by H. W. Brands
The constant pounding provoked one of Grant’s migraines; for three days he turned away all visitors. But in early April he had to resume work, for Congress was about to conclude its short session and adjourn till December. The legislature’s single noteworthy accomplishment had been a pledge to pay the federal debt in gold, following Grant’s inaugural recommendation. Grant signed the measure and urged another matter upon the lawmakers. “There is one subject which concerns so deeply the welfare of the country that I deem it my duty to bring it before you,” he declared in a special message. The time had come for military reconstruction to end. Grant made no apology for the past use of force in the South. “The authority of the United States, which has been vindicated and established by its military power, must undoubtedly be asserted for the absolute protection of all its citizens in the full enjoyment of the freedom and security which is the object of a republican government.” Yet military force was a wasting asset in a democracy. “Whenever the people of a rebellious State are ready to enter in good faith upon the accomplishment of this object, in entire conformity with the constitutional authority of Congress, it is certainly desirable that all causes of irritation should be removed as promptly as possible.” Virginia had held a convention that wrote a new constitution for the state; Grant recommended that Congress authorize an election to ratify the constitution and allow for Virginia’s full return to the federal Union. Mississippi had reached a similar stage and should receive similar treatment.
Grant’s message provoked debate in Congress. Radical Republicans wanted to condition the return of Virginia and Mississippi on the ratification by those states of the Fifteenth Amendment. Moderates asserted that the Constitution was too important to be amended by such strong-arm tactics. A few Republicans noted softly that their constituents weren’t crazy about letting Negroes vote outside the South.
The Radicals carried the day, and the legislature passed a new reconstruction law giving Grant the authority to call elections in Virginia and Mississippi—and Texas at the appropriate time—after those states had ratified the Fifteenth Amendment.
The departure of Congress left Grant relatively little to do. Nineteenth-century presidents took their lead from the legislature in lawmaking, and they delegated to customs agents, Treasury clerks and other employees of the executive branch the quotidian tasks of the federal government, chiefly collecting revenues and supervising spending. Absent war or national crisis, which mobilized the president’s authority as commander in chief, the presidency was a seasonal job.
Grant accepted the tradition and, following the lawmakers’ return to their homes, contented himself issuing a few executive orders. One that had lasting importance controlled compensation of federal workers. Congress had mandated an eight-hour day for workers employed by the government or on its behalf, but the law lacked teeth in not preventing government agencies or private contractors from reducing pay when they reduced hours. Grant made the eight-hour mandate meaningful for workers by declaring that the shortened day must not result in diminished wages.
By early July he had accomplished all he could accomplish at the capital. “I leave here tomorrow for Long Branch and the North, to be gone all summer,” he wrote Adam Badeau. Long Branch was a town on the New Jersey shore that Grant would make his recurrent summer headquarters. He told Badeau he was satisfied with his first months in office. “Public affairs look to me to be progressing very favorably. The revenues of the country are being collected as they have not been before, and expenditures are looked after more carefully.… The first thing, it seems to me, is to establish the credit of the country.” If he could pay down the debt and balance the books, he would be happy. “This is policy enough for the present.”
59
ABEL CORBIN, HAVING LOST HIS WIFE, WAS LOOKING FOR ANOTHER IN the spring of 1869. The president’s sister Virginia, never having married, was looking for a husband. Their age difference—Corbin was sixty-one, Jennie Grant thirty-seven—provoked comment, as did the fact that he had evinced little interest in her before her brother’s election. Corbin dabbled in finance with neither great success nor abject failure; he held his place in the small army of speculators seeking the main chance but never quite finding it. Grant didn’t especially approve of the match, but he declined to spoil what looked like Jennie’s last hope of marriage.
Corbin supposed that marrying Jennie would make him more popular. At least he would be mentioned in the papers as a member of the president’s family. He probably didn’t realize that his fame—or notoriety—would evolve so quickly. “Mr. Corbin is a very shrewd old gentleman,” Jay Gould told a congressional committee just months later. Gould was one of the most powerful men on Wall Street: a principal in the Erie Railroad, which he and partner James Fisk had wrested from transport titan Cornelius Vanderbilt in a series of raids dubbed the “Erie War,” and a speculator whose slightest gestures caused the markets to gyrate. “I used to meet him occasionally,” Gould said of Corbin. “He owned some real estate in Jersey City, where I was building a horse-railroad through some of our own lands and also through his.”
At one of these meetings Corbin diverted the discussion from real estate. “He asked me how he could make some money,” Gould recalled. “I told him if we were certain we were going to have a big harvest, and if the government would facilitate it, I could see how it could be done.” Gould’s plan depended on the fluctuating price of gold relative to greenbacks, the Civil War currency in which domestic prices were denominated. A rising price for gold meant a falling price for the greenbacks, in turn implying more-competitive prices internationally for American farm goods, which would flow from the nation’s heartland to the Atlantic coast and generate traffic for Gould’s Erie Railroad. The chain of events would be good for Gould and the Erie and for the farmers, railroad workers, dockhands and many others involved in the export trade. Gould explained this to Corbin; he meanwhile suggested that profits might be garnered in the gold market itself, as part of the broader business.
“He saw at a glance the whole case, and said that he thought it was the true platform to stand on,” Gould recounted of Corbin. “Whatever the government could do legitimately and fairly to facilitate the exportation of breadstuffs, and produce good prices for the products of the West, they ought to do.” Corbin offered to help. “He was anxious that I should see the president and communicate to him my view of the subject.” He said that Gould, as a railroad man, was just the person to make the argument. “He was anxious that I should see the president and talk with him, and he made an appointment for me to do so. I went to Mr. Corbin’s and was introduced to the president.”
Gould caught Grant as the president was heading for Boston to attend a peace jubilee. Gould offered transport on one of the Erie’s steamboats, and Grant accepted. “He was our guest,” Gould told the congressional committee, referring to the boat trip, which he and Jim Fisk joined. “We had supper about nine or ten o’clock going over. At this supper the question came up about the state of the country, the crops, prospects ahead, etc. The president was a listener; the other gentlemen were discussing.” The central question was the government’s role in determining the price of gold. The Treasury held sufficient gold to drive the price down should Grant and George Boutwell, the Treasury secretary, decide to sell. “Some were in favor of Boutwell’s selling gold, and some were opposed to it. After they had all interchanged their views, someone asked the president what his views were.”
A hush fell over the room. This was the million-dollar question on which Gould’s whole scheme depended. The president spoke slowly, between puffs on his cigar. “He remarked that he thought there was a certain amount of factiousness about the prosperity of the country, and that the bubble might as well be tapped in one way as another,” Gould told the committee.
Grant turned to Gould and asked what he thought of the subject. The financier made his strongest case. “I remarked that I thought if that policy”—bursting the bubble—“was carried
out, it would produce great distress, and almost lead to civil war. It would produce strikes among the workmen; and the workshops, to a great extent, would have to be closed.” The president could avert this outcome by doing nothing or by pitching in. “I took the ground that the government ought to let gold alone, and let it find its commercial level—that, as a matter of fact, it”—the government—“ought to facilitate an upward movement of gold.”
Grant offered no encouragement. Gould judged the evening a failure. “We supposed from that conversation that the president was a contractionist,” he told the committee.
Gould persisted. When Grant traveled to Newport in August to visit friends, Gould sent Jim Fisk after him. “I took a letter of introduction from Mr. Gould, in which it was written that there were three hundred sail of vessels then on the Mediterranean from the Black Sea, with grain to supply the Liverpool market,” Fisk told the congressional committee. “Gold was then about 34”—134 greenback dollars bought 100 gold dollars. “If it continued at that price we had very little chance of carrying forward the crop during the fall. I know that we felt very nervous about it. I talked with General Grant on the subject and endeavored, as far as I could, to convince him that his policy was one that would only bring destruction upon us all.” Grant listened; again he gave no encouragement.
But Abel Corbin continued to hope. He reflected at length on Gould’s theory of gold and commerce. “I think it had become a sort of monomania with him,” Gould recalled. Speaking publicly to the congressional committee, Gould credited Corbin’s regard for the country in his embrace of easy money. “I think any idea of making money for himself had ceased to weigh with him.” Privately Gould knew better, for he had arranged for Corbin to participate in the effort to boost gold, buying $1.5 million in gold on Corbin’s behalf. If gold rose, Corbin would get rich. Corbin accordingly offered his good services again. “He was very anxious that I should come round,” Gould told the committee. “I did so, and met with Mr. Corbin and the president.”
Grant’s views appeared to have changed. “The president said then that he was satisfied the country had a very bountiful harvest; that there was to be a large surplus; that unless we could find a market abroad for that surplus it would put down prices here. And he remarked that the government would do nothing during the fall months of the year to put down the price of gold or make money tight. On the contrary, they would do everything they could to facilitate the movement of breadstuffs. He seemed to take a very deep interest in it; it seemed to have been a matter of study with him. I was surprised at the clearness with which he seemed to comprehend the whole question.”
Gould may not have been the most reliable witness on Grant’s views. During September 1869 Gould’s design to enhance the Erie’s business by bulling gold transmuted into something larger: a scheme to corner the gold market. Contracts for gold delivery were bought and sold daily by both speculators and merchants; at any given time the gold promised often exceeded the gold available, but the market always cleared by the delivery dates. Gould aimed to purchase contracts far in excess of the existing supply, thereby “cornering” the market and compelling the gold promisers to settle on his terms. He estimated the existing supply of gold and arranged for various brokers to purchase contracts—quietly and without the brokers knowing they were working together, lest the secret get out and the plan be spoiled.
It was a delicate operation, involving various imponderables, of which the most important was the attitude of the federal government. The Treasury’s gold could foil any attempted corner; at a word from the president the doors of the vaults would open, the gold would flood the market and the corner would be broken, with those holding contracts being bankrupted by the collapsing price. Grant’s initial opposition to a rise in gold—his belief that the bubble ought to be burst—naturally discouraged Gould; his apparent change of mind caused Gould to press ahead.
Gould’s testimony regarding Grant’s reversal received corroboration from a less interested source. George Boutwell recalled Grant’s endorsing views such as Gould described. “About the 4th day of September, I suppose, I think on the evening of the 4th of September, I received a letter from the president,” the Treasury secretary told the congressional committee. “In that letter he expressed an opinion that it was undesirable to force down the price of gold. He spoke of the importance to the West of being able to move their crops. His idea was that if gold should fall the West would suffer and the movement of the crops would be retarded. The impression made upon my mind by the letter was that he had rather a strong opinion to that effect.… I saw from the letter that it was his opinion that the sale of gold in any considerable quantity might carry down the price of it, and that if the price were to fall the West would be embarrassed.”
Grant’s intention to let the market find its own level persisted into mid-September. He and Julia departed for a vacation in western Pennsylvania on September 12 and left a letter for Boutwell, who was traveling to New York. “You will be met by the bulls and bears of Wall Street,” Grant warned, “and probably by merchants, too, to induce you to sell gold, or pay the November interest”—on the federal debt, in gold—“in advance, on the one side, and to hold fast, on the other. The fact is, a desperate struggle is now taking place, and each party want the government to help them out. I write this letter to advise you of what I think you may expect, to put you on your guard.” Grant wrote, as well, to indicate his own preference. “I think, from the lights before me, I would move on without change, until the present struggle is over.”
Grant held his ground as the struggle intensified. The task wasn’t easy. To bolster their argument that the government was on their side, the gold bulls circulated rumors that the president and other officeholders had a stake in the fight. “The President was reported as having a large interest, as well as every member of his cabinet, especially the secretary of the Treasury,” James Hodgskin, an officer of the gold exchange, the market where gold contracts were traded, remembered. “Also a large number of the members of Congress.” Hodgskin himself didn’t believe the rumors. “There is no doubt but that these stories were set afloat by these men themselves in order to frighten people into buying gold.” Yet the tales produced the desired effect on those who needed or wanted gold. “A great many became seriously alarmed, and began to buy back the gold they had sold. And a great many nervous people, who had no gold, and who had nothing to do with gold in a speculative way, fearing the country was going to wreck and ruin, also went and bought large amounts of gold.”
Jay Gould didn’t believe the rumors either, at least as they related to Grant. Whether Gould started the rumors himself or simply benefited from them, he never said. But he did declare that they were unfounded regarding Grant. Summarizing his discussions with the president, Gould told the congressional committee: “Nothing ever occurred to me in any of these interviews that did not impress me that the president was a very pure, high-minded man; that if he was satisfied what was the best thing to do, that was what he would do.”
Gould went on to explain that as the battle between the bulls and bears grew hotter, Corbin became nervous that Grant might change his mind. Corbin wrote a letter to Grant, then in Pennsylvania. The gist of the letter, subsequently destroyed, was that the two sides in the gold battle would try to sway the president. Grant should stick to his decision to keep out of the fight.
Gould’s partner Fisk arranged for a messenger, William Chapin of the Erie Railroad, to carry the letter to Pennsylvania. Chapin took a train to Pittsburgh and hired horses and a driver and rode through the night toward the village of Washington, Pennsylvania. “We started, lost our way once on the trip, but finally got there,” Chapin told the congressional committee. “I think it was about nine o’clock in the morning.” Chapin went to the house where Grant was staying. The woman of the house said that Grant had gone to another house, in the country. Chapin hired a second team of horses and drove on. “A lady came to the door,” he said of th
e country house. “I told her I had a letter from Mr. Corbin which I was to deliver to the president in person. She showed me into the parlor. General Grant was playing croquet on the lawn, he and General Porter”—Grant’s secretary, his former military aide Horace Porter. The croquet duly ended and Grant came to the house. “I told him I had a letter from Mr. Corbin, and delivered it to him,” Chapin recalled. “General Grant broke his letter open, started down to the window of the parlor facing me, and read it. He seemed to be reading some of it twice.”
A servant approached and said that Mrs. Grant wished to see the president. Grant went out, then returned some fifteen minutes later. “He still had the letter in his hand,” Chapin testified. “I was waiting, expecting all the time he would give me some instructions, or send a message by me in return. He seemed to wait so long that, as I wanted to get back, I said to him, ‘Is it all satisfactory?’ or something like that. He says, ‘Yes.’ I asked him if there was any reply. He said, ‘No, nothing,’ and he wished me a good morning. I drove straight back to Pittsburgh and telegraphed to New York that the letters”—Corbin’s letter and a letter of introduction of Chapin—“were delivered all right.”
A committee member asked about the message to New York. “Did you mean by your telegram to say that the president answered that the contents of the letter”—Corbin’s letter—“were all right?”