Business Issues of the Presidential Canvass

PROBABLY the most important fact developed by the progress of the presidential canvass is the unwillingness of the great majority of the business community in the North to let the government pass into the hands of the democrats. Merchants, manufacturers, bankers, transporters, and others who have to do with the larger affairs of trade and finance distrust the democratic party, and are taking an unaccustomed interest in the republican campaign. The excellent record of General Garfield on all business questions which have come before Congress during the past twenty years has doubtless something to do with the attitude of these men, contrasting, as it does, very strongly with General Hancock’s want of any record which could be appealed to for controlling his course, if he should be elected. But the positively bad record of the democratic party has more influence in shaping their views than the known opinions of one candidate and the lack of known opinions of the other.

Business men are well satisfied with the present condition of things: manufacturing establishments are busy, trade is active and steady, prices of commodities are not fluctuating and afford a fair margin of profit to the producer and dealer, our foreign commerce shows a handsome balance in our favor, labor is employed at living wages, well-managed railroads are earning dividends, the banks are solvent, the currency is abundant without being excessive in quantity, and the treasury regularly reports a surplus of receipts over expenses which is applied to the reduction of the public debt. In a word, all is going well, so far as the affairs of the business community are concerned, and the action of the government tends to assist and prolong this satisfactory condition of things. The policy of the republican party, in all matters affecting business interests, is now fixed by the practice of three consecutive administrations, and has been repeatedly approved by the platforms of national conventions. If the republicans are again successful, this policy will of course be continued. The reduction of the principal and interest of the debt will go on, specie payments will be maintained, the national banking system will be continued, and whatever changes may be made in the tariff, the principle of protection to our home industries will not be abandoned.

What will happen if the democrats succeed ? Nobody can predict. In this uncertainty lies one of the chief sources of the weakness of the democratic party in the present canvass. In all countries governed by popular suffrage, power shifts from one party to another at longer or shorter intervals of time, and the longer one party has been in control of the government the greater are the chances of its defeat at the polls. With this law of politics in their favor, the democrats, who have been twenty years out of power, might reasonably hope for success this year, in spite of the memories of the rebellion, and in spite of the alarming solidity of the South, if they were able to give the country assurance that they would do nothing to disturb the prosperity of business. But they can give no such assurance, save by the cheap protestations of stump orators, and these protestations only have the effect of calling attention to the bad record of the party. If it had behaved well in the past there would be no need now for its leaders to assert with such warmth that it does not intend to destroy the public credit, debase the currency, cripple manufacturing interests, shut up the banks, and generally overturn the present stable condition of affairs. For the republicans to make suck assertions concerning their party would be absurd. It would be as if a banker of excellent reputation for solvency and integrity should say to a depositor, “ Sir, I do not mean to steal your money, or squander it in speculation.” The depositor would be likely to conceive a suspicion at once, and would take up his checks and cash from the counter and go to some other bank. The democrats are in the attitude of a banker who went out of business, bankrupt, years ago, and now applies for a renewal of public confidence. When inquiry is made as to what he has been doing in the mean while, it is found that he has been engaged in preparing schemes and tricks for the injury of his customers, to put in practice in case he should again be trusted with the management of a bank. His vehement declaration that he renounces all his swindling projects, and means to be honest in future, is hardly a reason why he should be given the keys to the bank vault.

Is the comparison unjust? Let us see. Did not the democratic party, almost as soon as the war ended, begin to devise schemes for preventing the government from dealing honorably with the public creditors ? As early as 1867, there arose a movement which got the name of Pendletonism from the fact that one of its conspicuous champions was George H. Pendleton, the democratic candidate for the vice-presidency in 1864. It had for its object the payment of United States bonds in a depreciated, irredeemable paper currency. The democratic party went into this movement almost en masse. With a few honorable exceptions in the East, all the leaders of the party indorsed this dishonest project. The National Democratic Convention of 1868 adopted it by passing a resolution in favor of paying all the bonds in greenbacks that were not on their face specifically made payable in coin. Most of the bonds bore no such specific declaration, because when the form of them was adopted it was not supposed that any political party would ever claim that a promise to pay dollars at a definite time could be redeemed with pieces of paper which were themselves only promises to pay dollars at some indefinite time. But the democratic theory in 1868 was that a bond bearing interest and maturing at a certain date could be honorably discharged with a note bearing no interest and maturing at no certain date.

A few years later there arose in the West a new and worse form of dishonest financial mania. Pendletonism left the question of the future redemption of the greenbacks for the future to settle, but this fresh heresy objected to all promises of redemption, and advocated the issue of an immense flood of paper declared to be money by the fiat of the government and forced upon the people by legal tender enactments. This fiat money delusion took such a strong hold of the Western democratic mind that it became the dominant issue in the campaigns in nearly every State beyond the Alleghanies. The idea was to pay off the whole bonded debt with paper notes having no connection, present or prospective, with real money. It is no exaggeration to say that a large majority of the democrats in the West and South favored this rascally scheme for robbing the public creditors. After the republican party had fairly fought it down in Congress and at the elections, the democrats fell back a little, abandoned the fiat notion, and confined themselves to an attack on the resumption act. To resume at the date fixed by the law of 1875 would, they declared, be ruinous to the business interests of the country, and they tried to make it appear, as the day for resuming drew nigh, that universal bankruptcy was impending and that everything was going to the dogs. On this issue they fought two successive campaigns in the West. In Congress they were so successful that they would have swept the law off the statute-books long before it took effect, had it not been for the obstacle of the president’s veto.

Seeking always to deprive the public creditors of a portion of their just due, the democrats next started the silver craze. They resurrected an abandoned coin which had never got into general circulation and which through the depreciation of silver had come to be worth only about eighty-seven cents, and sought to compel the government to mint it in unlimited quantities and force it upon the people by a legal-tender provision. They were so far successful that their bill passed and became a law, with some modifications, however, made by republican effort, which limited the amount of silver to be manufactured into the cheap dollars. The folly of this measure is now apparent. The treasury is so burdened with silver which nobody wants that additional vaults have been constructed for its storage. If forced into circulation it will drive gold from the country and bring the paper currency down to its own value.

One idea has run through all the financial schemes that the democratic party has broached since 1867,— to dilute and cheapen the currency in order that public and private debts may be discharged in money that will not be worth what it pretends on its face to be worth. Sensible men, who have a direct interest in the stability of the currency and a patriotic interest in the honest payment of the national debt, naturally ask themselves, as a presidential election approaches, what this party, so fertile in projects for inflation and repudiation, will do if it obtains complete control of the government.

The reply of the democratic leaders is that all these notions have been outgrown. and that the party platform of 1880 favors sound money and a strict fulfillment of the nation’s obligations. This is somewhat reassuring, but what guaranty have we that some fresh financial mania, as dangerous as the old ones, will not arise, or that one of the beaten and discredited heresies of recent years will not revive ? Evidently the democratic party cannot be depended on to resist a new movement to expand and depreciate the currency, and to cheat the bond-holders. If the past furnishes any lesson, it is that the republican party is the only political organization to which people have any reason to look for sound financial legislation and administration. True, the majority of the democratic leaders in the East have steadfastly combated the cheap money schemes, but they do not control their party. They can shape a national platform with a view to carrying the close States of New York, New Jersey, and Connecticut, but when it comes to congressional action they are lost in the crowd of Western and Southern members, and have no power save when they ally themselves with the republicans.

The probability of a fresh assault on the debt and currency may be thought to be very remote by people who live in the East and do not realize how deeply rooted is the cheap-money notion in the Western mind. The surface growth has been cut down, but the roots are still alive, and will sprout again whenever there is the slightest check to business prosperity. Nor are the ignorant masses of democratic voters in the East at all trustworthy. More than once in the past they have threatened to break away from their leaders and join the Western inflationists. In 1875 the soft-money movement got such strength among the Pennsylvania democrats that it captured their state convention and adopted the Ohio platform, on which William Allen was running to his defeat. The chief danger to the present safe and honorable financial policy of the government lies, however, not in the North, but in the South. Unfortunately the Southern democrats greatly outnumber their Northern colleagues in Congress, and by the power of the caucus have obtained full control over legislation. Whatever professions they may make in a campaign, it is not human nature that they should regard as sacred the debt contracted to defeat them upon the battle-fields of the war, and to crush their slave-holding Confederacy.

Besides, they lack the keen Northern sense of financial honor. They have repudiated, or scaled down, the debts of their own States, contracted to build railroads, canals, levees, turnpikes, and public buildings, for no other reason than that they are not willing to pay the taxes necessary to meet interest obligations. Is it reasonable to suppose that these sticklers for state rights and state honor will have more regard for a debt which represents to them all the bitterness and loss of the beaten rebellion ? Every scheme for getting rid of this debt in some other way than by honestly paying it will meet with a quick welcoming response from the South. This is an ugly fact of our political situation which no prudent man can overlook. As long as there is but one party in the South, and that the party which carried on the rebellion, the care of the public debt, and of the paper currency which is a part of that debt, cannot safely be confided to an administration elected by Southern votes and supported by a Congress controlled by Southern members. This consideration has taken strong hold of the business classes throughout the North, and will have a great deal to do in determining the result of the present canvass.

Another form of currency disturbance is more directly threatened by democratic ascendency, — the destruction of the national banking system. Judging from recent state canvasses, a large majority of the democratic party is hostile to the banks. This hostility has been repeatedly expressed in state platforms in the West and South, and as lately as last year it was the dominant issue in a campaign in Ohio which brought out the largest democratic vote ever polled in that State. It would be difficult to name a prominent democrat west of the Alleghanies or south of the Potomac who has not assailed the banks in his public speeches. Misrepresentation of the system, attempts to create popular prejudice against it by picturing the banks as monopolies oppressing industry and trade, have formed a large part of the staple democratic stump oratory of recent years. The system is not a monopoly; it is free to all who choose to invest their money in it. That it is not unduly profitable is shown by the fact that capital is not withdrawn from other channels and employed to start new banks. Much of the democratic hue and cry against the banks grows out of a lingering hostility to sound money. If the bank-notes can be got out of the way and their place supplied by greenbacks, the burden of maintaining specie payments, now a divided one, will all be placed upon the treasury, and at the first financial flurry suspension will be pretty sure to come. Then there would be a fair chance for reviving the old inflation and fiat-money schemes. The banks are the chief obstacle in the way of all projects for a fluctuating and depreciated currency. As long as they possess the power of issuing notes, no pretense that the country is suffering for the want of enough currency to transact its business can be successfully set up, because it is evident that if more currency is demanded the banks will find it profitable to increase their issues. The banks afford exactly what the inflationists used to clamor for in the times before resumption, a flexible currency, self-adjusting to meet the wants of trade. But this currency is sound, stable in value, and convertible into real money, — features which make it objectionable to ragmoney advocates like Mr. Ewing, whom the democrats ran for governor of Ohio last year, and Mr. Landers, whom they are running for governor of Indiana this year. An irredeemable paper currency, regulated in volume by act of Congress, and applicable to the payment of government bonds, is the financial scheme which the men who control the democratic party still cherish. The feature of no redemption is not now generally avowed, but it is necessarily involved in the scheme, for it would be impossible for the treasury to keep seven or eight hundred million dollars of paper afloat at par with coin if a monetary crisis should come. The substitution of greenbacks for bank-notes means, therefore, the abandonment of specie payments. Business men who have given any attention to the questions of national finance know this; they know too that apart from the matter of redemption the proposed change in the currency could not be made without a serious shock to the business community. They are apprehensive that the democrats would go further than taking the circulation away from the banks, and would strike down the whole banking system, with all its safeguards and beneficial checks and balances, and throw the country back to the old system of state banks not amenable to the national authority. Such a change would be a calamity to the business interests of the country of so serious a character that its evil consequences can hardly be foretold; yet the state rights advocates of the South who are potent in shaping the legislative work of the democratic party in Congress would unquestionably make it if they had the power. They have always maintained that the constitution gives Congress no right to charter banks.

The attitude of the democratic party towards the present tariff system is still another cause for the reluctance of the business public to trust it with the administration of the government. Outside of the States largely engaged in manufacturing, the party is almost solid in its opposition to protection. In the West and South it openly favors free trade. Its national platform demands “ a tariff for revenue only,” the old phraseology of “ a tariff for revenue affording incidental protection to home industries ” having been changed to a square avowal of opposition to the protective idea. A tariff for revenue only means, of course, one with duties so adjusted as to encourage importations and thus produce a large income for the treasury. Heavy importations imply a small home production. The logical conclusion from the tariff plank of the Cincinnati platform is that the democracy intends so far to reduce duties as to enable foreigners to fill our markets with their goods, and undersell American manufacturers. Such a policy carried into practice would have the same results as did the democratic tariff legislation of 1846, — it would close hundreds of manufacturing establishments, depopulate many prosperous towns and villages in the New England and Middle States, and throw thousands of mechanics and operatives out of employment.

The existing tariff law is undoubtedly faulty in many respects ; it needs a thorough, intelligent revision, or such changes from year to year as will adapt it to the new conditions of trade and industry ; but a radical change based on the entire abandonment of the protective principle would be disastrous in its effects on the business interests of the entire North. It would involve a loss of millions of invested capital and a readjustment of labor which could be effected only at the cost of an immense amount of suffering. Even the most enthusiastic free-trade doctrinaire would hesitate to inflict all this immediate loss and misery upon the country for the sake of the theoretical probability of future benefits. He would at least consent to make only a few changes first, and to study their effects before rushing on to the full accomplishment of his ideas. But the democratic party bluntly disposes of the whole question in five words, and declares its purpose to strike down the entire complex system of protective duties at one blow.

We might dismiss the democratic tariff plank as mere political clap-trap, not likely to be carried out in legislation, were it not for the great power of the South in the democratic party. That party survived the war only because of its expectation that the rebel States would come to its support as soon as they got back into the Union, and it now exists as a national organization only by the powerful alliance of that section. Withdraw from it the electoral votes and the congressional delegations of the old slave States, and the party would not survive two years in the North. Inasmuch as the South furnishes the democracy with its vitality, it is only natural that Southern ideas should control its policy. The South has always been hostile to the protective system. Its manufactures are inconsiderable, and the bulk of its agricultural staples seeks foreign markets. A free exchange of these staples for the cheap goods of Europe is regarded as advantageous to Southern interests. A tariff which enables Northern shops and factories to control the Southern markets has been strenuously opposed ever since South Carolina’s attempt at nullification in 1832. The Southern members shape the action of Congress by means of the democratic caucus, in which they largely preponderate over the Northern democrats. Why should they hesitate now to do what was done in 1846? The protective system is peculiarly a republican institution. Inherited in its main features from the old whig party, it has been extended and strengthened during the twenty years that the republican party has been in power. For political as well as material reasons the South would gladly destroy it.

The business public is menaced with still another disturbing possibility. The Southern democrats are openly hostile to the existing system of internal taxation, which places the heaviest burdens on whisky and tobacco. The taxes on these two articles are exceedingly unpopular at the South, and there is probably no candidate for Congress now running in that section who has not pledged himself to vote for a heavy reduction, if not for their entire repeal. So intense is the dislike of the Southern people to this manner of raising revenue that the skill and courage of the treasury officials are taxed to the utmost to enforce the law against illicit distilling and illicit vending of tobacco. Skirmishes between the “ moonshiners ” and the government officers have frequently occurred in the mountain districts of the South, and many revenue officers have been assassinated. When an outlaw is killed in an encounter with the law, the sympathy of the community is invariably manifested in his favor, and the officers, though acting strictly in self-defense, escape a trial for murder only by virtue of a United States statute authorizing a transfer of cases against them to the federal courts. No revenue scheme to take the place of the tax on distilled spirits and tobacco has been proposed from any source that would entitle it to be considered as the Southern plan, but from the utterances and votes of most of the Southern members of Congress, we may fairly conclude that they desire to supply the deficiency of government income, which would arise from the repeal or reduction of these taxes, by a larger tariff revenue to be obtained by encouraging heavy importations of foreign goods. The present revenue system meets with the general approval of the North. Taxes on whisky and tobacco are regarded in all civilized countries as the best method of raising a largo revenue at small expense for collection, and with but slight burden to the productive energies of the people. If these taxes are to be abandoned, they must be replaced either by new taxes levied upon articles of necessity or by a heavier customs income, which can be obtained only by a tariff that will give foreign goods the advantage in our markets and thus cripple our manufacturing industries. Such a change as the South — which for legislative purposes is practically the democratic party — desires to make in the revenue system, even if only partially carried into effect, would seriously derange the business relations of the country.

In reply to these arguments advanced from a business stand-point by men engaged in large commercial, financial, and manufacturing undertakings, to show why the democratic party should not be put in possession of the government, it is often urged that a party grows conservative when it gets into power, and modifies its policy. This is true as a rule. Probably the democrats would be wiser than they are now if the responsibilities of shaping the policy of the nation were placed upon them. But why make the experiment ? The policy of the republican party on all questions touching business and financial interests is approved by a large majority of the men who have the greatest stake in these interests, — we might almost say of the entire business community. The best that can be said of the democrats is that they will probably not do as much mischief as they propose, and that we need not quite take them at their word. We are to put the public debt, the currency, the banking system, the tariff, and the internal revenue system into their hands in the hope that they will conclude not to do what they have been saying, for the past ten or twelve years, they would do if they ever got an opportunity.

Why take the risk ? the business man asks. What compensating benefits do the democrats offer to offset the damage they are likely to do ? Will they reduce government expenses ? No ; because they have had control of the appropriations for five years already, and after a spasmodic and injudicious effort in that direction their bills have been steadily increasing. General Garfield told them when they got control of the house that the limit of reduction would soon be reached, and that the appropriations would thereafter increase with the growth of population and the settlement of new territory, and his prediction has been exactly verified, even to the date he named as the turning-point. Will they harmonize the North and the South and put an end to sectional feeling ? By no means, for their scheme of putting the South in power, and thus justifying the rebellion, would be sure to create fresh agitation in the North, and a new sectional struggle that would not end until the ideas of the North, which are the ideas of civilization, again prevailed. Would they improve the civil service ? The mere suggestion is preposterous in view of the horde of democratic politicians waiting to seize upon the offices, and turn out the present competent, well - trained incumbents, if General Hancock is elected. In what way, then, will democratic success benefit the country ? No satisfactory answer to this question has been given.