The Second Term Curse: Ulysses Grant's Second Term
After Abraham Lincoln died, the most popular man in the Union (outside of the former Confederate states) was General Ulysses Grant. After Lincoln was assassinated, Grant continued his service under Lincoln's successor President Andrew Johnson. Grant became disillusioned by Johnson's approach to Reconstruction, Grant received support from the "Radical" Republicans. In 1868 Grant was elected to be the youngest 19th Century president. In his first term he Grant stabilized the post-war national economy, created the Department of Justice, and prosecuted the Ku Klux Klan. He also appointed African-Americans and Jewish-Americans to prominent federal offices and in 1871, Grant created the first Civil Service Commission.
Midway through his first term, Grant experienced some difficulty in maintaining party unity. Although Grant had implemented some civil service reforms, some in in party questioned his commitment to reform. In New York, state Republicans under the leadership of Senator Roscoe Conkling controlled the lucrative New York Customs House, using it as means of rewarding supporters and raising party funds by demanding donations from those given jobs. In March 1871, Senator Carl Schurz of Missouri and General Jacob D. Cox, Grant's former Secretary of Interior, led a schism in which one hundred Republicans in Cincinnati broke from the party and formed what became the Liberal Republican Party. They were committed to more aggressive civil service reform, as well as low tariffs. They denounced the corruption within the administration and demanded the withdrawal of federal troops from the South. The Liberals nominated Horace Greeley, a leading Republican New York Tribune editor and a fierce enemy of Grant, for president. Weakened from their position during the civil war, the Democrats adopted the Greeley ticket and the Liberals party platform. Republicans borrowed from the Liberals party platform. They called for lowered tariffs and greater civil service reform. Grant won reelection easily. He received 3.6 million votes (55.6%) votes to Greeley's 2.8 million votes and an Electoral College landslide of 286 to 66. Grant was sworn in for his second term by Salmon P. Chase on March 4, 1873.
In his second inaugural address, Grant reiterated his commitment to freedom and fairness for all Americans, and stressed the benefits of citizenship for freed slaves. But his second term would encounter problems in other areas that would divert energy from his civil rights agenda. The foremost of these was what became known as the Panic of 1873. Grant had wanted to promote a strong US dollar. He signed into law the Coinage Act of 1873, which ended the legal basis for bimetallism (the use of both silver and gold as money), and established the gold standard. The Coinage Act discontinued the standard silver dollar and established the gold dollar as the sole monetary standard. Problems arose when the gold supply did not increase as quickly as the population, resulting in currency deflation. Silverites (those who wanted the country to be on the Silver standard) wanted more money in circulation to raise the prices that farmers received. They denounced the Coinage Act, calling it the "Crime of 1873". They argued that the deflation made debts more burdensome for farmers.
More economic problems plagued Grant's second term. In September 1873, Jay Cooke & Company, a New York brokerage house, collapsed after it failed to sell all of the bonds issued by Cooke's Northern Pacific Railway. The collapse rippled through Wall Street, and other banks. Brokerages that owned railroad stocks and bonds were also ruined. On September 20, the New York Stock Exchange suspended trading for ten days. Grant traveled to New York to consult leading businessmen and bankers for advice on how to resolve the crisis. Grant believed that the Panic of 1873 was only an economic fluctuation that affected bankers and brokers. He instructed the Treasury to buy $10 million in government bonds, in order to inject cash into the system. The purchases curbed the panic on Wall Street, but an industrial depression struck the nation. Eight-nine of the nation's railroads went bankrupt.
Congress hoped inflation would stimulate the economy. They passed what became known as the "Inflation Bill" in 1874. Many farmers and workingmen favored the bill, which proposed adding $64 million in greenbacks to circulation. Eastern bankers opposed it because it would have weakened the dollar. Grant believed the bill would destroy the credit of the nation, and he vetoed the bill. Grant then pushed Congress to pass a bill to further strengthen the dollar by gradually reducing the number of greenbacks in circulation. When the Democrats gained a majority in the House after the 1874 elections, the lame-duck Republican Congress did so before the Democrats took office. On January 14, 1875, Grant signed the Specie Payment Resumption Act, which required gradual reduction of the number of greenbacks allowed to circulate and declared that they would be redeemed for gold beginning on January 1, 1879.
The other issue that plagued Grant's presidency in his second term concerned widespread corruption in government offices. Many of Grant's executive departments were investigated by Congress. Grant often trusted his former wartime comrades and stubbornly defended cabinet members and appointees involved in corruption.
Grant's appointed New York Collector Thomas Murphy, an ally of Roscoe Conkling, resigned from office prior to the 1872 election. Murphy had created a corrupt profiteering ring at the New York Custom House. Grant appointed Chester A. Arthur, another Conkling man, to replace Murphy, and administration of the Customs House steadily improved. Pressured by an 1872 Congressional investigation, Grant ordered prosecutions of men involved in the bribery scandal. Grant's reputation was damaged by being associated with Conkling's patronage machine. On March 3, 1873, Grant signed a bill that increased pay for federal employees. It was called the "Salary Grab Act" by Grant's enemies and Congress repealed the law later that year, although but Grant was allowed to keep the President's doubled $50,000 annual salary. By the end of 1873, public confidence in government rule and Congress had reached its lowest point.
Scandals escalated in Grant's second term. Grant appointed Benjamin Helm Bristow, a man known for his honesty, as Treasury Secretary. He began a series of reforms in the department. Bristow's anti-corruption house cleaning discovered another scandal in 1875. Under the Bristow's direction, an investigation uncovered the notorious Whiskey Ring that involved collusion between distillers and Treasury officials to evade paying the Treasury millions in tax revenues. Much of this money was being pocketed while some of it went into Republican Party coffers. Bristow informed Grant of the ring in mid-April and in May, at Bristow's instruction, Federal marshals raided 32 installations nationwide and arrested 350 men. 176 indictments were obtained, leading to 110 convictions and $3,150,000 in fines returned to the Treasury.
Grant appointed David Dyer as federal attorney to prosecute the Ring in St. Louis. Among those indicted were Grant's old friend General John McDonald, supervisor of Internal Revenue. Grant wrote to Bristow, "Let no guilty man escape". Bristow's investigation discovered that Grant's former aide, General Orville Babcock, had received kickback payments, and that Babcock had secretly forewarned McDonald, the ring's mastermind boss, of the coming investigation. On November 22, 1875, the jury convicted McDonald. On December 9, Babcock was indicted. Grant refused to believe in Babcock's guilt, was ready to testify in Babcock's favor, but Secretary of State Hamilton Fish warned Grant that doing so would put Grant in the embarrassing position of testifying against a case prosecuted by his own administration. Grant remained in Washington and on February 12, 1876, gave a deposition in Babcock's defense, expressing that his confidence in his secretary was "unshaken". Grant's testimony likely helped bring about the jury's acquittal of Babcock. Babcock kept his position of Superintendent of Public Buildings in Washington.
The Interior Department under Secretary Columbus Delano was also rife with fraud and corrupt agents. Delano was later forced to resign after it was discovered that Surveyor General Silas Reed had set up corrupt contracts that benefited Delano's son, John Delano. Grant's Secretary Interior Zachariah Chandler, who succeeded Delano in 1875, cleaned up corruption and reformed the department. When Grant was informed by Postmaster Marshall Jewell of a potential Congressional investigation into an extortion scandal involving Attorney General George H. Williams' wife, Grant fired Williams and appointed Edwards Pierrepont in his place.
When the Democrats took control of the House in 1875, they launched a series of investigations into corruption in federal departments.[474] Among the most damaging was the Indian Ring scandal, which involved Secretary of War William W. Belknap taking quarterly kickbacks from the Fort Sill tradership. This led to Belknap's resignation in February 1876. Belknap was impeached by the House, but was acquitted by the Senate. Grant brother Orvil set up "silent partnerships" and received kickbacks from four trading posts. Congress also discovered that Secretary of Navy Robeson had been bribed by a naval contractor, but no articles of impeachment were drawn up against him. In November 1876, Grant apologized to the nation and admitted mistakes in his administration, saying, "Failures have been errors of judgement, not of intent."
The collected scandals of his presidency, the country's weak economy, and the Democratic gains in the House led many in the Republican party to distance themselves from Grant. They feared that Grant would run for a third term. Ultimately, Grant declined to run. The 1876 Republican convention settled on Ohio Governor Rutherford B. Hayes of Ohio, a reformer. This led to the most controversial election in US history.
Midway through his first term, Grant experienced some difficulty in maintaining party unity. Although Grant had implemented some civil service reforms, some in in party questioned his commitment to reform. In New York, state Republicans under the leadership of Senator Roscoe Conkling controlled the lucrative New York Customs House, using it as means of rewarding supporters and raising party funds by demanding donations from those given jobs. In March 1871, Senator Carl Schurz of Missouri and General Jacob D. Cox, Grant's former Secretary of Interior, led a schism in which one hundred Republicans in Cincinnati broke from the party and formed what became the Liberal Republican Party. They were committed to more aggressive civil service reform, as well as low tariffs. They denounced the corruption within the administration and demanded the withdrawal of federal troops from the South. The Liberals nominated Horace Greeley, a leading Republican New York Tribune editor and a fierce enemy of Grant, for president. Weakened from their position during the civil war, the Democrats adopted the Greeley ticket and the Liberals party platform. Republicans borrowed from the Liberals party platform. They called for lowered tariffs and greater civil service reform. Grant won reelection easily. He received 3.6 million votes (55.6%) votes to Greeley's 2.8 million votes and an Electoral College landslide of 286 to 66. Grant was sworn in for his second term by Salmon P. Chase on March 4, 1873.
In his second inaugural address, Grant reiterated his commitment to freedom and fairness for all Americans, and stressed the benefits of citizenship for freed slaves. But his second term would encounter problems in other areas that would divert energy from his civil rights agenda. The foremost of these was what became known as the Panic of 1873. Grant had wanted to promote a strong US dollar. He signed into law the Coinage Act of 1873, which ended the legal basis for bimetallism (the use of both silver and gold as money), and established the gold standard. The Coinage Act discontinued the standard silver dollar and established the gold dollar as the sole monetary standard. Problems arose when the gold supply did not increase as quickly as the population, resulting in currency deflation. Silverites (those who wanted the country to be on the Silver standard) wanted more money in circulation to raise the prices that farmers received. They denounced the Coinage Act, calling it the "Crime of 1873". They argued that the deflation made debts more burdensome for farmers.
More economic problems plagued Grant's second term. In September 1873, Jay Cooke & Company, a New York brokerage house, collapsed after it failed to sell all of the bonds issued by Cooke's Northern Pacific Railway. The collapse rippled through Wall Street, and other banks. Brokerages that owned railroad stocks and bonds were also ruined. On September 20, the New York Stock Exchange suspended trading for ten days. Grant traveled to New York to consult leading businessmen and bankers for advice on how to resolve the crisis. Grant believed that the Panic of 1873 was only an economic fluctuation that affected bankers and brokers. He instructed the Treasury to buy $10 million in government bonds, in order to inject cash into the system. The purchases curbed the panic on Wall Street, but an industrial depression struck the nation. Eight-nine of the nation's railroads went bankrupt.
Congress hoped inflation would stimulate the economy. They passed what became known as the "Inflation Bill" in 1874. Many farmers and workingmen favored the bill, which proposed adding $64 million in greenbacks to circulation. Eastern bankers opposed it because it would have weakened the dollar. Grant believed the bill would destroy the credit of the nation, and he vetoed the bill. Grant then pushed Congress to pass a bill to further strengthen the dollar by gradually reducing the number of greenbacks in circulation. When the Democrats gained a majority in the House after the 1874 elections, the lame-duck Republican Congress did so before the Democrats took office. On January 14, 1875, Grant signed the Specie Payment Resumption Act, which required gradual reduction of the number of greenbacks allowed to circulate and declared that they would be redeemed for gold beginning on January 1, 1879.
The other issue that plagued Grant's presidency in his second term concerned widespread corruption in government offices. Many of Grant's executive departments were investigated by Congress. Grant often trusted his former wartime comrades and stubbornly defended cabinet members and appointees involved in corruption.
Grant's appointed New York Collector Thomas Murphy, an ally of Roscoe Conkling, resigned from office prior to the 1872 election. Murphy had created a corrupt profiteering ring at the New York Custom House. Grant appointed Chester A. Arthur, another Conkling man, to replace Murphy, and administration of the Customs House steadily improved. Pressured by an 1872 Congressional investigation, Grant ordered prosecutions of men involved in the bribery scandal. Grant's reputation was damaged by being associated with Conkling's patronage machine. On March 3, 1873, Grant signed a bill that increased pay for federal employees. It was called the "Salary Grab Act" by Grant's enemies and Congress repealed the law later that year, although but Grant was allowed to keep the President's doubled $50,000 annual salary. By the end of 1873, public confidence in government rule and Congress had reached its lowest point.
Scandals escalated in Grant's second term. Grant appointed Benjamin Helm Bristow, a man known for his honesty, as Treasury Secretary. He began a series of reforms in the department. Bristow's anti-corruption house cleaning discovered another scandal in 1875. Under the Bristow's direction, an investigation uncovered the notorious Whiskey Ring that involved collusion between distillers and Treasury officials to evade paying the Treasury millions in tax revenues. Much of this money was being pocketed while some of it went into Republican Party coffers. Bristow informed Grant of the ring in mid-April and in May, at Bristow's instruction, Federal marshals raided 32 installations nationwide and arrested 350 men. 176 indictments were obtained, leading to 110 convictions and $3,150,000 in fines returned to the Treasury.
Grant appointed David Dyer as federal attorney to prosecute the Ring in St. Louis. Among those indicted were Grant's old friend General John McDonald, supervisor of Internal Revenue. Grant wrote to Bristow, "Let no guilty man escape". Bristow's investigation discovered that Grant's former aide, General Orville Babcock, had received kickback payments, and that Babcock had secretly forewarned McDonald, the ring's mastermind boss, of the coming investigation. On November 22, 1875, the jury convicted McDonald. On December 9, Babcock was indicted. Grant refused to believe in Babcock's guilt, was ready to testify in Babcock's favor, but Secretary of State Hamilton Fish warned Grant that doing so would put Grant in the embarrassing position of testifying against a case prosecuted by his own administration. Grant remained in Washington and on February 12, 1876, gave a deposition in Babcock's defense, expressing that his confidence in his secretary was "unshaken". Grant's testimony likely helped bring about the jury's acquittal of Babcock. Babcock kept his position of Superintendent of Public Buildings in Washington.
The Interior Department under Secretary Columbus Delano was also rife with fraud and corrupt agents. Delano was later forced to resign after it was discovered that Surveyor General Silas Reed had set up corrupt contracts that benefited Delano's son, John Delano. Grant's Secretary Interior Zachariah Chandler, who succeeded Delano in 1875, cleaned up corruption and reformed the department. When Grant was informed by Postmaster Marshall Jewell of a potential Congressional investigation into an extortion scandal involving Attorney General George H. Williams' wife, Grant fired Williams and appointed Edwards Pierrepont in his place.
When the Democrats took control of the House in 1875, they launched a series of investigations into corruption in federal departments.[474] Among the most damaging was the Indian Ring scandal, which involved Secretary of War William W. Belknap taking quarterly kickbacks from the Fort Sill tradership. This led to Belknap's resignation in February 1876. Belknap was impeached by the House, but was acquitted by the Senate. Grant brother Orvil set up "silent partnerships" and received kickbacks from four trading posts. Congress also discovered that Secretary of Navy Robeson had been bribed by a naval contractor, but no articles of impeachment were drawn up against him. In November 1876, Grant apologized to the nation and admitted mistakes in his administration, saying, "Failures have been errors of judgement, not of intent."
The collected scandals of his presidency, the country's weak economy, and the Democratic gains in the House led many in the Republican party to distance themselves from Grant. They feared that Grant would run for a third term. Ultimately, Grant declined to run. The 1876 Republican convention settled on Ohio Governor Rutherford B. Hayes of Ohio, a reformer. This led to the most controversial election in US history.