and ample provision should be made to secure their redemption on demand.

The examination, or, rather, conference, took a wide range between the members of the committee and myself. Mr. Beck pressed me to express my opinion of the legal tender which was contained in the bill introduced by him, providing for a mandatory legal tender of all forms of money. I answered:

"I do not think, Mr. Senator, you ought to ask me that question, because that is a matter you are called upon to decide and pass upon in your sphere as a Senator. I would say, on the other hand, that I do not think it ought to have any such effect. I suppose, however, Mr. Bayard would very frankly tell you what the intention of the resolution is."

Mr. Bayard then said:

"I know one thing: That banks cannot compel me to receive their notes for debts due me, nor can any man compel me to receive them. If the government owes me my salary, I think they could, perhaps, pay me in the national bank notes, under the existing law, but you cannot compel the payment of a debt between private parties with it."

I said:

"If you will allow me, I should like to amplify a little on one point: I think if Congress would take up this question of the modification of the legal tender note and make certain rules of evidence (which would be clearly constitutional), which good lawyers undoubtedly approve, declaring that where a contract is made between parties upon the basis of United States notes, it shall be presumed by courts, in the affirmance of contracts, that the payment in United States notes shall be a sufficient compliance therewith, and that, in the absence of any absolute provision to the contrary, paper money, or promises to pay money, shall be a legal tender in discharge of any obligation."

In respect to the cost of refunding, the next subject of inquiry, I was able to give them full details, with all the orders of the treasury department from the 16th of January, 1878, until the close of these operations in the summer of 1879. Many of these details had not then been published, but I furnished the fullest information possible. In response to an inquiry as to the amount of commissions paid to the national banks on account of the sale of the four per cent. bonds, a full table was exhibited of the subscriptions of, and commissions paid to, the twenty-six national banks chiefly engaged in this business, in

which the total amount of sales made by them was shown to be $552,929,100, and the amount of commissions paid was $1,363,070.34. In exhibiting these tables I said:

"Here is a table showing the sales and commissions of certain banks. I have taken all banks who sold over $1,000,000. There were twenty-six of them. The First National Bank, having been always connected with the national securities and having been the agent of the syndicate, continued to be the agent of the foreign syndicate, and continued to have altogether the largest business. They sold of the four per cent. bonds $262,625,000. The sales of the other banks are kept here in the same way. The Bank of New York (National Banking Association), I think, was the next. It sold $57,259,500. The National Bank of Commerce sold $51,684,000; the National Bank of the State of New York sold $46,915,000, and so on down."

I called attention to the fact that in the last sale of about $200,000,000 four per cent. bonds, we received one-half of one per cent. premium, or a million dollars, which nearly covered the entire commissions paid to the twenty-six banks named. Full details were given of the various loans, and it was shown that the cost of selling the last loan was less expensive to the government, in proportion to the amount sold, than any previous loan.

In reference to the sinking fund, about which I was asked my opinion, I said it was the same old question that had been so often debated. I explained that a sinking fund is nothing but an obligation or promise, on the part of the government or an individual, to pay a certain amount annually of the principal of the debt in addition to the interest. In this way the debt is gradually liquidated and the annual interest lessened. A sinking fund promised by a government is nothing more or less than a name for the surplus revenue of the government. A government without a surplus revenue cannot possibly have a sinking fund. There is no way to pay a debt except by having an income above your expenditures, and you can call your surplus revenue a sinking fund if you choose. I said that under existing law the department was required to purchase one per cent. of the entire debt of the United States each fiscal year, and to set the amount apart as a sinking fund, and to compute interest thereon to be added with the amount to

be subsequently purchased each year. This act can only be construed as an authority to purchase the debt in case of surplus revenue for the purpose.

In practice, while keeping a book account with the sinking fund, we have reduced the debt by the application of surplus revenue more rapidly than if the requirements of the sinking fund had been literally complied with. At several periods we, in fact, did not reduce the debt, but actually increased it, and especially within the last two years, but in other years of prosperity, when the revenues exceeded our expenditures, we were able to pay a much larger amount of the debt than the sinking fund required by law.

Mr. Beck said: "I propose to inquire pretty carefully, before we get through with this interview, concerning the immense reduction of the public debt which has been made, of over $700,000,000, from the highest point down to the present, so that we may be governed in the future taxation by actual requirements of the public service." He expressed his wish, after he had carefully examined the interview thus far, to continue it at a future day, but I was not again called upon.

S.-54

CHAPTER XL.

THE PRESIDENTIAL NOMINATION IN 1880.

Talk of Grant for President for a Third Term - His Triumphal Return from a Trip Around the World-The Candidacy of Mr. Blaine and Myself - Many of My Opponents Those Who Disagreed with Me on Financial Questions - Accused of Being a Catholic and of Using Patronage to Aid in My Nomination— My Replies-Delay in Holding the Ohio State Convention - My Interview with Garfield-Resolution of the State Convention in

D

My Favor - National Convention at Chicago on June 2,
1880- Fatal Move of Nine Ohio Delegates for Blaine -
Final Nomination of Garfield - Congratulations
Letters to Governor Foster and to Garfield

Wade Hampton and the "Ku-Klux Klan."

URING the entire period of this session of Congress, the nomination for President by the Republican national convention was naturally the chief subject of interest in political circles. General Grant returned from his voyage around the world arriving in San Francisco in December, 1879, and from that time until he reached Washington his progress was a grand popular ovation. He had been received in every country through which he passed, especially in China and Japan, with all the honors that could be conferred upon a monarch. He made no open declaration of his candidacy, but it was understood that he was very willing to again accept the office of President. His friends openly avowed their intention to support him, and answered the popular objection against a third term by the fact that a term had intervened since he last held the office. Mr. Blaine was also an avowed candidate and had strong supporters in every part of the Union. My name was mentioned as a candidate, and it was generally supposed that one of the three would be the nominee of the Republican convention. I soon found that the fact that I held an office which compelled me to express my opinions was a drawback rather than a benefit, and, while I had the natural ambition to attain such a distinction, I was handicapped by my official position.

The friends of General Grant succeeded in getting control of the national committee and could dictate the time and place for holding the convention. Senator Cameron was chosen chairman of that committee. He openly avowed his preference for the nomination of General Grant, and exercised all his influence and power to promote it. It was decided to hold the convention on the 2nd of June, 1880, at Chicago.

The chief topic of all the newspapers and politicians was the merits and demerits of the three candidates then recognized as the persons from whom the choice was to be made. Every charge against either the personal character or conduct of each was canvassed with the broadest license, and often with great injustice. The life and conduct of General Grant were analyzed, and praised or blamed according to the bias of the speaker or writer. Mr. Blaine always had a warm and ardent support by the younger Republicans in every part of the United States. His brilliant and dashing manner and oratory made him a favorite with all the young and active politicians, but, as he was a bold and active fighter, he had enemies as well as friends. My strength and weakness grew out of my long service in the House, Senate and cabinet, but, as my chief active work was connected with the financial questions, upon which men of all parties differed widely, I had to encounter the objections of all who were opposed to my views on these questions. The idea was that in the certain contest between Grant and Blaine I might be nominated, in case either of them should fail to receive a majority of the votes cast in the convention.

It is scarcely worth while to point out the changes of opinion during the popular discussion that preceded the meeting of the convention of which every newspaper was full, the discussion being universal. Votes were taken and expression of opinion sought in every community in the United States.

My letter book at this time became a curious mixture of business and politics, so that I was early compelled to ask two of my personal friends to take an office, which I furnished them in the Corcoran building in Washington, to answer such letters as grew out of the contest, and as a place where conferences could be held by persons interested in my nomination.