calm confidence. Yet the government did not go beyond the rôle of the big policeman. It took another full decade, and the experience of another period of depression filled with strikes more numerous though less violent, before our Congress began to grapple with the great problems of interstate transportation and industrial combinations.

A president with strong convictions of principle and the courage to adhere to them will accomplish as much, perhaps more, by resistance to unwise legislation as by insistence on his own positive program. In the latter case he can be thwarted by a hostile Congress, thanks to the system of "checks and balances which our Constitution provides. But he, too, has a powerful check on Congress by his veto power, his ultimate control of the patronage, and his sole responsibility for the execution of the laws. President Hayes, as we have seen, was not able to put through his program of civil-service reform. He was able, however, to prevent a good deal of mischief in financial legislation and to defend the prerogative of the president against the dictation of a Congress which tried to "Johnsonize" him.

On the currency question Hayes maintained a consistent and inflexible position-one which the country, after much vacillation and unfortunate experimentation, came to indorse thoroughly. He stated in his inaugural address the doctrine which he reiterated in all his messages; namely, that "the only sound paper currency is one which rests upon a coin basis, and is at all times promptly convertible into coin." The law providing for the redemption of the greenbacks in coin had been passed in 1875, but its enactment only stimulated the soft-money men to greater efforts. In the autumn of 1877 the Democratic House actually carried through a bill for the repeal of the Resumption Act. The powerful influence of the administration was brought to bear upon the Senate, through Secretary Sherman's remonstrances with the Finance Committee, and the upper House refused to concur in the repealing bill. Sherman went ahead bravely with his preparations for resumption, supported by the President at every step, though denounced in the

bitterest terms by the inflationists.' Through the sale of bonds the Secretary had accumulated a gold reserve of $140,000,000 at the close of the year 1878, and the greenbacks had risen to par. Resumption was effected without the slightest disturbance to the business world at the beginning of the new year; and the confidence of the people in the government's pledge to pay its obligations in coin was shown by the fact that on the first day of resumption only $135,000 of greenbacks were presented at the Treasury for redemption in gold, while $400,000 in gold was exchanged for the more convenient paper money.2

Because our crops were abundant in 1878 and 1879, and the European demand for our breadstuffs and cotton was large, the critics of the administration belittled the Secretary's work and declared that "resumption was brought about by Providence and not by John Sherman." It is true that the resumption year itself witnessed a sharp recovery of the country from the effects of the panic of 1873; but it is also true that the years during which the administration was courageously preparing for resumption were years of deep depression and gloom, of unprecedented failures and bankruptcies, of industrial demoralization, violent strikes and riots, agrarian revolt, and the agitation for the free coinage of depreciated silver. Many years later the President wrote in his diary (May 15, 1891): "A two-thirds vote in both Houses of Congress were ready and anxious to

1 When Sherman visited his home state of Ohio in the autumn of 1878 to plead the cause of sound money, he was received with hoots and jeers. At a great meeting at Toledo he was interrupted with the cries: "You are responsible for all the failures in the country"; "Capitalists own you, John Sherman, and you rob the orphans to make them rich." The headlines of a Democratic paper ran: "Howled Down! John Sherman's Welcome Home. Turbulent and Riotous Demonstrations at his Meeting at Toledo. Men Made Beggars by him Refuse to Listen to his Defense of the Process. The Architect of National Ruin Receives a Slight Foretaste of the Hereafter!" The student will note that the meeting took place just at the height of the greenback movement.

2 In congratulating Congress on the success of resumption in his message of December 1, 1879, President Hayes said: "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 United States notes redeemed is about $40,000,000."

repeal the Resumption Act and to launch the country on the dangerous sea of an unlimited and irredeemable paper currency." That the ship of state was piloted on a safer course was due to the clear vision and steady hand of the helmsman. President Hayes would have had the greenbacks entirely eliminated from our currency, as a war debt paid and canceled, but Congress would not support him in this recommendation.

While they were unable to stay the process of resumption, the inflationists won a partial victory in the passage of an act for the limited coinage of silver. The silver situation was a complicated one. It had been the policy of our government from the beginning to maintain both gold and silver as standard legaltender coin at a fixed ratio-the policy of bimetallism. The ratio of 1792, fixed by Alexander Hamilton, was 15 to 1; that is, the gold eagle (ten dollars) contained 247.5 grains of pure gold, and the silver dollar 371.25 grains of pure silver. But a fixed mint ratio cannot continue to correspond with a changing commercial ratio. Silver was actually less than one-fifteenth as valuable as gold when the mint began to turn out the coins. This "overvaluation" of silver at the mint caused gold to disappear from the currency, and in 1834 the ratio was changed to 16 to 1. But the new ratio, in turn, overvalued gold, and as a consequence silver was not brought to the mint.' When specie payments were suspended at the beginning of the Civil War, both gold and silver ceased to circulate, and our currency consisted of paper only: the notes of the state banks, then the greenbacks, then the national bank notes based on the bonds of the United States. In 1873 the coinage laws were revised,

1 This displacement of an undervalued metal by an overvalued metal in the currency system, which is called Gresham's law, may be illustrated as follows: If the mint pays an ounce of gold for sixteen ounces of silver when, in the commercial world, an ounce of gold is worth only fourteen ounces of silver, silver is "undervalued" at the mint. Consequently the silver producers will not bring their metal to the mint for coinage, but will sell it to the silversmiths; and the money brokers will melt down the silver dollars and have two ounces of silver bullion as profit beyond the value of a "dollar." The silver dollar will thus disappear from the currency as a standard coin, as it did in the years from 1834 to 1878.

and the silver dollar (which had not been in circulation for decades) was dropped from the list of coins. Just about that time, however, a number of events occurred to reduce the value of silver in the commercial world. The German Empire went on a gold basis, and threw upon the bullion market large sums of silver which had accumulated in the imperial treasury; India, for various economic reasons, ceased to absorb the great quantities of silver which she had for decades been importing from Europe; and, finally, vast new deposits of silver were opened up in this country, the Comstock lode in Nevada yielding $22,000,000 in the single year 1877. New processes in metallurgy reduced the cost of the extraction of the ore, and the new Western railroads insured its safe and cheap transportation.

Under these circumstances silver became so cheap that the mine owners would have profited substantially by selling it to the mint at the ratio of 16 to 1. Now that they wanted to sell their silver to the government at a price above its market value, they raised the cry that the government had meant to discredit silver by dropping it from the list of coins. They spoke of the "crime of '73," as if the demonetization of silver had been a dastardly scheme of the "gold ring" of New York, and not the simple result of their own natural desire to sell their product in the most favorable market; or as if the law had been passed stealthily instead of having been, by John Sherman's testimony, "publicly and openly presented and agitated . . . and printed thirteen times in order to invite attention to it." They demanded the remonetization of silver and its free and unlimited coinage at the ratio of 16 to 1 as "the restoration of the people's birthright." They had many allies. Free silver would increase the circulating medium and so please the inflationists. The government's patronage of silver would be in line with the policy of protection, to "do something" for the mine owners as it did for the mill and factory owners. The Greenbackers, failing to persuade the government to issue paper money and to pay its bonds in

1 The decline in the value of silver is shown by the following ratios of its value to gold: in 1873 it stood at 15.92 to 1; in 1875, at 16.62 to 1; in 1877, at 17.22 to 1; in 1879, at 18.39 to 1.

greenbacks, naturally preferred as a second choice that the country should use the cheaper and more abundant metal of the two. Richard P. Bland of Missouri, chairman of the House Committee on Mines and Mining and familiarly known as "Silver Dick" for his interests in the Nevada mines, put a bill through the House in the autumn of 1877, by a majority of five to one, providing for the free and unlimited coinage of legal-tender dollars at the ratio of 16 to 1. The Senate, under the lead of Allison of Iowa, modified the bill, limiting the amount of silver purchases by the Treasury to not less than $2,000,000 nor more than $4,000,000 a month, and providing that silver certificates in denominations of not less than $10 might be issued upon the deposit of silver dollars. In February, 1878, the Bland-Allison Bill passed the Democratic House by a vote of 203 to 72 and the Republican Senate by a vote of 48 to 21. It was not a party measure. The senators from states west of the Alleghenies cast only four votes against the bill, and not a senator from New England, New York, or New Jersey cast a vote in its favor. Though the bill received more than a two-thirds majority in both Houses of Congress, and though the pressure brought to bear on the President to sign it was enormous,1 Hayes vetoed the bill on February 28, 1878. He contended that it would be a stain on the country's honor to pay its debts in dollars worth 90 to 92 cents. Over $1,000,000,000 of the bonded debt outstanding had been issued before 1873, "when the silver dollar was unknown in circulation in this country"; $583,440,000 of the debt had been issued since 1873, "when gold alone was the coin for which the bonds were sold, and gold alone was the

1 Murat Halstead of the Cincinnati Commercial wrote Hayes that a veto would be "the greatest possible mistake." "On the side of silver," he said, "are the laws, the morals, the interests, of the country." Medill of the Chicago Tribune said, "Vast and uncalculable injuries may result from thwarting the popular will on the silver bill: silver will be worth 94 cents in thirty days after the bill goes into effect and will rise a cent a month until at par." He was completely mistaken in his prophecy. Silver was worth a little over 90 cents when the bill went into effect, and it declined in value steadily from 1878 on. Even John Sherman was in favor of the Bland-Allison compromise, believing that "the country could keep $2,000,000 a month of silver addition to the legal-tender coin money on a par with gold indefinitely.”