Part 71 (1/2)

”The proposition is favored by the banks generally, and it is believed that the representation of the treasury department in the clearing house will facilitate the transaction of business between the department and the banks, and I therefore respectfully suggest that application be made for the admission of the a.s.sistant treasurer in New York to the Clearing House a.s.sociation, provided it shall be found that there is no legal objection thereto.”

General Hillhouse also was strongly in favor of the plan proposed.

He said:

”The plan of going into the clearing house was proposed in correspondence with the department several years ago, as a remedy for the risk incurred in the collection of checks, and if there are no legal impediments in the way, it would very much simplify the business of the office if it could be adopted. The effect in connection with resumption would also, I think, be good, as it would place the banks and the treasury on the same footing with respect to the use of United States notes in settlements, and thus aid in maintaining them at par with gold in all the vast transactions connected with our internal trade and commerce. I have not given the question sufficient thought to speak with confidence, but it seems to me a very important one, and well worthy of careful consideration.”

A committee of the clearing house called upon me and the subject was thoroughly considered. Mr. Gilfillan wrote to General Hillhouse as follows:

”Treasury of the United States.} ”Was.h.i.+ngton, November 9, 1878. } ”Sir:--By direction of the secretary, I have the honor to request that you will submit to the Clearing House a.s.sociation of the banks of your city the following propositions, and, upon obtaining the a.s.sent of the a.s.sociation to them and communicating that fact to the department, you are expected to act in conformity with them.

”First. Hereafter, drafts drawn upon any bank represented in the Clearing House a.s.sociation in the city of New York, received by the a.s.sistant treasurer in that city, may be presented to such bank at the clearing house for payment.

”Second. Hereafter, drafts drawn on the a.s.sistant treasurer at New York may be adjusted by him at the clearing house, and the balances due from the United States may be paid at his office in United States notes or clearing house certificates.

”Third. After the 1st of January next, payment of checks presented to the a.s.sistant treasurer by any bank connected with the clearing house may be made by him in United States notes.

”Very respectfully, ”James Gilfillan, Treasurer United States.

”Hon. Thomas Hillhouse, a.s.sistant Treasurer United States, New York.”

General Hillhouse, on the 12th of November, advised me of the receipt of this letter, and that the propositions of the treasurer were referred to the Clearing House a.s.sociation, that a meeting would be held and there was little doubt but that they would be accepted.

On the same day the Clearing House a.s.sociation, fifty out of fifty- eight banks, members of the a.s.sociations, being present, unanimously adopted the following resolutions:

”_Resolved_, That in order to facilitate the payment of drafts and checks, between the treasurer of the United States and the a.s.sociated banks, the manager of the New York clearing house is authorized to make such an arrangement with the a.s.sistant treasurer as will accomplish that purpose through the medium of the clearing house.

”_Resolved_, That the reported interview between the members of the clearing house committee and the Secretary of the Treasury, with the views expressed by them to him in the paper presented to this meeting upon the subject of the restoration of specie payments, meets the cordial approbation of this a.s.sociation, and that the practical measures recommended for the adoption of the banks in respect to their treatment of coin in their business in the public, and with each other, be accepted and carried into practical operation; and, in pursuance thereof, it is hereby further

”_Resolved_, That the a.s.sociated banks of this city, after the 1st of January, 1879, will, first, decline receiving gold coins as 'special deposits,' but accept and treat them as lawful money; second, abolish special exchanges of gold checks at the clearing house; third, pay and receive balances between banks at the clearing house, either in gold or United States legal tender notes; fourth, receive silver dollars upon deposit only, under special contract to withdraw the same in kind; fifth, prohibit payments of balances at the clearing house in silver certificates, or in silver dollars, excepting as subsidiary coin, in small sums (say under $10); sixth, discontinue gold special accounts, by notice to dealers, on 1st of January next, to terminate them.

”_Resolved_, That the manager of the clearing house be requested to send copies of the proceedings of this meeting to clearing houses in other cities, with an expression of the hope that they will unite in similar measures for promoting the resumption of coin payments.”

I accepted in the following note:

”Treasury Department, } ”Was.h.i.+ngton, D. C., November 13, 1878.} ”George S. c.o.x, President American Exchange National Bank, New York.

”Sir:--Your letter of yesterday, advising me of the adoption by the Clearing House a.s.sociation of the result of our recent interview, is received with much pleasure.

”The end we all aim at, a specie standard and a redeemable currency, is greatly promoted by the judicious action of the banks, and I will, with greater confidence, do my part officially in securing the maintenance of resumption.

”John Sherman, Secretary.”

This arrangement, entered into with care, proved to be a measure of very great advantage to the government as well as to all business men engaged in the great commercial operations of New York. The necessary details to carry this agreement into effect were arranged between General Hillhouse, for the United States, and W. A. Camp, manager of the New York clearing house.

CHAPTER XXV.

INVESTIGATION OF THE NEW YORK CUSTOMHOUSE.

A General Examination of Several Ports Ordered--No Difficulty Except at New York--First Report of the Commission--President Hayes'

Recommendations--Letter of Instructions to Collector C. A. Arthur --Second Report of the Commission--Losses to the Government by Reason of Inefficiency of Employees--Various Measures of Reform Recommended--Four Other Reports Made--The President Decides on the Removal of Arthur, Cornell and Sharpe--Two Letters to R. C. McCormick on the Subject--Arthur et al. Refuse to Resign--The Senate Twice Refuses to Confirm the Men Appointed by the President to Succeed Them--Conkling's Contest Against Civil Service Reform--My Letter to Senator Allison--Final Victory of the President.

At the beginning of the administration of President Hayes, and for months previous, there had been complaints as to the conduct of business in the princ.i.p.al customhouses of the United States. This was especially called to my attention, and at my suggestion the President directed an examination into the conduct of the customhouses at New York, Philadelphia, New Orleans, San Francisco and perhaps other ports. Examinations were made by intelligent business men selected in the various ports, and full reports were made by them, and printed as public doc.u.ments. Many changes were made, and reforms adopted, founded upon these reports, and there was no difficulty except only at the port of New York, where more than two-thirds of all the customs revenue was collected. Chester A.

Arthur was then collector of the port, A. B. Cornell was naval officer, and George H. Sharpe was appraiser.