Unfortunately, he lacked such persistence in the cause of reform of Indian policy. In his inaugural address, he had pledged to encourage Indians toward "civilization and ultimate citizenship," and soon astonished the nation by the unprecedented appointment of an Indian, Ely S. Parker, a former staff officer, as commissioner of Indian affairs. He followed this by appointing the Board of Indian Commissioners, an unpaid group of advisers to the secretary of the interior who were charged with implementing the "peace policy," based on the appointment of churchmen as Indian agents. In his zeal to serve the Indians, Parker antagonized both board and bureaucrats; he resigned in 1871. The remainder of the peace policy disintegrated amid denominational squabbling, the counterattack of entrenched economic interests, and the unwillingness of the Indians to surrender their way of life to the concepts of white reformers. By the end of Grant's second term, reservation Indians were again at the mercy of a corrupt Interior Department; others were the charges of a United States Army still smarting from the death of George A. Custer at the Little Big Horn in 1876.
A similar fate awaited civil service reform. Filling government positions with nonpartisan appointees through competitive examination had the enthusiastic support of Congressman Thomas A. Jenckes of Rhode Island, Senator Carl Schurz of Missouri, and George William Curtis, editor of Harper's Weekly , and of Cox, Hoar, and Boutwell, who tried to implement reform within their departments. Asked by Grant to legislate reform, Congress returned the problem to the White House by asking the president to appoint a civil service commission to draw up rules. Grant appointed Curtis to head the commission and accepted its recommendations, to take effect on 1 January 1872. Civil service had Republican party support when applied to ill-paid clerkships but encountered resistance when it encroached upon such lush pasturage as the New York Customhouse, the preserve of Senator Roscoe Conkling, a loyal supporter of the president. Repeatedly Congress failed to enact civil service legislation; in 1875, it refused to appropriate funds to maintain the commission. Congressional resistance eventually persuaded Grant himself to abandon civil service procedures.
Reformers cooled toward Grant even before Grant cooled toward reform. Disappointment with failures to implement civil service reform, disgust with Reconstruction governments, and dismay with high-tariff policy (when free trade and laissez-faire represented the best economic thought) brought together a group eventually christened Liberal Republicans, who, embellishing their cause with cries of "Grantism," denounced corruption, inefficiency, and nepotism. Led by Schurz, Cox, Sumner, Lyman Trumbull, Charles Francis Adams, and Horace Greeley, editor of the New York Tribune , they moved toward independent political status. In 1872, they passed over such logical presidential nominees as Adams and Judge David Davis to nominate Greeley for president, a choice soon ratified by opportunistic Democrats. Greeley's eccentricities, high-tariff views, and record of unqualified abuse of the Democratic party played into the hands of the Republicans.
Grant won reelection easily. Economic prosperity, combined with debt reduction, temporarily lowered tariffs, and repeal of the income tax, hurt the opposition, as did the initial implementation of civil service. Ku Klux Klan outrages in the South reminded voters of Civil War issues, as did Republican orators. When doubts arose, Grantism seemed a small price for peace and prosperity. Grant received 3.6 million votes to 2.8 million for Greeley, who carried only six states: Missouri, Tennessee, Texas, Georgia, Maryland, and Kentucky. Of 366 electoral votes, the Greeley states had 66. The electoral college refused to count 14 disputed votes for Grant from Arkansas and Louisiana or 3 cast for Greeley, who had died shortly after the election, so the official tally gave 286 for Grant to 63 divided among four Democrats. Grant received the largest percentage (55.6 percent) of the popular vote of any candidate since Andrew Jackson's 56 percent in 1828. Grant rather smugly proclaimed the victory a personal vindication. Loyal Republicans crowed that their party had been purified by the departure of Liberal Republicans; history later proclaimed the opposite. Charges against Grant in the second election campaign were even nastier than those aired in the first, and some came from former allies, now Liberal Republicans. President Grant ignored the charges in public but inwardly seethed. His tendency to overvalue loyalty increased when he felt betrayed, and after 1872 he established a network of party stalwarts around him, men who seldom questioned his policy but instead furthered it. Ironically, Grantism increased in the second term.
The Grant family had settled comfortably in the White House. Julia's original apprehensions about her social role eased when she received assistance and advice from the wife of Secretary Fish. Fred Grant, the oldest son, graduated from West Point; Ulysses, Jr., scraped through Harvard and served his father as presidential secretary. Daughter Nellie enjoyed a White House wedding in 1874, much publicized throughout the country, even though people would have preferred she not marry an Englishman, and Walt Whitman, unacknowledged poet laureate of the Grant administration, wrote a poem in her honor. Jesse, the youngest son, ran happily through the White House in a manner reminiscent of Tad Lincoln, to the delight of his doting parents.
Grant himself usually worked in his office from ten in the morning until around three in the afternoon and then drove his carriage through Washington. Long summer vacations at Long Branch, New Jersey, drew criticism, as did other trips away from Washington, though none could claim that Grant neglected his duties. In fact, the business of the presidency proved so undemanding that Grant gained some thirty to forty pounds in the White House, apparently the happiest years of his life.
As the nation moved rapidly from an agricultural to an industrial economy, the effects of the business cycle increased. The Panic of 1873 represented the American phase of a depression that spread from Europe and settled over the United States for the remainder of the Grant administration. Railroad overbuilding hastened the onset, and efforts by railroad corporations to maintain profit squeezed farmers already hurt by low prices abroad. Economic distress enabled the Democrats, aided by militant farmers organized as Grangers, to gain control of the House in 1874 for the first time since the firing on Fort Sumter.
The Panic of 1873 raised the greenback issue once again. During the Johnson administration, the Treasury had retired some 10 percent of the $400 million issued; the Grant administration left the remainder in circulation. When the panic struck, Secretary of the Treasury William A. Richardson reissued some of the greenbacks, with mild inflationary effects, but hard-pressed westerners clamored for more. Congress passed legislation (14 April 1874) for the reissue of the remaining $18 million, hardly a large amount of money even then or likely to create inflation, but its reissue was an important symbolic act, demonstrating governmental willingness to acknowledge financial distress.
Grant sympathized with the unemployed and even hoped to create public works programs to provide jobs until he was persuaded to accept the conventional wisdom that government must retrench when revenues fall. His first reaction to the inflation bill was positive, and he drafted a message giving the reasons for his support, but he continued to agonize, found himself unconvinced by his own arguments, and eventually vetoed the bill. Even opponents admired his conscientious approach to the issue and regarded the veto as an act of courage.