Reminiscences of Sixty Years in Public Affairs Volume II Part 10

Mr. S. M. Clark was the chief of the Bureau of Printing and Engraving and everything was confided to him. It is to be said after the lapse of thirty years for examination, that not a t.i.ttle of evidence has been found warranting any imputation upon his integrity. It is true that in one instance a dishonest plate printer took an impression of a bond upon a sheet of lead for use in counterfeiting. The possibility of such an act was due to a lack of system and not to any want of fidelity in Mr. Clark. One of my first acts was to remove Mr. Clark, and then to open a new set of books. The printing of the old issues was suspended permanently, and new plates were prepared. Mr. Clark had had control of the manufacture of the paper, the control of the engravers, the control of the plates, the control of the printers, of the counters, and he had had the custody of the red seal. The postal currency was printed under his direction. The pieces were not numbered, they were due bills only. At the end of twenty years the books showed an issue of about fifteen million dollars in excess of the redemptions.

His power was unlimited as there were no checks upon him. He once said to me when a committee of Congress was investigating his bureau, during Mr. McCulloch's administration:

"They will never find a five cent piece out of the way."

After the discharge of Clark, I ordered an account of stock to be taken. I appointed a custodian of the plates after a full inventory had been made, whose duty it was to deliver the plates each morning to the printers, to charge them to the printers, to receive them at the close of the day, and to settle the account of each man. A special paper was designated and public notice was given under the statute by which it was made a crime for any person to make, use or have in his possession any paper so designated. The paper was manufactured under the supervision of an agent of the department, who was authorized to count and receive all the paper at the mills and to answer the orders for its delivery to the printers. The paper making machine was equipped with a register which numbered the sheets of paper. That record was compared daily with the number of sheets received by the agent, and thus the Government was protected against any fraudulent or erroneous issue of paper. Registers were also placed upon each printing press. Each morning one thousand sheets of paper were delivered to each plate printer, and at the close of work his printed sheets were counted and the number compared with the register before the printer was allowed to leave the office. In like manner there was an accounting with each counter. The same system was extended to the managers of the machines used for numbering bonds and bank notes. The registering machine was made by an employee, under my direction, and at the cost of the Government.

Books of account were opened upon the new system. During my administration, as far as I know, there was never the loss of a sheet of paper nor was there a fraud committed in connection with the business of the bureau. For further security, I made arrangements by which two bank note companies in the City of New York prepared sets of plates for a single printing on each security, the red seal being imprinted in the Treasury Bureau. By this arrangement collusion was impossible. The expense of printing was increased by this arrangement, but it seemed to be more important to attain absolute security against fraud than to save money. My successors have thought otherwise and the printing is now done in the Treasury.

During my term I ascertained that a man in New York who had once been employed to print certain securities, had in his possession the plates which he had used and which he claimed as his property. The printing had been done in Mr. Chase's administration and there was no agreement that the plates were to be delivered to the Government. The plates were obtained, finally, by the payment of a sum of money. The person who had the plates was an old man, and there was danger that they might fall into the hands of dishonest parties.

When I was in charge of the Treasury I had an understanding with Colonel Whiteley, the Chief of the Secret Service that I should have an interview with any expert professional criminals who might fall into his hands. I recall an interview with one such criminal. A man of forty years and a gentleman in appearance, and a professional gentleman, as well as a criminal by profession.

Upon the suggestion of Colonel Whiteley I gave the prisoner a fresh one dollar green-back note. He took a phial of liquid from his pocket, wet one half of the paper with the liquid and in my presence the colors disappeared from the paper. Time and exposure have given a dark tinge to the paper which was a pure white when the experiment was ended. By the use of the liquid the counterfeiter was able to obtain a piece of fibre paper on which a bill of large denomination might be printed, given only the engraving.

The revenue marine service was impaired by the incompetency of many of the officers, and its efficiency was also impaired by the size and quality of the s.h.i.+ps. Some of them were sailing vessels, most of them were of wood, and the modern ones were unnecessarily large in size. I created a commission and all the officers except a few who were too old for active service were subjected to an examination and those who were found incompetent were discharged from the service. Their places were filled by young, active and well qualified men.

A commission was appointed to consider and report upon the size of the vessels that were best adapted to the service. Three reports from successive commissions were made before a satisfactory result was reached. Finally, a report was made by Captain Carlisle Patterson, that was approved by me and by a committee of Congress. The recommendations of that report have been followed, as far as I know.

At that time the Mint Service was without organization. Each mint and a.s.say office was in charge of an officer called superintendent, but there was no head unless the Secretary of the Treasury could be so considered, as all the business came to him. Upon my recommendation Congress authorized the appointment of a Director of the Mint, and upon my recommendation the President appointed Dr. Linderman, a Philadelphia Democrat, but a gentleman familiar with the service.

Under him the service was organized and made systematic.

When I took charge of the Treasury Department there was no system of bookkeeping and accounting, that was uniform in the various customs houses of the country. Each port had a plan or mode of its own, and there was no one that was so perfect that it could be accepted as a model in all the ports. The books and forms were made and prepared at the several ports and often at inordinate rates of cost.

I appointed a commission of Treasury experts to prepare forms and books for every branch of business. Their report was accepted and since that time the modes of accounting have been the same at all the ports. The stationery prepared is furnished through the Government printing office, at a considerable saving in cost, and clerks in the accounting branch of the Treasury are relieved of much labor in the preparation of statements.

Upon the transfer of Mr. Columbus Delano from the office of commissioner of Internal Revenue to the Secretarys.h.i.+p of the Interior Department, the question of the appointment of a successor was considered. The President named General Alfred Pleasanton, who was then a collector of internal revenue in the city of New York. He had been a good cavalry officer, a graduate of West Point, and the President was attached to him. My acquaintance with Pleasanton was limited, but I was quite doubtful of his fitness for the place. My opposition gave rise to some delay, but at the end the appointment was made, the President saying in reply to my doubts that if he did not succeed he had only to say so to the General and he would leave at once. The appointment of Pleasanton was urged by Mr. Delano and General Horace Porter as I understood, both of whom were very near the President.

Pleasanton had been informed of my position, and although I was his immediate superior he did not call upon me, nor did he ever, except upon one occasion, come into my office, unless I sent for him. On my part I resolved to avoid any criticism upon his official conduct unless compelled to do so. He entered upon his duties the first of January, 1871, and although in several instances I had occasion to control his purposes in regard to contracts and to the refund of taxes, I did not feel called upon to mention the facts to the President. In May the President said:

"I have come to the conclusion that Pleasanton is not succeeding in his office."

I replied: "That is so."

The President then said: "I will try to find some other place for him, and I will then ask him to resign."

The President went to Long Branch for the summer and nothing was done.

I had very early discovered that Samuel Ward was exercising a good deal of influence over the commissioner. It was his policy to secure influence by giving dinners and entertainments, and, as far as possible, he obtained the attendance of influential members of Congress and of the chief officers in the executive departments. He once said:

"I do not introduce my measures at these entertainments, but I put myself upon terms with persons who have power."

On a time I received a report on the subject of refunding a cotton tax amounting to about $600,000. It bore two endors.e.m.e.nts--one by the solicitor "Examined and disallowed, Chesley," and one by the commissioner "Allowed, Pleasanton."

I placed the report in my private drawer with the purpose of delaying action until I should ascertain where the propelling force existed.

Having occasion to go to Ma.s.sachusetts I was absent about two weeks.

Upon my return Mr. Ward came into my office and inquired whether I had received the report. I replied that I had received it. "Had I acted upon it?" I said that I had not. He then proceeded to say that the claim was a good one,--that Mr. Delano had examined it, and had concluded to pa.s.s it, but as he left the office rather suddenly he had neglected to act upon it. Finally, he expressed the hope that I would act without delay. I had already decided the case adversely upon the ground that the allowance was unauthorized. Therefore I had only to endorse the word "disallowed" with my signature and to return the report to the commissioner. I learned that the commissioner was engaged through the agency of Ward in making a contract with a Connecticut firm that was in my opinion at once improvident and irregular. This act led me to determine to end the difficulty at once.

I went to the Executive Mansion and asked General Babc.o.c.k to go to Long Branch and say to the President that the business of the Internal Revenue Office was in such a condition that immediate action was necessary. As a result the President returned that night and early the next morning he sent for me. I stated the facts, and he said he would send for General Pleasanton and ask him to resign. At the interview Pleasanton asked for the reasons. The President said: "The Secretary is not satisfied with your administration." Pleasanton replied: "I think I can make everything satisfactory to the Secretary." The President replied, naturally: "If you can, I am content." Then for the first time Pleasanton came to my office without a request from me. I invited him into my private room, and when he had related his interview with the President, I said: "General, if this were a personal matter we might come to an understanding, but your administration of the office has been a failure from the first and you must resign." This ended the interview.

He refused to resign and the President removed him. He appealed to the Senate in a lengthy communication, but without effect. Pleasanton may have been, and probably was, a good military officer, but he did not possess the qualities that are essential in the discharge of important civil trusts.

Neither from my experience in Congress nor in the Treasury Department can I deduce much support for the doctrines of the cla.s.s of politicians called Civil Service Reformers. From their statements it would appear that every member of Congress was the recipient of an amount of patronage in the nature of clerks.h.i.+ps that he could and did control.

I can say for myself that as a member I never a.s.serted any such right and as the head of the Treasury I can say that no such claim was ever made upon me by any member of Congress. The nearest approach to it was by George W. Julian. During one of his canva.s.ses for re-nomination, a clerk named Smith, and a correspondent of a journal in Mr. Julian's district, had advocated the nomination of Mr. Wilson (Jeremiah). When Mr. Julian secured the nomination, Smith gave him his support.

Nevertheless when Julian returned to Was.h.i.+ngton he demanded Smith's removal. After hearing all the facts I declined to act. Julian was very indignant, and afterwards from the Astor House, New York, wrote me a violent, I think I might say unreasonable letter.

The public mind has been much misled by the statements in regard to removals and appointments. The employees in a department are of two sorts. There is a cla.s.s who are trained men in the places that they occupy. They have been in the service for a long period. They are familiar with the laws relating to their duties, and to the decisions of the courts thereon, and they are the possessors of the traditions of the offices. They are as nearly indispensable as one man can be to another, or to the safe management of business. The head of a department cannot dispense with the services of such men. All thought of political opinions disappears. The responsibility of a change in such a case is very great. No prudent administrator of a public trust will venture upon such experiments. There is another cla.s.s of clerks who are employed in copying, in making computations in simple arithmetic, in writing letters under dictation, and in other ordinary clerical work.

The public interest is not very large in the retention of such persons.

The ordinary graduates of the high schools of the country are competent for all those duties. But the clerks of this cla.s.s are not removed in ma.s.s, and they never will be, under any administration. Even a fresh man at the head of a department will soon find that the fancied political advantages are no adequate compensation for the trouble that he a.s.sumes and the risk of error and fraud that he runs when he takes new and untried persons in the place of those who have been tested.

As late as 1870 about thirty per cent. of the employees of the Treasury in 1860 were in office, and this notwithstanding that the Treasury furnished recruits for both armies. During my time and for years afterward, the post of a.s.sistant Secretary was held by Mr.

Hartley, a Democrat from the days of Pierce and Buchanan. He was experienced, diligent and entirely trustworthy.

Of the first cla.s.s of employees it is to be said that there is no occasion to embalm them in their offices, and if their pay is adequate there is no ground for placing them upon the pension rolls. Their duties are not as exacting as the duties and labors of men in corresponding stations in private life. As to the second cla.s.s, their relations to the public are such that no public obligation arises except to pay them the stipulated salaries.

It is essential to a proper administration that the Secretary or the President should have the power of removal, and it should never be coupled with the duty of making a statement of the cause. Not infrequently a statement would be the occasion of scandal and of suffering by innocent parties. The power may be abused as every power may be, in the hands of dishonest or corrupt men. This is one of the perils to the public, a peril from which no government can escape. With us a change of rulers is a remedy for political wrongs that do not belong to the catalogue of crimes. It may be said, however, that this power of removal gives to a dishonest administrator of a department the opportunity to secure the appointment of his political friends in the place of political opponents removed, and this whatever may be the method of appointment. The candidates may pa.s.s the compet.i.tive examination, and they may enter upon their duties, but their chief in thirty or sixty days may find them lacking in practical apt.i.tude, and so on, until those of the true faith shall be sent forward by the examining board.

Honest administrators of official duties are embarra.s.sed by the system and dishonest ones evade it. The system may become the enemy of honesty and the s.h.i.+eld of hypocrisy. Only this is needed. When the appointing power has designated a person for an office, let that person be examined by an independent board with reference to character and those qualifications which seem to be a fit preparation for the practical duties of the place. Whenever the power of appointment and removal is abused the public has a remedy in a change of administration. And herein is one reason why the Presidential term should not be extended. There may be many evils of administration which are not so flagrant as to warrant proceedings for impeachment.

Such evils may be borne for brief periods, when if the term of the President were extended to six or eight years the dissatisfied elements of society might be tempted to engage in revolutionary movements. Nor is there wisdom in limiting the Presidential office to a single term in the same person. The thought that one has a future is a great stimulus to careful and energetic action in the performance of public duties.

For a President there is no future except a re-election, which is in fact an approval by the country of his administration. A wise man will strive to so conduct affairs as to merit that approval. A House of Representatives already condemned by a popular verdict is but a poor guardian of the rights of the people; and a defeated administration performs its duties in the most indifferent manner. After a defeat appointments will be made and acts done that would not have been hazarded pending an election. It is true, probably, of every administration, not excepting that of General Was.h.i.+ngton, that the second term was less acceptable to the country than the first. Mr.

Lincoln had no second term, and it is useless to speculate upon its probable character, if he had lived to perform its duties.

It was my habit to be at the Treasury every morning at nine o'clock, and I usually sent immediately for one or more heads of division or chiefs of bureau for conference upon some matter connected with their duties. By frequent interviews I acquired such knowledge of their duties and of pending questions that I always had a reason for those interviews. By this course I maintained relations of familiarity with the officers who const.i.tuted the department for administrative purposes, and I also established a system of punctuality in the matter of attendance. When the head of a division is tardy, the clerks soon venture to follow his example, and if he is prompt they are ashamed to be dilatory unless they have an adequate excuse. The same relation exists between the bureau officers and the head of a department.

One of my first acts in the nature of a financial policy was to establish the Sinking Fund, agreeably to the act of February 25, 1862.

Seven years had pa.s.sed since the pa.s.sage of the law and four years since the end of the war and yet nothing had been done to provide for the redemption of the public debt agreeably to the promise that had been made when the Government was a large borrower of money and when its credit was depreciated, seriously, in all the markets of the world. In my first annual report, December, 1869, I advised Congress of my action and I recommended the application of the bonds that I had then purchased, amounting to about fifty-four million dollars, to the Sinking Fund, until the deficiency then existing had been met. The step that I then took was taken in obedience to the law, and not from any great faith in the wisdom of the Sinking Fund policy, nor was it from any fear that the Government could not pay its debts whether a Sinking Fund was or was not created.

The faith of the Government had been pledged to a particular policy and I thought that the observance of that policy was both wise and just. A government cannot afford to disregard the terms of its undertakings even if a violation or neglect does not work harm to anyone. The payments to the Sinking Fund were made regularly during General Grant's administration, and the credit of the Government was thereby somewhat strengthened. The chief element of strength was in the fact that the payments were such as to astonish the heavily taxed and debt burdened States of Europe. In my four years of service as the head of the Treasury the payments on the debt reached the enormous sum of three hundred and sixty-four million dollars. No one of my successors has paid an equal amount, nor has an equal amount been paid in any other equal period of time by the United States or by any other government.

At the time I entered the Treasury the price of gold was at about forty per cent premium and when I left the Treasury it was at about twelve per cent premium. In the summer of 1869 I entered upon the policy of selling gold and buying bonds. The sales and purchases were made by the a.s.sistant Treasurer in New York, but the bids were reported to me and by me accepted or rejected. A leading criticism was this: It was claimed that the simple method was to buy bonds in gold and thus to secure the bonds by one transaction.

This policy would have limited the number of purchasers of gold to those who could command bonds. By the policy pursued the sales of gold were open to anyone who had money. The gold was sold for currency, and the bonds were purchased with currency. When the Treasury announced its purpose to purchase bonds the price advanced in the market. The President remarked to me jocularly that he had suffered by not knowing what the department was about to do, inasmuch as he had sold bonds a few days too early and at a price below their then present value.

During my service as Secretary of the Treasury I carried two questions only to the Cabinet discussions--and I have forgotten one of the questions, but it had some political significance. The other arose in this manner: My method of negotiating the sale of new bonds under the Funding Act of July, 1870, had been severely criticized.

The Government was compelled to give ninety days' notice of its purpose to redeem five-twenty bonds, and as we could not with safety make a call until we had the funds, and as our chief source was the proceeds of new bonds we could not call until a sale was made. As a consequence the Government was a loser of interest on all called bonds for the period of ninety days. I arranged with the subscribers for new bonds, that they should have the interest for the ninety days upon a deposit of old bonds as security for the new ones subscribed and taken. The Government lost nothing, and the subscribers were benefitted greatly, and thus the subscriptions were increased.

During the campaign of 1872 I had an opportunity to negotiate a new loan upon the same basis. Knowing that the proceeding would renew criticism, I thought it proper to lay the case before the President and Cabinet. Upon their advice the negotiations were suspended.

Governor Fish on more than one occasion complained that the Cabinet were as ignorant of the proceedings and purposes of the Treasury as was the outside world. His complaints were well founded. Much of the business aside from routine matters was secret. For example my orders for the sale of gold and the purchase of bonds were never issued at any other time than Sunday evening, and then always by myself. The orders were sent to the Sub-Treasurer at New York, and given to the a.s.sociated Press at the same time. Consequently, on Monday morning all the country was informed, and under such circ.u.mstances that the chance of some to speculate upon the ignorance of others were reduced to the minimum. Moreover, the members of the Cabinet might divide. I should then be compelled to act upon my own judgment, and against the views of some of my a.s.sociates. Again, if I had the support of the President and Cabinet, I could not have used the fact as an excuse for myself. The public knew no one but the Secretary. I chose to act upon my own judgment knowing that there was no one else to share the responsibility in case of failure.

In my report to Congress, in December, 1869, I set forth a system for refunding the Public Debt. I had unfolded the scheme in a speech in the House of Representatives, July 1868. I had already taken two steps preparatory to the undertaking. First, in May, 1869, I established the Sinking Fund under the Act of February 25, 1862.

Second, by the purchase of bonds the world had a.s.surance that the debt would be paid. The effect of these two measures was seen in the increasing market value of the bonds. In other words the credit of the country was improving. When the President was preparing his message of December, 1869, he called upon me for my views in regard to the Treasury, and I furnished him with a synopsis of my plan which he embodied in his message. I retained a copy of the synopsis and that copy is in the hands of my daughter. Simultaneously I prepared a bill upon the basis of the report and caused the same to be printed upon the Treasury press. Upon an examination of the papers on file in the archives of the Senate I find that cuttings from my printed bill form a part of the bill which was printed by the Finance Committee of the Senate of which Senator Sherman was chairman. The bill was changed in details but not in principle. The loan was in three parts as my bill was prepared. A portion at 5 per cent, a portion at 4 per cent, and a third portion at 4 per cent. The division was retained in the statute, but the amount of the loan at each of the several rates was changed. By my bill the interest could be made payable in Europe.

This feature was stricken out by the committees in the House or the Senate. This change I overcame or avoided ultimately by a rule of the department by which interest on registered bonds could be made payable in checks of the Treasurer. These checks are now sent to all parts of the world and through the banking facilities they are everywhere as good as gold, subject only to the natural rates of exchange between different countries. Since that time railroad companies and other business corporations have accepted the system. My plan of making the interest on the bonds payable in Europe was rejected under the lead of gentlemen who thought it involved some sort of national degradation.

My object was to make the loan more negotiable in Europe and thus to extend the demand, and consequently, to increase the value of our securities.

The records of the Treasury Department show that on the 23rd day of December, 1869, I sent to General Schenck of the House, a draught of a bill for refunding the Public Debt. The same records show that on the 19th of January, 1870, I sent to Senator Sherman eight copies of a bill. These bills were framed in conformity to the plan marked out in my report of December, 1869. Previous to the preparation of that report I had not any conference with any member of Congress nor with any other person in regard to the details of the scheme.

On the 12th of July, 1870, Mr. Sumner introduced a bill for refunding the Pubic Debt (Sen. S. 80). As might have been expected it was not a practical measure, and on the 3rd day of the following February Mr.

Sherman reported the bill of Mr. Sumner in a new draught. A single copy of that bill is on file in the office of the secretary of the Senate, and no other copy can be found.

This bill conforms to my report, and upon my recollection it is the bill as prepared by me. The division of the loan conforms to my recommendation in the report, and it provides that the interest may be made payable abroad. Subsequently these provisions were changed.

General Schenck had then recently returned from Europe and he was of the opinion that the loan could all be negotiated at four or four and one half per cent and it was this opinion on his part which led to delays. The bill was not pa.s.sed till July, 1870, at the very moment when the Franco-Prussian War opened. Had the bill been pa.s.sed in March, quite large negotiations could have been made in April of that year. But the sale of the new five per cent bonds was an undertaking of great difficulty. It is now impossible to realize that a six per cent bond was not worth par in 1869-'70. At that time the leading bankers of the world were unwilling to engage in the undertaking. The Rothschilds and Barings stood aloof. The Amsterdam bankers wrote letters of inquiry, but they did nothing more. Mr. Morton, of the firm of Morton, Bliss & Co., New York, was inclined to engage in the business, but his partner, Mr. Bliss was doubtful of the success of the scheme, and they therefore stood aside when the first negotiations were attempted. Finally an arrangement was made with Jay Cooke & Co., by which they advertised what was called a popular loan, asking for a subscription to the five per cent bonds.