1.4 President Grant and the Divided North, 1868–1876

By the time of the Republican national convention in 1868, the most popular man in the country was General Ulysses S. Grant, whose troops had destroyed General Robert E. Lee’s Confederate army in Virginia, effectively ending the Civil War. It was no surprise that Republicans nominated Grant on the first ballot at their convention in Chicago.

The campaign exposed the political tensions produced by the Civil War and Reconstruction. The Democrats, who met in New York on July 4, picked Horatio Seymour, former governor of New York, as their candidate. The Democratic platform blasted the Republicans for subjecting the nation, “in time of profound peace, to military despotism and negro supremacy.” The Republicans “waved the bloody shirt,” reminding northern voters of those who had died to save the Union and charging that Democrats were the party of rebellion.

Grant carried the Republicans to victory on election day, winning 214 electoral votes to Seymour’s 80 and carrying twenty-six states to Seymour’s eight. The popular vote did not match his resounding victory in the Electoral College. He won by only 306,592 votes (3,013,421 to 2,706,829). In fact, Grant’s victory was made possible by the 450,000 votes cast by the freed people in the southern states under military occupation. In Congress, the Democrats picked up a few seats, but Republicans retained their large majorities in both the House and Senate.

Grant’s success on the battlefield did not translate into effectiveness in the White House. The growth in federal power and the close relationship between government and business provided elected officials with ample opportunity for personal gain. With a few exceptions, Grant appointed greedy men who could not resist the temptation. These “spoilsmen” tainted the Grant administration with scandal. In 1869 the president’s brother-in-law joined the crafty financier Jay Gould in an effort to corner the gold market. In 1872 a congressional committee confirmed newspaper reports of widespread bribery of prominent Republican officials by Union Pacific Railroad promoters, who were trying to cover up a phony construction company called Crédit Mobilier, through which they diverted profits into their own pockets. That same year greedy congressmen pushed through a bill doubling the president’s salary and increasing the salary of congressmen by 50 percent, retroactive to 1870, thus granting each member $5,000 in back salary. The press vehemently protested the “salary grab,” and public indignation forced Congress to repeal the law in 1874.

The most dramatic scandal, which reached into the White House itself, involved the so-called Whiskey Ring, a network of large whiskey distillers and Treasury agents, led by a Grant appointee and former Union general, who defrauded the Internal Revenue Service of $4 million in taxes. Worst of all, Grant’s private secretary, Orville E. Babcock, was involved in the duplicity. There is no evidence that Grant knew about the fraud, but his poor choice of associates earned him widespread public censure.

As early as 1870 a small but vocal group of distinguished Republicans had become disaffected with Grant’s administration. These self-proclaimed “Liberal Republicans” were a mixed lot, though most were educated middle-class reformers who believed in limited government and rule by an enlightened elite. The Liberals wanted people like themselves to replace the party hacks who dominated the Grant administration. As a result, they made the creation of a civil service system, based on merit rather than political appointments, the centerpiece of their campaign.

In keeping with their belief in limited government, the Liberal Republicans also supported amnesty for all former Confederates and removal of troops from the South. Many saw the “southern question” as a distraction that enabled party spoilsmen to retain the allegiance of voters by “waving the bloody shirt,” while avoiding the more important issues of civil service reform and effective government. Reformers had abolished slavery, the Liberals argued; now it was up to African Americans themselves to make the most of their new opportunities.

In 1872 the Liberal Republicans organized a national convention and nominated Horace Greeley, the eccentric editor of the New York Tribune and a longtime champion of reform, for president. The choice stunned many veteran political observers, who believed that Greeley had little chance of beating Grant. One reporter gibed that there had been “too much brains and not enough whiskey” at the convention. Democrats, realizing they had a lot to gain by joining forces with the disaffected Liberal Republicans, overlooked their differences with the reformers and also made Greeley their nominee.

A month after Greeley’s nomination, the regular Republicans met in Philadelphia and chose Grant for reelection on the first ballot. Despite his declining popularity and new revelations of scandal, Grant was still a powerful political force, enjoying support from southern Republicans, business interests, and Radicals. Above all, he still evoked the glory of his Civil War victory at Appomattox. The Republicans adopted a platform paying lip service to civil service, but taking a strong stand in favor of political and civil rights for all citizens in every part of the country.

In the election of 1872 Grant carried thirty-one states and took 286 of the 349 electoral votes. His popular vote margin (3,596,745 to 2,843,446) was the highest since Andrew Jackson’s in 1828. But the election also revealed the extent of southern disaffection with Radical Reconstruction. In the South, the Republicans could muster only 50.1 percent of the popular vote.

Continuing revelations of corruption and persistent arguments about “the money question”—federal monetary policy—dominated Grant’s second term in office. To help finance the Civil War, Congress had issued almost $450 million in so-called greenbacks—paper currency that was not backed by either gold or silver. The inflation of the money supply led to a steep increase in prices and shook public faith in the government. When the war ended, the government proposed to call in greenbacks for payment in gold or silver.

In general, restricting the money supply hurt debtors and helped creditors. People who had borrowed money when the currency was inflated would have to repay loans when fewer dollars were in circulation. Conversely, creditors who had loaned inflated dollars would receive payment in currency worth more since there was less of it. The debate, however, was never that simple, since not everyone viewed the issue in terms of economic self-interest. Eastern business interests tended to see the debate over paper currency in religious terms: government had a moral obligation to back its currency in gold; failure to do so was sinful. In addition to fear over falling farm prices, hatred of the eastern establishment—the “money power”—drove many farmers to favor inflated money.

The conflicting and complicated views on the currency cut across party lines. Despite disagreement within his own party, Grant sided with the advocates of hard money, endorsing payment of the national debt in gold as a point of national honor. The president’s support for hard money could not have come at a worse time. In 1873 the bankruptcy of the Northern Pacific Railroad set off the Panic of 1873—a steep economic depression that lasted six years. By 1876 eighteen thousand businesses were bankrupt, and nearly 15 percent of the labor force was unemployed. In 1878 alone, more than ten thousand businesses failed. Those who managed to hold on to their jobs suffered painful wage cuts.

Many people, believing that Grant’s tight, or contracted, money policy contributed to the depression, increased their calls to print more greenbacks. In 1874 the Democrats and a handful of Republicans succeeded in passing a bill that increased the number of greenbacks in circulation, but Grant vetoed it. The following year, Republicans passed the Specie Resumption Act, which called for redeeming all greenbacks by 1879 and replacing them with certificates backed by gold. The legislation satisfied creditors, but it failed to calm the fears of small farmers and debtors, who worried that any money standard tied to gold would be too restrictive. As the nation emerged from depression in 1879, the clamor for “easy money” subsided. It would resurface more persistently in the 1890s.