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WILLIAM J. BRYAN, EDITOR AND PROPRIETOR.
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Commoner
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Voirv'No; 18,
Lincoln, Nebraska, May 20, 1904.
Wholt No. 174,
THE CLEVELAND BOND DEALS
Ex-Presiderit Cleveland, after a silence upon
the subject for some ten. years, feels called upon
to give to the public through the Saturday Even
ing Post "a detailed history of tne crimes charged -against
an administration that issued, bonds of
the government in time of peace." He proceeds
at great length to describe the situation and the
manner of issuing and selling the bonds. To
those who investigated the matter at the time,
liis article presents nothing new, and it is only,
significant for two reasons first, because there
was no occasion for the making of such an ex
planation at this time, and, second,, because the
explanation conceals or misrepresents some of
the most important parts of the transaction. The
only plausible excuse that can be given for the
preparation of the article at this time is that Mr.
Cleveland desires a renominatfon and, keenly,
feeling the criticism directed against his admin
istration on account of these bond deals, is try
ing to- explain, them in such a way as to satisfy,
the financial, element to which he looks for the
support of his candidacy. His political opponents
in the democratic party (''may their tribe in
crease") are not alarmed by the article because
if the people aro "sane" they will think no more
of Mr. Cleveland after reading the article, and
still less of him if they will consider -what he
ought to have said, as well as what he did say..
He starts out with a misstatement o the law.
He assumes that the greenbacks, were redeem
able in gold. This is a groundless assumption
The greenbacks called for paymont in dollars,
and were payable in either gold or silver at the
option 'of the government. The creation of a
gold reserve did not obligate the government to
redeem its paper in gold. The bonds which the
secretary of the treasury was authorized to sell
to provide a redemption fund, were coin, bonds.
Mr. Cleveland sent a message to congress com
plaining that he could only issue coin bonds, and
asking for authority (which was denied) to issue
gold bonds. Gold and silver were standard money
and every national platform upon which Mr.
Cleveland has run recognized gold and silver as
the coinage of the constitution. His platform of
1884 so declared; his platform of 1888 reaffirmed
the platform of 1884, and his platform of 1892
said: "We hold to the use of gold and silver as
the standard money of the country," etc.. Coin"
means silver as well as gold. He Issued bonds
because at the dictation of Wall street he re
fused to recognize silver as a standard money.
He acted upon the assumption that gold alone was
good money, and he permitted the financiers to
raid the treasury and force an issue of bonds at
the expense of the people. In his attempt to find
an excuse, h& has searched the law of 1890, and
finding there an innocent clause, attempts to make
that clause a scapegoat, and blames, it with tho
bond issue. He saysr ,
"It is hardly necessary to say that the as
sertion in the act of 1890 (tho established pol- -icy
of tho United States to maintain, the "two ,.
metals at a parity) had the effect of transfer? -ring
the discretion of determining whether -,
those treasury notes should be redeemedin
gold or silver from the secretary of the t;reas-.
ury to the- holder of the notes.
This is mere subterfuge. Tho clause referred
to does not necessarily Imply that geld could 'be
rightfully demanded. That is a construction which
iWall street has placed upon the section, and Mr.
Cleveland simply accepted the Wall street con
struction. ' That, this was not a necessary con
struction, or even a reasonable construqtion, , is
shown by a quotation from 'the testimony given
, by Secretary Carlisle on the 21st of January, 1895,
before the house committee on appropriations.
' Tho following question and answer bring out the
point; 4
Mr. Sibley? ' I would like to ask you (per
"' ; fiapg not entirely connected with the matter r
; ninder discussion) what objections there could
J". be to having 'the option of redeeming either
in silver or gold He with the treasury in
stead of tho noteholder?
Secretary Carlisle; If that policy had been
adopted at the beginning of resumption and
I am not saying this for the purpose of criti
cising the action of any of my predecessors, or
anybody else but if tho policy o reserving to
the government at tho beginning of resump
tion, the option of redeeming in gold or sil
ver all its paper presented, I believe it would
have worked beneficially, and there would
have been no trouble growing out of it, but
the secretaries of the treasury Irom tho be
ginning of resumption have pursued a policy
of redeeming in gold or silver, at the option
of the holder of tho paper, and If any secre
tary had afterwards attempted to change that
policy and force silver upon a man who
wanted gold; or gold upon a man who wanted
silver, and especially if he had made that at
tempt at such a. critical period as we have
had in the last two years, my Judgment is,
it would have been very disastrous. There is
a vast difference between establishing a policy
at. the beginning, and reversing a policy after
it has been long established, and, especially,
after the situation has been changed.
It will be seen that Secretary Carlisle blamed
preceding, secretaries of the treasury. He did not
blamo the law, and this, it must be remembered,
ivas after Mr. Cleveland had issued his bonds
after, Mr. Cleveland had made the deals with
Morgan, Belmont and Rothschild. Cai lisle, it
seems, had never discovered tho clause to which
Mr. Cleveland refers, and upon which ho relies.
He blames preceding secretaries for establishing
the precedent, and hides behind tho excuse that
the precedent having been established, he was
not able to disregard it. He even went so far as
to say that in his opinion it would have worked
beneficially if the government had reserved tho
option of redeeming in either gold or sliver.
This testimony of Mr. Carlisle's convicts Mr.
Cleveland of having manufactured an excuse
AFTER HE HAD DONE THE THING WHICH
HE IS NOW TRYING TO EXCUSE. From the
testimony- of Mr. Carlisle it appears that previous
administrations surrendered thq, option which tho
law gave to the government, and Mr. Cleveland's
administration refused to resume tho op'ion and
thus protect the public From Mr. Carlisle's tes
timony it is also apparent that no distinction was
made between the greenbacks and the .Sherman
notes. The distinction created by Cleveland's
article is an afterthought, a distinction created
for tho purpose of unloading upon some one else
the blame for his disgraceful bond transactions.
Again Mr. Cleveland saysr
"Manifestly, in the face of this assertion
of the government's intention, a demand for
gold redemption on the part of tho holders of
such notes could not be refused, and the ac
ceptance of the silver dollars insisted upon,
without either subjecting to doubt the good
faith; and honest intention of the government's
professions, or creating a suspicion of our
country's solvency. The parity between the
two metals could not be maintained, but, on
. the contrary, would be distinctly denied, If
the secretary of the treasury persisted in
redeeming these notes, against the will of
the holders, in dollars of silver Instead of
gold."
Here, too, Mr, Cleveland is assuming a fact
that he cannot prove. In France gold and silver
are maintained at a parity at the ratio of 15
to 1, and the Bank of France exercises the op
tion, and pays In whatever coin it desires. If
the bank officials' think that an attempt is being
made- to secure too much gold for export, they
refuse to pay in gold, or offer to pay part in gold
and part In silver. By thus exercising the option
they are able to protect their gold reserve, and
'they do not raise a doubt as to the good faith and
honest intention' of the government, nor do they
creato a suspicion of tho solvoncy of oithor the
country or tho bank. Instead of strengthening
silver by using it as full legal tender standard
money, Mr. Cleveland constantly discredited it and
discriminated against it.
Mr. Cleveland does not think for himself on
tho money question. Ho accepts tho ready-made
opinion of tho monoy changers and permits thorn
to do his thinking for him. Whatever they want
done Is, in his opinion, "manifestly" proper, and
with him it Is "hardly necessary to say" that
what they want dono should bo dono.
It has been currently reported that Mr. Clove
land's first secretary, Mr. Manning, prevented a
raid upon tho treasury gold by announcing that he
would pay in silver if tho financiers attempted to
draw out gold. Tho threat was sufficient and it
raised no doubt as to tho government's Intentions,
and it created no suspicion of Insolvency.
Mr. Cleveland describes with some minute
ness his struggles to keep gold in tho treasury,
and there is a refreshing innocence in his narra
tion of the way in which tho purchasers of bonds
drew from tho treasury tho gold with which to
pay for tho bonds. It is difficult to understand
how any ono with sense enough to save him from
incarceration in an institution for tho imbecile
would permit tho withdrawal of gold for the ex
press purpose of purchasing bonds that wore is
sued to obtain gold. And yet Mr. Cleveland, in a
really serious vein, explains that the treasury was
depleted by tho purchasers of bonds, and that it
was for this reason that ho stipulated in the
Rothschild-Morgan contract (tho contract was
drawn by his former law partner, Mr. Stetson,
and gave a largo profit to Morgan, Belmont and
Rothschild) that at least half of tho gold pur
chased with tho bonds should be Imported. This,
however, was no real protection, because It sim
ply enlarged tho circlo without at all breaking
that circle. The papers at the time reported some
amusing instances. In ono case a bond buyer
presented some greenbacks and Sherman notes
and called for the gold with which to pay for his
bonds. They told him at tho sub-treasury offico
in New York that ho could not make the exchange
in tho building, so he had to cart the gold across
the street to his office, and then cart it back
again, and he complained that ho was thus put
to the expense of carting both ways. His protest
was a reasonable ono, for if the government would
let him draw out gold and take it across the
street to his offico, and bring it back and deposit
it In payment for bonds Issued foi tho sole pur
pose of securing gold, why would not the gov
ernment let him make tho exchange in tho room?
In explaining the Morgan-Belmont-Rothschlld
contract, Mr. Cleveland says that ho could have
sold gold bonds on terms that would have netted
the government $18,000,000 more than tho com
bonds did, and yet in spite of the fact that the
purchasers of tho bonds- charged $18,000,000 dif
ference between coin and gold bonds, Mr. Cleve
land has always insisted that the bonds should
bo paid in gold. In other words, after the bond-
holders had charged for tho risk, they were to be
saved the risk and given the amount charged a& a
gratuity.
Mr. Cleveland says that while the bonds sold
under tho contract were sold at a lower rate than
bonds sold at auction, he believes that the gov
ernment got an advantage equal In value to the
difference paid, in that Morgan and Belmont were
able to regulate tho rate of foreign exchange and
lessen the depletion of the treasury. In other
words, he charges that the. government wag in a
helpless condition and had to hire two financiers,
at a high price, to take care of its interests, and
he admits that he preferred to hire Morgan and
Belmont rather than exercise the rights conferred
upon the administration by law, namely, the
right to redeem coin obligations in silver.
In addition to misrepresenting the law and
the consequences of silver redemption, in addition
to defending the Morgan-Belmont-Rothschild con
tract, he deliberately covers up ono of the most
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