demonstration, the result would be to make it a failure everywhere else, and to prevent its spread over the entire country”; and in that connection he indicated that it might be advisable, instead of relying entirely upon warrants issued under criminal statutes against persons actually guilty of the offense of obstructing 91United States mails, to apply to the courts for injunctions which would restrain and prevent any attempt to commit such offense. This suggestion contemplated the inauguration of legal proceedings in a regular and usual way to restrain those prominently concerned in the interference with the mails and the obstruction of interstate commerce, basing such proceedings on the proposition that, under the Constitution and laws, these subjects were in the exclusive care of the Government of the United States, and that for their protection the Federal courts were competent under general principles of law to intervene by injunction; and on the further ground that under an act of Congress, passed July 2, 1890, conspiracies in restraint of trade or commerce among the several States were declared to be illegal, and the circuit courts of the United States were therein expressly given jurisdiction to prevent and restrain such conspiracies.
On the first day of July the district attorney reported to the Attorney-General that he was preparing a bill of complaint to be presented to the court the next day, on an application for an injunction. He further reported that very little mail and no freight was moving, that the marshal 92was using all his force to prevent riots and the obstruction of tracks, and that this force was clearly inadequate. On the same day the marshal reported that the situation was desperate, that he had sworn in over four hundred deputies, that many more would be required to protect mail trains, and that he expected great trouble the next day. He further expressed the opinion that one hundred riot guns were needed.
Upon the receipt of these reports, and anticipating an attempt to serve injunctions on the following day, the Attorney-General immediately sent a despatch to the district attorney directing him to report at once if the process of the court should be resisted by such force as the marshal could not overcome, and suggesting that the United States judge should join in such report. He at the same time sent a despatch to the special counsel requesting him to report his view of the situation as early as the forenoon of the next day.
In explanation of these two despatches it should here be said that the desperate character of this disturbance was not in the least underestimated by executive officials at Washington; and it must be borne in mind that while menacing conditions were moving swiftly and accumulating 93at Chicago, like conditions, inspired and supported from that central point, existed in many other places within the area of the strike’s contagion.
Of course it was hoped by those charged with the responsibility of dealing with the situation, that a direct assertion of authority by the marshal and a resort to the restraining power of the courts would prove sufficient for the emergency. Notwithstanding, however, an anxious desire to avoid measures more radical, the fact had not been overlooked that a contingency might occur which would compel a resort to military force. The key to these despatches of the Attorney-General is found in the determination of the Federal authorities to overcome by any lawful and constitutional means all resistance to governmental functions as related to the transportation of mails, the operation of interstate commerce, and the preservation of the property of the United States.
The Constitution requires that the United States shall protect each of the States against invasion, “and on application of the legislature, or of the executive (when the legislature cannot be convened), against domestic violence.” There was plenty of domestic violence in the city of Chicago and in the State of Illinois during 94the early days of July, 1894; but no application was made to the Federal Government for assistance. It was probably a very fortunate circumstance that the presence of United States soldiers in Chicago at that time did not depend upon the request or desire of Governor Altgeld.
Section 5298 of the Revised Statutes of the United States provides: “Whenever, by reason of unlawful obstructions, combinations or assemblages of persons, or rebellion against the authority of the United States, it shall become impracticable in the judgment of the President to enforce, by the ordinary course of judicial proceedings, the laws of the United States within any State or Territory, it shall be lawful for the President to call forth the militia of any or all of the States, and to employ such parts of the land or naval forces of the United States as he may deem necessary to enforce the faithful execution of the laws of the United States, or to suppress such rebellion, in whatever State or Territory thereof the laws of the United States may be forcibly opposed, or the execution thereof be forcibly obstructed”; and Section 5299 provides: “Whenever any insurrection, domestic violence, unlawful combinations or conspiracies in any State ... opposes or obstructs the laws of the United 95States, or the due execution thereof, or impedes or obstructs the due course of justice under the same, it shall be lawful for the President, and it shall be his duty, to take such measures, by the employment of the militia, or the land and naval forces of the United States, or of either, or by other means as he may deem necessary, for the suppression of such insurrection, domestic violence or combinations.” 96
II
It was the intention of the Attorney-General to suggest in these despatches that immediate and authoritative information should be given to the Washington authorities if a time should arrive when, under the sanction of general executive authority, or the constitutional and statutory provisions above quoted, a military force would be necessary at the scene of disturbance.On the 2d of July, the day after these despatches were sent, information was received from the district attorney and special counsel that a sweeping injunction had been granted against Eugene V. Debs, president of the American Railway Union, and other officials of that organization, together with parties whose names were unknown, and that the writs would be served that afternoon. The special counsel also expressed the opinion that it would require Government troops to enforce the orders of the court and protect the transportation of mails.
Major-General Schofield was then in command of the army; and, after a consultation 97with him, in which the Attorney-General and the Secretary of War took part, I directed the issuance of the following order by telegraph to General Nelson A. Miles, in command of the Military Department of Missouri, with headquarters at Chicago:
It should by no means be inferred from this despatch that it had been definitely determined that the use of a military force was inevitable. It was still hoped that the effect of the injunction would be such that this alternative might be avoided. A painful emergency is created 98when public duty forces the necessity of placing trained soldiers face to face with riotous opposition to the general Government, and an acute and determined defiance to law and order. This course, once entered upon, admits of no backward step; and an appreciation of the consequences that may ensue cannot fail to oppress those responsible for its adoption with sadly disturbing reflections. Nevertheless, it was perfectly plain that, whatever the outcome might be, the situation positively demanded such precaution and preparation as would insure readiness and promptness in case the presence of a military force should finally be found necessary.Headquarters of the Army.To the Commanding-General,
Department of Missouri,
Chicago, Ill.
You will please make all necessary arrangements confidentially for the transportation of the entire garrison at Fort Sheridan—infantry, cavalry, and artillery—to the lake front in the city of Chicago. To avoid possible interruption of the movement by rail and by marching through a part of the city, it may be advisable to bring them by steam-boat. Please consider this matter and have the arrangements perfected without delay. You may expect orders at any time for the movement. Acknowledge receipt and report in what manner movement is to be made.
On the morning of the next day, July 3, the Attorney-General received a letter from Mr. Walker, the special counsel, in which, after referring to the issuance of the injunctions and setting forth that the marshal was engaged in serving them, he wrote:
I do not believe that the marshal and his deputies can protect the railroad companies in moving their trains, either freight or passenger, including, of course, the trains carrying United States mails. Possibly, however, the service of the writ of injunction will have a restraining influence upon Debs and other officers of the association. If it does not, from 99present appearances, I think it is the opinion of all that the orders of the court cannot be enforced except by the aid of the regular army.Thereupon the Attorney-General immediately sent this despatch to the district attorney:
I trust use of United States troops will not be necessary. If it becomes necessary, they will be used promptly and decisively upon the justifying facts being certified to me. In such case, if practicable, let Walker and the marshal and United States judge join in statement as to the exigency.A few hours afterward the following urgent and decisive despatch from the marshal, endorsed by a judge of the United States court and the district attorney and special counsel, was received by the Attorney-General.
Hon. Richard Olney, Attorney-General,
Washington, D. C.:
When the injunction was granted yesterday, a mob of from two to three thousand held possession of a point in the city near the crossing of the Rock Island by other roads, where they had already ditched a mail-train, and prevented the passing of any trains, whether mail or otherwise. I read the injunction writ to this mob and commanded them to disperse. The reading of the writ met with no response except jeers and hoots. Shortly after, the mob threw a number of baggage-cars across the track, since when no mail-train has been able to move. 100I am unable to disperse the mob, clear the tracks, or arrest the men who were engaged in the acts named, and believe that no force less than the regular troops of the United States can procure the passage of the mail-trains, or enforce the orders of the courts. I believe people engaged in trades are quitting employment to-day, and in my opinion will be joining the mob to-night and especially to-morrow; and it is my judgment that the troops should be here at the earliest moment. An emergency has arisen for their presence in this city.
We have read the foregoing, and from that information, and other information that has come to us, believe that an emergency exists for the immediate presence of United States troops.In the afternoon of the same day the following order was telegraphed from army headquarters in the city of Washington:
P. S. Grosscup, Judge. Edwin Walker, Attys. Thomas E. Milchist,
Immediately after this order was issued, the following despatch was sent to the district attorney by the Attorney-General:War Department,To Martin, Adjutant-General,
Headquarters of the Army.
Washington, D. C., July 3, 1894,4 o’clock P.M.
Headquarters Department of Missouri,
Chicago, Ill.It having become impracticable in the judgment of the President to enforce by the ordinary course of 101judicial proceedings the laws of the United States, you will direct Colonel Crofton to move his entire command at once to the city of Chicago (leaving the necessary guard at Fort Sheridan), there to execute the orders and processes of the United States court, to prevent the obstruction of the United States mails, and generally to enforce the faithful execution of the laws of the United States. He will confer with the United States marshal, the United States district attorney, and Edwin Walker, special counsel. Acknowledge receipt and report action promptly. By order of the President.
Colonel Crofton’s command ordered to Chicago by the President. As to disposition and movement of troops, yourself, Walker, and the marshal should confer with Colonel Crofton and with Colonel Martin, adjutant-general at Chicago. While action should be prompt and decisive, it should of course be kept within the limits provided by the Constitution and laws. Rely upon yourself and Walker to see that this is done.Colonel Martin, adjutant-general at Chicago, reported, the same night at half-past nine o’clock, that the order for the movement of troops was, immediately on its receipt by him, transmitted to Fort Sheridan, and that Colonel 102Crofton’s command started for Chicago at nine o’clock.
During the forenoon of the next day, July 4, Colonel Martin advised the War Department that Colonel Crofton reported his command in the city of Chicago at 10:15 that morning. After referring to the manner in which the troops had been distributed, this officer added: “People seem to feel easier since arrival of troops.”
General Miles, commanding the department, arrived in Chicago the same morning, and at once assumed direction of military movements. In the afternoon of that day he sent a report to the War Department at Washington, giving an account of the disposition of troops, recounting an unfavorable condition of affairs, and recommending an increase of the garrison at Fort Sheridan sufficient to meet any emergency.
In response to this despatch General Miles was immediately authorized to order six companies of infantry from Fort Leavenworth, in Kansas, and two companies from Fort Brady, in Michigan, to Fort Sheridan.
On the fifth day of July he reported that a mob of over two thousand had gathered that morning at the stock-yards, crowded among the troops, obstructed the movement of trains, 103knocked down a railroad official, and overturned about twenty freight-cars, which obstructed all freight and passenger traffic in the vicinity of the stock-yards, and that the mob had also derailed a passenger-train on the Pittsburg, Fort Wayne and Chicago Railroad, and burned switches. To this recital of violent demonstrations he added the following statement:
The injunction of the United States court is openly defied, and unless the mobs are dispersed by the action of the police or they are fired upon by United States troops, more serious trouble may be expected, as the mob is increasing and becoming more defiant.In view of the situation as reported by General Miles, a despatch was sent to him by General Schofield directing him to concentrate his troops in order that they might act more effectively in the execution of orders theretofore given, and in the protection of United States property. This despatch concluded as follows:
The mere preservation of peace and good order in the city is, of course, the province of the city and state authorities.The situation on the sixth day of July was thus described in a despatch sent in the afternoon 104of that day by General Miles to the Secretary of War:
In answer to your telegram, I report the following: Mayor Hopkins last night issued a proclamation prohibiting riotous assemblies and directing the police to stop people from molesting railway communication. Governor Altgeld has ordered General Wheeler’s brigade on duty in Chicago to support the Mayor’s authority. So far, there have been no large mobs like the one of yesterday, which moved from 51st Street to 18th Street before it dispersed. The lawlessness has been along the line of the railways, destroying and burning more than one hundred cars and railway buildings, and obstructing transportation in various ways, even to the extent of cutting telegraph lines. United States troops have dispersed mobs at 51st Street, Kensington, and a company of infantry is moving along the Rock Island to support a body of United States marshals in making arrests for violating the injunction of the United States court. Of the twenty-three roads centering in Chicago, only six are unobstructed in freight, passenger, and mail transportation. Thirteen are at present entirely obstructed, and ten are running only mail- and passenger-trains. Large numbers of trains moving in and out of the city have been stoned and fired upon by mobs, and one engineer killed. There was a secret meeting to-day of Debs and the representatives of labor unions considering the advisability of a general strike of all labor unions. About one hundred men were present at that meeting. The result is not yet known. United States troops are at the stock-yards, Kensington, 105Blue Island, crossing of 51st Street, and have been moving along some of the lines: the balance, eight companies of infantry, battery of artillery, and one troop of cavalry, are camped on Lake Front Park, ready for any emergency and to protect Government buildings and property. It is learned from the Fire Department, City Hall, that a party of strikers has been going through the vicinity from 14th to 41st streets and Stewart Avenue freight-yards, throwing gasoline on freight-cars all through that section. Captain Ford, of the Fire Department, was badly stoned this morning. Troops have just dispersed a mob of incendiaries on Fort Wayne tracks, near 51st Street, and fires that were started have been suppressed. Mob just captured mail-train at 47th Street, and troops sent to disperse them.On the eighth day of July, in view of the apparently near approach of a crisis which the Government had attempted to avoid, the following Executive Proclamation was issued and at once extensively published in the city of Chicago:
Whereas, by reason of unlawful obstruction, combinations and assemblages of persons, it has become impracticable, in the judgment of the President, to enforce, by the ordinary course of judicial proceedings, the laws of the United States within the State of Illinois, and especially in the city of Chicago within said State; andOn the 10th of July, Eugene V. Debs, the president of the American Railway Union, together with its vice-president, general secretary, and one other who was an active director, were arrested upon indictments found against them for complicity in the obstruction of mails and interstate commerce. Three days afterward our special counsel expressed the opinion that the strike was practically broken. This must not be taken to mean, however, that peace and quiet had been completely restored or that the transportation of mails and the activities of interstate commerce were entirely free from interruption. It was only the expression of a well-sustained and deliberate expectation that the combination of measures already inaugurated, and others contemplated in the near future, would speedily bring about a termination of the difficulty.
Whereas, for the purpose of enforcing the faithful execution of the laws of the United States and 106protecting its property and removing obstructions to the United States mails in the State and city aforesaid, the President has employed a part of the military forces of the United States:—
Now, therefore, I, Grover Cleveland, President of the United States, do hereby admonish all good citizens, and all persons who may be or may come within the City and State aforesaid, against aiding, countenancing, encouraging, or taking any part in such unlawful obstructions, combinations, and assemblages; and I hereby warn all persons engaged in or in any way connected with such unlawful obstructions, combinations, and assemblages to disperse and retire peaceably to their respective abodes on or before twelve o’clock noon of the 9th day of July instant.
Those who disregard this warning and persist in taking part with a riotous mob in forcibly resisting and obstructing the execution of the laws of the United States, or interfering with the functions of the Government, or destroying or attempting to destroy the property belonging to the United States or under its protection, cannot be regarded otherwise than as public enemies.
Troops employed against such a riotous mob will act with all the moderation and forbearance consistent with the accomplishment of the desired end; but the stern necessities that confront them will not with certainty permit discrimination between guilty participants and those who are mingling with them from curiosity and without criminal intent. The only safe course, therefore, for those not actually participating, is to abide at their homes, or at least not to be found in the neighborhood of riotous assemblages.
While there will be no vacillation in the decisive 107treatment of the guilty, this warning is especially intended to protect and save the innocent.
On the seventeenth day of July an information was filed in the United States Circuit Court at Chicago against Debs and the three other officials of the Railway Union who had been arrested on indictment a few days before, but were then at large on bail. This information alleged 108that these parties had been guilty of open, continued, and defiant disobedience of the injunction which was served on them July 3, forbidding them to do certain specified acts tending to incite and aid the obstruction of the carriage of mails and the operation of interstate commerce. On the footing of this information these parties were brought before the court to show cause why they should not be punished for contempt in disobeying the injunction. Instead of giving bail for their freedom pending the investigation of this charge against them, as they were invited to do, they preferred to be committed to custody—perhaps intending by such an act of martyrdom either to revive a waning cause, or to gain a plausible and justifying excuse for the collapse of their already foredoomed movement. Debs himself, in speaking of this event afterward, said: “As soon as the employees found that we were arrested and taken from the scene of action they became demoralized, and that ended the strike.”
That the strike ended about the time of this second arrest is undoubtedly true; for, during the few days immediately preceding and following the seventeenth day of July, reports came from nearly all the localities to which the strike had spread, indicating its defeat and the accomplishment 109of all the purposes of the Government’s interference. The successful assertion of national authority was conclusively indicated when on the twentieth day of July the last of the soldiers of the United States who had been ordered for duty at the very center of opposition and disturbance, were withdrawn from Chicago and returned to the military posts to which they were attached.
I hope I have been successful thus far in my effort satisfactorily to exhibit the extensive reach and perilous tendency of the convulsion under consideration, the careful promptness which characterized the interference of the Government, the constant desire of the national administration to avoid extreme measures, the scrupulous limitation of its interference to purposes which were clearly within its constitutional competency and duty, and the gratifying and important results of its conservative but stern activity.
I must not fail to mention here as part of the history of this perplexing affair, a contribution made by the governor of Illinois to its annoyances. This official not only refused to regard the riotous disturbances within the borders of his State as a sufficient cause for an application to the Federal Government for its protection 110“against domestic violence” under the mandate of the Constitution, but he actually protested against the presence of Federal troops sent into the State upon the general Government’s own initiative and for the purpose of defending itself in the exercise of its well-defined legitimate functions.
On the fifth day of July, twenty-four hours after our soldiers had been brought to the city of Chicago, pursuant to the order of July 3d, I received a long despatch from Governor Altgeld, beginning as follows:
I am advised that you have ordered Federal troops to go into service in the State of Illinois. Surely the facts have not been correctly presented to you in this case or you would not have taken the step; for it is entirely unnecessary and, as it seems to me, unjustifiable. Waiving all question of courtesy, I will say that the State of Illinois is not only able to take care of itself, but it stands ready to-day to furnish the Federal Government any assistance it may need elsewhere.This opening sentence was followed by a lengthy statement which so far missed actual conditions as to appear irrelevant and, in some parts, absolutely frivolous.
This remarkable despatch closed with the following words: 111
As Governor of the State of Illinois, I protest against this and ask the immediate withdrawal of Federal troops from active duty in this State. Should the situation at any time get so serious that we cannot control it with the State forces, we will promptly and freely ask for Federal assistance; but until such time I protest with all due deference against this uncalled-for reflection upon our people, and again ask for the immediate withdrawal of these troops.Immediately upon the receipt of this communication, I sent to Governor Altgeld the following reply:
Federal troops were sent to Chicago in strict accordance with the Constitution and the laws of the United States, upon the demand of the Post-Office Department that obstructions of the mails should be removed, and upon the representation of the judicial officers of the United States that process of the Federal courts could not be executed through the ordinary means, and upon abundant proof that conspiracies existed against commerce between the States. To meet these conditions, which are clearly within the province of Federal authority, the presence of Federal troops in the city of Chicago was deemed not only proper but necessary; and there has been no intention of thereby interfering with the plain duty of the local authorities to preserve the peace of the city.112
III
In response to this the governor, evidently unwilling to allow the matter at issue between us to rest without a renewal of argument and protest, at once addressed to me another long telegraphic communication, evidently intended to be more severely accusatory and insistent than its predecessor. Its general tenor may be inferred from the opening words:Your answer to my protest involves some startling conclusions, and ignores and evades the question at issue—that is, that the principle of local self-government is just as fundamental in our institutions as is that of Federal supremacy. You calmly assume that the Executive has the legal right to order Federal troops into any community of the United States in the first instance, whenever there is the slightest disturbance, and that he can do this without any regard to the question as to whether the community is able to and ready to enforce the law itself.After a rather dreary discussion of the importance of preserving the rights of the States and a presentation of the dangers to constitutional 113government that lurked in the course that had been pursued by the general Government, this communication closed as follows:
Inasmuch as the Federal troops can do nothing but what the State troops can do there, and believing that the State is amply able to take care of the situation and to enforce the law, and believing that the ordering out of the Federal troops was unwarranted, I again ask their withdrawal.I confess that my patience was somewhat strained when I quickly sent the following despatch in reply to this communication:
This closed a discussion which in its net results demonstrated how far one’s disposition and inclination will lead him astray in the field of argument.Executive Mansion.While I am still persuaded that I have neither transcended my authority nor duty in the emergency that confronts us, it seems to me that in this hour of danger and public distress, discussion may well give way to active efforts on the part of all in authority to restore obedience to law and to protect life and property.
Washington, D. C., July 6, 1894.
Hon. John P. Altgeld,
Governor of Illinois.
I shall conclude the treatment of my subject 114by a brief reference to the legal proceedings which grew out of this disturbance, and finally led to an adjudication by the highest court in our land, establishing in an absolutely authoritative manner and for all time the power of the national Government to protect itself in the exercise of its functions.
It will be recalled that in the course of our narrative we left Mr. Debs, the president of the Railway Union, and his three associates in custody of the law, on the seventeenth day of July, awaiting an investigation of the charge of contempt of court made against them, based upon their disobedience of the writs of injunction forbidding them to do certain things in aid or encouragement of interference with mail transportation or interstate commerce.
This investigation was so long delayed that the decision of the Circuit Court before which the proceedings were pending was not rendered until the fourteenth day of December, 1894. On that date the court delivered an able and carefully considered decision finding Debs and his associates guilty of contempt of court, basing its decision upon the provisions of the law of Congress, passed in 1890, entitled: “An act to protect trade and commerce against unlawful restraint and monopolies”; sometimes called 115the Sherman Anti-Trust Law. Thereupon the parties were sentenced on said conviction to confinement in the county jail for terms varying from three to six months.
Afterward, and on the 14th day of January, 1895, the prisoners applied to the Supreme Court of the United States for a writ of habeas corpus to relieve them from imprisonment, on the ground that the facts found against them by the Circuit Court did not constitute disobedience of the writs of injunction and that their commitment in the manner and for the reasons alleged was without justification and not within the constitutional power and jurisdiction of that tribunal.
On this application, the case was elaborately argued before the Supreme Court in March, 1895; and on the twenty-seventh day of May, 1895, the court rendered its decision, upholding on the broadest grounds the proceedings of the Circuit Court and confirming its adjudication and the commitment to jail of the petitioners thereupon.
Justice Brewer, in delivering the unanimous opinion of the Supreme Court, stated the case as follows:
The United States, finding that the interstate transportation of persons and property, as well as 116the carriage of mails, is forcibly obstructed, and that a combination and conspiracy exists to subject the control of such transportation to the will of the conspirators, applied to one of their courts sitting as a court of equity, for an injunction to restrain such obstructions and prevent carrying into effect such conspiracy. Two questions of importance are presented: First, are the relations of the general Government to interstate commerce and the transportation of the mails such as to authorize a direct interference to prevent a forcible obstruction thereof? Second, if authority exists,—as authority in governmental affairs implies both power and duty,—has a court of equity jurisdiction to issue an injunction in aid of the performance of such duty?Both of these questions were answered by the court in the affirmative; and in the opinion read by the learned justice, the inherent power of the Government to execute the powers and functions belonging to it by means of physical force through its official agents, and on every foot of American soil, was amply vindicated by a process of reasoning simple, logical, unhampered by fanciful distinctions, and absolutely conclusive; and the Government’s peaceful resort to the court, the injunction issued in its aid, and all the proceedings thereon, including the imprisonment of Debs and his associates, were fully approved.
Thus the Supreme Court of the United States 117has written the closing words of this history, tragical in many of its details, and in every line provoking sober reflection. As we gratefully turn its concluding page, those who were most nearly related by executive responsibility to the troublous days whose story is told may well especially congratulate themselves on the part which fell to them in marking out the way and clearing the path, now unchangeably established, which shall hereafter guide our nation safely and surely in the exercise of the important functions which represent the people’s trust. 118119
120
121
THE BOND ISSUES
I
The sales of United States bonds in the years 1894, 1895, and 1896 for the purpose of replenishing the stock of gold in the public Treasury have been greatly misunderstood by many honest people, and often deliberately misrepresented.My conviction that a love of fairness still abides with the masses of our people has encouraged me to give a history of these transactions for the benefit of those who are uninformed or have been misled concerning them. In undertaking this task I shall attempt to avoid unprofitable and tiresome explanation; but I shall, nevertheless, indulge in the recital of details to such an extent as may appear necessary to an easy understanding of the matter in hand. I desire, above all things, to treat the subject in such a way that none who read my 122narrative will be confused by the use of obscure or technical language.
The Government’s gold reserve, as it is usually known, originated under the provision of an act of Congress passed January 14, 1875, entitled, “An Act to provide for the resumption of specie payments.” This law contemplated the redemption in gold and the retirement of the currency obligations legally known as United States notes, but commonly called greenbacks; and it provided that such notes in excess of $300,000,000 should be redeemed and retired prior to January 1, 1879, and that after that date all the remainder of such notes should be likewise redeemed and canceled. This law further provided that “to enable the Secretary of the Treasury to prepare and provide for such redemption” he should have the authority “to issue, sell and dispose of” bonds of the United States which were therein particularly specified. Of course this authority was given to the Secretary of the Treasury in order that, by the sale of Government bonds, he could accumulate a sufficient gold fund or reserve to meet the demands of the gold redemption provided for, and accomplish the ultimate retirement of all the United States notes in circulation.
In compliance with this act, the sum of about 123$92,000,000 in gold was realized by the sale of bonds, and about $41,000,000, in addition, was obtained from surplus revenue; and thereupon the contemplated redemption was entered upon. But after the retirement and cancelation of only about $30,000,000 of these notes, and on the thirty-first day of May, 1878, this process was interrupted by the passage of an act forbidding their further retirement or cancelation, and providing that any such notes thereafter redeemed should not be canceled or destroyed, but should be “reissued and paid out again and kept in circulation.” At the time this act was passed the United States notes uncanceled and still outstanding amounted to $346,681,016. It will be observed that though the actual retirement of these notes was prohibited, their redemption in gold was still continued, coupled with the condition that, though thus redeemed, they should be still kept on foot and again put in circulation as a continuing and never-ending obligation of the Government, calling for payment in gold—not once alone, but as often as their reissue permitted, and without the least regard to prior so-called redemptions. It will be also observed that this prohibition of cancelation intervened seven months prior to January 1, 1879, the date when the general and unrestricted 124redemption and retirement of all these outstanding notes was, under the terms of the act of 1875, to commence. At the time when their further cancelation was thus terminated there remained of the gold which had been provided as a reserve for their redemption about $103,000,000. This is the fund which has since then been called the “gold reserve.”
In point of fact, this reserve was thereafter made up of all the net gold held by the Government; and its amount at any particular date was ascertained by deducting from the entire stock of gold in the Treasury the amounts covered by outstanding gold certificates, which instruments resemble a bank’s certificate of deposit, and are issued by the Secretary of the Treasury to those making with the Government specific deposits of gold, to be returned to the holders of the certificates on demand. Of course the gold thus held for certificate-holders is not available for the redemption of United States notes.
In the year 1882 a law was passed by Congress which provided that the Secretary of the Treasury should suspend the issue of these gold certificates “whenever the amount of gold coin and gold bullion in the Treasury, reserved for the redemption of United States notes, falls below 125$100,000,000.” Whatever may have been the actual relationship between gold certificates representing gold deposited for their redemption, and the gold kept on hand for the redemption of United States notes, the provision of law just quoted seems to have been accepted as a statutory recognition of the fact that our gold reserve for note redemption should have for its lowest limit this sum of $100,000,000. It is a singular circumstance that until very lately, when this reserve was increased and fixed at $150,000,000, no Act of Congress actually provided, or in any way expressly stated, what the limits of this gold reserve for redemption purposes should be; and it is no less singular that this provision in the law of 1882 fixed its lowest safe limit as perfectly and authoritatively in the understanding of our people as it could have been done by a distinct legislative requirement. At the time this reserve was created, as well as when the actual cancelation of United States notes after redemption was prohibited, it evidently was thought by those directing our nation’s financial affairs that the sum of $100,000,000 in net gold actually in hand, especially with such additions as might naturally be expected to reach the fund by way of surplus revenue receipts, 126or otherwise, would constitute a sufficient gold reserve to redeem such of these notes still left outstanding as might be presented, and that the assurance of their gold redemption when presented would keep them largely in circulation. This scheme seemed for a time to be abundantly vindicated by the people’s contentment with the sufficiency of the redemption reserve, and by their willingness to keep in circulating use these United States notes as currency more convenient than gold itself.
Another most important condition of mind among the people, however, grew out of, or at least accompanied, their acceptance of the redemptive sufficiency of the gold reserve as constituted. The popular belief became deep-seated and apparently immovable that the reduction of this gold reserve to an amount less than $100,000,000 would, in some way, cause a disastrous situation, and perhaps justify an apprehension concerning our nation’s financial soundness. Thus a gold reserve containing at all times at least $100,000,000 came to be regarded by the people with a sort of sentimental solicitude, which, whatever else may be said of it, was certainly something to be reckoned with in making our national financial calculations.
That the plans thus set on foot for the so-called 127redemption of the United States notes outstanding promised to be adequate and effective is seen in the fact that the gold reserve, starting at the end of June, 1878, with about $103,500,000, never afterward fell as low as $100,000,000 until April, 1893, and that sometimes in its fluctuations during this interval of twenty-five years it amounted to upward of $200,000,000. Under conditions then existing popular confidence was well established, the reserve satisfactorily endured the strain of all redemption demands, and United States notes were kept well in circulation as money.
In an evil hour, however, a legislative concession was made to a mischievous and persistent demand for the free and unlimited coinage of silver. This concession was first exhibited in an act of Congress passed in 1878, directing the expenditure of not less than $2,000,000 nor more than $4,000,000 each month by the Secretary of the Treasury in the purchase of silver bullion, and the coinage of such bullion into silver dollars. Though this act is not in itself so intimately related to my subject as to require detailed explanation, it was the forerunner of another law of Congress which had much to do with creating the financial conditions that necessitated 128the issuance of Government bonds for the reinforcement of the gold reserve.
This law was passed in 1890, and superseded the provision of the law of 1878 directing the purchase and coinage of silver. In lieu of these provisions the Secretary of the Treasury was thereby directed to purchase silver bullion from time to time in each month to the aggregate amount of 4,500,000 ounces, or as much as might be offered, at the market price, not to exceed, however, a limit therein fixed. It was further provided that there should be issued, in payment of such purchases of silver bullion, Treasury notes of the United States in denominations not less than one dollar nor more than $1000; that such notes should be redeemable in coin, and should “be a legal tender in payment of all debts, public and private, except where otherwise expressly stipulated in the contract, and should be receivable for customs, taxes and all public dues”; and that when they were redeemed or paid into the Treasury they might be reissued. The Secretary of the Treasury was directed to coin into silver dollars in each month until the first day of July, 1891, 2,000,000 ounces of the silver so purchased, and thereafter so much as might be necessary to provide for the redemption of the notes issued in payment 129for the silver from time to time purchased under the act.
I have recited these provisions by way of leading up to the proposition that, under the law of 1890, the burden upon the gold reserve was tremendously enlarged. It will be readily seen that it forced larger monthly purchases of silver than were required under the prior act, and that, instead of providing for silver dollars, which as coins, or certificates of deposit representing such coins, should circulate as silver currency, unredeemable in gold as was done under the act of 1878, it directed that in payment of such purchases a new obligation of the Government, redeemable in coin, should be issued and added to our circulating medium.
It is, however, only when we examine the specific provision for the redemption of these notes that we discover in its full extent the harmful relationship of this new device to the integrity of the gold reserve. At its outset the redemption clause of the act courageously and manfully gave to the Secretary of the Treasury the authority to redeem such notes in gold or silver at his discretion; but in its ending it fell down a pitiful victim of the silver craze. The entire clause is in these words: “That upon demand of the holder of any of the Treasury 130notes herein provided for, the Secretary of the Treasury shall, under such regulations as he may provide, redeem such notes in gold or silver coin at his discretion, it being the established policy of the United States to maintain the two metals at a parity with each other upon the present legal ratio, or such ratio as may be provided by law.”
According to the legal ratio then existing, which has never been changed, the average intrinsic gold value of a silver dollar as compared with a gold dollar was, during the year 1891, about seventy-six cents, during 1892 a trifle more than sixty-seven cents, and during 1893 about sixty cents.
It is hardly necessary to say that the assertion in the act of “the established policy of the United States to maintain the two metals at a parity” had the effect of transferring the discretion of determining whether these Treasury notes should be redeemed in gold or silver, from the Secretary of the Treasury to the holder of the notes. Manifestly, in the face of this assertion of the Government’s intention, a demand for gold redemption on the part of the holders of such notes could not be refused, and the acceptance of silver dollars insisted upon, without either subjecting to doubt the good 131faith and honest intention of the Government’s professions, or creating a suspicion of our country’s solvency. The parity between the two metals could not be maintained, but, on the contrary, would be distinctly denied, if the Secretary of the Treasury persisted in redeeming these notes, against the will of the holders, in dollars of silver instead of gold.
Therefore it came to pass that the Treasury notes issued for the purchase of silver under the law of 1890 took their place by the side of the United States notes, commonly called greenbacks, as demands against our very moderate and shifting gold reserve.
It should have been plainly apparent to all who had eyes to see that the monetary scheme, thus additionally burdened, was adequate and safe only in smooth financial weather, and was miserably calculated to resist any disturbances in public confidence, or the rough waves of business emergencies. The proof of this was quickly forthcoming.
The new Treasury notes made their first appearance as part of our money circulation in August, 1890; and at the close of that month the gold reserve amounted to $185,837,581. During the next month it fell off about $38,000,000, reducing the amount on the last day of September 132to nearly $148,000,000; and with a few slight spasmodic rallies it continued to decrease until the sale of bonds for its replenishment.
In the latter part of 1892 and the first months of 1893, these Treasury notes having, in the meantime, very greatly multiplied, the withdrawals of gold from the Treasury through the redemption of these as well as the United States notes strikingly increased; and the fact that by far the larger part of the gold so withdrawn was shipped abroad plainly showed that foreign investors in American securities had grave apprehensions as to our ability to continue to redeem all these notes in gold and thus maintain the integrity and soundness of our financial condition.
I succeeded Mr. Harrison in the Presidency on the fourth day of March, 1893; and on the seventh of that month Mr. Carlisle became Secretary of the Treasury. The gold reserve on that day amounted to $100,982,410—only $982,410 in excess of the sum that had come to be generally regarded as indicating the danger line. The retiring Secretary of the Treasury, appreciating the importance of preventing the fall of the reserve below this limit, had just before his retirement directed the preparation of plates for the engraving of bonds so that 133he might by their sale obtain gold to reinforce the fund. I have heard him say within the last few years that he expected before the close of his term to resort to bond sales for the purpose of such reinforcement, unless prevented at the last moment by the President’s disapproval. Of course it is but natural that any one directing the affairs of the Treasury Department should be anxious to avoid such an expedient; and Secretary Foster avoided it, and barely saved the reserve from falling below the $100,000,000 mark during his term, by effecting arrangements, in January and February, 1893, with certain bankers in New York, by which he obtained from them in exchange for United States notes, or on other considerations, something over $8,000,000 in gold, which enabled him to escape the sale of bonds in aid of the reserve.
With the gold reserve lower than it had ever been since its creation in 1878, and showing an excess of less than $1,000,000 above the supposed limit of disaster, and with the demand for gold redemption of Government currency obligations giving no sign of abatement, the prospect that greeted the new administration was certainly not reassuring. In our effort to meet the emergency without an issue of bonds Secretary 134Carlisle immediately applied to banks in different localities for an exchange with the Government of a portion of their holdings of gold coin for other forms of currency. This effort was so far successful that on the 25th of March the gold reserve amounted to over $107,000,000, notwithstanding the fact that considerable withdrawals had been made in the interval. The slight betterment thus secured proved, however, to be only temporary; for under the stress of continued and augmented withdrawals, the gold reserve, on the twenty-second day of April, 1893, for the first time since its establishment, was reduced below the $100,000,000 limit—amounting on that day to about $97,000,000.
Though this fall below the minimum theretofore always maintained was not followed by any sudden and distinctly new disaster, it had the effect of accelerating withdrawals of gold. It became apparent that there had intervened a growing apprehension among the masses of our own people concerning the Government’s competency to continue gold redemption, with the result that a greatly increased proportion of the amount withdrawn from the gold reserve, instead of going abroad to satisfy the claims of foreigners or as a basis of commercial exchange, 135was hoarded by our citizens at home as a precaution against possible financial distress. In the meantime, nearly the entire gold receipts in payment of customs and other revenue charges had ceased. To meet this situation strenuous efforts were made by the Secretary of the Treasury to improve the condition by resorting again to the plan of exchanging for gold other forms of currency, with some success, while in the month of August, 1893, gold revenue receipts were temporarily considerably stimulated. Thus a fleeting gleam of hope was given to the dark surroundings.
In these troublous times those charged with the administration of the Government’s financial affairs could not fail to recognize in the law of 1890, directing the monthly purchase of silver and the issuance in payment therefor of Treasury notes in effect redeemable in gold, a prolific cause of our financial trouble. Accordingly, a special session of Congress was called to meet on the seventh day of August, 1893, to repeal this law, and thus terminate the creation of further demands upon our already overburdened and feeble gold reserve. The repealing act was quite promptly passed in the House of Representatives on the twenty-eighth day of August; but, on account of vexatious 136opposition in the Senate, the repeal was not finally effected until the first day of November, 1893, and then only after there had been added to the act an inopportune repetition of the statement concerning the Government’s intention to maintain the parity of both gold and silver coins. 137
II
The effect of this repeal in its immediate results failed to quiet the fear of impending evil now thoroughly aroused; nor were all the efforts thus far made to augment the gold reserve effective as against the constant process of its depletion.On the seventeenth day of January, 1894, the Government was confronted by a disquieting emergency. The gold reserve had fallen to less than $70,000,000, notwithstanding the most diligent efforts to maintain it in sounder condition. Against this slender fund gold demands amounting to not less than $450,000,000 in United States notes and Treasury notes were in actual circulation, and others amounting to about $50,000,000, in addition, were temporarily held in the Treasury subject to reissue—the entire volume, by peremptory requirement of law, remaining uncanceled even after repeated redemption; nor was there any promise of a cessation of the abnormal and exhausting drain of gold then fully under way. Another factor 138in the situation, most perplexing and dangerous, was the distrust, which was growing enormously, regarding the wisdom and stability of our scheme of finance. As a result of these conditions there loomed in sight the menace of the destruction of our gold reserve, the repudiation of our gold obligations, the humiliating fall of our nation’s finances to a silver basis, and the degradation of our Government’s high standing in the respect of the civilized world.
There was absolutely but one way to avert national calamity and our country’s disgrace; and this way was adopted when, on the seventeenth day of January, 1894, the Secretary of the Treasury issued a notice that bids in gold would be received until the first day of February following for $50,000,000 in bonds of the United States, redeemable in coin at the pleasure of the Government after ten years from the date of their issue, and bearing interest at the rate of five per cent. per annum. It was further stated in the notice that no bid would be considered that did not offer a premium on said bonds of a fraction more than seventeen per cent., which would secure to the purchaser an investment yielding three per cent. per annum.
It should here be mentioned that the only Government bonds which could be sold in the 139manner and for the purpose contemplated were such as were authorized and described in a law passed in 1870, and which were designated in the law of 1875 providing for the redemption of United States notes as the kind of bonds which the Secretary of the Treasury was permitted to sell to enable him “to prepare and provide for” such redemption. The issues of bonds thus authorized were of three descriptions: one payable at the pleasure of the Government after ten years from their date, and bearing interest at the rate of five per cent.; one so made payable after fifteen years from their date, bearing four and a half per cent. interest; and one in like manner made payable after thirty years from their date, bearing interest at the rate of four per cent. The five per cent. bonds were specified in the Secretary’s offer of sale because on account of their high rate of interest they would command a greater premium, and therefore a larger return of gold, and for the further reason that the option of the Government regarding their payment could be earlier exercised.
The withdrawals of gold did not cease with the offer to sell bonds for the replenishment of the reserve, and on the day before the date limited for the opening of bids the fund had decreased 140to less than $66,000,000. In the meantime, the perplexity of the situation, already intense, was made more so by the fact that the bids for bonds under the offer of the Secretary came in so slowly that a few days before the 1st of February, when the bids were to be opened, there were plain indications that the contemplated sale would fail unless prompt and energetic measures were taken to avoid such a perilous result.
Thereupon the Secretary of the Treasury invited to a conference, in the city of New York, a number of bankers and presidents of moneyed institutions, which resulted in so arousing their patriotism, as well as their solicitude for the protection of the interests they represented, that they effectively exerted themselves, barely in time to prevent a disastrous failure of the sale. The proceeds of this sale, received from numerous bidders large and small, aggregated $58,660,917.63 in gold, which so increased the reserve that on the sixth day of March, 1894, it amounted to $107,440,802.
It was hoped that this measure of restoration and this exhibition of the nation’s ability to protect its financial integrity would allay apprehension and restore confidence to such an extent as to render further bond sales unnecessary. 141It was soon discovered, however, that the complications of our ill condition were so deep-seated and stubborn that the treatment resorted to was only a palliative instead of a cure.
On the last day of May, 1894, less than three months after its reinforcement, as mentioned, the gold reserve had been again so depleted by withdrawals that it amounted to only $78,693,267. An almost uninterrupted downward tendency followed, notwithstanding constant efforts on the part of the Government to check the fall, until, on the fourteenth day of November, 1894, the fund had fallen to $61,878,374. In the meantime, the inclination of our timid citizens to take gold from the reserve for hoarding “had grown by what it fed on,” while large shipments abroad to meet foreign indebtedness or for profit still continued and increased in amount.
In these circumstances the inexorable alternative presented itself of again selling Government bonds for the replenishment of its redemption gold, or assuming the tremendous risk of neglecting the safety and permanence of every interest dependent upon the soundness of our national finances. An obedient regard for official duty made the right path exceedingly plain. 142
On the day last mentioned a public proposal was issued inviting bids in gold for the purchase of additional five per cent. bonds to the amount of $50,000,000. Numerous bids were received under this proposal, one of which, for “all or none” of the bonds, tendered on behalf of thirty-three banking institutions and financiers in the city of New York, being considerably more advantageous to the Government than all other bids, was accepted, and the entire amount was awarded to these parties. This resulted in adding to the reserve the sum of $58,538,500.
The president at that time of the United States Trust Company, one of the strongest and largest financial institutions in the country, rendered most useful and patriotic service in making both this and the previous offer of bonds successful; and his company was a prominent purchaser on both occasions. He afterward testified under oath that the accepted bid for “all or none,” in which his company was a large participant, proved unprofitable to the bidders.
The payment of gold into the Treasury on account of this sale of bonds was not entirely completed until after the 1st of December, 1894. Then followed a time of bitter disappointment 143and miserable depression, greater than any that had before darkened the struggles of the Executive branch of the Government to save our nation’s financial integrity.
The addition made to the gold reserve by this completed transaction seemed to be of no substantial benefit, if, on the contrary, it did not actually stimulate the disquieting factors of the situation. In December, 1894, during which month $58,538,500 in gold, realized from this second sale of bonds, was fully paid in and added to the reserve, the withdrawals from the fund amounted to nearly $32,000,000; and this was followed in the next month, or during January, 1895, by a further depletion in the sum of more than $45,000,000.
In view of the crisis which these suddenly increased withdrawals seemed to portend, the aid of Congress was earnestly invoked in a special presidential message to that body, dated on the 28th of January, 1895, in which the gravity and embarrassment of the situation were set forth in the following terms:
The real trouble which confronts us consists in a lack of confidence, widespread and constantly increasing, in the continuing ability or disposition of the Government to pay its obligations in gold. This lack of confidence grows to some extent out of the 144palpable and apparent embarrassment attending the efforts of the Government under existing laws to procure gold, and to a greater extent out of the impossibility of either keeping it in the Treasury or canceling obligations by its expenditure after it is obtained....After giving a history of the bond issues already made to replenish the reserve, and of their results, it was further stated:
The most dangerous and irritating feature of the situation, however, remains to be mentioned. It is found in the means by which the Treasury is despoiled of the gold thus obtained (by the sale of bonds) without canceling a single Government obligation, and solely for the benefit of those who find profit in shipping it abroad, or whose fears induce them to hoard it at home. We have outstanding about $500,000,000 of currency notes of the Government for which gold may be demanded, and, curiously enough, the law requires that when presented, and, in fact, redeemed and paid in gold, they shall be reissued. Thus the same notes may do duty many times in drawing gold from the Treasury; nor can the process be averted so long as private parties, for profit or otherwise, see an advantage in repeating the operation. More than $300,000,000 of these notes have been redeemed in gold, and, notwithstanding such redemption, they are still outstanding.
The financial events of the past year suggest facts and conditions which should certainly arrest attention. More than $172,000,000 in gold have been 145drawn out of the Treasury during the year for the purpose of shipment abroad or hoarding at home.Following a reference to existing differences of opinion in regard to the extent to which silver should be coined or used in our currency, and the irrelevancy of such differences to the matter in hand, the message continued:
While nearly $103,000,000 was drawn out during the first ten months of the year, a sum aggregating more than two-thirds of that amount, being about $69,000,000, was drawn out during the following two months, thus indicating a marked acceleration of the depleting process with the lapse of time.
While I am not unfriendly to silver, and while I desire to see it recognized to such an extent as is consistent with financial safety and the preservation of national honor and credit, I am not willing to see gold entirely banished from our currency and finances. To avert such a consequence I believe thorough and radical remedial legislation should be promptly passed. I therefore beg the Congress to give the subject immediate attention.After recommending the passage of a law authorizing the issue of long-term bonds, bearing a low rate of interest, to be used for the maintenance of an adequate gold reserve and in exchange for outstanding United States notes and Treasury notes for the purpose of their cancelation, and after giving details of the proposed 146scheme, the message concluded as follows:
In conclusion, I desire to frankly confess my reluctance to issue more bonds in present circumstances and with no better results than have lately followed that course. I cannot, however, refrain from adding to an assurance of my anxiety to co-operate with the present Congress in any reasonable measure of relief, an expression of my determination to leave nothing undone which furnishes a hope for improving the situation, or checking a suspicion of our disinclination or disability to meet, with the strictest honor, every national obligation.This appeal to Congress for legislative aid was absolutely fruitless.
On the eighth day of February, 1895, those who, under the mandate of Executive duty, were striving, thus unaided, to avert the perils of the situation, could count in the gold reserve only the frightfully low sum of $41,340,181; and it must be remembered that this was only two months after the proceeds of the second sale of bonds had been added to the fund. In point of fact, the withdrawals of gold during the short period mentioned had exceeded by more than $18,000,000 the amount of such proceeds; and several million dollars more had been demanded, some of which, though actually taken 147out, was unexpectedly, and on account of the transaction now to be detailed, returned to the Treasury.
This sudden fall in the reserve, and the apparent certainty of the continuance of its rapid depletion, seemed to justify the fear that before another bond sale by means of public notice and popular subscription could be perfected the gold reserve might be entirely exhausted; nor could we keep out of mind the apprehension that in consequence of repeated dispositions of bonds, with worse instead of better financial conditions impending, further sales by popular subscription might fail of success, except upon terms that would give the appearance of impaired national credit.
Notwithstanding all this, no other way seemed to be open to us than another public offer of bonds; and it was determined to move in that direction immediately.
In anticipation of this action it was important to obtain certain information and suggestions touching the feeling and disposition of those actively prominent in financial and business circles.
I think it may here be frankly confessed that it never occurred to any of us to consult, in this emergency, farmers, doctors, lawyers, shoe-makers, 148or even statesmen. We could not escape the belief that the prospect of obtaining what we needed might be somewhat improved by making application to those whose business and surroundings qualified them to intelligently respond.
Therefore, on the evening of the seventh day of February, 1895, an interview was held at the White House with Mr. J. P. Morgan of New York; and I propose to give the details of that interview as gathered from a recollection which I do not believe can be at fault. Secretary Carlisle was present nearly or quite all the time, Attorney-General Olney was there a portion of the time, and Mr. Morgan and a young man from his office and myself all the time. At the outset Mr. Morgan was inclined to complain of the treatment he had received from Treasury officials in the repudiation of an arrangement which he thought he had been encouraged to perfect in connection with the disposal of another issue of bonds. I said to Mr. Morgan, whatever there might be in all this, another offer of bonds for popular subscription open to all bidders had been determined upon, and that there were two questions I wanted to ask him which he ought to be able to answer: one was whether the bonds to be so offered would 149probably be taken at a good price on short notice; and the other was whether, in case there should be imminent danger of the disappearance of what remained of the gold reserve, during the time that must elapse between published notice and the opening of bids, a sufficient amount of gold could be temporarily obtained from financial institutions in the city of New York to bridge over the difficulty and save the reserve until the Government could realize upon the sale of its bonds. Mr. Morgan replied that he had no doubt bonds could be again sold on popular subscription at some price, but he could not say what the price would be; and to the second inquiry his answer was that, in his opinion, such an advance of gold as might be required could be accomplished if the gold could be kept in this country, but that there might be reluctance to making such an advance if it was to be immediately withdrawn for shipment abroad, leaving our financial condition substantially unimproved. After a little further discussion of the situation he suddenly asked me why we did not buy $100,000,000 in gold at a fixed price and pay for it in bonds, under Section 3700 of the Revised Statutes. This was a proposition entirely new to me. I turned to the Statutes and read the section he had mentioned. 150Secretary Carlisle confirmed me in the opinion that this law abundantly authorized such a transaction, and agreed that it might be expedient if favorable terms could be made. The section of the Statutes referred to reads as follows:
Section 3700. The Secretary of the Treasury may purchase coin with any of the bonds or notes of the United States authorized by law, at such rates and upon such terms as he may deem most advantageous to the public interest.Mr. Morgan strongly urged that, if we proceeded under this law, the amount of gold purchased should not be less than $100,000,000; but he was at once informed that in no event would more bonds be then issued than would be sufficient to provide for adding to the reserve, about $60,000,000, the amount necessary to raise the fund to $100,000,000.
Not many months afterward I became convinced that on this point Mr. Morgan made a wise suggestion; and I have always since regretted that it was not adopted. 151
III
It can hardly be necessary to state that any plan which would protect from immediate withdrawal the gold we might add to our reserve could not fail to be of extreme value. Such of these withdrawals as were made for hoarding gold could be prevented only by a restoration of confidence among those of our people who had grown suspicious of the Government’s financial ability; but the considerable drain from the reserve for the purchase of the very bonds to be sold for its reinforcement, and the much larger drain made by those who profited by the shipment of gold abroad, could be, measurably at least, directly arrested. Thus to the extent that foreign gold might be brought here and used for the purchase of bonds, the use for that purpose of such as was held by our own people or as was already in the reserve subject to their withdrawal would not only be decreased, but the current of the passage of gold would be changed and would flow toward us instead of away from us, making the prospect of 152profit in gold exportation less alluring. An influx of gold from abroad would also have a tendency to decrease the sentimental estimate of its desirability which its unrelieved scarcity was apt to create in timid minds. It was especially plain that so far as withdrawals from our reserve for speculative shipment abroad were concerned, they could be discouraged by the efforts of those whose financial connections in other countries enabled them to sell gold exchange on foreign money centers at a price which would make the actual transportation of the coin itself unprofitable.The position of Mr. Morgan and the other parties in interest whom he represented was such in the business world that they were abundantly able, not only to furnish the gold we needed, but to protect us in the manner indicated against its immediate loss. Their willingness to undertake both these services was developed during the discussion of the plan proposed; and after careful consideration of every detail until a late hour of the night, an agreement was made by which J. P. Morgan & Co. of New York, for themselves and for J. S. Morgan& Co. of London; and August Belmont & Co. of New York, for themselves and for N. M. Rothschild & Son of London, were to sell and 153deliver to the Government 3,500,000 ounces of standard gold coin of the United States, to be paid for in bonds bearing annual interest at the rate of four per cent. per annum, and payable at the pleasure of the Government after thirty years from their date, such bonds to be issued and delivered from time to time as the gold coin to be furnished was deposited by said parties in the subtreasuries or other legal depositories of the United States. At least one half of the coin so delivered was to be obtained in Europe, and shipped from there in amounts not less than 300,000 ounces per month, at the expense and risk of the parties furnishing the same; and so far as it was in their power they were to “exert all financial influence and make all legitimate efforts to protect the Treasury of the United States against the withdrawals of gold pending the complete performance of the contract.”
Four per cent. bonds were selected for use in this transaction instead of ten-year bonds bearing five per cent. interest, because their maturity was extended to thirty years, thus offering a more permanent and inviting investment, and for the further reason that $100,000,000 of shorter five per cent. bonds had already been issued, and it was, therefore, deemed desirable 154to postpone these further bond obligations of the Government to a later date. The price agreed upon for the gold coin to be delivered was such that the bonds given in payment therefor would yield to the investor an annual income of three and three fourths per cent.
It has already been stated that the only bonds which could be utilized in our efforts to maintain our gold reserve were those described in a law passed as early as 1870, and made available for our uses by an act passed in 1875. The terms of these bonds were ill suited to later ideas of investment, and they were made payable in coin and not specifically in gold. Nothing at any time induced the exchange of gold for these coin bonds, except a reliance upon such a measure of good faith on the part of the Government, and honesty on the part of the people, as would assure their payment in gold coin and not in depreciated silver.
It was exceedingly fortunate that, at the time this agreement was under consideration, certain political movements calculated to undermine this reliance upon the Government’s continued financial integrity were not in sight; but it was, nevertheless, very apparent that the difficulties of the situation would be greatly lessened if, in safeguarding our reserve, bonds could be used 155payable by their terms in gold, and bearing a rate of interest not exceeding three per cent. Accordingly, at the instance of Secretary Carlisle, a bill had been introduced in the House of Representatives, some time before the Morgan-Belmont agreement was entered upon, which authorized the issue of bonds of that description. A few hours before the agreement was consummated this sane and sensible legislation was brought to a vote in the House and rejected.
When, in our interview with Mr. Morgan, the price for the gold to be furnished was considered, he gave reasons which we could not well answer in support of the terms finally agreed upon; but he said that the parties offering to furnish the gold would be glad to accept at par three per cent. bonds, payable by their terms in gold instead of in coin, in case their issue could be authorized. He expressed not only a willingness but a strong desire that a substitution might be made of such bonds in lieu of those already selected, and readily agreed to allow us time to procure the necessary legislation for that purpose. He explained, however, that only a short time could be stipulated for such a substitution, because in order to carry out successfully the agreement contemplated, the bonds 156must be offered in advance to investors both here and abroad, and that after numerous subscriptions had been received from outside parties the form and condition of the securities could not be changed; and he added that, but for this, there would be no objection to the concession of all the time desired. It was finally agreed that ten days should be allowed us to secure from Congress the legislation necessary to permit the desired substitution of bonds. A simple calculation demonstrated that by such a substitution the Government would save on account of interest more than $16,000,000 before the maturity of the bonds. It was further stipulated on the part of the Government that if the Secretary of the Treasury should desire to sell any further bonds on or before October 1, 1895, they should first be offered to the parties then represented by Mr. Morgan. This stipulation did not become operative.
When our conference terminated it was understood that Secretary Carlisle and Attorney-General Olney should act for the Government at a meeting between the parties early the following day, at which the agreement we had made was to be reduced to writing; and thereupon I prepared a message which was submitted to the Congress at the opening of its session on the 157following day, in which the details of our agreement were set forth and the amount which would be saved to the Government by the substitution of three per cent. gold bonds was plainly stated; but having no memorandum of the agreement before me, in my haste I carelessly omitted to mention the efforts agreed on by Mr. Morgan and his associates to prevent gold shipments. The next morning a contract embodying our agreement was drawn and signed, and a copy at once given to the chairman of the Ways and Means Committee of the House, so that the delay of a demand for its inspection might be avoided. A bill was also immediately introduced again giving authority to issue three per cent. bonds, payable by their terms in gold, to be substituted in place of the four per cent. bonds as provided in the contract—to the end that $16,000,000 might be saved to the Government, and the public welfare in every way subserved.
The object of this message was twofold. It was deemed important, considering the critical condition of our gold reserve, that the public should be speedily informed of the steps taken for its protection; and in addition, though previous efforts to obtain helpful legislation had resulted in discouragement, it was hoped that 158when the saving by the Government of $16,000,000 was seen to depend on the action of Congress there might be a response that would accord with patriotic public duty.
Quite in keeping with the congressional habit prevailing at that time, the needed legislation was refused, and this money was not saved.
The contract was thereupon carried out as originally made. In its execution four per cent. bonds were delivered amounting to $62,315,400, and the sum of $65,116,244.62 in gold received as their price. The last deposit in completion of the contract was made in June, 1895, but additional gold was obtained from the contracting parties in exchange for United States notes and Treasury notes until in September, 1895, when the entire amount of gold received from them under the contract and through such exchanges had amounted to more than $81,000,000. The terms of the agreement were so well carried out, not only in the matter of furnishing gold, but in procuring it from abroad and protecting the reserve from withdrawals, that during its continuance the operation of the “endless chain” which had theretofore drained our gold was interrupted. No gold was, during that period, taken from the Treasury to be used in the purchase of bonds, as had previously 159been the case, nor was any withdrawn for shipment abroad.
It became manifest, however, soon after this contract was fully performed, that our financial ailments had reached a stage so nearly chronic that their cure by any treatment within Executive reach might well be considered a matter of anxious doubt. In the latter months of the year 1895 a scarcity of foreign exchange and its high rate, the termination of the safeguards of the Morgan-Belmont contract, and, as a result, the renewal of opportunity profitably to withdraw gold for export with a newly stimulated popular apprehension, and perhaps other disturbing incidents, brought about a recurrence of serious depletions of gold from the reserve.
In the annual Executive message sent to Congress on the second day of December, 1895, the situation of our finances and currency was set forth in detail, and another earnest plea was made for remedial legislative action. After mentioning the immediately satisfactory results of the contract for the purchase of gold, the message continued:
Though the contract mentioned stayed for a time the tide of gold withdrawals, its good results could not be permanent. Recent withdrawals have reduced the reserve from $107,571,230 on the eighth 160day of July, 1895, to $79,333,966. How long it will remain large enough to render its increase unnecessary is only a matter of conjecture, though quite large withdrawals for shipment in the immediate future are predicted in well-informed quarters. About $16,000,000 has been withdrawn during the month of November.The prediction of further withdrawals mentioned in this message was so fully verified that eighteen days after its transmission, and on the twentieth day of December, 1895, another Executive communication was sent to Congress, in contemplation of its holiday recess, in which, after referring to the details contained in the former message, it was stated:
The contingency then feared has reached us, and the withdrawals of gold since the communication referred to, and others that appear inevitable, threaten such a depletion in our Government’s gold reserve as brings us face to face with the necessity of further action for its protection. This condition is intensified by the prevalence in certain quarters of sudden and unusual apprehension and timidity in business circles.Perhaps it should not have been expected that members of Congress would permit troublesome thoughts of the Government’s financial difficulties to disturb the pleasant anticipations of their holiday recess; at any rate, these difficulties and the appeal of the President for at least some manifestation of a disposition to aid in their remedy were completely ignored.
The real and sensible cure for our recurring troubles can only be effected by a complete change in our financial scheme. Pending that, the Executive branch of the Government will not relax its efforts nor abandon its determination to use every means within its reach to maintain before the world American 161credit, nor will there be any hesitation in exhibiting its confidence in the resources of our country and the constant patriotism of our people.
In view, however, of the peculiar situation now confronting us, I have ventured to herein express the earnest hope that the Congress, in default of the inauguration of a better system of finance, will not take a recess from its labors before it has, by legislative enactment or declaration, done something, not only to remind those apprehensive among our own people that the resources of this Government and a scrupulous regard for honest dealing afford a sure guarantee of unquestioned safety and soundness, but to reassure the world that with these factors, and the patriotism of our citizens, the ability and determination of our nation to meet in any circumstances every obligation it incurs do not admit of question.
On the sixth day of January, 1896, the gold reserve having fallen to $61,251,710, its immediate repair became imperative. Though our resort to the expedient of purchasing gold with bonds under contract had been productive 162of very satisfactory results, it by no means indicated our abandonment of the policy of inviting offerings of gold by public advertisement. It was rather an exceptional departure from that policy, made necessary by the dangerously low state of the reserve on account of extensive and sudden depletions, and the peril attending any delay in replenishing it. We had not lost faith in the loyalty and patriotism of the people, nor did we doubt their willingness to respond to an appeal from their Government in any emergency. We also confidently believed that if the bonds issued for the purpose of increasing our stock of gold were widely distributed among our people, self-interest as well as patriotism would stimulate the solicitude of the masses of our citizens for the welfare of the nation. No reason for discouragement had been found in public offerings for bonds, so far as obtaining a needed supply of gold and a fair price for our bonds were concerned. The failure of their wide distribution among the people when so disposed of seemed to be largely owing to the fact that the bonds themselves were so antiquated in form, and bore so high a rate of interest, that it was difficult for an ordinary person to make the rather confusing computation of premium and other factors necessary to 163a safe and intelligent bid. In a transaction of this sort, where the smallest fraction of a cent may determine the success of an offer, those accustomed to the niceties of financial calculations are apt to hold the field to the exclusion of many who, unaided, dare not trust themselves in the haze of such intricacies. If Congress had provided for the issuance of bonds bearing a low rate of interest, which could have been offered to the public at par, I am convinced that the plain people of the land would more generally have become purchasers. Another difficulty that had to some extent prevented a more common participation by the people in prior public sales arose, it was thought, from their lack of notice of the pendency of such sales, and want of information as to the advantages of the investment offered, and the procedure necessary to present their bids in proper form.
In view of the fact that the gold then in the reserve amounted to $20,000,000 more than it contained eleven months earlier, when the Morgan-Belmont contract was made, and because, for that reason, more time could be allowed for its replenishment, there was no hesitation in deciding upon a return to our original plan of offering bonds in exchange for gold by public subscription. 164
Having determined upon a return to this method, it was deemed wise, upon consideration of all the circumstances, to make some modification of prior action in such cases. Instead of short-term five per cent. bonds, the longer-term bonds bearing four per cent. interest were substituted, as, on the whole, the best we could offer for popular subscription. Since two offerings of $50,000,000 each had proved to be of only very temporary benefit, it was determined to double the amount and offer $100,000,000 for subscription. Nearly a month was to be given instead of a shorter time, as theretofore, between the date of notice of the offer and the opening of the bids; and extraordinary efforts were to be made to give the most thorough publicity to the offerings—to the end that we might stimulate in every possible way the desire of the masses of our people to invest in the bonds. Especial information and aid were to be furnished for the guidance of those inclined to subscribe; and successful bidders were to be allowed to pay for the bonds awarded to them in instalments. The lowest denomination of the bonds was to be fifty dollars, and the larger ones were to be in multiples of that sum. In point of fact, it was resolved that nothing should be left undone which would in any way 165promote the success of this additional and increased offer of bond subscription to the public.
Accordingly, on the sixth day of January, 1896, a circular bearing that date was issued, giving notice that proposals would be received until the fifth day of February following for gold coin purchases of $100,000,000 of the four per cent. bonds of the United States, upon the terms above mentioned. These circulars were extensively published in the newspapers throughout the country. Copies, together with a letter of instruction to bidders, containing, among other things, a computation showing the income the bonds would yield to the investor upon their purchase at prices therein specified, and accompanied by blanks for subscription, were sent to the postmasters in every State and Territory with directions that they should be conspicuously displayed in their offices. The Comptroller of the Currency prepared and sent to all national banks a circular letter, urging them to call the attention of their patrons to the desirability of obtaining the bonds as an investment, and to aid in stimulating subscriptions; and with this was forwarded a complete set of papers similar to those sent to the postmasters. These papers 166were also sent to other banks and financial institutions and to bankers in all parts of the country, and, in addition, notice was given that they could be obtained upon application to the Treasury Department or any of the subtreasuries of the United States. Soon afterward, in view of the large amount of the bonds offered, and as a precaution against an undue strain upon the general money market, as well as to permit the greatest possible opportunity for subscription, the terms of the original offer of the Secretary of the Treasury were modified by reducing in amount the instalments of the purchase price and extending the time for their payment.
On an examination of the bids at the expiration of the time limited for their presentation, it was found that 4635 bids had been received, after rejecting six which were palpably not genuine or not made in good faith. The bidders were scattered through forty-seven of our States and Territories, and the aggregate amount represented by their bids was $526,970,000. The number of accepted bids upon which bonds were awarded was only 828, and of these ten were forfeited after acceptance, on account of non-payment of the first instalment of the purchase price. Several of the bids accepted 167were for a single fifty-dollar bond, and they varied in amount from that to one bid made by J. P. Morgan & Co. and several associates for the entire issue of $100,000,000, for which they offered 110.6877 on the dollar. To all the other 827 accepted bidders who offered even the smallest fraction of a farthing more than this the full number of bonds for which they bid were awarded.
The aggregate of the bonds awarded to these bidders, excluding the Morgan bid, amounted to $62,321,150. The remainder of the entire offering, including more than $4,700,000 of the awards which became forfeited for non-payment as above mentioned, were awarded to Mr. Morgan and his associates, their bid being the highest next to those on which bonds had been awarded in full, as already stated.
The aggregate of the prices received for these bonds represented, by reason of the premiums paid, an income to the investor of a trifle less than three and four tenths per cent.
As a result of this large sale of bonds, the gold reserve, which, on the last day of January, 1896, amounted to less than $50,000,000, was so increased that at the end of February, in spite of withdrawals in the meantime, it stood at nearly $124,000,000. 168
It will be observed that, notwithstanding all the efforts made to distribute this issue of bonds among the people, but 827 bids out of 4641 were entitled to awards as being above the Morgan bid; and that more than one third of all the bonds sold were awarded on the single bid of Mr. Morgan and his associates.
The price received on this public sale was apparently somewhat better for the Government than that secured by the Morgan-Belmont contract; but their agreement required of them such labor, risk, and expense as perhaps entitled them to a favorable bargain. In any event, the advantages the Government derived from this contract were certainly very valuable and should not be overlooked. On every sale of bonds by public offering, not excluding that just mentioned, large amounts of gold were withdrawn from the Treasury and used in paying for the bonds offered. In the execution of the contract of February, 1895, no gold was withdrawn for the purchase of the bonds, and the reserve received the full benefit of the transaction. Each sale by public advertisement made prior to the time of the contract had been so quickly followed by extensive and wasting withdrawals of gold from the reserve, that scarcely a breathing-time was allowed 169before we were again overtaken by the necessity for its reinforcement. Even after the notice given for the last sale on the eighth day of January, 1896, and between that date and the 1st of June following, these withdrawals amounted to more than $73,000,000, while during the six months or more of the existence of the Morgan-Belmont contract the withdrawals of gold for export were entirely prevented and a season of financial quiet and peace was secured.
Whatever may be the comparative merits of the two plans for maintaining our gold reserve, both of them when utilized were abundantly and clearly justified.
Whether from fatigue of malign conditions or other causes, ever since the last large sale of bonds was made the gold reserve has been so free from depletion that its condition has caused no alarm.
Two hundred and sixty-two millions of dollars in bonds were issued on its account during the critical time covered by this narrative; but the credit and fair fame of our nation were saved.
I have attempted to give a detailed history of the crime charged against an administration which “issued bonds of the Government in 170time of peace.” Without shame and without repentance, I confess my share of the guilt; and I refuse to shield my accomplices in this crime who, with me, held high places in that administration. And though Mr. Morgan and Mr. Belmont and scores of other bankers and financiers who were accessories in these transactions may be steeped in destructive propensities, and may be constantly busy in sinful schemes, I shall always recall with satisfaction and self-congratulation my association with them at a time when our country sorely needed their aid.
No comments:
Post a Comment