Richardson had profited by the arrangement and the real complaint against him was for negligence, the committee accepted Grant's proposal. Richardson was made a justice of the Court of Claims, and Benjamin H. Bristow, a Kentucky lawyer who had made a record for effectiveness as United States Attorney, was appointed Secretary in his place.

CHAPTER XLI

VETO OF THE INFLATION BILL-THE RESUMPTION

ACT

FOR more than two years after the Supreme Court's reversal of its Legal Tender decision there was a period of seemingly unexampled prosperity. Business boomed; new railroads shot out through the Western country to gather up the grain for which Europe waited with outstretched hands; others pierced the coal and iron regions of Pennsylvania and the border States. In the four years from 1869 to 1872 the railroad mileage of the United States increased over twenty-four thousand miles more than three times the average annual increase during the years from 1865 to 1868. All this meant a tremendous demand for iron and steel, a great expansion of shipping on the Great Lakes. Workshops and mills were run at full capacity; labor was in demand; wages were high; the tide of immigration was at flood. New issues of railway bonds were frequent, at high rates of interest; and they were widely distributed among people like clergymen, school teachers, and others of meager pay, who eagerly welcomed the unusual returns upon their small investments.

Many of these railway bonds, notably those of the Northern Pacific, were floated by Jay Cooke & Co., who, ever since their great success in handling the Government bond issues of the Civil War, had stood in the popular imagination as the house of Morgan later stood for so many years, the representative banking institution of the United States. Besides the legitimate business advancement, there were thousands of wildcat schemes.

Every one was busy about something; every one had money; the world was looking up; the Vanderbilts and other men, who for years had been doing the biggest things in the biggest way, were carrying on their constructive schemes with sublime confidence in the future. They saw no clouds ahead; why should the average citizen who had faith in their experience? Then in the late summer of 1873, a few months after Grant had entered on his second term, money began to tighten even more than usual for that season of the year, when it was needed for the movement of the crops. There were other indications which might well have been taken as warnings that the boom had gone too far. And finally on September 18, 1873, the country was stunned by the announcement that Jay Cooke & Co. had failed.

The props were knocked from under the flimsy structure of prosperity and it crumbled overnight.

Bank after bank went to the wall in all parts of the United States. The stock exchanges remained closed for eight days; greenbacks and national bank notes were hoarded; clearing-house certificates were issued for the first time in the history of panics; every conceivable device was resorted to for luring money back into circulation. The country was stricken with industrial paralysis. Grant did not see "good times" again while he was President.

At the height of the panic the frightened financiers of New York cried to Washington for help. Three days after the failure of Jay Cooke & Co., Grant came over to New York with Richardson, the Secretary of the Treasury, and was besieged at the Fifth Avenue Hotel by the business leaders of the city. "I happened in New York on that Sunday," said Morton, of Indiana, "and saw the crowds of bankers, brokers, capitalists, merchants, manufacturers, and railroad men, who throughout that day thronged the halls, corridors, and parlors of the Fifth Avenue Hotel, beseeching the President to increase the currency by every means in his power, and declaring that unless the Government came to the rescue nothing could save the country from bankruptcy and ruin.”

Two measures of relief were at Grant's hand. Before McCulloch was stopped by Congress he had retired and canceled $44,000,000 out of $400,000,000

greenbacks authorized by law, leaving in circulation $356,000,000. Boutwell at times had reissued these notes in small amounts to meet the current expenses of the Government and had retired them again as the need passed. Grant now had it in his power to reissue these notes in the financial emergency. Some of the biggest men in the Street begged him to do it..

But he refused thus to inflate the currency in order to ease the money market. At best it would have been a temporary and fictitious relief and probably illegal, though that irregularity would doubtless have been overlooked in so great a crisis. There were other surplus greenbacks in the Treasury, however, and he directed the Secretary to use these to buy bonds, thus restoring to the savings banks $13,000,000 of currency, which, while it did not go directly into circulation for the benefit of Wall Street, was far-reaching in its moral effect.

Congress meeting in December, 1873, found the country in financial depths looking to Washington for relief. There were few Senators or Representatives without a remedy, fresh from home. The cry for inflation, which had been blatant many years, now gained in volume.

Grant called attention in his message to the fallingoff of revenues "owing to the general panic now prevailing." It was the duty of Congress to provide