Shylock: as banker
" Specie-resumption," as we know from our preceding chapter, was laid out, urged, and violently undertaken by "one, Hugh McCulloch." He soon passed away from life in Washington and went to the bosom of Dives in Lombard Street, London. But in the course of time his twin-soul, if more subtle of brain, John Sherman, occupied his place as Secretary of the Treasury. The so-called "honorable" John Sherman has occasionally taken a stand on the money-question in favor of the public welfare. When his fellow-citizens of Ohio have now and then roused themselves and bristled with anger at the most impudent aggressions of his gold-fiends, he has deftly trimmed himself to the wind and looked well that it might not blow him out of public office. In 1861 and '2 he appears to have meant well for his country. Was John Sherman really honest in those early days or was the money-power economical of purchases that were not absolutely needed? Never mind. A few years later, he became the political attorney for every legislative abomination that Shylock could invent to rob the American people. However sad a thing it has been for us, we can readily conceive what a convenience it has been to the National Banks and the Bank of England to have a chief-clerk in the United States Senate.
On the 14th of January, 1875 it was duly provided by law [U.S. Statutes: an Act to provide for the Resumption of Specie Payments.] that resumption of specie payments should take place in the United States four years subsequently that is to say, commencing with the 1st of January, 1879. This law was of course an act of the banks and the gold-bugs. It provided for the unlimited issue of national-bank notes which had been confined to a volume of three hundred and fifty-four millions an arrangement to give the banks a complete monopoly of the nation's money. It provided that as fast as the banks should put out their extra issues, the government legal-tenders our "greenbacks" should be "redeemed" to the extent of "eighty per centum of the sum of national-bank notes so issued" a result necessitating the sale of bonds and a perpetual load of interest for tax-payers on the investment. This Bankers' statute provided, finally, that all the "greenbacks," beyond those got rid of in this way a balance of three hundred millions should be "redeemed in coin, on and after the first day of January, 1879, on presentation at the office of the assistant treasurer of the United States in the City of New York, in sums of not less than fifty dollars."
The purpose here was the complete destruction of all the greenbacks. But as the time approached, it was seen that by no human possibility could this intent of the law be carried out. The country neither had, nor could procure, gold for the purpose and silver had been demonetized. As Senator Voorhees explained in his speech of January 15th, 1878:
"The demonetization of silver was purposely accomplished before the policy of specie-resumption was declared, in order to make money as scarce as possible in reaching, by forced contraction, the single standard of gold."
So the Shylocks had overreached themselves and they began to hear from it. To demand their pound of flesh would have produced a stringency of money with a chaos of poverty equal to that in France at the outbreak of her first revolution. The gold-bugs themselves might have risked even this "slough of despond." But Congress intervened, and on the 31st of May, 1878 a law was passed annulling "resumption," so far as to require the re-issue of the treasury-notes, as taken up.
On January 1st, 1879 the United States Treasury had in hand A hundred and thirty-three millions of dollars in coin. There were three hundred and forty-six millions of "greenbacks" to be redeemed. What if these "greenbacks" had all been presented? The Government of the United States would have stood a bankrupt.
But John Sherman is a man who can see a point and meet an emergency till his time shall come! How did he get coin? In 1879 John Sherman, Secretary of the Treasury made United States treasury-notes exactly what Stevens and Spaulding had tried to make them in 1861 receivable for all treasury-purposes including customs-duties and interest on the national debt. Then they turned into bank "reserves" and little was cared for the gold behind them. But this scheme threw the whole onus of actual specie payments on the Government, while the banks were left free to inflate the currency to any extent.
Thereupon, a personally harmless man, who happened to be President and who did as he was told, prattled thus:
"I congratulate Congress on the successful execution of the resumption act. At the time fixed and in the manner contemplated by law, United States notes began to be redeemed in coin. Since the 1st of January last they have been promptly redeemed on presentation; and in all business transactions, public and private and in all parts of the country they are received and paid out as the equivalent of coin. The demand upon the treasury for gold and silver in exchange for United States notes has been comparatively small and the voluntary deposit of coin and bullion in exchange for notes has been very large. The excess of the precious metals deposited or exchanged for United States notes, over the amount of the United States notes redeemed, is about $40,000,000."
Rutherford Burchard Hayes was a pious and trustful soul. He was capable of faith even in John Sherman.