Reminiscences of Sixty Years in Public Affairs, Vol. 2

G >> George S. Boutwell >> Reminiscences of Sixty Years in Public Affairs, Vol. 2

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His power was unlimited as there were no checks upon him. He once said
to me when a committee of Congress was investigating his bureau, during
Mr. McCulloch's administration:

"They will never find a five cent piece out of the way."

After the discharge of Clark, I ordered an account of stock to be
taken. I appointed a custodian of the plates after a full inventory
had been made, whose duty it was to deliver the plates each morning
to the printers, to charge them to the printers, to receive them at the
close of the day, and to settle the account of each man. A special
paper was designated and public notice was given under the statute by
which it was made a crime for any person to make, use or have in his
possession any paper so designated. The paper was manufactured under
the supervision of an agent of the department, who was authorized to
count and receive all the paper at the mills and to answer the orders
for its delivery to the printers. The paper making machine was
equipped with a register which numbered the sheets of paper. That
record was compared daily with the number of sheets received by the
agent, and thus the Government was protected against any fraudulent or
erroneous issue of paper. Registers were also placed upon each
printing press. Each morning one thousand sheets of paper were
delivered to each plate printer, and at the close of work his printed
sheets were counted and the number compared with the register before
the printer was allowed to leave the office. In like manner there was
an accounting with each counter. The same system was extended to the
managers of the machines used for numbering bonds and bank notes. The
registering machine was made by an employee, under my direction, and
at the cost of the Government.

Books of account were opened upon the new system. During my
administration, as far as I know, there was never the loss of a sheet
of paper nor was there a fraud committed in connection with the
business of the bureau. For further security, I made arrangements by
which two bank note companies in the City of New York prepared sets
of plates for a single printing on each security, the red seal being
imprinted in the Treasury Bureau. By this arrangement collusion was
impossible. The expense of printing was increased by this arrangement,
but it seemed to be more important to attain absolute security against
fraud than to save money. My successors have thought otherwise and the
printing is now done in the Treasury.

During my term I ascertained that a man in New York who had once been
employed to print certain securities, had in his possession the plates
which he had used and which he claimed as his property. The printing
had been done in Mr. Chase's administration and there was no agreement
that the plates were to be delivered to the Government. The plates
were obtained, finally, by the payment of a sum of money. The person
who had the plates was an old man, and there was danger that they might
fall into the hands of dishonest parties.

When I was in charge of the Treasury I had an understanding with
Colonel Whiteley, the Chief of the Secret Service that I should have an
interview with any expert professional criminals who might fall into
his hands. I recall an interview with one such criminal. A man of
forty years and a gentleman in appearance, and a professional
gentleman, as well as a criminal by profession.

Upon the suggestion of Colonel Whiteley I gave the prisoner a fresh
one dollar green-back note. He took a phial of liquid from his
pocket, wet one half of the paper with the liquid and in my presence
the colors disappeared from the paper. Time and exposure have given
a dark tinge to the paper which was a pure white when the experiment
was ended. By the use of the liquid the counterfeiter was able to
obtain a piece of fibre paper on which a bill of large denomination
might be printed, given only the engraving.

The revenue marine service was impaired by the incompetency of many of
the officers, and its efficiency was also impaired by the size and
quality of the ships. Some of them were sailing vessels, most of them
were of wood, and the modern ones were unnecessarily large in size. I
created a commission and all the officers except a few who were too old
for active service were subjected to an examination and those who were
found incompetent were discharged from the service. Their places were
filled by young, active and well qualified men.

A commission was appointed to consider and report upon the size of the
vessels that were best adapted to the service. Three reports from
successive commissions were made before a satisfactory result was
reached. Finally, a report was made by Captain Carlisle Patterson,
that was approved by me and by a committee of Congress. The
recommendations of that report have been followed, as far as I know.

At that time the Mint Service was without organization. Each mint and
assay office was in charge of an officer called superintendent, but
there was no head unless the Secretary of the Treasury could be so
considered, as all the business came to him. Upon my recommendation
Congress authorized the appointment of a Director of the Mint, and
upon my recommendation the President appointed Dr. Linderman, a
Philadelphia Democrat, but a gentleman familiar with the service.
Under him the service was organized and made systematic.

When I took charge of the Treasury Department there was no system of
bookkeeping and accounting, that was uniform in the various customs
houses of the country. Each port had a plan or mode of its own, and
there was no one that was so perfect that it could be accepted as a
model in all the ports. The books and forms were made and prepared at
the several ports and often at inordinate rates of cost.

I appointed a commission of Treasury experts to prepare forms and books
for every branch of business. Their report was accepted and since that
time the modes of accounting have been the same at all the ports. The
stationery prepared is furnished through the Government printing
office, at a considerable saving in cost, and clerks in the accounting
branch of the Treasury are relieved of much labor in the preparation
of statements.

Upon the transfer of Mr. Columbus Delano from the office of
commissioner of Internal Revenue to the Secretaryship of the Interior
Department, the question of the appointment of a successor was
considered. The President named General Alfred Pleasanton, who was
then a collector of internal revenue in the city of New York. He had
been a good cavalry officer, a graduate of West Point, and the
President was attached to him. My acquaintance with Pleasanton was
limited, but I was quite doubtful of his fitness for the place. My
opposition gave rise to some delay, but at the end the appointment
was made, the President saying in reply to my doubts that if he did
not succeed he had only to say so to the General and he would leave
at once. The appointment of Pleasanton was urged by Mr. Delano and
General Horace Porter as I understood, both of whom were very near
the President.

Pleasanton had been informed of my position, and although I was his
immediate superior he did not call upon me, nor did he ever, except
upon one occasion, come into my office, unless I sent for him. On
my part I resolved to avoid any criticism upon his official conduct
unless compelled to do so. He entered upon his duties the first of
January, 1871, and although in several instances I had occasion to
control his purposes in regard to contracts and to the refund of
taxes, I did not feel called upon to mention the facts to the
President. In May the President said:

"I have come to the conclusion that Pleasanton is not succeeding in
his office."

I replied: "That is so."

The President then said: "I will try to find some other place for him,
and I will then ask him to resign."

The President went to Long Branch for the summer and nothing was done.
I had very early discovered that Samuel Ward was exercising a good
deal of influence over the commissioner. It was his policy to secure
influence by giving dinners and entertainments, and, as far as
possible, he obtained the attendance of influential members of Congress
and of the chief officers in the executive departments. He once said:

"I do not introduce my measures at these entertainments, but I put
myself upon terms with persons who have power."

On a time I received a report on the subject of refunding a cotton
tax amounting to about $600,000. It bore two endorsements--one by the
solicitor "Examined and disallowed, Chesley," and one by the
commissioner "Allowed, Pleasanton."

I placed the report in my private drawer with the purpose of delaying
action until I should ascertain where the propelling force existed.
Having occasion to go to Massachusetts I was absent about two weeks.
Upon my return Mr. Ward came into my office and inquired whether I had
received the report. I replied that I had received it. "Had I acted
upon it?" I said that I had not. He then proceeded to say that the
claim was a good one,--that Mr. Delano had examined it, and had
concluded to pass it, but as he left the office rather suddenly he had
neglected to act upon it. Finally, he expressed the hope that I would
act without delay. I had already decided the case adversely upon the
ground that the allowance was unauthorized. Therefore I had only to
endorse the word "disallowed" with my signature and to return the
report to the commissioner. I learned that the commissioner was
engaged through the agency of Ward in making a contract with a
Connecticut firm that was in my opinion at once improvident and
irregular. This act led me to determine to end the difficulty at once.
I went to the Executive Mansion and asked General Babcock to go to
Long Branch and say to the President that the business of the Internal
Revenue Office was in such a condition that immediate action was
necessary. As a result the President returned that night and early
the next morning he sent for me. I stated the facts, and he said he
would send for General Pleasanton and ask him to resign. At the
interview Pleasanton asked for the reasons. The President said: "The
Secretary is not satisfied with your administration." Pleasanton
replied: "I think I can make everything satisfactory to the
Secretary." The President replied, naturally: "If you can, I am
content." Then for the first time Pleasanton came to my office
without a request from me. I invited him into my private room, and
when he had related his interview with the President, I said:
"General, if this were a personal matter we might come to an
understanding, but your administration of the office has been a
failure from the first and you must resign." This ended the interview.
He refused to resign and the President removed him. He appealed to
the Senate in a lengthy communication, but without effect. Pleasanton
may have been, and probably was, a good military officer, but he did
not possess the qualities that are essential in the discharge of
important civil trusts.

Neither from my experience in Congress nor in the Treasury Department
can I deduce much support for the doctrines of the class of politicians
called Civil Service Reformers. From their statements it would appear
that every member of Congress was the recipient of an amount of
patronage in the nature of clerkships that he could and did control.
I can say for myself that as a member I never asserted any such right
and as the head of the Treasury I can say that no such claim was ever
made upon me by any member of Congress. The nearest approach to it was
by George W. Julian. During one of his canvasses for re-nomination,
a clerk named Smith, and a correspondent of a journal in Mr. Julian's
district, had advocated the nomination of Mr. Wilson (Jeremiah). When
Mr. Julian secured the nomination, Smith gave him his support.
Nevertheless when Julian returned to Washington he demanded Smith's
removal. After hearing all the facts I declined to act. Julian was
very indignant, and afterwards from the Astor House, New York, wrote me
a violent, I think I might say unreasonable letter.

The public mind has been much misled by the statements in regard to
removals and appointments. The employees in a department are of two
sorts. There is a class who are trained men in the places that they
occupy. They have been in the service for a long period. They are
familiar with the laws relating to their duties, and to the decisions
of the courts thereon, and they are the possessors of the traditions
of the offices. They are as nearly indispensable as one man can be
to another, or to the safe management of business. The head of a
department cannot dispense with the services of such men. All thought
of political opinions disappears. The responsibility of a change in
such a case is very great. No prudent administrator of a public trust
will venture upon such experiments. There is another class of clerks
who are employed in copying, in making computations in simple
arithmetic, in writing letters under dictation, and in other ordinary
clerical work.

The public interest is not very large in the retention of such persons.
The ordinary graduates of the high schools of the country are competent
for all those duties. But the clerks of this class are not removed in
mass, and they never will be, under any administration. Even a fresh
man at the head of a department will soon find that the fancied
political advantages are no adequate compensation for the trouble that
he assumes and the risk of error and fraud that he runs when he takes
new and untried persons in the place of those who have been tested.
As late as 1870 about thirty per cent. of the employees of the
Treasury in 1860 were in office, and this notwithstanding that the
Treasury furnished recruits for both armies. During my time and for
years afterward, the post of Assistant Secretary was held by Mr.
Hartley, a Democrat from the days of Pierce and Buchanan. He was
experienced, diligent and entirely trustworthy.

Of the first class of employees it is to be said that there is no
occasion to embalm them in their offices, and if their pay is adequate
there is no ground for placing them upon the pension rolls. Their
duties are not as exacting as the duties and labors of men in
corresponding stations in private life. As to the second class, their
relations to the public are such that no public obligation arises
except to pay them the stipulated salaries.

It is essential to a proper administration that the Secretary or the
President should have the power of removal, and it should never be
coupled with the duty of making a statement of the cause. Not
infrequently a statement would be the occasion of scandal and of
suffering by innocent parties. The power may be abused as every
power may be, in the hands of dishonest or corrupt men. This is one
of the perils to the public, a peril from which no government can
escape. With us a change of rulers is a remedy for political wrongs
that do not belong to the catalogue of crimes. It may be said,
however, that this power of removal gives to a dishonest administrator
of a department the opportunity to secure the appointment of his
political friends in the place of political opponents removed, and this
whatever may be the method of appointment. The candidates may pass
the competitive examination, and they may enter upon their duties, but
their chief in thirty or sixty days may find them lacking in practical
aptitude, and so on, until those of the true faith shall be sent
forward by the examining board.

Honest administrators of official duties are embarrassed by the system
and dishonest ones evade it. The system may become the enemy of
honesty and the shield of hypocrisy. Only this is needed. When the
appointing power has designated a person for an office, let that person
be examined by an independent board with reference to character and
those qualifications which seem to be a fit preparation for the
practical duties of the place. Whenever the power of appointment and
removal is abused the public has a remedy in a change of
administration. And herein is one reason why the Presidential term
should not be extended. There may be many evils of administration
which are not so flagrant as to warrant proceedings for impeachment.
Such evils may be borne for brief periods, when if the term of the
President were extended to six or eight years the dissatisfied elements
of society might be tempted to engage in revolutionary movements. Nor
is there wisdom in limiting the Presidential office to a single term in
the same person. The thought that one has a future is a great stimulus
to careful and energetic action in the performance of public duties.
For a President there is no future except a re-election, which is in
fact an approval by the country of his administration. A wise man will
strive to so conduct affairs as to merit that approval. A House of
Representatives already condemned by a popular verdict is but a poor
guardian of the rights of the people; and a defeated administration
performs its duties in the most indifferent manner. After a defeat
appointments will be made and acts done that would not have been
hazarded pending an election. It is true, probably, of every
administration, not excepting that of General Washington, that the
second term was less acceptable to the country than the first. Mr.
Lincoln had no second term, and it is useless to speculate upon its
probable character, if he had lived to perform its duties.

It was my habit to be at the Treasury every morning at nine o'clock,
and I usually sent immediately for one or more heads of division or
chiefs of bureau for conference upon some matter connected with their
duties. By frequent interviews I acquired such knowledge of their
duties and of pending questions that I always had a reason for those
interviews. By this course I maintained relations of familiarity with
the officers who constituted the department for administrative
purposes, and I also established a system of punctuality in the matter
of attendance. When the head of a division is tardy, the clerks soon
venture to follow his example, and if he is prompt they are ashamed
to be dilatory unless they have an adequate excuse. The same relation
exists between the bureau officers and the head of a department.

One of my first acts in the nature of a financial policy was to
establish the Sinking Fund, agreeably to the act of February 25, 1862.
Seven years had passed since the passage of the law and four years
since the end of the war and yet nothing had been done to provide for
the redemption of the public debt agreeably to the promise that had
been made when the Government was a large borrower of money and when
its credit was depreciated, seriously, in all the markets of the
world. In my first annual report, December, 1869, I advised Congress
of my action and I recommended the application of the bonds that I had
then purchased, amounting to about fifty-four million dollars, to the
Sinking Fund, until the deficiency then existing had been met. The
step that I then took was taken in obedience to the law, and not
from any great faith in the wisdom of the Sinking Fund policy, nor was
it from any fear that the Government could not pay its debts whether
a Sinking Fund was or was not created.

The faith of the Government had been pledged to a particular policy and
I thought that the observance of that policy was both wise and just. A
government cannot afford to disregard the terms of its undertakings
even if a violation or neglect does not work harm to anyone. The
payments to the Sinking Fund were made regularly during General Grant's
administration, and the credit of the Government was thereby somewhat
strengthened. The chief element of strength was in the fact that the
payments were such as to astonish the heavily taxed and debt burdened
States of Europe. In my four years of service as the head of the
Treasury the payments on the debt reached the enormous sum of three
hundred and sixty-four million dollars. No one of my successors has
paid an equal amount, nor has an equal amount been paid in any other
equal period of time by the United States or by any other government.

At the time I entered the Treasury the price of gold was at about
forty per cent premium and when I left the Treasury it was at about
twelve per cent premium. In the summer of 1869 I entered upon the
policy of selling gold and buying bonds. The sales and purchases
were made by the Assistant Treasurer in New York, but the bids were
reported to me and by me accepted or rejected. A leading criticism was
this: It was claimed that the simple method was to buy bonds in gold
and thus to secure the bonds by one transaction.

This policy would have limited the number of purchasers of gold to
those who could command bonds. By the policy pursued the sales of gold
were open to anyone who had money. The gold was sold for currency, and
the bonds were purchased with currency. When the Treasury announced
its purpose to purchase bonds the price advanced in the market. The
President remarked to me jocularly that he had suffered by not knowing
what the department was about to do, inasmuch as he had sold bonds a
few days too early and at a price below their then present value.
During my service as Secretary of the Treasury I carried two
questions only to the Cabinet discussions--and I have forgotten one
of the questions, but it had some political significance. The other
arose in this manner: My method of negotiating the sale of new bonds
under the Funding Act of July, 1870, had been severely criticized.
The Government was compelled to give ninety days' notice of its
purpose to redeem five-twenty bonds, and as we could not with safety
make a call until we had the funds, and as our chief source was the
proceeds of new bonds we could not call until a sale was made. As a
consequence the Government was a loser of interest on all called bonds
for the period of ninety days. I arranged with the subscribers for
new bonds, that they should have the interest for the ninety days
upon a deposit of old bonds as security for the new ones subscribed
and taken. The Government lost nothing, and the subscribers were
benefitted greatly, and thus the subscriptions were increased.

During the campaign of 1872 I had an opportunity to negotiate a new
loan upon the same basis. Knowing that the proceeding would renew
criticism, I thought it proper to lay the case before the President
and Cabinet. Upon their advice the negotiations were suspended.

Governor Fish on more than one occasion complained that the Cabinet
were as ignorant of the proceedings and purposes of the Treasury as
was the outside world. His complaints were well founded. Much of the
business aside from routine matters was secret. For example my orders
for the sale of gold and the purchase of bonds were never issued at
any other time than Sunday evening, and then always by myself. The
orders were sent to the Sub-Treasurer at New York, and given to the
Associated Press at the same time. Consequently, on Monday morning
all the country was informed, and under such circumstances that the
chance of some to speculate upon the ignorance of others were reduced
to the minimum. Moreover, the members of the Cabinet might divide. I
should then be compelled to act upon my own judgment, and against the
views of some of my associates. Again, if I had the support of the
President and Cabinet, I could not have used the fact as an excuse for
myself. The public knew no one but the Secretary. I chose to act upon
my own judgment knowing that there was no one else to share the
responsibility in case of failure.

In my report to Congress, in December, 1869, I set forth a system for
refunding the Public Debt. I had unfolded the scheme in a speech in
the House of Representatives, July 1868. I had already taken two
steps preparatory to the undertaking. First, in May, 1869, I
established the Sinking Fund under the Act of February 25, 1862.
Second, by the purchase of bonds the world had assurance that the debt
would be paid. The effect of these two measures was seen in the
increasing market value of the bonds. In other words the credit of the
country was improving. When the President was preparing his message of
December, 1869, he called upon me for my views in regard to the
Treasury, and I furnished him with a synopsis of my plan which he
embodied in his message. I retained a copy of the synopsis and that
copy is in the hands of my daughter. Simultaneously I prepared a bill
upon the basis of the report and caused the same to be printed upon the
Treasury press. Upon an examination of the papers on file in the
archives of the Senate I find that cuttings from my printed bill form
a part of the bill which was printed by the Finance Committee of the
Senate of which Senator Sherman was chairman. The bill was changed in
details but not in principle. The loan was in three parts as my bill
was prepared. A portion at 5 per cent, a portion at 4 1/2 per cent,
and a third portion at 4 per cent. The division was retained in the
statute, but the amount of the loan at each of the several rates was
changed. By my bill the interest could be made payable in Europe.
This feature was stricken out by the committees in the House or the
Senate. This change I overcame or avoided ultimately by a rule of the
department by which interest on registered bonds could be made payable
in checks of the Treasurer. These checks are now sent to all parts of
the world and through the banking facilities they are everywhere as
good as gold, subject only to the natural rates of exchange between
different countries. Since that time railroad companies and other
business corporations have accepted the system. My plan of making the
interest on the bonds payable in Europe was rejected under the lead of
gentlemen who thought it involved some sort of national degradation.
My object was to make the loan more negotiable in Europe and thus to
extend the demand, and consequently, to increase the value of our
securities.

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