promise that had
been made when the Government was a large borrower of money and when
its credit was depreciated, seriously, in all the markets of the
world. In my first annual report, December, 1869, I advised Congress
of my action and I recommended the application of the bonds that I had
then purchased, amounting to about fifty-four million dollars, to the
Sinking Fund, until the deficiency then existing had been met. The
step that I then took was taken in obedience to the law, and not
from any great faith in the wisdom of the Sinking Fund policy, nor was
it from any fear that the Government could not pay its debts whether
a Sinking Fund was or was not created.

The faith of the Government had been pledged to a particular policy and
I thought that the observance of that policy was both wise and just. A
government cannot afford to disregard the terms of its undertakings
even if a violation or neglect does not work harm to anyone. The
payments to the Sinking Fund were made regularly during General Grant's
administration, and the credit of the Government was thereby somewhat
strengthened. The chief element of strength was in the fact that the
payments were such as to astonish the heavily taxed and debt burdened
States of Europe. In my four years of service as the head of the
Treasury the payments on the debt reached the enormous sum of three
hundred and sixty-four million dollars. No one of my successors has
paid an equal amount, nor has an equal amount been paid in any other
equal period of time by the United States or by any other government.

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
Presi