CHAPTER XXV.

INVESTIGATION OF THE NEW YORK CUSTOMHOUSE. A General Examination of Several Ports Ordered--No Difficulty Except at New York--First Report of the Commission--President Hayes' Recommendations--Letter of Instructions to Collector C. A. Arthur --Second Report of the Commission--Losses to the Government by Reason of Inefficiency of Employees--Various Measures of Reform Recommended--Four Other Reports Made--The President Decides on the Removal of Arthur, Cornell and Sharpe--Two Letters to R. C. McCormick on the Subject--Arthur et al. Refuse to Resign--The Senate Twice Refuses to Confirm the Men Appointed by the President to Succeed Them--Conkling's Contest Against Civil Service Reform--My Letter to Senator Allison--Final Victory of the President.

At the beginning of the administration of President Hayes, and for months previous, there had been complaints as to the conduct of business in the principal customhouses of the United States. This was especially called to my attention, and at my suggestion the President directed an examination into the conduct of the customhouses at New York, Philadelphia, New Orleans, San Francisco and perhaps other ports. Examinations were made by intelligent business men selected in the various ports, and full reports were made by them, and printed as public documents. Many changes were made, and reforms adopted, founded upon these reports, and there was no difficulty except only at the port of New York, where more than two-thirds of all the customs revenue was collected. Chester A. Arthur was then collector of the port, A. B. Cornell was naval officer, and George H. Sharpe was appraiser.

On the 23rd of April, 1877, I designated John Jay, Lawrence Turnure, of New York, and J. H. Robinson, Assistant Solicitor of the Treasury, as a commission on the New York customhouse. They were requested to make a thorough examination into the conduct of business in that customhouse. Full instructions were given and many specifications were made in detail of all the points embraced in their examination.

On the 24th of May they made their first report, preferring to treat the general subject-matter separately. This report related chiefly to appointments upon political influence without due regard to efficiency. I promptly referred it to the President, and received the following letter:

"Executive Mansion, } "Washington, May 26, 1877.} "My Dear Sir:--I have read the partial report of the commission appointed to examine the New York customhouse. I concur with the commission in their recommendations. It is my wish that the collection of the revenues should be free from partisan control, and organized on a strictly business basis, with the same guarantees for efficiency and fidelity in the selection of the chief and subordinate officers that would be required by a prudent merchant. Party leaders should have no more influence in appointments than any other equally respectable citizens. No assessments for political purposes, on officers or subordinates, should be allowed. No useless officer or employee should be retained. No officer should be required or permitted to take part in the management of political organizations, caucuses, conventions, or election campaigns. Their right to vote, and to express their views on public questions, either orally or through the press, is not denied, provided it does not interfere with the discharge of their official duties.

"Respectfully, "R. B. Hayes. "Hon. John Sherman, etc."

My answer to the commission was as follows:

"Treasury Department, May 26, 1877. "Gentlemen:--Your first report on the customhouse in New York, of date the 24th instant, has been received, and the reduction proposed by you of twenty per cent. of the number of persons employed therein is approved.

"So far as these offices are created by law, vacancies will be made and left for the action of Congress. The reduction of the other employees, the number of whom and whose compensation are not fixed by law, will be made as soon as practicable.

"I am much gratified that the collector, the naval officer, and the surveyor of the port, concur with you in the proposed reduction.

"The hours of employment, after the 31st of this month, will be from 9 o'clock a. m. till 4 o'clock p. m., excepting where a longer time is prescribed by law. This corresponds to the hours of clerical service in this department. This rule will be strictly enforced, and absence will be the cause of reduction of pay or removal. Strict attention to duty will be required, and other business will not be allowed to interfere with the full discharge of the duty attached to the office.

"I notice that you do not suggest a mode of carrying into effect the reduction of the force recommended, and I cannot, with due regard to the remaining subjects of your inquiry, ask you to extend your investigation into the _personnel_ of each employee, his character, efficiency, and merits. This must be mainly left to the collector, who, by law, is authorized to employ, with the approval of the Secretary of the Treasury, proper persons as deputy collectors, weighers, gaugers, and measurers, in the several ports within his district. Thus, nearly all the officers of the customhouse are appointed by the collector, and, with the approval of the Secretary of the Treasury, may be removed at pleasure. He will be promptly called upon, under special orders, to perform this delicate and onerous duty. It is very important that it should be executed with due regard to the efficiency and merit of the employees, and so as best to promote the public service.

"In order that a rule might be furnished him, I called upon the President for instructions to govern alike the collector and myself in the execution of this duty. A copy of his answer is hereto annexed. You will see from it that he approves your recommendations, and that he wishes the customhouse conducted free from partisan control, on a strictly business basis, with the same guarantees for efficiency and fidelity in the selection of the chief and subordinate officers that would be required by a prudent merchant; that the public business should not be affected injuriously by the interests or influence of party leaders or party struggles; and that, while an officer should freely exercise his political rights as a citizen, he should not use his power as an officer to influence the conduct of others.

"I believe the opinions expressed by the President will meet with your hearty approval, and they are in harmony with your report.

"Permit me to add the thanks of this department for your care, ability and industry in conducting this inquiry.

"Very respectfully, "John Sherman, Secretary. "Messrs. John Jay, L. Turnure, and J. H. Robinson, "Commission on Custom House, New York."

I inclosed a copy of the report of the commission to Collector Arthur, with the following letter of instruction:

"Treasury Department, May 28, 1877. "Sir:--Inclosed I send you a copy of the first report of the commission on the New York customhouse, recommending a large reduction of the employees in the various offices in your collection district, and the approval and adoption of that report.

"It only remains now to execute this order, upon the principles and in the spirit stated by the President. This task, always an unpleasant one, when it requires the removal of employees, falls mainly upon you, subject to my approval. It may not be amiss now for me to state, in advance, somewhat in more detail, my views as to the mode of reduction. The extent of the reduction is fully stated in the report, and we are thus relieved from that portion of the task.

"I notice by the report that you have an exceptionally large proportion of experienced officers still in the service. You will have no difficulty in selecting, from these, the more efficient and trustworthy to fill the more important positions, and when these are carefully selected, you will have secured for the duties of greatest trust, active, efficient, and experienced officers. It must happen that among those longest in service some are disabled by age and infirmity. It is often the most painful, but necessary, duty, to dismiss there, or reduce them to positions which they are still able to fill. The government is fairly entitled to the services of those who are fully able to discharge personally the duties of their office, and who are willing to give their entire attention to their official duty. If they cannot, or do not, do this, it is no injustice to remove them.

"In the selection of inferior officers, the only rule should be the one daily acted upon by merchants--to employ only those who are competent for the special work assigned them, whose industry, integrity, and good habits give guarantees for faithful services, honestly rendered. This reduction will enable you to transfer those now employed on work for which they are not fitted, to other work for which they are competent, and to reward exceptional merit and ability by promotion.

"It is impossible, in a force so large as yours, that you should know the peculiar qualities and merits of each employee, and it is important, in making selections, that you secure this information through committees of trusted officers, and in proper cases to test the intelligence, ability, and qualifications of an officer or applicant for office by written questions or an oral examination. In many cases the partiality and influence of relations secure several persons of the same family in office, thus causing complaints and favoritism. As a rule, it is best in all cases to have but one of the same family under your jurisdiction, and no just complaint can be made if this rule is impartially enforced.

"The President properly lays great stress on excluding from a purely business office active participation in party politics. Naturally, in a government like ours, other things being equal, those will be preferred who sympathize with the party in power; but persons in office ought not to be expected to serve their party to the neglect of official duty, or to promote the interests of particular candidates, or to interfere with the free course of popular opinion, or to run caucuses or conventions. Such activity of office-holders is offensive to the great mass of the people who hold no office, and gives rise to complaints and irritation. If any have been appointed for purely political reasons, without regard to their efficiency, now is a good time to get rid of them.

"Where actual misconduct is proven, such as receiving gratuities or bribes, or oppression or insolence in office, or even the want of common courtesy, or drunkenness or other bad habits tending to degrade the officer, or absence from or neglect of duty--in all such cases I know it will be your pleasure to dismiss the employee.

"The payment of taxes is not pleasant at best, but if rudely enforced by oppression or discreditable officers, it renders the tax as well as the tax-collector odious.

"I do not fix any time within which this reduction must be made, but shall expect it to be completed by the 30th day of June proximo. So far as the reduction is specifically made by the adoption of the report, it should be made by the 1st day of June, and it should be made as to each particular division or department of the customhouse as early as practicable.

"After all, the success of this movement for reform of old abuses, which existed for many years before you became collector, will depend mainly upon your good sense and discretion. I assure you I will heartily sustain and approve any recommendation you may make that appears to me to tend to make the New York customhouse--not only what it now is, the most important, but what it ought to be-- the best managed business agency of the government.

"Very respectfully, "John Sherman, Secretary. "C. A. Arthur, Esq., Collector of Customs, New York."

When the inquiry commenced there was no purpose or desire on the part of the President or anyone to make a change in the officers of the New York customhouse. This is apparent from my letter to Collector Arthur. The commission proceeded with their examination, and on the 2nd of July made their second report. This contained specific charges, but of a general character, against persons employed in the customhouse. They found that for many years past, the view had obtained with some political leaders that the friends of the administration in power had a right to control the customs appointments; and this view, which seemed to have been acquiesced in by successive administrations, had of late been recognized to what the commission deemed an undue extent by the chief officers of the service. These gentlemen, on the ground that they were compelled to surrender to personal and partisan dictation, appeared to have assumed that they were relieved, in part, at least, from the responsibilities that belonged to the appointing power.

The collector of the port, in speaking of the "ten thousand applications," and remarking that the urgency for appointments came from men all over the country, added, "the persons for whom it is made bear their proportion of the responsibility for the character of the whole force."

The surveyor had said:

"I had, within the last two weeks, a letter, from a gentleman holding a high official position, in regard to the appointment of an officer whom he knows had been dropped three times from the service for cause. He has also been to see me about him, and the last time he came he admitted to me that he had been engaged in defrauding the revenue; and yet he writes me calling my attention to the case, and requesting his appointment."

The collector, in his testimony before the commission, said that "the larger number of complaints probably come from the surveyor of the port," and, on being asked their character, said:

"Some are for inefficiency, some are for neglect of duty, some for inebriety, and some for improper conduct in various ways; some for want of integrity, and some for accepting bribes."

The commission further stated:

"The investigation showed that ignorance and incapacity on the part of the employees were not confined to the surveyor's department, but were found in other branches of the service--creating delays and mistakes, imperiling the safety of the revenues and the interests of importers, and bringing the service into reproach. It was intimated by chiefs of departments that men were sent to them without brains enough to do the work, and that some of those appointed to perform the delicate duties of the appraiser's office, requiring the special qualities of an expert, were better fitted to hoe and to plow. Some employees were incapacitated by age, some by ignorance, some by carelessness and indifference; and parties thus unfitted have been appointed, not to perform routine duties distinctly marked, but to exercise a discretion in questions demanding intelligence and integrity, and involving a large amount of revenue.

"The evidence shows a degree and extent of carelessness which we think should not be permitted to continue. This point was illustrated to some degree by the testimony of the chiefs of the appraiser's department, the important duties of which would certainly justify a reasonable exactness. The invoices, which are recorded in that office, and which are sent out to the different divisions to be passed upon and then returned to the chief clerk, are found to exhibit, on their return, errors on the part of the several divisions --according to one witness, nearly eight hundred errors a month-- although the number by the appraiser was estimated at a lesser figure. A part of these errors may be assigned to a difference of opinion as to the classification of the goods; but fully one-half are attributed to carelessness. At the naval office it was stated that the balance in favor of the government, of the many and large errors which they discover in the customhouse accounts of the liquidation of vessels and statements of refund, amounts to about a million and a half of dollars per annum."

The commission entered into a full statement and details as to irregularities, inefficiency and neglect of duties in different departments of the customhouse, and recommended various measures of reform, both in the laws regulating the customs service and its actual administration. A copy of this report was immediately sent to Collector Arthur and Naval Officer Cornell, with instructions to recommend to me the number of each grade for each branch of his office, with various details designated by me, and to carry into execution the general recommendations of the commission. I added:

"You will please take your own way, by committee of your officers or otherwise, to fix the number of each grade requisite to conduct the business of your office, and make report as early as practicable."

The third report was made on the 21st of July, and related to the management of the department of weighers and gaugers.

The fourth report, made on the 31st of August, related to the appraiser's office. In acknowledging the receipt of this report on the 12th of September, I stated:

"The recommendations made by you will be fully examined in detail, and be acted upon cotemporaneously with the proposed change in the leading officers of that customhouse."

Two other reports were made, dated October 31 and November 1, 1877, the latter containing suggestions as to the recommendations of legislative amendments to various existing laws and usages.

After the receipt of the report of August 31 the President, who had carefully read the several reports, announced his desire to make a change in the three leading officers of the New York customhouse. He wished to place it upon the ground that he thought the public service would be best promoted by a general change, that new officers would be more likely to make the radical reforms required that those then in the customhouse. The matter was submitted to the cabinet, and I was requested to communicate with these officers, in the hope that they would resign and relive the President from the unpleasant embarrassment of removing them. On the 6th of September I wrote to Richard C. McCormick, Assistant Secretary of the Treasury, who was then at his home near New York on account of illness, the following letter. I knew that Mr. McCormick was on friendly terms with Collector Arthur, and that he might better than I inform him of the wish of the President to receive the resignations of himself, and Messrs. Cornell and Sharpe:

"Treasury Department, } "Washington, D. C., September 6, 1877.} "Dear Governor:--After a very full consideration, and a very kindly one, the President, with the cordial assent of his cabinet, came to the conclusion that the public interests demanded a change in the three leading offices in New York, and a public announcement of that character was authorized. I am quite sure that this will, on the whole, be considered to be a wise result. The manner of making the changes and the persons to be appointed will be a subject of careful and full consideration, but it is better to know that it is determined upon and ended. This made it unnecessary to consider the telegrams in regard to Mr. Cornell. It is probable that no special point would have been made upon his holding his position as chairman of the state committee for a limited time, but even that was not the thing, the real question being that, whether he resigned or not, it was better that he and Arthur and Sharpe should all give way to new men, to try definitely a new policy in the conduct of the New York customhouse.

"I have no doubt, unless these gentlemen should make it impossible by their conduct hereafter, that they will be treated with the utmost consideration, and, for one, I have no hesitation in saying that I hope General Arthur will be recognized in a most complimentary way.

"Things are going on quietly here, but we miss you very much. Hope you will have a pleasant time and return to us in fresh health and vigor.

"Very truly yours, "John Sherman. "Hon. R. C. McCormick."

On the next day I wrote him a supplementary letter:

"Treasury Department, } "Washington, D. C., September 7, 1877.} "Dear Governor:--Your note of yesterday is received.

"The action of the President on the New York customhouse cases turned upon the general question of change there, and not upon Cornell's case. It happened in this way: General Sharpe, in a very manly letter, withdrew his application for reappointment as surveyor of the port. In considering the question of successor the main point, as to whether the changes in the New York customhouse rendered necessary a general change of the heads of the departments, was very fully and very kindly considered, and, without any reference to Cornell's matter, until it was thought, as a matter of public policy, it was best to make change in these heads, with some details about it which I will communicate to you when you return. When that was seen to be the unanimous opinion, it was thought hardly worth while to single out Mr. Cornell's case, and act upon it on the question that affected him alone. If he was allowed to resign from the committee, it would undoubtedly be upon an implied supposition that he would be continued as naval officer. I think even yet he ought to do as he proposed to Orton, but we could not afford to have him do it with any such implied assent, and, therefore, it was deemed better to make the formal announcement agreed upon. You know how carefully such things are considered, and, after a night's reflection, I am satisfied of the wisdom of the conclusion.

"I want to see Arthur, and have requested him to come here. You can say to him that, with the kindest feelings, and, as he will understand when he sees me, with a proper appreciation of his conduct during the examination by the commission, there should be no feeling about this in New York. At all events, what has been done is beyond recall.

"Very truly yours, "John Sherman. "Hon. R. C. McCormick."

Mr. McCormick complied with my request, and orally reported his interview on his return to Washington. We were given to understand that these officers did not wish to be removed pending the investigation, as it would seem that they were charged with the acknowledged defects and irregularities which they themselves had pointed out. The President was quite willing to base his request for their resignation, not upon the ground that they were guilty of the offenses charged, but that new officers could probably deal with the reorganization of the customhouse with more freedom and success than the incumbents. I also saw General Arthur, and explained to him the view taken by the President and his desire not in any way to reflect upon the collector and his associates, Cornell and Sharpe. I believed that at the close of the investigation by the commission these gentlemen would resign, and that their character and merits would be recognized possibly by appointments to other offices.

Acting on this idea, on the 15th of October, I wrote the following letter to Arthur:

"Washington, D. C., October 15, 1877. "Dear Sir:--I regret to hear from Mr. Evarts that you decline the consulship at Paris which I supposed would be very agreeable to you.

"As the time has arrived when your successor must be appointed, I submit to you whether, though your resignation might be inferred from your letters on file, it would not be better for you to tender it formally before your successor is appointed.

"The President desires to make this change in a way most agreeable to you, and it would be most convenient to have it announced to- morrow.

"An early answer is requested.

"Very truly, etc., "John Sherman. "General C. A. Arthur, Collector Customs, New York."

It soon became manifest that these gentlemen had no purpose to resign, and that Senator Conkling intended to make a political contest against the policy of civil service reform inaugurated by President Hayes. On the 24th of October, 1877, the President sent to the Senate the nominations of Theodore Roosevelt to succeed Arthur as collector, Edwin A. Merritt to succeed George H. Sharpe as surveyor, and L. B. Prince to succeed A. B. Cornell as naval officer. All of them were rejected by the Senate on the 29th of October. On the 6th day of December, during the following session, Roosevelt, Prince and Merritt were again nominated, and the two former were again rejected. Merritt was confirmed as surveyor on the 16th of December.

This action of the Senate was indefensible. There was not the slightest objection to Roosevelt or Prince, and none was made. The reasons for a change were given in the report of the Jay commission. Even without this report the right of the President to appoint these officers was given by the constitution. To compel the President to retain anyone in such an office, charged with the collection of the great body of the revenue from customs, in the face of such reasons as were given for removal, was a gross breach of public duty. No doubt the Democratic majority in the Senate might defend themselves with political reasons, but the motive of Mr. Conkling was hostility to President Hayes and his inborn desire to domineer. The chief embarrassment fell upon me. I wished to execute the reforms needed in the collector's office, but could only do it with his consent. The co-operation required was not given, and the office was held in profound contempt of the President. If the rejection of these nominations had been placed upon the ground of unfitness, other names could have been sent to the Senate, but there was no charge of that kind, while specific and definite charges were made against the incumbents. Other names were mentioned to the President, and suggestions were made, among others by Whitelaw Reid, whose letter I insert:

"New York, March 29, 1878. "My Dear Mr. Sherman:--Leaving Washington unexpectedly this morning, I was unable to call again at the treasury department in accordance with your polite invitation of last night. I have, however, been thinking over the customhouse problem of which you asked my opinion. It seems to me, more and more clear, that, if a new appointment is to be made, it should be controlled by two considerations: First, the appointee should be a man who can be confirmed; and, second, he should be a man equal to all the practical duties of the place, which are necessarily and essentially political as well as mercantile.

"To nominate another man only to have him rejected would do great harm, and the confirmation cannot, by any means, be taken for granted. I believe it is possible to select some well-known man, who has carefully studied the subject of revenue collection, and could bring to the task executive skill, experience, and sound business and political sagacity, and that such a nomination could be confirmed. I assume, of course, that any movement of this sort would be based upon the previous removal of the present incumbent, for good cause--of which I have been hearing rumors for some time.

"Pray let me renew more formally the invitation to dine with me, on the evening of the 10th of April, at seven o'clock, at the Union League Club, to meet Mr. Bayard Taylor just before his departure for Berlin. I sincerely hope you can arrange your movements after the Chester visit so as to make it possible.

"Very truly yours, "Whitelaw Reid. "Hon. John Sherman, Secretary of the Treasury, Washington, D. C."

The President would not make other appointments during the session of the Senate, as the implication would arise that the rejections were based upon opposition to the persons named, and he, therefore, postponed any action until the close of the session.

After the close of the session, on the 11th of July, 1878, the President gave temporary commissions to Edwin A. Merritt as collector to succeed C. A. Arthur, and Silas W. Burt to succeed Cornell as naval officer, and these gentlemen entered upon the duties of their respective offices.

On the following December it became necessary to send their nominations to the Senate. I had definitely made up my mind that if the Senate again rejected them I would resign. I would not hold an office when my political friends forced me to act through unfriendly subordinates. I wrote a letter to Senator Allison as follows:

"Washington, D. C., January 31, 1879. "My Dear Sir:--I would not bother you with this personal matter, but that I feel the deepest interest in the confirmation of General Merritt, which I know will be beneficial to us as a party, and still more so to the public service. Personally I have the deepest interest in it because I have been unjustly assailed in regard to it in the most offensive manner. I feel free to appeal to you and Windom, representing as you do western states, and being old friends and acquaintances, to take into consideration this personal aspect of the case. If the restoration of Arthur is insisted upon, the whole liberal element will be against us and it will lose us tens of thousands of votes without doing a particle of good. No man could be a more earnest Republican than I, and I feel this political loss as much as anyone can. It will be a personal reproach to me, and merely to gratify the insane hate of Conkling, who in this respect disregards the express wishes of the Republican Members from New York, of the great body of Republicans, and, as I personally know, runs in antagonism to his nearest and best friends in the Senate.

"Surely men like you and Windom, who have the courage of your convictions, should put a stop to this foolish and unnecessary warfare. Three or four men who will tell Conkling squarely that, while you are his friends, you will not injure our party and our cause, would put a stop to this business. Arthur will not go back into the office. This contest will be continued, and the only result of all this foolish madness will be to compel a Republican administration to appeal to a Democratic Senate for confirmation of a collector at New York. It is a most fatal mistake.

"I intended to call upon some of the Senators this morning, but I am very much pressed, and will ask you to show this in confidence to Senator Windom, as I have not time to write him.

"Very truly yours, "John Sherman. "Hon. W. B. Allison, U. S. Senate."

I wrote to Senator Justin S. Morrill a much longer letter, giving reasons in detail in favor of confirmation and containing specific charges of neglect of duty on the part of Arthur and Cornell, but I do not care to revive them.

Conkling was confident of defeating the confirmations, and thus restoring Arthur and Cornell. The matter was decided, after a struggle of seven hours in the Senate, by the decisive vote in favor of confirmation of Merritt 33, and against him 24, in favor of Burt 31, against 19. From this time forward there was but slight opposition to the confirmation of Hayes' appointments. The reforms proposed in the customhouse at New York were carried out.

This termination of the controversy with Arthur and Cornell was supported by public opinion generally throughout the United States. I insert a letter from John Jay upon the subject.

"N. Y. C. H., 24 Washington Square,} "New York, February 3, 1879. } "The Honorable John Sherman.

"My Dear Sir:--Allow me to thank you for the two papers you have kindly sent me, in reference to the customhouse, the last of which, the firm message of the President with your second conclusive letter, reached me to-day.

"Whatever may be the result in the Senate, and I can scarcely believe that, after so full an exposure, the nomination will be rejected, the plain-thinking people of this country will appreciate the attitude taken by the government as the only one consistent with the duty of the executive and the general welfare.

"It will give new hope and confidence to the great body of Republicans, and to many who can hardly be called Republicans, who look to the administration for an unflinching adherence--no matter what the opposition--to the pledge of reform on which the party was successful in the last election, and on fidelity to which depends its safety in the next.

"The country is infinitely indebted to you for redeeming its faith by a return to honest money. A new debt will be incurred of yet wider scope if you succeed in liberating the custom service from the vicious grip of the immoral factions of office holders and their retainers, who have made it a scandal to the nation with such gigantic loss to the treasury and immeasurable damage to our commerce, industry and morals.

"I hope that the President will feel that all good citizens who are not blinded by prejudice or interest are thoroughly with him in the policy and resolve of his message that the customhouse shall no longer be 'a center of partisan political management.'

"With great regard I have the honor to be, dear Mr. Sherman,

"Faithfully yours, "John Jay."