U. S. Grant Presidential Library
Presidents Abraham Lincoln and Ulysses S. Grant, both of whom worked closely with George Boutwell.
Boutwell would make his mark politically while serving in Congress from 1863 to 1869, most notably in helping to write and enact the 14th and 15th amendments to the Constitution and in leading the impeachment of President Andrew Johnson. In March 1869, however, just days before Ulysses S. Grant was inaugurated as President, the President-elect pleaded with Boutwell to become his Treasury Secretary. Grant’ s first choice, the wealthy New York department store magnate Alexander T. Stewart, had been forced to withdraw over possible conflict-of-interest concerns. Grant needed a reliable Republican party ally in his cabinet, and Boutwell said yes.
When he began work at Treasury on March 11, 1869, Boutwell took command of the largest branch of the US government, responsible not only for managing fiscal, monetary and tax policy, but for overseeing the operations of the US Revenue Marine Service, the US Coast Survey, the bureaus of weights and measures, the country’ s fledgling public health service, the government’ s supervising architect and, importantly, the US Secret Service, which was tasked with combatting the widespread counterfeiting of US currency.
At the time, the country was still recovering from the economic crisis caused by four years of civil war. Hundreds of millions of dollars in paper currency had been printed from 1861-1865 to help pay for the war, but these“ greenbacks” were
now chasing too few goods and driving up prices. Boutwell’ s policy, described as“ growing up to specie,” was predicated on the natural processes of an expanding population, increased economic activity and more favorable trade balances with Europe to increase the value of paper currency relative to gold, rather than taking it out of circulation too quickly and causing economic dislocations, especially to farmers and small businessmen.
In addition, four years of Johnson’ s disastrous presidency and resulting impeachment trial— which came up one vote short of conviction— had thrown the government into disarray. To get Treasury’ s house in order, Boutwell began to institute personnel changes, common bookkeeping and accounting standards and strict controls on the printing of paper currency to prevent fraud and theft. The latter included having Treasury officials at three different printing plants in Pennsylvania to oversee the transfer of paper to be manufactured into bank notes. Such efficiencies helped increase the amount the government could apply to reducing its Civil War debt, from $ 30 million to $ 100 a million a year.
Another Boutwell innovation was the regular, well-publicized sale of US government gold reserves with which to soak up excess greenbacks and stabilize their price relative to gold. In announcing these sales through the press, Boutwell sought to minimize the risk of speculators manipulating the price of gold at a time when there were too few controls on the activities of stock and gold traders and the banks that financed them.
A spectacular example of such speculation was the Black Friday scandal of September 24, 1869. Financiers Jay Gould and“ Diamond Jim” Fisk, having previously wrested control of the Erie Railroad from Cornelius Vanderbilt, hatched a scheme to artificially drive up gold prices, buying as they went and then selling their holdings at the top of the market before prices tumbled. They thought fall would be a good time to do so, given that the harvesting of American crops would produce a shortage of the gold specie needed to buy and transport grain and foodstuffs to the East Coast and Europe.
Months earlier, Gould and Fisk had enlisted the help of President Grant’ s brother-in-law, Abel Rathbone Corbin, to help convince the President of their
Collection of Jeffrey Boutwell
This US revenue stamp from the“ Rectified Spirits Puerto Rico” series features George Boutwell, first Commissioner of Internal Revenue, and was issued from 1942 to 1957. Stamps in this series were administered by Internal Revenue agents at Puerto Rico rum distilleries, with the tax collected and forwarded to the treasurer of Puerto Rico.
so-called“ crop theory”— that allowing the price of gold to rise would benefit farmers, the railroads transporting their crops and the American economy. The only obstacle in their way was Secretary Boutwell’ s regularly scheduled sales of government gold, which acted as a brake on prices.
Gould and Fisk nearly succeeded, buying gold during the summer and pushing the price from the $ 130s to above $ 160. Only when Grant and Boutwell learned of Corbin’ s duplicity did they move quickly to announce the sale of $ 400 million in government gold that caused prices to fall back into the $ 130s. While Gould and Fisk caused considerable economic damage on Wall Street, they suffered little themselves. Gould was able to sell most of his gold at the end of the gold panic, and both men enjoyed the protection of corrupt judges controlled by Tammany Hall and William“ Boss” Tweed. Perhaps the only retribution to be had was Fisk being shot to death a few years later, at age 36, as the result of a love triangle.
Another colorful aspect of Boutwell’ s Treasury tenure was his oversight of the US Secret Service and its freewheeling director, Hiram Coombs Whitley. With a
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