Chapter 41

RECOLLECTIONS OF THE FINANCIAL PANIC OF 1857. Its Effect on the State Banks--My Maiden Speech in Congress on National Finances--Appointed a Member of the Committee on Naval Affairs--Investigation of the Navy Department and its Results--Trip to Europe with Mrs. Sherman--We Visit Bracklin's Bridge, Made Famous by Sir Walter Scott--Ireland and the Irish--I Pay a Visit to Parliament and Obtain Ready Admission--Notable Places in Paris Viewed With Senator Sumner--The Battlefield of Magenta--Return Home.

In the summer of 1857 there occurred one of those periodical revulsions which seem to come after a term of apparent prosperity. On the 24th of August the Ohio Life Insurance & Trust Company failed. That single event, in itself unimportant, indicated an unhealthy condition of trade, caused by reckless speculation, high prices, the construction of railroads in advance of their need, a great increase of imports, and the excessive development of cities and towns. All credits were expanded. The immediate results of the panic were the suspension of credits, the diminution of imports, the failure of banks, and the general or partial suspension or lessening of all industries. The revenues of the government were greatly diminished.

On the 1st of July, 1857, the balance in the treasury was $17,710,000. On the 1st of July, 1858, the balance was reduced to $6,398,000, and during the year preceding, the United States borrowed $10,000,000. On the 1st of July, 1859, the surplus was reduced to $4,320,000, and during the year preceding the United States borrowed $20,774,000. This sudden change in the financial condition of the treasury was an indication of a like or greater change in the condition of every person engaged in productive industries.

The panic especially affected the state banks. These banks were authorized by the laws of several states to issue notes as money payable on demand, with no common system or methods of redemption, and varying in value according to the solvency of the banks issuing them. The banks in a few of the states maintained their notes at par, or at a small discount, but the great body of the notes could circulate only in the states where issued, and then only because their people could get no other money in exchange for their products. The necessities created by the Civil War compelled the United States to borrow large sums, and to aid in this a national currency was provided, concerning which a statement of the measures adopted will be made hereafter. It is sufficient here to state that the national currency adopted proved one of the most beneficial results of the war.

The financial stringency of 1857 led to a careful scrutiny of appropriations for the support of the government.

On the 27th of May, 1858, I expressed my views in respect to the expenditures of the United States. This speech was the first effort I made in Congress to deal with the finances of the national government. In the previous Congresses I had devoted my time to the struggle in Kansas. At the meeting of the 35th Congress, I naturally turned to the condition of the finances, then the paramount subject of interest in the country, and, especially in Ohio, devoting most of my time to a careful study thereof. The speech referred to on national finances was the result of much labor, and I believe it will bear favorable scrutiny even at this late day. It certainly attracted the attention of my colleagues, and no doubt led to my transfer, at the next Congress, to the committee of ways and means.

In this speech I state fully the increase of expenditures and the diminution of the revenues, and the then condition of the treasury. I quote as follows:

"And yet, sir, for this alarming condition of the public finances, the administration has no measures of relief except loan bills and paper money in the form of treasury notes. No provision is made for their payment; no measure of retrenchment and reform; but these accumulated difficulties are thrust upon the future, with the improvidence of a young spendthrift. While the secretary is waiting to foresee contingencies, we are prevented by a party majority from instituting reform. If we indicate even the commencement of retrenchment, or point out abuses, on this side of the House, we are at once assailed by members of the committee of ways and means."

I cited the abuses and usurpations of the executive departments in diverting specific appropriations to purposes not authorized by law. I said: "The theory of our government is, that a specific sum shall be appropriated by a _law_ originating in this House, for a specific purpose, and within a given fiscal year. It is the duty of the executive to use that sum, and no more, especially for that purpose, and no other, and within the time fixed."

I pointed out cases where the departments assumed the power to transfer appropriations made for one purpose, to other purposes in the same department. Another abuse by the executive departments was the habit of making contracts in advance of appropriations, thus, without law, compelling Congress to sanction them or violate the public faith. All these evils have since been remedied by restrictive legislation. The habit of the Senate to load down appropriation bills with amendments already refused by the House of Representatives, and then insist that, if not agreed to, the bill would fail, was more frequent then than now, but under the practice now established an amendment finally disagreed to by either House is abandoned.

An illustration of the former practice in the Senate occurred in the 36th Congress, when I was chairman of the committee on ways and means. An appropriation bill was loaded down with amendments, among them an appropriation of $500,000 each for the construction of public buildings in Charleston and New Orleans. The amendments were disagreed to and referred to a committee of conference, of which Senator Toombs was a member. His first expression in the committee was that the House must agree to the items for Charleston and New Orleans or the bill would fail. I promptly answered that I would report what he said to the House, and _the bill would fail_. He said nothing further, the conference agreed, and the bill passed without any mention of Charleston or New Orleans. Even now the abuse I refer to sometimes occurs, but the general rule and practice is to exclude any item of an appropriation bill not freely agreed to by both Houses.

It was generally agreed that the views expressed by me on the 27th of May were sound in principle, but the strong partisan feeling that ran through the speech weakened its effect. I insert the last two paragraphs:

"But, sir, I have no hope, while this House is constituted as it is now, of instituting any radical reform. I believe that the House of Representatives should be in opposition to the President. We know the intimate relations made by party ties and party feelings. We know that with a party House, a House a majority of whose Members are friends of the President, it is impossible to bring about a reform. It is only by a firm, able, and determined opposition-- not yielding to every friendly request, not yielding to every urgent demand, not yielding to every appeal--that we can expect to reform the abuse in the administration of the government.

"At the beginning of this session, I did hope that a majority of this House would compose such an opposition; and while on the one hand it crushed the unholy attempt to impose an odious constitution --by force, or with threats or bribes--upon a free people, it would be prepared to check the reckless extravagance of the administration in the disbursement of the public funds. But the power of party ties and the executive influence were too potent. We can only look now to the virtue and intelligence of the people, whose potent will can overthrow Presidents, Senators, and majorities. I have an abiding hope that the next House of Representatives will do what this should have done, and become, like its great prototype, the guardian of the rights and liberties of the people."

At the beginning of the 35th Congress I was appointed by Speaker Orr a member of the committee on naval affairs, with Mr. Bocock as chairman. Among the subjects referred to the committee was the capture, by Commodore Paulding of the United States navy, of William Walker, engaged in an armed foray against Nicaragua. It was fully considered, and on the 3rd of February, 1858, the majority of the committee, through Mr. Bocock, made a full report, accompanied by the following resolutions:

"_Resolved_, That the act of Hiram Paulding, a captain of the United States navy, in arresting General William Walker, was not authorized by the instructions which had been given him from the navy department.

"_Resolved_, That while we have no reason to believe that the said Paulding acted form any improper motives or intention, yet we regard the act in question as a grave error, and deserving, for the reason already given, the disapproval of the American Congress."

By direction of the minority of the committee I submitted a minority report as a substitute, as follows:

"_Resolved_, That Commodore Hiram Paulding, in arresting William Walker and his associates, and returning them to the jurisdiction of the United States, acted within the spirit of his orders, and deserves the approbation of his country."

It appeared, from the documents submitted, that in September, 1857, Walker was fitting out, within the limits of the United States, a military expedition against the Republic of Nicaragua, that on the 18th of September, Lewis Cass, Secretary of State, issued a circular letter, warning all persons against setting on foot such expeditions, and urging all officers of the United States to enforce the provisions of the law cited by him, to prevent such expeditions "so manifestly prejudicial to the national character and so injurious to the national interests."

A copy of this circular was transmitted to Commodore Paulding, for his guidance, by the Secretary of the Navy, and he was required to regard the instruction contained in it as addressed to himself. Commodore Chatard was suspended for failing to arrest Walker within the port of San Juan. Commodore Paulding arrived at San Juan on the 6th day of December. Walker and his men were in sight on shore, at Punta Arenas, opposite San Juan. This point, though within the limits of Nicaragua, has been successively claimed and occupied by Costa Rica, Nicaragua and the so-called Mosquito Kingdom, under British protection. It was an almost deserted point, to which a British subject had set up a doubtful title, founded upon a purchase from a pilot of the port of San Juan. Its occupants were engaged as a military force, and were then waging war against the existing government of Nicaragua--a government with which ours was at peace, and one so weak that it was inhuman to fight it. Although freshly landed from our shores, in violation of our laws, and controlling no spot except that they occupied--receiving, so far as we know, no accession or aid from the natives of the country, they issued orders and manifestoes headed;

"Headquarters Army of Nicaragua, Punta Arenas, December 2, 1857."

Their leader signed these orders:

"William Walker, Commander-in-Chief, Army of Nicaragua."

There was no doubt that the expedition was the very one denounced by the Secretary of State in the circular, and by the Secretary of the Navy in his orders, for Walker and his men sought no disguise.

Under these circumstances, Commodore Paulding arrested Walker and his men and returned them to the jurisdiction of the United States. This brief and imperfect sketch of the voluminous majority and minority reports of the committee will convey but a faint idea of the excitement created by this arrest. An attempt was made to censure Commodore Paulding, but it utterly failed. The purpose of Walker was to seize Nicaragua, adopt slavery and convert the Central American states into slaveholding communities, and thus strengthen slavery in the United States. It was the counterpart of the movements in Kansas, and was supported by powerful influence in the southern states.

Another investigation of great importance was ordered by the House of Representatives, upon the following resolution introduced by me on the 18th of January, 1859:

"Whereas, D. B. Allen, a citizen of the State of New York, specifically charges that certain officers in the navy department, in awarding contracts for the construction of vessels of war of the United States, have been guilty of partiality, and of violation of law and their public duty: and whereas, grave charges have been made that money appropriated for navy yards and for the repair of vessels of the United States, has been expended for partisan purposes, and not for the purposes prescribed by law: Therefore,

"_Resolved_, That a committee of five members be appointed to examine, 1. Into the specifications and bids for, and the terms of, the contracts for the work and labor done, or materials furnished for the vessels of the United States, constructed, or in process of construction or repair, by the United States, since the 4th day of March, 1857, and the mode and manner of awarding said contracts, and the inducements and recommendations influencing such awards. 2. Into the mode and manner, and the purpose, in which the money appropriated for the navy and dock yards, and for the repair and increase of vessels, has been expended. That said committee have power to send for persons and papers, and have leave to report by bill or otherwise."

This investigation occupied most of the remaining session of that Congress. The committee of five was composed of Messrs. Sherman, Bocock, Ritchie, Groesbeck and Ready, three Democrats and two Republicans, of which I was chairman. The committee took a mass of testimony, disclosing abuses and frauds of a startling character, covering over 1,000 printed pages. The majority of the committee, Messrs. Bocock, Groesbeck and Ready, submitted a report condemning the glaring abuses proven, and, while reporting the inefficiency and incompetency of subordinate officers and employees, yet declared that nothing had been proven which impeached the personal or official integrity of the Secretary of the Navy. They proposed the following resolutions:

"1. _Resolved_, That the testimony taken in this investigation proves the existence of glaring abuses in the Brooklyn navy yard, and such as require the interposition of legislative reform; but it is due to justice to declare that these abuses have been slowly and gradually growing up during a long course of years, and that no particular administration should bear the entire blame therefor.

"2. _Resolved_, That it is disclosed, by the testimony in this case, that the agency for the purchase of anthracite coal for the use of the navy has been, for some time past, in the hands of a person wholly inefficient and grossly incompetent, and that reform is needed in the regulations which exist on that subject; but there is no proof which traces any knowledge of such inefficiency and incompetency to the responsible authorities in Washington, nor any which shows that the need of reform grows especially out of any act of theirs; but, on the contrary, it is expressly proven that the supply of coal for the naval service has been purchased during this administration upon terms relatively as favorable as ever heretofore.

"3. _Resolved_, That while we could never sanction or approve any arrangement, on the part of an officer of the government, which, under pretense of making contracts for supplies, was designed to confer especial and exclusive favor upon individuals, yet, in the contract entered into in September, 1858, between the navy department and W. C. N. Swift, for the supply of live oak to said department, it is clearly proven by the testimony that, if the Secretary of the Navy did contemplate any favor to said Swift, he did not design to bestow it to the detriment of the government, but that in all he did in this matter he kept always in view the good of the public and the interests of the service.

"4. _Resolved_, That in the letting of the contracts for the construction of the steam machinery for the vessels of the navy during the present administration, nothing has been shown which calls for the interposition of the Congress of the United States; but it is manifest that the present head of the navy department has displayed a very laudable zeal to secure the greatest amount of speed and efficiency attainable for said vessels.

"5. _Resolved_, That nothing has been proven in this investigation which impeaches, in any way, the personal or official integrity of the Secretary of the Navy."

The minority report was made by Ritchie and myself on the 24th of February, 1859, in which we recommended the following resolutions:

"_Resolved_, That the Secretary of the Navy has, with the sanction of the President, abused his discretionary power in the selection of a coal agent and in the purchase of fuel for the government.

"_Resolved_, That the contract made by the Secretary of the Navy, under date of September 23, 1858, with W. C. N. Swift, for the delivery of live oak timber, was made in violation of the law, and in a manner unusual, improper, and injurious to the public service.

"_Resolved_, That the distribution, by the Secretary of the Navy, of the patronage in the navy yard among Members of Congress was destructive of discipline, corrupting in its influence, and highly injurious to the public service.

"_Resolved_, That the President and Secretary of the Navy, by receiving and considering the party relations of bidders for contracts with the United States, and the effect of awarding contracts upon pending elections, have set an example dangerous to the public safety and deserving the reproof of the House.

"_Resolved_, That the appointment, by the Secretary of the Navy, of Daniel B. Martin, chief engineer, as a member of the board of engineers, to report upon proposals for constructing machinery for the United States, the said Martin at the same time being pecuniarily interested in some of said proposals, is hereby censured by this House."

No action was taken on these reports during that session, which terminated on the 4th of March; but in the succeeding Congress the resolutions of the minority were reported favorably from the committee on the expenditures of the navy department, and, after debate, were adopted, a separate yea and nay vote being taken on each resolution, and the vote generally being 119 in favor of the resolution and 60 against, a large number of Democrats voting for each resolution.

This investigation, and the action of the House of Representatives upon it, led to radical reforms in the purchase of supplies in the navy department, and stamped with deserved censure the Secretary of the Navy, and his subordinates, who participated in his action.

In the spring of 1859, Mrs. Sherman and I started on my first trip to Europe, on the steamer "Vanderbilt," without any definite route or plan. Fortunately, we formed on shipboard some pleasant acquaintances, among others Judge Harris of the Supreme Court of New York, afterwards Senator of the United States, and his wife. Each had children by a former marriage, who had arrived at or near manhood or womanhood, and all were pleasant traveling companions. Mr. Platt and his wife, of New York, a young married couple, were of the party. We were fortunate in the weather and the sea. I had often encountered the waves of Lake Erie, but the ocean was to me the great unknown, and I imagined that from its magnitude, its waves would be in proportion to its size, but, instead, the waves of the Atlantic were a gentle cradle compared with the short and chopping movement of the lake. Since then I have crossed the ocean many times, but never was sea sick. We thought the voyage of eleven days a brief one, but now it is reduced to six or seven days, on vessels much greater and stronger. We landed safely at Southampton late in the evening. Many of the passengers left immediately for London, but our party, with others, went to the hotel. We seemed to overcrowd the capacity of the place. One of our passengers, a young gentleman from Baltimore, said to me he would drive out those Englishmen, who were quietly enjoying themselves in the waiting room. He had been a quiet gentlemanly passenger, but he changed his tone and manner, was boisterous in his talk and rather rude. One by one the Englishmen departed, slamming the door after them, casting a sour look at their persecutor, but he was not disturbed until "the coast was clear," and then quieting down in his usual manner he said he knew these Englishmen, and thought he would give them a chance to abuse the d----d Americans. After long waiting we had a good supper.

On the next day, or the day following, we visited the Isle of Wight, and what is misnamed the "New Forest"--which is very old instead of new, and is an open park instead of a forest--in the neighborhood. Like most travelers we soon went to London. This great city impressed me more by the association of great men and women who had lived and died in it than by the grandeur of its buildings and public works. Every street and many houses in it recalled the names of persons whose writings I had read, and of others whose deeds made them immortal. As Parliament was not in session we shortened our visit in London until our return. My trip to Scotland was especially interesting. Mrs. Sherman, a daughter of Judge Stewart, was in her face and affinities a thorough Scotch woman, though her ancestors for several generations were born in America. She was familiar with Scottish history, and with the geography of Scotland. Our visit to Edinburgh and its environs was to her like a return to familiar scenes. In our slow progress towards the lakes we stopped at Callender over Sunday. After looking into the well-filled church we started for Bracklinn bridge, made famous in Scott's "Lady of the Lake." "Bracklinn's thundering wave" is a beautiful cascade made at a place called the Bridge of Bracklinn, by a mountain stream called the Keltie, about a mile from the village of Callender, in Mentieth. Above a chasm where the brook precipitates itself from a height of at least 50 feet, there is thrown, for the convenience of the neighborhood, a rustic foot bridge, of about three feet in breadth, and without ledges, which is scarcely to be crossed by a stranger without awe and apprehension. We were told it was but a short walk, a mile or two, but we soon found that Scottish miles were very long. On the way we encountered an old woman, dressed in Scotch plaid, of whom we inquired the way to Bracklinn bridge. She pointed out the way, and in return asked us where we lived. We told her the United States. She replied, in language we could hardly understand, "Ah, ye maun come a lang way to spay it." She then told us where to leave the road and how to find the bridge. There was nothing remarkable at the bridge, nothing to justify "But wild as Bracklinn's thundering roar," but the genius of Sir Walter invested it with his glamour.

"It had much of glamour might To make a lady seem a knight."

The lakes of Scotland we would call bays. The waters of the ocean fill these deep depressions between high hills. A boat ride over these interlocked waters was pleasing, but the views did not impress me like the lakes in Switzerland in the midst of high mountains, nor did they compare with the grandeur of the Yellowstone Lake, 6,000 feet above the sea, with surrounding mountains rising to the height of 12,000 feet, and covered with snow. We were much pleased with Scotland and its people until we arrived at Glasgow. Here we walked about the city. It seemed to be crowded with discontented, unhappy people, with sad faces and poorly clad. We were told not to go into certain portions of the city, as we might be insulted.

We soon left Glasgow for Belfast and visited different parts of Ireland, and especially the city of Cork, and Lake Killarney. The southern part of Ireland was very beautiful, the herbage was fresh and green, and the land productive. The great drawback was the crowds of beggars, who would surround us wherever we went, soliciting alms, but they were generally good humored. I saw little of the disposition to fight attributed to them. At a subsequent visit I saw much more of Ireland and the Irish people, but on this, my first visit, I left with a very kindly impression of the country and the people. We have more people of Irish descent in the United States than now live in Ireland, and they have done their full part in our development, not only as laborers, but in all the walks and professions of life. They are heartily welcomed in our midst. If all the discontented people of Ireland would migrate to the United States we would welcome them if they would leave their Irish vs. English politics behind them. We have enough possible points of controversy on this continent with Great Britain, without importing from that country old controversies that have been the occasion of wars and rumors of war for centuries.

We made but a short stay in Dublin and crossed the channel to Caernarvon. Here we took the old tally-ho coach. Despite all that is said about railroads and steamboats, I believe in the old- fashioned stage coach, and especially in the one in which we crossed the hills of Wales, in full view of Mount Snowdon. We remained over Sunday in a village on the way, inquired for the church, and were shown to a very pretty church building near by. When we entered we found perhaps ten or fifteen persons, mostly women. The pastor, with an assistant, soon entered, and services commenced. The pastor read his part, and the assistant led, and practically made, the responses. The singing was led by the assistant and shared in by the few women present. The sermon was short and lifeless and the entire service--though read from the Book of Common Prayer, as fine a model of impressive English as exists--was spiritless. When we left the church we met lines of well-dressed, but plain, proper men, women and children in Sunday garb. I inquired where these people came from, and was informed they were Methodists on the way home from their meeting house. This settled the question with me. The church I attended was the "established church," supported by taxes on all the people, and the Methodist meeting was the church of the people, supported by their voluntary contributions. How such a policy could have been sustained so long was beyond my comprehension. Our policy of respect and toleration for all religious sects, but taxes for none, is a better one.

Our party, still consisting of Judge Harris and family, Mr. Platt and wife, and Mrs. Sherman and myself, visited several of the central counties and towns of England, chiefly the towns of Warwick, Stratford, Kenilworth and Leamington. This is well trodden ground for tourists, and I need not repeat the many descriptions of interesting places and the historic names and events attached to them.

When we returned to London, I visited the courts of law, Westminster Abbey, and the new Parliament House. I had no difficulty in gaining free access to the gallery of the House of Commons by stating that I was a Member of the House of Representatives. Though I had letters of introduction to members of Parliament I did not present them. Judge Harris was greatly interested in the proceedings of the courts of London, while I wandered through every part of the great city. We attended, by invitation, a dinner given by the Goldsmith's Guild, and accepted some invitations, among them that of Mr. Morgan, the leading American banker in London.

Our congenial party then separated with mutual regret, Judge Harris going to the Rhine and Mrs. Sherman and I to Paris. Here we remained some time. Senator Sumner, not yet recovered from the blows of Brooks, had been some time in Paris and accompanied us to many of the noted places in that city--among them I remember the grave of Lafayette.

Our visit was during the Franco-Italian-Austrian War. I was anxious to reach the seat of war. On the way we made hurried visits to Geneva, and Lake Leman. After traversing this lake we took the coach over the Alps, on the road to Milan, stopping several times on the way. We passed over the battle field at Magenta but a few days after the battle was fought. We saw there the signs of destructive war. The killed had been buried and the wounded were in hospitals, but the smell of dead horses poisoned the air, and the marks of the battle were on almost every house. We pushed on to Milan and were comfortably quartered. The city was full of soldiers on the way to the army to the eastward. It was then known that a battle was about to be fought at Solferino. I was very anxious to witness a battle. General Crittenden, of the United States army, was attached as an aid to the French army, and I sought the same facility, but the authorities would not permit it. I was assured that my horse would be taken from me, especially as I could not speak French, and that I would be treated as a spy unless I was formally attached to a particular command. I therefore gave up my contemplated trip and awaited the battle, which occurred in a day or two. I then returned to Switzerland by the Simplon Pass, and visited Berne, Luzerne, and Neuchâtel. From thence I returned to London and soon after embarked on the "Vanderbilt" for home.