At the time I entered the Treasury the price of gold was at about forty per cent premium and when I left the Treasury it was at about twelve per cent premium. In the summer of 1869 I entered upon the policy of selling gold and buying bonds. The sales and purchases were made by the Assistant Treasurer in New York, but the bids were reported to me and by me accepted or rejected. A leading criticism was this: It was claimed that the simple method was to buy bonds in gold and thus to secure the bonds by one transaction.
This policy would have limited the number of purchasers of gold to those who could command bonds. By the policy pursued the sales of gold were open to anyone who had money. The gold was sold for currency, and the bonds were purchased with currency. When the Treasury announced its purpose to purchase bonds the price advanced in the market. The President remarked to me jocularly that he had suffered by not knowing what the department was about to do, inasmuch as he had sold bonds a few days too early and at a price below their then present value. During my service as Secretary of the Treasury I carried two questions only to the Cabinet discussions--and I have forgotten one of the questions, but it had some political significance. The other arose in this manner: My method of negotiating the sale of new bonds under the Funding Act of July, 1870, had been severely criticized. The Government was compelled to give ninety days' notice of its purpose to redeem five-twenty bonds, and as we could not with safety make a call until we had the funds, and as our chief source was the proceeds of new bonds we could not call until a sale was made. As a consequence the Government was a loser of interest on all called bonds for the period of ninety days. I arranged with the subscribers for new bonds, that they should have the interest for the ninety days upon a deposit of old bonds as security for the new ones subscribed and taken. The Government lost nothing, and the subscribers were benefitted greatly, and thus the subscriptions were increased.
During the campaign of 1872 I had an opportunity to negotiate a new loan upon the same basis. Knowing that the proceeding would renew criticism, I thought it proper to lay the case before the President and Cabinet. Upon their advice the negotiations were suspended.