The Government Debt

George S. Boutwell served as Secretary of the Treasury under Ulysses S. Grant.

Grant and the Government Debt

In the first two years of the Grant administration, with George Boutwell at the helm, Treasury expenditures had been reduced to $292 million in 1871 – down from $322 million in 1869. The cost of collecting taxes fell to 3.11% in 1871. Grant reduced the number of employees working in the government by 2,248 persons from 6,052 on March 1, 1869 to 3,804 on December 1, 1871. He also increased tax revenues by $108 million from 1869 to 1872. During his first administration, the national debt fell from $2.5 billion to $2.2 billion.

Grant's first move upon taking office was signing the Public Credit Act of 1869, which the Republican Congress had just passed. It ensured that all public debts, particularly war bonds, would be paid only in gold rather than in greenbacks. The price of gold on the New York exchange fell to $130 per ounce – the lowest point since the suspension of specie payment in 1862.

On May 19, 1869, Grant protected the wages of those working for the U.S. Government. In 1868, a law had been passed that reduced the government working day to eight hours. However, much of the law was later repealed that allowed day wages to also be reduced. To protect workers, Grant signed an executive order that "no reduction shall be made in the wages" regardless of the reduction in hours for the government day workers.

Boutwell and the Treasury

Treasury Secretary George S. Boutwell reorganized and reformed the United States Treasury. First, he discharged unnecessary employees. Second, he started sweeping changes in Bureau of Printing and Engraving to protect the currency from counterfeiters. Finally, he revitalized tax collections to hasten the collection of revenue. These changes soon led the Treasury to have a monthly surplus. By May 1869, Boutwell reduced the national debt by $12 million. By September, the national debt was reduced by $50 million, which was achieved by selling the growing gold surplus at weekly auctions for greenbacks and buying back wartime bonds with the currency.