JOHN SHERMAN AND THE SILVER DRIVE OF
1877-78:
THE ORIGINS OF THE GIGANTIC SUBSIDY
By JEANNETTE
P. NICHOLS
That tour de force, the Silver
Purchase Act of 1934, is too
close to the present to be judged
fairly.1 While some critics claim
that it simply signifies a cowardly,
unpatriotic surrender to a small
group of wealthy mine-owners, others
suspect that the faithful
servitors of those interests--the
fourteen senators from the seven
silver states--had the power and
disposition to wreck the Admin-
istration's broader domestic and foreign
program if their demands
were not met. A third group sees silver
agitations as mere parts
of a larger popular urge for
inflation--an urge which in hard
times has affected eastern as well as
western blocs, manufacturers
(particularly of exports) and laborers
as well as farmers and
miners, hard money voters as well as
fiat money voters.
Today evidence upon the compulsions of
the present Admin-
istration is lacking; but much evidence
is at hand upon silver
movements of earlier depressions. During
that of 1873 the silver-
men inserted their entering wedge for
powerful leverage, forcing
upon the Hayes Administration monthly
purchases of not less than
$2,000,000 worth of silver. Deeper they
thrust their wedge in
1890, compelling the Harrison
Administration to purchase 4,500,-
ooo ounces monthly. When Grover
Cleveland in 1893 had ended
their subsidy, they helped to wreck his
Administration. During
that of the present Roosevelt, they have
obtained the tremendous
concession that silver should become
one-fourth of our monetary
stocks. Obviously, so strong a movement,
long surviving, must
ramify into the emotions and objectives
of a much larger class
than the silver producers.
1 For the terms of the 1934 Act, see U. S. Statutes at Large, XLVIII,
p. 1178,
Perhaps the bitterest denunciation of
this act is Neil Carothers' Silver in America,
published during the 1936 campaign under
the auspices of the Reserve City Banks.
(148)
JOHN SHERMAN AND THE
SILVER DRIVE
149
Today's wide breadth of the silver
appeal was forecast, sixty
years ago, in the correspondence of John
Sherman, an Ohioan,
who as secretary of the Treasury had to
bear the brunt of the
first tremendous silver drive. There
must be in existence yet
more material which would further
broaden our understanding;
but what follows here clarifies the
issue as far as possible from
material located to date. It is a story
of why, and how, a great
many kinds of people can be persuaded to
connive, directly and
indirectly, in inflation through the
manipulation of silver.
When a depression has dragged through
five weary years, as
it had by 1878 and by 1934, the general
electorate inevitably look
with longing on the pleasant landscapes
painted by ardent apostles
of cheap money. When the cheapest money
concept of the moment
is a dollar of silver, thoughts of that
dollar must solace hundreds
of thousands of people, irrespective of
political affiliation and pre-
depression economic status. When silver
advocates and cheap-
money politicians ride this wave at its
crest, a silver law cer-
tainly must result, regardless of
private preferences of presidents
and secretaries of the Treasury. This
might be called "The Silver
Law of Inflation Politics." Its
practical working is demonstrable.
The Hayes Administration was
ill-equipped to cope with
silver agitation, for the Republicans
had desperately avoided that
issue in the 1876 campaign and Hayes'
clouded title counselled
him to conciliation. Threatened by the
currency issue, he cau-
tiously elevated to the Treasury that
Senator who had been chair-
man of the Senate Finance Committee
since 1867 and who had
wavered in position, just enough to
convince politicians of his
reasonableness, without destroying the
faith of business interests
in his innate conservatism and sound
judgment. Rutherford B.
Hayes' selection of Sherman thus
gratified the most powerful
business and political elements of their
party nationally, and of
their home State as well.2
Ohio, however, did not allow her
ex-governor and ex-senator
2 For
Rutherford B. Hayes' selection of John Sherman, see entry of January
17, and Hayes' letters to Sherman,
Columbus, February 15, 16, 18, 19, 1877, in Hayes,
Diary and Letters (Columbus, Ohio, 1922-26), III, 402, 415, 416, 418,
419; Sherman
to Hayes, Washington, February 17, 1877,
Sherman MSS. (in Library of Congress);
Adam Badeau to Sherman, London, March
12, Parker MSS. (in private hands); a
typical business congratulation was that
in the New York Commercial and Financial
Chronicle, March 10, 1877.
150
OHIO ARCHAEOLOGICAL AND HISTORICAL QUARTERLY
to forget for an instant that the State
was strong for silver. From
among his intimates there, Hayes helped
into Sherman's vacated
senatorship Stanley Matthews, a silver
inflationist by political am-
bition and native temperament; and that
active gentleman proved
inclined to embarrass the Treasury
endlessly. To complicate things,
the State Legislature daily was becoming
more "wild on finance"
and Ohio Democrats fortified the silver
inflation faction by elect-
ing Thomas Ewing, Jr., to conspire in
the National House of Rep-
resentatives with that indefatigable
silver Republican from Penn-
sylvania, William D. Kelley, and with
Missouri's silver Democrat,
Richard P. Bland. The more that cheap
money colored the talk
of ambitious Ohioans of all parties, the
more piteously did Ohio
Republicans plead with Hayes and Sherman
to lessen local pres-
sure by national concessions. James A.
Garfield, almost alone,
prevented the Republican State
Convention of 1877 from imitat-
ing the Democratic endorsement of free
coinage and resumption
repeal; thereupon a Democratic
legislature was returned,
pledged to elect to the Senate the next
year neither Matthews nor
Garfield but some free-coinage Democrat.
Undaunted by this
disaster, Matthews devoted the interim
to an ardent cultivation of
silver and greenback policies strongly
suggestive of a yearning
for gubernatorial office thereafter,
regardless of embarrassment
to his friend in the White House.3
During the summer of 1877, hard times,
serious strikes and
riots, and the accumulation of silver
supplies magnified the cura-
tive properties of the silver dollar in
the popular imagination.
Republican officeholders, worried
somewhat by their loss of con-
gressional control and more by Hayes'
puristic patronage policy,
slipped into a mood of willingness to
flaunt their titular leader on
silver, especially if their
disgruntlement could take the color of
action on behalf of the people.
The President belonged to that large
group of American citi-
zens whose occasional financial
embarrassments leave their cred-
3 On Stanley Matthews' senatorship and
Ohio urgency, see letter of Hayes
to S. Shellabarger, Columbus, February
18, 1877, and entry of October 17, 1877, in
Hayes, Diary, III, 417-8, 448;
New York Tribune, June 12, 1877, New York Times,
June 10, 15, 21, 23, 1877; St. Louis Globe-Democrat,
June 7, 1877; Cincinnati Com-
mercial, June 9, 11, August 17, September 18, 20, 24, 27, 1877;
W. M. Bateman to
Sherman, Cincinnati, June 13, 1877; J.
S. Morrill to id., Stafford, Vermont, June 20,
1877, Sherman MSS.
JOHN SHERMAN AND THE SILVER DRIVE 151
itor preferences unshaken; the fact that
White House expenses
were draining his resources did not
destroy Hayes' faith in the
sacredness of obligations. But he hated
to handle dynamite and
hopefully confided to his Diary that
currency, like the Southern
Question, "seems to be on a good
footing." As the New York
Sun aptly put it, Hayes was "very cloudy" on
silver. This made
him more popular than Sherman, because
the President was
alleged to favor full remonetization of
silver as an aid to resump-
tion, while the secretary admitted, to
baiting reporters, that he
was not enthusiastic for full legal
tender and free coinage of the
metal.4
The wealth of the secretary of the
Treasury might have made
that gentleman forthright on the evils
of silver coinage if political
expediency had not dictated compromise.
Furthermore, there was
much in his private experience, as a
developer of real estate, to
encourage his belief that the country
would speedily grow up to
an enlarged volume of the metallic
currency. Hence he took
refuge in those assertions for which so
many economists have
criticised him, declaring that the
economic risks of silver coinage
might be offset by a return of
prosperity, and that silver should
circulate to the extent that it could be
maintained at par with gold.
Silver seemed to Sherman a minor
problem, as compared with
refunding and resumption. He was devoted
to reducing interest
on the public debt, decreasing
outstanding greenbacks and in-
creasing the Treasury's gold supply.
These varied aspects of his
policy seemed to him parts of one worthy
whole--fortification of
the national credit. But his methods of
achieving these conserva-
tive ends met an astonishing amount of
acrid criticism from con-
servative sources--from divers railroad
directors, bankers and
other embarrassed business men. His hard
fought campaigns on
so many fronts assured him of his own
moral stamina and sharp-
ened his wits.5
4 Hayes
revealed his diffidence toward the currency in entries of April 21,
June 28, July 7, October 4, 1877, in his Diary, III,
255, 281, 283, 444. He was so
naive as a politician that after he had
been President seven months he still could
ask his Diary whether Congress would not take the
background on the patronage.
See entry of October 21, 1877, ibid.,
III, 448-9.
5 Among the many evidences of business
fear of resumption which came to
Sherman's special attention may be
mentioned: J. B. Trevor (banker) to Cyrus W.
Field (capitalist promoter), New York,
March 5, 1877, U. S. Treasury Department
Secretary's Files; O. P. Morton to
Sherman, Indianapolis, May 25, 1877, and Sherman
152 OHIO ARCHAEOLOGICAL
AND HISTORICAL QUARTERLY
Assailed as he was by manufacturers
opposing resumption,
by bankers criticising his methods of
achieving both resumption
and refunding, and by inflationists on
all counts, Sherman went
hunting for allies; he determined to
save the national credit by
compromise with certain moderates among
the silver element.
There were Joseph Medill of the Chicago Tribune,
influential be-
cause of his record as a reforming
father of the Republican party,
and the infectiously optimistic Murat
Halstead of the Cincinnati
Commercial; these two had been harping on the so-called "Crime
of '73," demanding that the silver
dollar be remonetized. But
while they called for a dollar with a
full legal tender, they con-
ceded that its coinage probably would
need to be limited, and they
nearly always defended resumption. If
they would play ball with
Sherman, their influence would make
resumption more palatable
to such silver men as were indifferent
or hostile to it. As Hal-
stead sagely observed, the secretary
wished to wade, not swim,
in the silver movement.6
Thus it came about that a Sherman
interview appeared in
the Cincinnati Commercial, in
which he came out for recoinage of
the 412 1/2 grain silver dollar,
declaring that everybody should have
as many of them as they wished--provided
they turned in green-
backs or fractional currency for them,
and provided further that
coinage was only on government account and
that their legal ten-
der was limited to that of the
greenbacks which were not receiv-
able for customs dues. Sherman's
announcement was aimed at
three objectives; he would quiet
resentment over the dollar's
demonetization, avoid the wrath of
anti-contractionists, and yet
smooth the road to resumption. He
calculated that the majority
of the population hankered after the
feel of hard cash and would,
whether they favored resumption or not,
aid it by accepting silver
in place of paper.
to Morton, Washington, May 28, 1877;
William B. Allison to Sherman, Dubuque,
June 21, 1877, Sherman MSS; Chicago Tribune,
June 18, 1877; John I. Bennett to
Hayes, Chicago, June 22, 1877, U. S.
Treasury Department Executive Correspondence;
W. H. Smith to id., Chicago,
August 8, 1877, Hayes, Diary, III, 441-2.
6 For Cincinnati Commercial and
Chicago Tribune insistencies, see especially
Commercial, June 12, 22, July 2, 29, 1877; Murat Halstead to editor
of The Public
(New York), Cincinnati, January 6, 1877,
in The Public, January 17, 1877; Chicago
Tribune, June 16, 19, 26, 27, July 5, August 18, 22, September
14, 15, October 18,
1877; Inter-Ocean (Chicago), June
19, 1877. For differing motives of Silverites, see
Cincinnati Commercial, September
1, 1877.
JOHN SHERMAN AND THE SILVER DRIVE 153
His kind of silver coinage, he
explained, would give paper,
silver and gold a common value in the
United States, providing
the citizenry with paper and silver for
domestic business and with
gold, "the ultimate standard,"
for foreign trade. As the New
York Times, which of late had
been annoying Sherman, con-
ceded, this plan had in it elements of
risk but it was harmless com-
pared with the program of the
"silver maniacs." Whitelaw Reid
of the New York Tribune privately
wrote Sherman that he would
postpone criticism, in view of the
greater issues pending, and
Sherman gratefully replied,
"sufficient for the day is the evil
thereof."7
Of course Sherman's effort to win the
more moderate silver
men worried eastern and foreign bankers,
especially when Mat-
thews went to New York and gave
reporters the impression that
Hayes favored bond payments in silver.
When the bond market
slumped, threatening both resumption and
refunding, hurried
letters passed between Washington and
New York, Sherman con-
ferred with the Cabinet, and he then
gave his tacit assurances that
principal and interest should be paid,
not in silver, but in gold.
He also injected into the Ohio campaign
a courageous speech
(widely praised) reaffirming his
intention to use every legal de-
vice for resumption preparations. But
Sherman could not per-
manently rejuvenate the bond market.
Continuing agitation for
free coinage, and for payment of
interest and principal of bonds
in silver, was doing more than the
agitation for resumption repeal
to hurt the Government credit, at home
and abroad.8
This was partly because the silver
market would not rise
obligingly. The price had been so
depressed by sales of German
stocks and by a fall in Chinese and
Indian demand that the metal
7 Whitelaw Reid to Sherman, New York,
June 13, 1877; Sherman to Reid,
Washington, June 14, 1877, Sherman MSS.;
Cincinnati Commercial, June 12, 1877;
New York Times and New York Tribune,
June 13, 1877. Sherman most resented
the hostility of the New York Times, but
protests were ineffective. See New York
Times, June 15, 22, 23, 1877; August Belmont to Sherman, New
York, June 22, 1877;
Sherman to L. P. Morton, id. to
Belmont, and id. to George Jones (editor of the
New York Times), Washington, June
23, 26, 1877; Jones to Sherman, New York
June 25, 1877; Morton to Jones, and id.
to Sherman, June 27, 1877, Sherman MSS.
8 Sherman's speech at Mansfield, Ohio,
August 17, 1877, was one of his best;
leading papers printed it in full the
next day and he received a flood of congratulatory
messages and some denunciation. See
Sherman MSS.; Sherman, Recollections of
Forty Years in the House, Senate, and Cabinet (Chicago and New York, 1896),
486-7. He reported it in his Selected
Speeches and Reports (New York, 1879), pub-
lished as a bid for the presidential nomination. It
showed exceptional facility with
words.
154 OHIO
ARCHEOLOGICAL AND HISTORICAL QUARTERLY
accumulated in San Francisco banks.
Sherman tried to raise the
price and quiet the demand for silver
dollars by a change in the
timing of Government purchases for
subsidiary coinage, and by
pouring into business channels dimes,
quarters and half dollars.
His efforts were flaunted by the opening
of new mines and the
certainty of increased production.
The silver producers proved most
intractable. James C.
Flood and Louis McLane of the bonanza
"Nevada Bank of Cali-
fornia" became angry because
Sherman would not countenance
all their schemes for obtaining good
gold bonds in exchange for
depreciating silver bullion. They
objected to selling their silver
at the world price, they objected to paying
the cost of transport-
ing the bullion and they boldly refused
to sell to the mint "part-
able" silver, knowing that the
Government could not obtain from
other mines sufficient of that kind of
silver to meet its needs for
gold refining. Bullion holders undertook
to unload their surplus,
by getting it minted into trade dollars
and then exchanging these
locally, for greenbacks (which were
nearer par in gold) and
pocketing the difference. But as the law declared that trade
dollars were not legal tender in the
United States and required
the secretary of the Treasury to mint
them only for export, Sher-
man closed this outlet. Thereupon the
bullion owners demanded
its reopening and exerted pressures
which forced Sherman to
yield, temporarily.9
All this time producers and public
realized, as Sherman con-
fided to Garfield, that the
Administration had no "definite" policy
on silver.10
The Senators and Representatives who
descended upon
Washington, October 15, 1877, were
vastly more interested in
the currency than in the army
appropriations for which they
had been called together in special
session. Senator John P. Jones,
silver-mine-owner from Nevada, quickly
introduced a free coin-
age bill and put into active circulation
that imposing report upon
9 On Nevada Bank demands and compromise, see Sherman to
Henry Richard
Linderman, Washington, March 30, July 26, 1877;
Linderman to Sherman, Wash-
ington, March 31, 1877, San Francisco,
July 5, August 3, 7, 31, September 14, 18,
1877, Sherman MSS. and U. S. Treasury
Mint Correspondence. On January 29,
1878, the Cabinet decided to open the Philadelphia Mint
to trade dollar coinage, but
Sherman discouraged circulation of the
new pieces.
10 Sherman to James A. Garfield,
Washington, July 24, 1877, Sherman MSS.
JOHN SHERMAN AND THE SILVER DRIVE 155
silver which his chairmanship of the
1876 Commission had given
him an opportunity to assemble and
publicize. Critical comment
by Sherman, on some of the opinions set
forth as facts in that
report, scarcely lessened its appeal for
the classes to which Jones
cleverly addressed it. Clearly, this was
to be a battle between
Sherman and Jones.1l
Most of the southern and western
members, in lightsome
mood, fathered bills for free coinage,
or repeal of resumption, or
greenbacks--bills which their colleagues
sometimes greeted with
laughter, but which combined to block
Sherman's refunding op-
erations. He tried to quiet his
apprehensions by assuring him-
self that Congressmen were so thoroughly
ingrained with the in-
stinct for gain that they always stopped
short of repudiation.
But it was political, rather than
financial, gain with which many
congressional inflationists were
ingrained. Their dreams were
peopled with free coinage, resumption
repeal, and greenbacks,
walking arm in arm toward enactment.
However, into the cold gray noontide of
congressional
manoeuvering there obtruded rivalries
over credit for legislation,
innumerable differences over details,
and stubborn sectional
trends. Northern and eastern radicals
proved less fond of re-
sumption repeal than were westerners and
southerners; westerners
proved less fond of greenbacks than were
southerners; and sil-
vermen came to realize that the
greenbackers hoped to swallow
them whole, before the 1878 election.
All of which, gave hope
to Sherman for compromise.
The one bond of unity among all
Representatives and one-
third of the Senators was fear of
voters, who at the moment
were in the belligerent mood of keen
disappointment over par-
tially filled expectations. The year
1877 had known a false pros-
perity spurt in agriculture, stocks and
commodity prices, which
aggravated many classes. Also, for
Congressmen in their prac-
tical capacities, it had been a lean
year; they moved into less ex-
pensive hotels and into lodgings, where
the bills were down to
11 John P. Jones' bill
was Senate 86. The one-sided character of his report
was perfectly well understood among members, and was
featured in House quarrels
over its printing, especially as the
correspondence and testimony were relegated to
a second later volume. See Congressional
Record, 46 Cong., 1 Sess., November 18,
27, 1877, p. 373,
716-20.
156 OHIO ARCHAEOLOGICAL AND HISTORICAL QUARTERLY
$40 and $50 a month. Resentments arising from such uncer-
tainties were sharpened by pre-election
nagging.
The silvermen in the House determined to
put an end to at
least one uncertainty; they held a
caucus on the welter of pending
bills and on the committee and personal
jealousies bound up in
them; and as a result they on November
5, permitted Richard
Parks Bland to bring up for passage,
without a debate, a bill
which technically had no place whatever
in that day's delibera-
tions. Like the measure recently
fathered by Jones, this one
specified the old silver dollar of 412 1/2 grains with full legal
tender and coinage for the benefit of
silver owners. At the mo-
ment nearly one-third of the 293 members
were absent and most
of those unpaired were easterners
opposed to the bill. The
House was an exciting scene, with
westerners working hard to
make the votes of their states
unanimous. The tally finally stood
at 163-34, with ninety-three not voting.
Immediately afterward,
Ewing succeeded in making resumption
repeal a special order.
The huge size of the silver majority was
supposed, at the
time, to have a great effect upon the
Senate, especially as Charles
Foster, Jacob D. Cox and other intimates
of Hayes had voted in
the affirmative and as Matthews claimed
Hayes would sign the
bill. The silver press shouted that the
battle was won.12
Sherman was not so sure. He denounced
the bill roundly in
public; in private, he opined that
inflation sentiment had rapidly
subsided since members now sitting were
elected. What he
feared was "premature action"
and he undertook to encourage
delay. Jones feared that Sherman's
"intense hostility" might
influence Hayes to veto free coinage. If
Jones could have read
what Hayes wrote in his Diary each
night he would have felt
further anxiety. The President was
wondering whether there
had been any move for remonetization
before silver fell in price;
whether payments in depreciated silver
might not violate public
12 Rivalry between the Banking and Currency Committee and
the Committee
on Coinage, Weights and Measures
complicated the issue. Richard Parks Bland's
bill of October 29, 1877, was House of
Representatives 571. He brought in November
5, 1877, H. R. Bill 1093. Thomas Ewing's
Resumption Repeal Bill was H. R. 805.
On the November 5th development, see Cong.
Record, 45 Cong., 1 Sess., October
22, 29, November 3, 5, 6, 1877, p. 116,
189, 198, 232-3, 241-2, 247; Chicago Tribune,
October 30, 31, November 8, 6, 8, 9,
1877; Cincinnati Commercial, November 6, 7, 9,
1877; Sherman to Horace White,
Washington, November 5, 1877, Sherman MSS.
JOHN SHERMAN AND THE SILVER DRIVE 157
credit and add to the debt burden;
whether silver coinage could
not be so limited as to avoid
contraction on the one hand and
injustice to creditors on the other. The
President and his secre-
tary of the Treasury continued to take
their long Sunday rides
together.
A week had elapsed after the House
passed the Bland bill,
when the Senate Finance Committee began
its deliberations by
receiving, against the wishes of Jones,
the delegation of New
York and Philadelphia bankers and
merchants. These emissaries
pointed out tremendous profits which
free coinage would give
silver producers, painted in blackest
colors tremendous losses
which savings banks, laborers, business,
property, and capitalists
in general would suffer from depreciated
currency, and paid a
call at the White House. They were
received with respect by
most of the committee members, although
Bland earnestly as-
sured them that the people intended to
wipe out the national debt
"as with a sponge." Hayes gave
them no assurances and Hal-
stead told them that the country did not
regard their views with
"reverential awe."
Nevertheless, their visit had weakened the
inflation group, as the House soon
indicated by modifying the
form of Ewing's proposition for repeal
of resumption.13
The New York Sun decided to
shorten the suspense and
published, November 29, a
"bootleg" copy of important para-
graphs of Hayes' message. Thus
informally, the world learned
that Sherman no longer need shoulder all
the burden in the heat
of the day. Hayes publicly agreed that
silver would aid resump-
tion if so coined as to circulate with
gold, instead of driving
gold out. Nor would he pay any bonds,
principal or interest, in
coinage of less commercial value than
gold, lest this work "irre-
parable injury to the public
credit."
As this was an epoch in American history
when charges of
violation of public faith and credit
were a serious matter, the
13 The most detailed report of the
hearing is in New York Tribune, November
14, 1877; see also Frederick Fraley to
Sherman, Philadelphia, November 1, 1877, U. S.
Treasury Department Miscellaneous
Correspondence; Cincinnati Commercial, No-
vember 14, 1877; Chicago Tribune, November
17, 1877. For White House conference,
see Chicago Tribune, and
Cincinnati Commercial, November 15, 1877. Ewing's H. R.
Bill 805 would have repealed free
banking as well as retirement of greenbacks and
resumption of specie payments; the House
passed instead, November 28, 1877, a propo-
sition of Greenbury L. Fort of Illinois,
which did not repeal free banking.
158 OHIO
ARCHAEOLOGICAL AND HISTORICAL QUARTERLY
members of Congress who had no intention
of following Hayes'
advice felt the need of
self-justification. This was why Mat-
thews quickly introduced his concurrent
resolution, denying
Hayes' allegation that payment of
interest and principal in silver
would violate public faith. Both houses
passed it by large ma-
jorities and, as a consequence, within
one week $10,000,000 in
bonds returned from Europe.
Senator William B. Allison of Iowa, who
was up for re-
election, also demonstrated senatorial
indifference to presidential
advice. He promptly obtained permission
to advance silver in
the Senate debate.14
While Washington was the scene of these
pleasantries, pierc-
ing propaganda for and against silver
filled the air of other cities.
The days were filled with that intense
excitement in which the
American people luxuriate when major
legislation is pending.
Only in New England, New York, New
Jersey, and parts of
Pennsylvania and Maryland did a majority
of the press oppose
silver. From the lively, insulting
epithets which editors of the
New York Herald, Post, and Tribune
exchanged with Halstead,
Medill and their followers, the
circulation figures of them all
must have profited. Huge sums were spent
on both sides, while
real estate operators, languishing for a
boom, joined the chorus,
and the Negroes chanted that silver was
the colored man's money.
Details of innumerable meetings and
memorials filled the press
and the congressmen's mail. Overwhelmed,
Congress took a
Christmas recess of twenty-six days.15
During this "breathing space"
Sherman warned the bankers,
who had not organized their fight
against silver aggressively, that
unless they worked up a
counter-sentiment they must expect a
14 The Matthews Resolution was agreed to
in the Senate 43-22-11 and concurred
in by the House 189-79-24; Roscoe
Conkling tried vainly to make it a joint resolu-
tion so as to embarrass Hayes. Allison
had H. R. Bill 1093 made the special order
for December 11, 1877, by vote of
41-18-16. See Cong. Record, 45 Cong., 2 Sess.,
December 6, 10, 1877, January 25, 28,
1878, p. 42-7, 87-94, 549-64, 627-8. Matthews had
also fathered a bill for greenback expansion. See
Chicago Tribune, November 9, 1877;
Cincinnati Commercial, November
10, 1877. The newspapers of January 26, 1878,
developed the relation of the Matthews
Resolution to the silver situation.
15 For modus operandi of
some propaganda groups, see New York Tribune,
December 22, 1877, January 28, 1878;
Chicago Tribune, January 14, 28, 1878; Cincinnati
Commercial, February 22, 26, 1878; The Public, January 24,
1878; Cong. Record, 45
Cong., 2 Sess. February 9, 1878, p.
878-82 and Index to Cong. Record, under the
names of chief cities. Charleston, Savannah, and New
Orleans trade groups opposed
the Bland Bill.
JOHN SHERMAN AND THE SILVER DRIVE 159
silver bill. Surprising as it may seem,
"big business" itself was
uncertain in its counsels. Some bankers tried to offset silver
agitation by purchasing gold and putting
it in circulation. Some
New York bankers wanted to blacklist
Chicago firms supporting
the Bland Bill, and, although they had a
surfeit of idle funds,
they talked of raising interest rates
and of refusing loans except
on a gold-for-gold and silver-for-silver
basis. Westerners and
southerners of course could hate as
heartily as their creditors, and
were infuriated by the ridicule and
sarcasm heaped upon them
from the eastern seaboard.
More conciliatory was the New York Economist,
whose edi-
tor suggested that the people be offered
a silver dollar of larger
content. Other propositions were as
varied as the temperaments
of the would-be compromisers. Not until
the day before Congress
reassembled, January 10, 1878, did the
associated banks of Bos-
ton, New York, Philadelphia and
Baltimore organize to marshal
their own group against the bill.16
Sherman was in a tight place, with
frightened foreigners
dumping United States bonds back upon
him, draining his gold
supply, stopping retirement of the six percents
and pushing the
market below par. The bond syndicate
handling the four percent
contract for refunding was insisting on
something politically im-
possible--that the Bland Bill be amended
to stipulate gold pay-
ments.
Holders of silver were thumbing their noses at him,
derisively offering to exchange bullion,
at "16 to I" for bonds.
Desperate, Sherman fell back upon his
faith in the common cit-
izenry, and with the approval of the
rest of the Cabinet issued an
appeal to them to support the bonds of their
own Government.
Fortunately for the Treasury, the
members of the Senate
Finance Committee, for the most part,
returned to Washington in
a practical frame of mind. Juggling the
visit of the bankers
against the flood of silver petitions,
the failure of the bond sales
against the political probabilities,
they consented to hear pleas
16 On the banking reaction to the situation, see especially Belmont to
Sherman,
New York, November 7, 9, 1877, John Sherman,
Resumption of Specie Payments
(Washington, 1878) p. 183, 186. Some
banks refusing western loans avoided publicity,
but others appeared to welcome it. See
New York Tribune, December 24, 27, 28, 29,
1877. For western resentment at eastern
insults, see especially Chicago Tribune,
January 14, 1878.
160
OHIO ARCHAEOLOGICAL AND HISTORICAL QUARTERLY
from Senator John Sherman and Director
of the Mint Henry
Richard Linderman. These asked that
instead of free coinage at
the whim of the silver producers it
should be coinage on govern-
ment account at the behest of trade;
instead of unlimited legal
tender it should be the legal tender of
greenbacks.
In the committeeroom, Senator William A.
Wallace of Penn-
sylvania held the balance of power. He
finally joined other
Eastern members in a major
operation--cutting free coinage out
of the Bland Bill. Then he turned, and
joined western members
under the leadership of Allison in
grafting into the bill a limited
silver coinage. Linderman had told them
the Government could
safely coin 2,000,000 silver dollar pieces monthly; and in typical
legislative fashion they expanded this
limit into the mandate for a
monthly purchase of from $2,000,000 to
$4,000,000 worth of
bullion at the market price (then $1.19), the bullion to
be coined
at 412½ grains to the dollar ($1.29 per ounce)
with the Govern-
ment pocketing the difference. That the
dollars thus limited as to
their coinage, were given unlimited
legal tender, furnished another
illustration of legislative ideas of
exchange.17
Thus did the compromisers disappoint
both Jones and Sher-
man, Jones by limiting the amount of
bullion to be purchased and
coined, Sherman by giving full legal
tender to what was coined.
Sherman concluded that the
"Crime" charge had worked so power-
fully upon public imagination that this
much concession was in-
escapable. He proclaimed his
disappointment but worked with
Congressmen daily to clinch votes for
the compromise as a whole.
Not so Jones. His mine-laboring
constituency was in a
worrisome frame of mind; and so he gave
a demonstration of
how far beyond his natural course of
action political ambition and
rash commitments may take a politician.
His momentum carried
him away from many other owners of
western silver mines, who
refused support for free coinage, full
legal tender and abolition
of the mint charges on silver, because
they produced gold as well
17 Significant details of Finance
Committee deliberations are in Cincinnati
Commercial, November 7, 10, 15, 21, 22, 1877; Chicago Tribune, November
9, 14, 15, 17,
19, 20, 21, 1877; New York Sun, and
New York Tribune, November 20, 21, 22, 1877.
Committee draft of November 21 appeared
in the metropolitan dailies November 22.
Allison took charge of the bill because
he was the oldest ranking member of the
special group which determined the
amendments in the Finance Committee.
JOHN SHERMAN AND THE SILVER
DRIVE 161
as silver, held government bonds, and
had close ties with Cali-
fornia holdings, in which state (like
Oregon) the preponderant
metal was gold. Jones, in fact, had
similar ties.
Jones rashly cultivated allies he
earlier had scorned, worked
actively with greenback and
anti-resumption Representatives, and
announced himself a greenback man.
"Secret" caucuses and
signatures to "secret" agreements were
duly detailed in the press. The greenback-anti-resumption
allies
schemed to counteract the influence of
the Herald in Boston, the
Sentinel in Indianapolis and the Times in Chicago. The
masses in
the East they hoped to reach by
agitation outside of party lines.
But in the multitude of their counsels
there was little wisdom, for
Republican Congressmen shied away from a
concerted attack upon
the national bank system hallowed by
their party. They insisted
that silver remonetization must come
before repeal of resumption.
Jones wanting a generous silver market,
tried to make a bar-
gain--that if he should agree that the
Government could pocket
the profits of coinage, his opponents
would defeat the proposed
limits on the amount of bullion to be
minted; but he could not
obtain, against Sherman's influence, the
political leverage for this
degree of inflation. In vain he
proclaimed that he had mined no
silver and taken no profits from silver
mining during the past
three years, that he had "no
bonanza interest in this thing." He
argued that unlimited coinage would
salvage, not drown, industry,
finance and commerce, that silver would
serve as a breakwater
against the tidal wave of bankruptcy
sweeping the country. This
was all futile. Opponents of free
coinage had been lined up for
limited coinage as the lesser of two
evils. Enough western states
had not yet been admitted to the Union
to give the silvermen the
balance of power they exercised in the
Senate in 1934. After a
decent delay for delivering and printing
speeches, the Senate
accepted the compromise urged by the
majority of the Finance
Committee.l8
18 On Jones' progression in
inflation, see Chicago Tribune, January 10, February
4, 13, 15, 16, 23, 1878;
Cincinnati Commercial, January 10, February 2, 1878; Cong.
Record, 45 Cong., 2 Sess., February 14, 15, 1878, p. 1017-26,
1110. Jones attended the
first National Greenback Convention at
Toledo, February 22, and was made one of
the vice presidents. William
Morris Stewart, Jones' colleague, already was working
on the admission of Idaho in order to
strengthen silver.
162 OHIO ARCHAEOLOGICAL AND
HISTORICAL QUARTERLY
But in the process of garnering votes
the managers made
damaging concessions. For those who
doubted Sherman's loyalty
to the compromise, they added the
mandate that he coin the silver
monthly as fast as purchased. For lovers
of paper they inserted
silver certificates. For the
conscience-smitten like Allison (whose
political predicament made them vote for
silver dollars while their
intelligence told them the United States
could not maintain silver
without international aid) they decreed
that the United States
must invite other nations immediately to
an international confer-
ence.
These amendments were finally accepted
at a bibulous session
seventeen hours in length. Not in ten
years had the galleries wit-
nessed so much drunkenness as on the
night the Senate passed
the so-called "Allison"
amendments. Silver had been pending
from November 21 to February 15, and
after thirty-two set
speeches and ten "re-speeches"
it was small wonder that "the
wine was in and the wit was out."19
In the House politics preserved the
amendments from defeat
at greenback hands, for silvermen
suspected that greenbackers
courted a silver defeat for political purposes.
Silvermen feared
to harm silver in a haggle with the
Senate; the Allison version
would secure more votes for overriding a
veto than Bland's.
Hence, they deserted Ewing and their
erstwhile greenback asso-
ciates, after Allison had secured them a
pledge from Sherman
that he would execute the act "in
the spirit in which it was passed"
--a delicious bit of irony.20
All partisans in Congress understood the
main reasons for the
silver compromise. But the President
never had held a legislative
position, was not up for re-election in
1878 (although he hoped
for a Republican Congress) and had not
the slightest desire to run
19 See Cong. Record, 45 Cong., 2
Sess., February 15, 1878, p. 1102-5. Thomas
Francis Bayard wrote Grover Cleveland,
December 4, 1895, that Sherman resisted
all his pleas that the notes should not
be reissuable, Cleveland MSS. (in Library
of Congress). Allison's conference
amendment was at first defeated, 5-2, by the
Finance Committee and in the House it
had to combat the traditional suspicion of
foreign entanglements. See New York Sun,
and New York Tribune, November 22,
1877; Chicago Tribune, January
30, February 1, 19, 1878. The press of February 16-18
referred to the disgraceful scenes
guardedly.
20 On silver split, see Cincinnati Commercial,
and Chicago Tribune, February
19-22, 1878; The Public, February
21, 1878. On Sherman's pledge, see Cincinnati Com-
mercial, February 22, 1878; Chicago Tribune, February 22,
27, March 2, 1878. On
House acceptance, see Cong. Record, 45
Cong., 2 Sess., February 21, 1878, p. 1237-85.
JOHN SHERMAN AND THE SILVER DRIVE 163
again in 1880. He liked to regard the
silver issue as a clear-cut
conflict between high principles and low
politics, in which he would
take an elevated position. He luxuriated
in the thought of a veto
and could afford it politically.
However, many Republicans, especially in
Ohio, thought the
party could not afford it; as Halstead
put it, Congress might not
override the veto and the greenbackers
then would have a strong
pump handle. August Belmont and some
conservative people
feared a veto would mean a worse bill.
Persons of every shade
of opinion felt completely competent to
direct the President. That
dignitary calmly polled his Cabinet and
conveniently decided that
a majority of them favored a veto. Sherman,
who understood
both Hayes and Congress, had his own
reservations, but had long
expected the bill would become a law
without Hayes' signature.
He apparently made little effort to
affect the veto message other
than to lengthen it with a detailed
statement of the evils of that
unlimited legal tender which the Finance
Committee had adopted
against his wishes.21
The substance of the veto was known by
Congressmen two
days before they formally received it
and they felt no compulsion
to give it the courtesy of even a
printing, before proceeding to act.
Neither party was willing to let silver
jeopardize its political
future.
Representatives eager to override crowded around the
wheelchair of the withered chairman of
the Committee on Coinage,
Weights and Measures, until in the
excitement only the top of old
Alexander H. Stephens' white wig was
visible from the galleries.
After voting many dashed over to the
Senate, and formed a semi-
circle of sentinels behind the brethren
there, while they in turn
overrode--all in less than three hours.
Soon the Treasury was reaping the
harvest of the alliance be-
tween Sherman, Halsted and Medill. As
the secretary had suc-
ceeded in retaining means to substitute
specie for greenbacks, as
limited coinage technically kept silver
in a subsidiary position, in-
21 Veto possibilities had been the
favorite sport of the press since the first of
January and bad guesses by sanguine
editors had fed the speculative market. On
Hayes' attitude, see entries of February
3, 6, 17, 26, March 18, 1878, in his Diary,
III, 459, 460, 461-2, 465-6, 470. On
Halstead and Ohio, see Halstead to Sherman, Cin-
cinnati, February 24, 1878, U. S.
Treasury Department Miscellaneous Letters; London
Times, January 30, 1878. On expansion of message, see Chicago Tribune,
March 2,
1878.
164
OHIO ARCHAEOLOGICAL AND HISTORICAL QUARTERLY
vestors gradually came to realize that
the Bland-Allison Law was
not what the free coinage men were
telling their constituents it
was. The bond market was reassured, and
the silver-resumption-
ists assumed content.
The silver anti-resumptionists, furious,
talked of tacking free
coinage riders to appropriation bills,
and agitated for that House
bill preventing resumption which had
been languishing in Senate
pigeonholes since November 26. Sherman and
Linderman fought
them in Stephens' committee room,
telling the Representatives,
confidentially, that the silver
producers of the United States were
motivated by something other than fair
dealing:--" a pretty heavy
contest" with bullionists was
pending, and "care should be taken
not to legislate to the detriment of the
government." Sherman
visited also the Senate Finance
Committee and the House Com-
mittee on Banking and Currency,
furnishing a masterly demonstra-
tion of an executive cleverly using the
language of a legislator.
The fears of Senator Thomas W. Ferry of
Michigan and
of Representative Thomas Ewing of Ohio
in particular, Sherman
sought to allay, with assurances of his
firm intention to pay out
silver, his eagerness to sell bonds to
Americans instead of Europ-
eans, his ability to best wicked
bankers. "Take away the fears of
all classes of people," he
counselled:--the inflationists' fear lest
all greenbacks be retired, the
creditors' fear lest the Government
prove unable to redeem the greenbacks.
Allay both by a neat bal-
ancing feat:--stop retirement of
greenbacks at $300,000,000 and
declare them reissuable after
redemption; establish a gold reserve
of $100,000,000 with which to redeem
them; let the Treasury ac-
cept them in payment for coin bonds. For
the benefit of all up
for reelection Sherman gently observed,
"In a government like
ours, it is always good to obey the
popular current, and that has
been done, I think, by the passage of
the silver bill."22
Obediently, the Senate converted the
November House bill
22 Sherman's interview with the Finance
Committee, March 19, 1878, was a
political masterpiece; it was considered
of such importance that the papers merely
gave a summary the twentieth, printing a
stenographic version March 21. He himself
considered his appearance before the
Banking and Currency Committee, April 1 and 4
most important. See his Recollections,
515-21; New York Tribune, March 12, 21,
April 5, 1878; Sherman to T. W. Ferry,
Washington, March 22, 1878, U. S. Treasury
Department Letters Sent. His
congressional influence survived baseless charges
that he personally gained by syndicate
contracts.
JOHN SHERMAN AND THE SILVER DRIVE 165
for complete prevention of resumption,
into an April measure for
partially aiding it--by permitting
Sherman to accept greenbacks
for bonds. But April wore into May while
it became evident that
amour propre, and Ewing, would prevent the House from accept-
ing Sherman's Resumption Bill, even if
it were coated over with
sugary provisions designed to pacify
greenbackers. Thereupon,
with that frank and unembarrassed
understanding which underlies
most violent House-Senate differences,
Congress agreed that if
the inflationists would ask no more this
session they might have
one further bill to take to the country.
It was under these cir-
cumstances that they enacted the
much-criticized law which halted
the retirement of greenbacks at the
point then reached (about
$346,000,000) and specified that all
these were to be redeemable
in coin and reissuable after
redemption.23
This was more, and less, than Sherman
wished, especially as
no gold reserve was set up. But the
measure was infinitely pre-
ferable to that repeal of resumption
which had been dangling by
one hair above the head of the Treasury.
Also, the bill was cal-
culated to check further development of
the National Greenback
party. Hayes signed it, with Sherman's
approval. The two con-
gratulated themselves that at the hands
of this inflation Congress
they had fared no worse. Resumption
January I, 1879, still was
possible, and the gold dollar still
remained the unit of value.
For Sherman this currency episode had
been illuminated
throughout by the pragmatic philosophy
of the politician--tried
and true--"Sufficient for the day
is the evil thereof."24
23 For Ewing's opposition to Treasury
Bill and agreement for no more legis
lation, see New York Tribune, June
15, 18, 20, 1878. For the involved legislative
treatment of the bills repealing
resumption and ending retirement of greenbacks, see
H. R. Bill 805, and H. R. Bill 4663; Cong.
Record, 45 Cong., 1 and 2 Sess. The
banks wanted to exchange greenbacks for interest-paying
bonds, the inflationists liked
any recognition of greenbacks, and Sherman wanted to
garner them into the Treasury.
24 For Sherman's acceptance of H. R.
Bill 4663, see Sherman to Morrill, Wash-
ington, May 21, 1878; Morrill to Sherman, Washington,
May 21, 1878, U. S. Treasury
Department Congressional Correspondence; Chicago Tribune,
May 22, 29, 1878.
JOHN SHERMAN AND THE SILVER DRIVE OF
1877-78:
THE ORIGINS OF THE GIGANTIC SUBSIDY
By JEANNETTE
P. NICHOLS
That tour de force, the Silver
Purchase Act of 1934, is too
close to the present to be judged
fairly.1 While some critics claim
that it simply signifies a cowardly,
unpatriotic surrender to a small
group of wealthy mine-owners, others
suspect that the faithful
servitors of those interests--the
fourteen senators from the seven
silver states--had the power and
disposition to wreck the Admin-
istration's broader domestic and foreign
program if their demands
were not met. A third group sees silver
agitations as mere parts
of a larger popular urge for
inflation--an urge which in hard
times has affected eastern as well as
western blocs, manufacturers
(particularly of exports) and laborers
as well as farmers and
miners, hard money voters as well as
fiat money voters.
Today evidence upon the compulsions of
the present Admin-
istration is lacking; but much evidence
is at hand upon silver
movements of earlier depressions. During
that of 1873 the silver-
men inserted their entering wedge for
powerful leverage, forcing
upon the Hayes Administration monthly
purchases of not less than
$2,000,000 worth of silver. Deeper they
thrust their wedge in
1890, compelling the Harrison
Administration to purchase 4,500,-
ooo ounces monthly. When Grover
Cleveland in 1893 had ended
their subsidy, they helped to wreck his
Administration. During
that of the present Roosevelt, they have
obtained the tremendous
concession that silver should become
one-fourth of our monetary
stocks. Obviously, so strong a movement,
long surviving, must
ramify into the emotions and objectives
of a much larger class
than the silver producers.
1 For the terms of the 1934 Act, see U. S. Statutes at Large, XLVIII,
p. 1178,
Perhaps the bitterest denunciation of
this act is Neil Carothers' Silver in America,
published during the 1936 campaign under
the auspices of the Reserve City Banks.
(148)