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again vetoed, and the President sent a special message urging the
necessity of an appropriation to pay United States marshals. Bills
were accordingly introduced, but were defeated. This failure to
appropriate moneys called for continued until the end of the session.
The President was compelled, therefore, to call an extra session,
which he did March 19th, 1879, in words which briefly explain the
cause:—

THE EXTRA SESSION OF 1879.

“The failure of the last Congress to make the requisite

appropriation for legislative and judicial purposes, for the expenses
of the several executive departments of the Government, and for the
support of the Army, has made it necessary to call a special session of
the Forty-sixth Congress.
“The estimates of the appropriations needed, which were sent to
Congress by the Secretary of the Treasury at the opening of the last
session, are renewed, and are herewith transmitted to both the
Senate and the House of Representatives.
“Regretting the existence of the emergency which requires a
special session of Congress at a time when it is the general judgment
of the country that the public welfare will be best promoted by
permanency in our legislation, and by peace and rest, I commend
these few necessary measures to your considerate attention.”
By this time both Houses were Democratic. In the Senate there
were 42 Democrats, 33 Republicans and 1 Independent (David
Davis). In the House 149 Democrats, 130 Republicans, and 14
Nationals—a name then assumed by the Greenbackers and Labor-
Reformers. The House passed the Warner Silver Bill, providing for
the unlimited coinage of silver, the Senate Finance Committee
refused to report it, the Chairman, Senator Bayard, having refused to
report it, and even after a request to do so from the Democratic
caucus,—a course of action which heralded him every where as a
“hard-money” Democrat.
The main business of the extra session was devoted to the
consideration of the Appropriation Bills which the regular session
had failed to pass. On all of these the Democrats added “riders” for
the purpose of destroying Federal supervision of the elections, and
all of these political riders were vetoed by President Hayes. The
discussions of the several measures and the vetoes were highly
exciting, and this excitement cemented afresh the Republicans, and
caused all of them to act in accord with the administration. The
Democrats were equally solid, while the Nationals divided—Forsythe,
Gillette, Kelley, Weaver, and Yocum generally voting with the
Republicans; De La Matyr, Stevenson, Ladd and Wright with the
Democrats.
President Hayes, in his veto of the Army Appropriation Bill, said:
“I have maturely considered the important questions presented by
the bill entitled ‘An Act making appropriations for the support of the
Army for the fiscal year ending June 30, 1880, and for other
purposes,’ and I now return it to the House of Representatives, in
which it originated, with my objections to its approval.
“The bill provides, in the usual form, for the appropriations
required for the support of the Army during the next fiscal year. If it
contained no other provisions, it would receive my prompt approval.
It includes, however, further legislation, which, attached as it is to
appropriations which are requisite for the efficient performance of
some of the most necessary duties of the Government, involves
questions of the gravest character. The sixth section of the bill is
amendatory of the statute now in force in regard to the authority of
persons in the civil, military and naval service of the United States ‘at
the place where any general or special election is held in any State.’
This statute was adopted February 25, 1865, after a protracted
debate in the Senate, and almost without opposition in the House of
Representatives, by the concurrent votes of both of the leading
political parties of the country, and became a law by the approval of
President Lincoln. It was re-enacted in 1874 in the Revised Statutes
of the United States, sections 2002 and 5528.

“Upon the assembling of this Congress, in pursuance of a call for

an extra session, which was made necessary by the failure of the
Forty-fifth Congress to make the needful appropriations for the
support of the Government, the question was presented whether the
attempt made in the last Congress to engraft, by construction, a new
principle upon the Constitution should be persisted in or not. This
Congress has ample opportunity and time to pass the appropriation
bills, and also to enact any political measures which may be
determined upon in separate bills by the usual and orderly methods
of proceeding. But the majority of both Houses have deemed it wise
to adhere to the principles asserted and maintained in the last
Congress by the majority of the House of Representatives. That
principle is that the House of Representatives has the sole right to
originate bills for raising revenue, and therefore has the right to
withhold appropriations upon which the existence of the
Government may depend, unless the Senate and the President shall
give their assent to any legislation which the House may see fit to
attach to appropriation bills. To establish this principle is to make a
radical, dangerous, and unconstitutional change in the character of
our institutions. The various Departments of the Government, and
the Army and Navy, are established by the Constitution, or by laws
passed in pursuance thereof. Their duties are clearly defined, and
their support is carefully provided for by law. The money required
for this purpose has been collected from the people, and is now in the
Treasury, ready to be paid out as soon as the appropriation bills are
passed. Whether appropriations are made or not, the collection of
the taxes will go on. The public money will accumulate in the
Treasury. It was not the intention of the framers of the Constitution
that any single branch of the Government should have the power to
dictate conditions upon which this treasure should be applied to the
purpose for which it was collected. Any such intention, if it had been
entertained, would have been plainly expressed in the Constitution.”
The vote in the House on this Bill, notwithstanding the veto, was
148 for to 122 against—a party vote, save the division of the
Nationals, previously given. Not receiving a two-thirds vote, the Bill
failed.
The other appropriation bills with political riders shared the same
fate, as did the bill to prohibit military interference at elections, the
modification of the law touching supervisors and marshals at
congressional elections, etc. The debates on these measures were
bitterly partisan in their character, as a few quotations from the
Congressional Record will show:
The Republican view was succinctly and very eloquently stated by
General Garfield, when, in his speech of the 29th of March, 1879, he
said to the revolutionary Democratic House:
“The last act of Democratic domination in this Capitol, eighteen
years ago, was striking and dramatic, perhaps heroic. Then the
Democratic party said to the Republicans, ‘If you elect the man of
your choice as President of the United States we will shoot your
Government to death;’ and the people of this country, refusing to be
coerced by threats or violence, voted as they pleased, and lawfully
elected Abraham Lincoln President of the United States.
“Then your leaders, though holding a majority in the other branch
of Congress, were heroic enough to withdraw from their seats and
fling down the gage of mortal battle. We called it rebellion; but we
recognized it as courageous and manly to avow your purpose, take all
the risks, and fight it out on the open field. Notwithstanding your
utmost efforts to destroy it, the Government was saved. Year by year
since the war ended, those who resisted you have come to believe
that you have finally renounced your purpose to destroy, and are
willing to maintain the Government. In that belief you have been
permitted to return to power in the two Houses.
“To-day, after eighteen years of defeat, the book of your
domination is again opened, and your first act awakens every
unhappy memory and threatens to destroy the confidence which
your professions of patriotism inspired. You turned down a leaf of
the history that recorded your last act of power in 1861, and you have
now signalized your return to power by beginning a second chapter
at the same page; not this time by a heroic act that declares war on
the battle-field, but you say if all the legislative powers of the
Government do not consent to let you tear certain laws out of the
statute book, you will not shoot our Government to death as you
tried to do in the first chapter; but you declare that if we do not
consent against our will, if you cannot coerce an independent branch
of this Government against its will, to allow you to tear from the
statute books some laws put there by the will of the people, you will
starve the Government to death. [Great applause on the Republican
side.]
“Between death on the field and death by starvation, I do not know
that the American people will see any great difference. The end, if
successfully reached, would be death in either case. Gentlemen, you
have it in your power to kill this Government; you have it in your
power, by withholding these two bills, to smite the nerve-centres of
our Constitution with the paralysis of death; and you have declared
your purpose to do this, if you cannot break down that fundamental
element of free consent which up to this hour has always ruled in the
legislation of this Government.”
The Democratic view was ably given by Representative Tucker of
Virginia, April 3, 1879: “I tell you, gentlemen of the House of
Representatives, the Army dies on the 30th day of June, unless we
resuscitate it by legislation. And what is the question here on this
bill? Will you resuscitate the Army after the 30th of June, with the
power to use it as keepers of the polls? That is the question. It is not a
question of repeal. It is a question of re-enactment. If you do not
appropriate this money, there will be no Army after the 30th of June
to be used at the polls. The only way to secure an Army at the polls is
to appropriate the money. Will you appropriate the money for the
Army in order that they may be used at the polls? We say no, a
thousand times no. * * * The gentlemen on the other side say there
must be no coercion. Of whom? Of the President? But what right has
the President to coerce us? There may be coercion one way or the
other. He demands an unconditional supply. We say we will give
him no supply but upon conditions. * * * When, therefore, vicious
laws have fastened themselves upon the statute book which imperil
the liberty of the people, this House is bound to say it will
appropriate no money to give effect to such laws until and except
upon condition that they are repealed. [Applause on the Democratic
side.] * * * We will give him the Army on a single condition that it
shall never be used or be present at the polls when an election is held
for members of this House, or in any presidential election, or in any
State or municipal election. * * * Clothed thus with unquestioned
power, bound by clear duty, to expunge these vicious laws from the
statute book, following a constitutional method sanctioned by
venerable precedents in English history, we feel that we have the
undoubted right, and are beyond cavil in the right, in declaring that
with our grant of supply there must be a cessation of these
grievances, and we make these appropriations conditioned on
securing a free ballot and fair juries for our citizens.”
The Senate, July 1, passed the House bill placing quinine on the
free list.
 The extra session finally passed the Appropriation bills without
riders, and adjourned July 1st, 1879, with the Republican party far
more firmly united than at the beginning of the Hayes
administration. The attempt on the part of the Democrats to pass
these political riders, and their threat, in the words of Garfield, who
had then succeeded Stevens and Blaine as the Republican
Commoner of the House, reawakened all the partisan animosities
which the administration of President Hayes had up to that time
allayed. Even the President caught its spirit, and plainly manifested
it in his veto messages. It was a losing battle to the Democrats, for
they had, with the view not to “starve the government,” to abandon
their position, and the temporary demoralization which followed
bridged over the questions pertaining to the title of President Hayes,
overshadowed the claims of Tilden, and caused the North to again
look with grave concern on the establishment of Democratic power.
If it had not been for this extra session, it is asserted and believed by
many, the Republicans could not have so soon gained control of the
lower House, which they did in the year following; and that the plan
to nominate General Hancock for the Presidency, which originated
with Senator Wallace of Pennsylvania, could not have otherwise
succeeded if Tilden’s cause had not been kept before his party,
unclouded by an extra session which was freighted with disaster to
the Democratic party.
 The Negro Exodus.

During this summer political comment, long after adjournment,

was kept active by a great negro exodus from the South to the
Northwest, most of the emigrants going to Kansas. The Republicans
ascribed this to ill treatment, the Democrats to the operations of
railroad agents. The people of Kansas welcomed them, but other
States, save Indiana, were slow in their manifestations of hospitality,
and the exodus soon ceased for a time. It was renewed in South
Carolina in the winter of 1881–82, the design being to remove to
Arkansas, but at this writing it attracts comparatively little notice.
The Southern journals generally advise more liberal treatment of the
blacks in matters of education, labor contracts, etc., while none of the
Northern or Western States any longer make efforts to get the benefit
of their labor, if indeed they ever did.
 Closing Hours of the Hayes Administration.

At the regular session of Congress, which met December 1st, 1879,

President Hayes advised Congress against any further legislation in
reference to coinage, and favored the retirement of the legal tenders.
The most important political action taken at this session was the
passage, for Congress was still Democratic, of a law to prevent the
use of the army to keep the peace at the polls. To this was added the
Garfield proviso, that it should not be construed to prevent the
Constitutional use of the army to suppress domestic violence in a
State—a proviso which in the view of the Republicans rid the bill of
material partisan objections, and it was therefore passed and
approved. The “political riders” were again added to the
Appropriation and Deficiency bills, but were again vetoed and failed
in this form to become laws. Upon these questions President Hayes
showed much firmness. During the session the Democratic
opposition to the General Election Law was greatly tempered, the
Supreme Court having made an important decision, which upheld its
constitutionality. Like all sessions under the administration of
President Hayes and since, nothing was done to provide permanent
and safe methods for completing the electoral count. On this
question each party seemed to be afraid of the other. The session
adjourned June 16th, 1880.
The second session of the 46th Congress began December 1st,
1880. The last annual message of President Hayes recommended the
earliest practicable retirement of the legal-tender notes, and the
maintenance of the present laws for the accumulation of a sinking
fund sufficient to extinguish the public debt within a limited period.
The laws against polygamy, he said, should be firmly and effectively
executed. In the course of a lengthy discussion of the civil service the
President declared that in his opinion “every citizen has an equal
right to the honor and profit of entering the public service of his
country. The only just ground of discrimination is the measure of
character and capacity he has to make that service most useful to the
people. Except in cases where, upon just and recognized principles,
as upon the theory of pensions, offices and promotions are bestowed
as rewards for past services, their bestowal upon any theory which
disregards personal merit is an act of injustice to the citizen, as well
as a breach of that trust subject to which the appointing power is
held. Considerable space was given in the Message to the condition
of the Indians, the President recommending the passage of a law
enabling the government to give Indians a title-fee, inalienable for
twenty-five years, to the farm lands assigned to them by allotment.
He also repeats the recommendation made in a former message that
a law be passed admitting the Indians who can give satisfactory proof
of having by their own labor supported their families for a number of
years, and who are willing to detach themselves from their tribal
relations, to the benefit of the Homestead Act, and authorizing the
government to grant them patents containing the same provision of
inalienability for a certain period.
The Senate, on the 19th, appointed a committee of five to
investigate the causes of the recent negro exodus from the South. On
the same day a committee was appointed by the House to examine
into the subject of an inter-oceanic ship-canal.
The payment of the award of the Halifax Fisheries Commission—
$5,500,000—to the British government was made by the American
minister in London, November 23, 1879, accompanied by a
communication protesting against the payment being understood as
an acquiescence in the result of the Commission “as furnishing any
just measure of the value of a participation by our citizens in the
inshore fisheries of the British Provinces.”
On the 17th of December 1879, gold was sold in New York at par. It
was first sold at a premium January 13, 1862. It reached its highest
rate, $2.85, July 11, 1864.
The electoral vote was counted without any partisan excitement or
disagreement. Georgia’s electoral college had met on the second
instead of the first Wednesday of December, as required by the
Federal law. She actually voted under her old Confederate law, but as
it could not change the result, both parties agreed to the count of the
vote of Georgia “in the alternative,” i. e.—“if the votes of Georgia
were counted the number of votes for A and B. for President and
Vice-President would be so many, and if the votes of Georgia were
not counted, the number of votes for A and B. for President and Vice-
President would be so many, and that in either case A and B are
elected.”
Among the bills not disposed of by this session were the electoral
count joint rule; the funding bill; the Irish relief bill; the Chinese
indemnity bill; to restrict Chinese immigration; to amend the
Constitution as to the election of President; to regulate the pay and
number of supervisors of election and special deputy marshals; to
abrogate the Clayton-Bulwer Treaty; to prohibit military interference
at elections; to define the terms of office of the Chief Supervisors of
elections; for the appointment of a tariff commission; the political
assessment bill; the Kellogg-Spofford case; and the Fitz-John Porter
bill.
The regular appropriation bills were all completed. The total
amount appropriated was about $186,000,000. Among the special
sums voted were $30,000 for the centennial celebration of the
Yorktown victory, and $100,000 for a monument to commemorate
the same.
Congress adjourned March 3d, 1881, and President Hayes on the
following day retired from office. The effect of his administration
was, in a political sense, to strengthen a growing independent
sentiment in the ranks of the Republicans—an element more
conservative generally in its views than those represented by
Conkling and Blaine. This sentiment began with Bristow, who while
in the cabinet made a show of seeking out and punishing all
corruptions in government office or service. On this platform and
record he had contested with Hayes the honors of the Presidential
nominations, and while the latter was at the time believed to well
represent the same views, they were not urgently pressed during his
administration. Indeed, without the knowledge of Hayes, what is
believed to be a most gigantic “steal,” and which is now being
prosecuted under the name of the Star Route cases, had its birth, and
thrived so well that no important discovery was made until the
incoming of the Garfield administration. The Hayes administration,
it is now fashionable to say, made little impress for good or evil upon
the country, but impartial historians will give it the credit of
softening party asperities and aiding very materially in the
restoration of better feeling between the North and South. Its
conservatism, always manifested save on extraordinary occasions,
did that much good at least.
 The Campaign of 1880.

The Republican National Convention met June 5th, 1880, at

Chicago, in the Exposition building, capable of seating 20,000
people. The excitement in the ranks of the Republicans was very
high, because of the candidacy of General Grant for what was
popularly called a “third term,” though not a third consecutive term.
His three powerful Senatorial friends, in the face of bitter protests,
had secured the instructions of their respective State Conventions for
Grant. Conkling had done this in New York, Cameron in
Pennsylvania, Logan in Illinois, but in each of the three States the
opposition was so impressive that no serious attempts were made to
substitute other delegates for those which had previously been
selected by their Congressional districts. As a result there was a large
minority in the delegations of these States opposed to the
nomination of General Grant, and the votes of them could only be
controlled by the enforcement of the unit rule. Senator Hoar of
Massachusetts, the President of the Convention, decided against its
enforcement, and as a result all of the delegates were free to vote
upon either State or District instructions, or as they chose. The
Convention was in session three days. We present herewith the

BALLOTS.
 Ballots. 1 2 3 4 5 6
Grant, 304 305 305 305 305 305
Blaine, 284 282 282 281 281 281
Sherman, 93 94 93 95 95 95
Edmunds, 34 32 32 32 32 31
Washburne, 30 32 31 31 31 31
Windom, 10 10 10 10 10 10
Garfield, 1 1 1 2 2
Harrison, 1
Ballots. 7 8 9 10 11 12
Grant, 305 306 308 305 305 304
Blaine, 281 284 282 282 281 283
Sherman, 94 91 90 91 62 93
Edmunds, 32 31 31 30 31 31
Washburne, 31 32 32 22 32 33
Windom, 10 10 10 10 10 10
Garfield, 1 1 1 2 2 1
Hayes, 1 2
Ballots, 13 14 15 16 17 18
Grant, 305 305 309 306 303 305
Blaine, 285 285 281 283 284 283
Sherman, 89 89 88 88 90 92
Edmunds, 31 31 31 31 31 31
Washburne, 33 35 36 36 34 35
Windom, 10 10 10 10 10 10
Garfield, 1
Hayes, 1 1
Davis, 1
McCrary, 1
Ballots, 19 20 21 22 23 24
Grant, 305 308 305 305 304 305
Blaine, 279 276 276 275 274 279
Sherman, 95 93 96 95 98 93
Edmunds, 31 31 31 31 31 31
Washburne, 31 35 35 35 36 35
Windom, 10 10 10 10 10 10
 Garfield, 1 1 1 1 2 2
Hartranft, 1 1 1 1
Ballots, 25 26 27
Grant, 302 303 306
Blaine, 281 280 277
Sherman, 94 93 93
Edmunds, 31 31 31
Washburne, 36 35 36
Windom, 10 10 10
Garfield, 2 2 2

There was little change from the 27th ballot until the 36th and
final one, which resulted as follows:

Whole number of votes 755

Necessary to a choice 378
Grant 306
Blaine 42
Sherman 3
Washburne 5
Garfield 399

As shown, General James A. Garfield, of Ohio, was nominated on

the 36th ballot, the forces of General Grant alone remaining solid.
The result was due to a sudden union of the forces of Blaine and
Sherman, it is believed with the full consent of both, for both
employed the same wire leading from the same room in Washington
in telegraphing to their friends at Chicago. The object was to defeat
Grant. After Garfield’s nomination there was a temporary
adjournment, during which the friends of the nominee consulted
Conkling and his leading friends, and the result was the selection of
General Chester A. Arthur of New York, for Vice-President. The
object of this selection was to carry New York, the great State which
was then almost universally believed to hold the key to the
Presidential position.
The Democratic National Convention met at Cincinnati, June 22d.
Tilden had up to the holding of the Pennsylvania State Convention
been one of the most prominent candidates. In this Convention there
was a bitter struggle between the Wallace and Randall factions, the
former favoring Hancock, the latter Tilden. Wallace, after a contest
far sharper than he expected, won, and bound the delegation by the
unit rule. When the National Convention met, John Kelly, the
Tammany leader of New York, was again there, as at St. Louis four
years before, to oppose Tilden, but the latter sent a letter disclaiming
that he was a candidate, and yet really inviting a nomination on the
issue of “the fraudulent counting in of Hayes.” There were but two
ballots, as follows:
 FIRST BALLOT.

Hancock 171
Bayard 153½
Payne 81
Thurman 63½
Field 66
Morrison 62
Hendricks 46½
Tilden 38
Ewing 10
Seymour 8
Randall 6
Loveland 5
McDonald 3
McClellan 3
English 1
Jewett 1
Black 1
Lothrop 1
Parker 1

SECOND BALLOT.

Hancock 705
Tilden 1
Bayard 2
Hendricks 30

Thus General Winfield S. Hancock, of New York, was nominated

on the second ballot. Wm. H. English, of Indiana, was nominated for
Vice-President.
The National Greenback-Labor Convention, held at Chicago, June
11, nominated General J. B. Weaver, of Iowa, for President, and
General E. J. Chambers, of Texas, for Vice-President.
 In the canvass which followed, the Republicans were aided by such
orators as Conkling, Blaine, Grant, Logan, Curtis, Boutwell, while the
Camerons, father and son, visited the October States of Ohio and
Indiana, as it was believed that these would determine the result,
Maine having in September very unexpectedly defeated the
Republican State ticket by a small majority. The Democrats were
aided by Bayard, Voorhees, Randall, Wallace, Hill, Hampton, Lamar,
and hosts of their best orators. Every issue was recalled, but for the
first time in the history of the Republicans of the West, they accepted
the tariff issue, and made open war on Watterson’s plank in the
Democratic platform—“a tariff for revenue only.” Iowa, Ohio, and
Indiana, all elected the Republican State tickets with good margins;
West Virginia went Democratic, but the result was, notwithstanding
this, reasonably assured to the Republicans. The Democrats,
however, feeling the strong personal popularity of their leading
candidate, persisted with high courage to the end. In November all of
the Southern States, with New Jersey, California,[36] and Nevada in
the North, went Democratic; all of the others Republican. The
Greenbackers held only a balance of power, which they could not
exercise, in California, Indiana, and New Jersey. The electoral vote of
Garfield and Arthur was 214, that of Hancock and English 155. The
popular vote was Republican, 4,442,950; Democratic, 4,442,035;
Greenback or National, 306,867; scattering, 12,576. The
Congressional elections in the same canvass gave the Republicans
147 members; the Democrats, 136; Greenbackers, 9; Independents, 1.
Fifteen States elected Governors, nine of them Republicans and six
Democrats.
General Garfield, November 10, sent to Governor Foster, of Ohio,
his resignation as a Senator, and John Sherman, the Secretary of the
Treasury, was in the winter following elected as his successor.
The third session of the Forty-sixth Congress was begun December
6. The President’s Message was read in both Houses. Among its
recommendations to Congress were the following: To create the
office of Captain-General of the Army for General Grant; to defend
the inviolability of the constitutional amendments; to promote free
popular education by grants of public lands and appropriations from
the United States Treasury; to appropriate $25,000 annually for the
expenses of a Commission to be appointed by the President to devise
a just, uniform, and efficient system of competitive examinations,
and to supervise the application of the same throughout the entire
civil service of the government; to pass a law defining the relations of
Congressmen to appointments to office, so as to end Congressional
encroachment upon the appointing power; to repeal the Tenure-of-
office Act, and pass a law protecting office-holders in resistance to
political assessments; to abolish the present system of executive and
judicial government in Utah, and substitute for it a government by a
commission to be appointed by the President and confirmed by the
Senate, or, in case the present government is continued, to withhold
from all who practice polygamy the right to vote, hold office, and sit
on juries; to repeal the act authorizing the coinage of the silver dollar
of 412½ grains, and to authorize the coinage of a new silver dollar
equal in value as bullion with the gold dollar; to take favorable action
on the bill providing for the allotment of lands on the different
reservations.
Two treaties between this country and China were signed at Pekin,
November 17, 1881, one of commerce, and the other securing to the
United States the control and regulation of the Chinese immigration.
President Hayes, February 1, 1881, sent a message to Congress
sustaining in the main the findings of the Ponca Indian Commission,
and approving its recommendation that they remain on their
reservation in Indian Territory. The President suggested that the
general Indian policy for the future should embrace the following
ideas: First, the Indians should be prepared for citizenship by giving
to their young of both sexes that industrial and general education
which is requisite to enable them to be self-supporting and capable
of self-protection in civilized communities; second, lands should be
allotted to the Indians in severalty, inalienable for a certain period;
third, the Indians should have a fair compensation for their lands not
required for individual allotments, the amount to be invested, with
suitable safeguards, for their benefit; fourth, with these prerequisites
secured, the Indians should be made citizens, and invested with the
rights and charged with the responsibilities of citizenship.
The Senate, February 4, passed Mr. Morgan’s concurrent
resolution declaring that the President of the Senate is not invested
by the Constitution of the United States with the right to count the
votes of electors for President and Vice-President of the United
States, so as to determine what votes shall be received and counted,
or what votes shall be rejected. An amendment was added declaring
in effect that it is the duty of Congress to pass a law at once providing
for the orderly counting of the electoral vote. The House concurred
February 5, but no action by bill or otherwise has since been taken.
Senator Pendleton, of Ohio, December 15, 1881, introduced a bill
to regulate the civil service and to promote the efficiency thereof, and
also a bill to prohibit Federal officers, claimants, and contractors
from making or receiving assessments or contributions for political
purposes.
The Burnside Educational Bill passed the Senate December 17,
1881. It provides that the proceeds of the sale of public land and the
earnings of the Patent Office shall be funded at four per cent., and
the interest divided among the States in proportion to their illiteracy.
An amendment by Senator Morgan provides for the instruction of
women in the State agricultural colleges in such branches of
technical and industrial education as are suited to their sex. No
action has yet been taken by the House.
On the 9th of February the electoral votes were counted by the
Vice-President in the presence of both Houses, and Garfield and
Arthur were declared elected President and Vice-President of the
United States. There was no trouble as to the count, and the result
previously stated was formally announced.
 The Three Per Cent. Funding Bill.

The 3 per cent. Funding Bill passed the House March 2, and was
on the following day vetoed by President Hayes on the ground that it
dealt unjustly with the National Banks in compelling them to accept
and employ this security for their circulation in lieu of the old bonds.
This feature of the bill caused several of the Banks to surrender their
circulation, conduct which for a time excited strong political
prejudices. The Republicans in Congress as a rule contended that the
debt could not be surely funded at 3 per cent.; that 3½ was a safer
figure, and to go below this might render the bill of no effect. The
same views were entertained by President Hayes and Secretary
Sherman. The Democrats insisted on 3 per cent., until the veto, when
the general desire to fund at more favorable rates broke party lines,
and a 3½ per cent. funding bill was passed, with the feature
objectionable to the National Banks omitted.
The Republicans were mistaken in their view, as the result proved.
The loan was floated so easily, that in the session of 1882 Secretary
Sherman, now a Senator, himself introduced a 3 per cent. bill, which
passed the Senate Feb. 2d, 1882, in this shape:—
Be it enacted, &c. That the Secretary of the Treasury is hereby
authorized to receive at the Treasury and at the office of any
Assistant Treasurer of the United States and at any postal money
order office, lawful money of the United States to the amount of fifty
dollars or any multiple of that sum or any bonds of the United States,
bearing three and a half per cent, interest, which are hereby declared
valid, and to issue in exchange therefore an equal amount of
registered or coupon bonds of the United States, of the denomination
of fifty, one hundred, five hundred, one thousand and ten thousand
dollars, of such form as he may prescribe, bearing interest at the rate
three per centum per annum, payable either quarterly or semi-
annually, at the Treasury of the United States. Such bonds shall be
exempt from all taxation by or under state authority, and be payable
at the pleasure of the United States. “Provided, That the bonds
herein authorized shall not be called in and paid so long as any bonds
of the United States heretofore issued bearing a higher rate of
interest than three per centum, and which shall be redeemable at the
pleasure of the United States, shall be outstanding and uncalled. The
last of the said bonds originally issued and their substitutes under
this act shall be first called in and this order of payment shall be
followed until all shall have been paid.”

The money deposited under this act shall be promptly applied

solely to the redemption of the bonds of the United States bearing
three and a half per centum interest, and the aggregate amount of
deposits made and bonds issued under this act shall not exceed the
sum of two hundred million dollars. The amount of lawful money so
received on deposit, as aforesaid, shall not exceed, at any time, the
sum of twenty-five million dollars. Before any deposits are received
at any postal money office under this act, the postmaster at such
office shall file with the Secretary of the Treasury his bond, with
satisfactory security, conditioned that he will promptly transmit to
the Treasury of the United States the money received by him in
conformity with regulations to be prescribed by such secretary; and
the deposit with any postmaster shall not at any time, exceed the
amount of his bond.
Section 2. Any national banking association now organized or
hereafter organized desiring to withdraw its circulating notes upon a
deposit of lawful money with the Treasury or the United States as
provided in section 4 of the Act of June 20, 1874, entitled “An act
fixing the amount of United States notes providing for a
redistribution of National bank currency and for other purposes,”
shall be required to give thirty days’ notice to the Controller of the
Currency of its intention to deposit lawful money and withdraw its
circulating notes; provided that not more than five million of dollars
of lawful money shall be deposited during any calendar month for
this purpose; and provided further, that the provisions of this section
shall not apply to bonds called for redemption by the Secretary of the
Treasury.
 Section 3. That nothing in this act shall be so construed as to
authorize an increase of the public debt.
In the past few years opinions on the rates of interest have
undergone wonderful changes. Many supposed—indeed it was a
“standard” argument—that rates must ever be higher in new than old
countries, that these higher rates comported with and aided the
higher rates paid for commodities and labor. The funding operations
since the war have dissipated this belief, and so shaken political
theories that no party can now claim a monopoly of sound financial
doctrine. So high is the credit of the government, and so abundant
are the resources of our people after a comparatively short period of
general prosperity, that they seem to have plenty of surplus funds
with which to aid any funding operation, however low the rate of
interest, if the government—State or National—shows a willingness
to pay. As late as February, 1882, Pennsylvania funded seven
millions of her indebtedness at 3, 3½ and 4 per cent., the two larger
sums commanding premiums sufficient to cause the entire debt to be
floated at a little more than 3 per cent., and thus floating commands
an additional premium in the money exchanges.
 History of the National Loans.

In Book VII of this volume devoted to Tabulated History, we try to

give the reader at a glance some idea of the history of our National
finances. An attempt to go into details would of itself fill volumes, for
no class of legislation has taken so much time or caused such a
diversity of opinion. Yet it is shown, by an admirable review of the
loans of the United States, by Rafael A. Bayley, of the Treasury
Department published in the February (1882) number of the
International Review, that the “financial system of the government
of the United States has continued the same from its organization to
the present time.” Mr. Bayley has completed a history of our National
Loans, which will be published in the Census volume on “Public
Debts.” From his article in the Review we condense the leading facts
bearing on the history of our national loans.
The financial system of the United States, in all its main features,
is simple and well defined, and its very simplicity may probably be
assigned as the reason why it appears so difficult of comprehension
by many people of intelligence and education. It is based upon the
principles laid down by Alexander Hamilton, and the practical
adoption of the fundamental maxim which he regarded as the true
secret for rendering public credit immortal, viz., “that the creation of
the debt should always be accompanied with the means of
extinguishment.” A faithful adherence to this system by his
successors has stood the test of nearly a century, with the nation at
peace or at war, in prosperity or adversity; so that, with all the
change that progress has entailed upon the people of the age, no
valid grounds exist for any change here.
“During the colonial period, and under the confederation, the
financial operations of the Government were based on the law of
necessity, and depended for success upon the patriotism of the
people, the co-operation of the several States, and the assistance of
foreign powers friendly to our cause.
“It was the willingness of the people to receive the various kinds of
paper money issued under authority of the Continental Congress,
and used in payment for services and supplies, together with the
issue of similar obligations by the different States, for the
redemption of which they assumed the responsibility; aided by the
munificent gift of money from Louis XVI. of France, followed by
loans for a large amount from both France and Holland, that made
victory possible, and laid the foundations for the republic of to-day,
with its credit unimpaired, and with securities commanding a ready
sale at a high premium in all the principal markets of the world.
“Authorities vary as to the amount of paper money issued and the
cost of the war for independence. On the 1st of September, 1779,
Congress resolved that it would ‘on no account whatever emit more
bills of credit than to make the whole amount of such bills two
hundred millions of dollars.’ Mr. Jefferson estimates the value of this
sum at the time of its emission at $36,367,719.83 in specie, and says;
‘If we estimate at the same value the like sum of $200,000,000
supposed to have been emitted by the States, and reckon the Federal
debt, foreign and domestic, at about $43,000,000, and the State
debt at $25,000,000, it will form an amount of $140,000,000, the
total sum which the war cost the United States. It continued eight
years, from the battle of Lexington to the cessation of hostilities in
America. The annual expense was, therefore, equal to about
$17,500,000 in specie.’
“The first substantial aid rendered the colonies by any foreign
power was a free gift of money and military supplies from Louis XVI.
of France, amounting in the aggregate to 10,000,000 livres,
equivalent to $1,815,000.
“These supplies were not furnished openly, for the reason that
France was not in a position to commence a war with Great Britain.
The celebrated Caron de Beaumarchais was employed as a secret
agent, between whom and Silas Deane, as the political and
commercial agent of the United States, a contract was entered into
whereby the former agreed to furnish a large amount of military
supplies from the arsenals of France, and to receive American
produce in payment therefor.
 “Under this arrangement supplies were furnished by the French
Government to the amount of 2,000,000 livres. An additional
1,000,000 was contributed by the Government of Spain for the same
purpose, and through the same agency. The balance of the French
subsidy was paid through Benjamin Franklin. In 1777 a loan of
1,000,000 livres was obtained from the ‘Farmers General of France’
under a contract for its repayment in American tobacco at a
stipulated price. From 1778 to 1783, additional loans were obtained
from the French King, amounting to 34,000,000 livres. From 1782
to 1789, loans to the amount of 9,000,000 guilders were negotiated
in Holland, through the agency of John Adams, then the American
Minister to the Hague.
“The indebtedness of the United States at the organization of the
present form of government (including interest to December 31,
1790) may be briefly stated, as follows:

Foreign debt $11,883,315.96

Domestic debt 40,256,802.45
Debt due foreign officers 198,208.10
Arrears outstanding (since discharged) 450,395.52

Total $52,788,722.03

To this should be added the individual debts of the several States,

the precise amount and character of which was then unknown, but
estimated by Hamilton at that time to aggregate about $25,000,000.
“The payment of this vast indebtedness was virtually guarantied by
the provisions of Article VI. of the Constitution, which says: ‘All
debts contracted, and engagements entered into, before the adoption
of this Constitution shall be as valid against the United States under
this Constitution as under the confederation.’ On the 21st of
September, 1789, the House of Representatives adopted the
following resolutions:
Resolved, That this House consider an adequate provision for the
support of the public credit as a matter of high importance to the
national honor and prosperity.
 Resolved, That the Secretary of the Treasury be directed to prepare
a plan for that purpose, and to report the same to this House at its
next meeting.
“In reply thereto Hamilton submitted his report on the 9th of
January, 1790, in which he gave many reasons for assuming the
debts of the old Government, and of the several States, and furnished
a plan for supporting the public credit. His recommendations were
adopted, and embodied in the act making provision for the payment
of the debt of the United States, approved August 4, 1790.
This act authorized a loan of $12,000,000, to be applied to the
payment of the foreign debt, principal and interest; a loan equal to
the full amount of the domestic debt, payable in certificates issued
for its amount according to their specie value, and computing the
interest to December 31, 1791, upon such as bore interest; and a
further loan of $21,500,000, payable in the principal and interest of
the certificates or notes which, prior to January 1, 1790, were issued
by the respective States as evidences of indebtedness incurred by
them for the expenses of the late war. ‘In the case of the debt of the
United States, interest upon two-thirds of the principal only, at 6 per
cent., was immediately paid; interest upon the remaining third was
deferred for ten years, and only three per cent. was allowed upon the
arrears of interest, making one-third of the whole debt. In the case of
the separate debts of the States, interest upon four-ninths only of the
entire sum was immediately paid; interest upon two-ninths was
deferred for ten years, and only 3 per cent. allowed on three-ninths.’
Under this authority 6 per cent. stock was issued to the amount of
$30,060,511, and deferred 6 per cent. stock, bearing interest from
January 1, 1800, amounting to $14,635,386. This stock was made
subject to redemption by payments not exceeding, in one year, on
account both of principal and interest, the proportion of eight dollars
upon a hundred of the sum mentioned in the certificates;
$19,719,237 was issued in 3 per cent. stock, subject to redemption
whenever provision should be made by law for that purpose.
“The money needed for the payment of the principal and interest
of the foreign debt was procured by new loans negotiated in Holland
and Antwerp to the amount of $9,400,000, and the issue of new
stock for the balance of $2,024,900 due on the French debt, this
stock bearing a rate of interest one-half of one per cent. in advance of
the rate previously paid, and redeemable at the pleasure of the
Government. Subsequent legislation provided for the establishment
of a sinking fund, under the management of a board of
commissioners, consisting of the President of the Senate, Chief
Justice of the Supreme Court, Secretary of State, Secretary of the
Treasury, and Attorney-General, for the time being, who, or any
three of whom, were authorized, under the direction of the President
of the United States, to make purchases of stock, and otherwise
provide for the gradual liquidation of the entire debt, from funds set
apart for this purpose. On assuming the position of Secretary of the
Treasury, Hamilton found himself entirely without funds to meet the
ordinary expenses of the Government, except by borrowing, until
such time as the revenues from duties on imports and tonnage began
to come into the Treasury. Under these circumstances, he was forced
to make arrangements with the Bank of New York and the Bank of
North America for temporary loans, and it was from the moneys
received from these banks that he paid the first installment of salary
due President Washington, Senators, Representatives and officers of
Congress, during the first session under the Constitution, which
began at the city of New York, March 4, 1789.
“The first ‘Bank of the United States’ appears to have been
proposed by Alexander Hamilton in December, 1790, and it was
incorporated by an act of Congress, approved February 25, 1791, with
a capital stock of $10,000,000 divided into 25,000 shares at $400
each. The government subscription of $2,000,000, under authority
of the act, was paid by giving to the bank bills of exchange on
Holland equivalent to gold, and borrowing from the bank a like sum
for ten years at 6 per cent. interest. The bank went into operation
very soon after its charter was obtained, and declared its first
dividend in July, 1792. It was evidently well managed, and was of
great benefit to the Government and the people at large, assisting the
Government by loans in cases of emergency, and forcing the ‘wildcat’
banks of the country to keep their issues ‘somewhere within
reasonable bounds.’ More than $100,000,000 of Government money
was received and disbursed by it without the loss of a single dollar. It
made semi-annual dividends, averaging about 8½ per cent., and its
stock rose to a high price. The stock belonging to the United States
was sold out at different times at a profit, 2,220 shares sold in 1802
bringing an advance of 45 per cent. The government subscription,
with ten years’ interest amounted to $3,200,600, while there was
received in dividends and for stock sold $3,773,580, a profit of nearly
28.7 per cent. In 1796 the credit of the Government was very low, as
shown by its utter failure to negotiate a loan for the purpose of
paying a debt to the Bank of the United States for moneys borrowed
and used, partly to pay the expenses of suppressing the whisky
insurrection in Pennsylvania and to buy a treaty with the pirates of
Algiers. On a loan authorized for $5,000,000, only $80,000 could be
obtained, and this at a discount of 12½ per cent.; and, there being no
other immediate resource, United States Bank stock to the amount of
$1,304,260 was sold at a premium of 25 per cent.
“Under an act approved June 30, 1798, the President was
authorized to accept such vessels as were suitable to be armed for the
public service, not exceeding twelve in number, and to issue
certificates, or other evidences of the public debt of the United
States, in payment. The ships George Washington, Merrimack,
Maryland and Patapsco, brig Richmond, and frigates Boston,
Philadelphia, John Adams, Essex and New York, were purchased,
and 6 per cent. stock, redeemable at the pleasure of Congress, was
issued in payment to the amount of $711,700.
“The idea of creating a navy by the purchase of vessels built by
private parties and issuing stock in payment therefor, seems to have
originated with Hamilton.
“In the years 1797 and 1798 the United States, though nominally at
peace with all the world, was actually at war with France—a war not
formally declared, but carried on upon the ocean with very great
virulence. John Marshall, Elbridge Gerry and Charles C. Pinckney
were appointed envoys extraordinary to the French Republic, with
power for terminating all differences and restoring harmony, good
understanding and commercial and friendly intercourse between the
two nations; but their efforts were in vain, and extensive
preparations were made to resist a French invasion. It was evident
that the ordinary revenues of the country would be inadequate for
the increased expenditure, and a loan of $5,000,000 was authorized
by an act approved July 16, 1798, redeemable at pleasure after fifteen
years. The rate of interest was not specified in the act, and the
market rate at the time being 8 per cent. this rate was paid, and it
was thought by a committee of Congress that the loan was negotiated
‘upon the best terms that could be procured, and with a laudable eye
to the public interest.’ A loan of $3,500,000 was authorized by an act
approved May 7, 1800, for the purpose of meeting a large deficit in
the revenues of the preceding year, caused by increased expenditures
rendered necessary on account of the difficulties with France, and
stock bearing 8 per cent. interest, reimbursable after fifteen years,
was issued to the amount of $1,481,700, on which a premium was
realized of nearly 5¾ per cent. These are the only two instances in
which the Government has paid 8 per cent. interest on its bonds.
“The province of Louisiana was ceded to the United States by a
treaty with France, April 30, 1803, in payment for which 6 per cent.
bonds, payable in fifteen years, were issued to the amount of
$11,250,000, and the balance which the Government agreed to pay
for the province, amounting to $3,750,000, was devoted to
reimbursing American citizens for French depredations on their
commerce. These claims were paid in money, and the stock
redeemed by purchases made under the direction of the
Commissioners of the Sinking Fund within twelve years. Under an
act approved February 11, 1807, a portion of the ‘old 6 per cent.’ and
‘deferred stocks’ was refunded into new stock, bearing the same rate
of interest, but redeemable at the pleasure of the United States. This
was done for the purpose of placing it within the power of the
Government to reimburse the amount refunded within a short time,
as under the old laws these stocks could only be redeemed at the rate
of 2 per cent. annually. Stock was issued amounting to $6,294,051,
nearly all of which was redeemed within four years. Under the same
act old ‘3 per cent. stock’ to the amount of $2,861,309 was converted
into 6 per cents., at sixty-five cents on the dollar, but this was not
reimbursable without the assent of the holder until after the whole of
certain other stocks named in the act was redeemed. The stock
issued under this authority amounted to $1,859,871. It would appear
that the great majority of the holders of the “old stock” preferred it to
the new. A loan equal to the amount of the principal of the public
debt reimbursable during the current year was authorized by an act
approved May 1, 1810, and $2,750,000 was borrowed at 6 per cent.
interest from the Bank of the United States, for the purpose of
meeting any deficiency arising from increased expenditures on
account of the military and naval establishments. This was merely a
temporary loan, which was repaid the following year.
 “The ordinary expenses for the year 1812 were estimated by the
Committee of Ways and Means of the House of Representatives at
$1,200,000 more than the estimated receipts for the same period,
and the impending war with Great Britain made it absolutely
necessary that some measures should be adopted to maintain the
public credit, and provide the requisite funds for carrying on the
Government. Additional taxes were imposed upon the people, but as
these could not be made immediately available there was no other
resource but new loans and the issue of Treasury notes. This was the
first time since the formation of the new Government that the issue
of such notes had been proposed, and they were objected to as
engrafting on our system of finance a new and untried measure.
“Under various acts of Congress approved between March 4, 1812,
and February 24, 1815, 6 per cent. bonds were issued to the amount
of $50,792,674. These bonds were negotiated at rates varying from
20 per cent. discount to par, the net cash realized amounting to
$44,530,123. A further sum of $4,025,000 was obtained by
temporary loans at par, of which sum $225,000 was for the purpose
of repairing the public buildings in Washington, damaged by the
enemy on the night of August 24, 1814. These ‘war loans’ were all
made redeemable at the pleasure of the Government after a specified
date, and the faith of the United States was solemnly pledged to
provide sufficient revenues for this purpose. The ‘Treasury note
system’ was a new feature, and its success was regarded as somewhat
doubtful.
“Its subsequent popularity, however, was owing to a variety of
causes. The notes were made receivable everywhere for dues and
customs, and in payment for public lands. They were to bear interest
from the day of issue, at the rate of 5–⅖ per cent. per annum, and
their payment was guaranteed by the United States, principal and
interest, at maturity. They thus furnished a circulating medium to
the country, superior to the paper of the suspended and doubtful
State banks. These issues were therefore considered more desirable
than the issue of additional stock, which could be realized in cash
only by the payment of a ruinous discount. The whole amount of
Treasury notes issued during the war period was $36,680,794. The
Commissioners of the Sinking Fund were authorized to provide for
their redemption by purchase, in the same manner as for other