Ulysses S. Grant - Financial affairs

The basic conservatism of the Grant administration found fullest expression in the handling of financial issues. On 18 March 1869, Congress passed the Public Credit Act, which pledged the repayment of the bonded debt in gold and thus ended years of uncertainty over whether the nation might follow an inflationary course by redeeming bonds with the greenbacks issued during the Civil War, a policy advocated by some Republicans as well as Democrats. Basically, the government followed a policy of hard currency, economy, and gradual reduction of the national debt.

Grant's own ideas about finance were relatively simple, and he seemed to have absorbed some of them from the wealthy businessmen who so assiduously courted him. Aware of Grant's attraction to the financially successful, James Fisk and Jay Gould devised a plan to snare him into a scheme for their own profit. Greenback currency fluctuated in relation to gold; government could affect the price by selling or withholding gold. Gould and Fisk planned to drive up gold prices by convincing Grant that such an increase would benefit farmers, and they enlisted Abel Rathbone Corbin, who was married to Grant's sister and claimed greater influence with the president than he actually possessed. Corbin assisted Fisk and Gould in gaining social access to Grant, something that enhanced the reputations of the unscrupulous pair in New York financial circles.

Gould and Fisk bought up gold, intending to persuade the president to take steps to drive the price upward. While Grant visited relatives in out-ofthe-way Washington, Pennsylvania, Corbin wrote him a letter, delivered by special messenger, that argued the case for the public benefits of higher gold prices. Suspicious at last, Grant asked his wife to write Mrs. Corbin a letter telling her to have her husband stop his speculations. Gould double-crossed his partner by secretly unloading his holdings, while Fisk continued to buy until he had driven the price to unprecedented heights on "Black Friday" (24 September 1869). On that same day, Grant and Secretary of the Treasury Boutwell decided to sell gold, and the price immediately plummeted. In the gyrations, fortunes were made and lost, and the whole affair became the subject of a congressional investigation embarrassing to Grant and his wife. The president, although guilty of indiscretion and naïveté, could not be charged with personal profiteering.

Financial concerns again claimed Grant's interest when the Supreme Court decided Hepburn v. Griswold (7 February 1870) by declaring the Legal Tender Acts unconstitutional as applied to contracts made prior to their enactment. Conservative Republicans who dreaded the inflationary impact of increased issuance of greenbacks equally feared the deflationary shock of their sudden disappearance as lawful currency. Grant soon filled two vacancies on the Court with justices believed to favor the Legal Tender Acts. As a result, the Court reversed its stand in ruling on two additional greenback cases, Knox v. Lee and Parker v. Davis (1 May 1871). Inevitably, Grant was accused of packing the Court, a charge justified to the extent that he had some idea in advance of how his appointees would vote. Nonetheless, he had appointed two qualified men and had no obligation to select justices who might create financial upheaval.

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