Delivered on March 5—since March 4 was a Sunday—Rutherford B. Hayes’s inaugural address tried to calm the nation and make clear his main policy concerns. According to the new President, “The fact that two great political parties have in this way settled a dispute in regard to which good men differ as to the facts and the law . . . is an occasion for general rejoicing.” Above all, Hayes wished to heal the wounds left by the Civil War: "Let me assure my countrymen of the southern states that it is my earnest desire to regard and promote their truest interest, the interests of the white and of the colored people both and equally and to put forth my best efforts in behalf of a civil policy which will forever wipe out in our political affairs the color line and the distinction between North and South, to the end that we may have not merely a united North or a united South, but a united country."

Hayes wanted the South to have "wise, honest, and peaceful local self-government" but insisted that the interests of blacks and whites be guarded equally. Above all, that meant that southern states must obey the Reconstruction amendments guaranteeing civil and voting rights. Hayes emphasized that the schoolhouse, not the railroad station, was the key to political stability and to economic prosperity in the South and elsewhere. He therefore did not ask for railroad subsidies but did call for federal aid for education, observing that "universal suffrage should rest upon universal education."

In addition to the disputed election and the South, Hayes addressed the problem of the depressed economy by returning to the gold standard. As for the possibility of disputes with foreign powers, he embraced arbitration as Grant had with Great Britain in the 1871 Treaty of Washington. He also dealt with the problem of corruption by advocating a "thorough, radical, and complete" reform of the civil service. Although Hayes realized he was elected by the "zealous labors of a political party," he reminded himself, in his most memorable words, "that he serves his party best who serves his country best." 

Although Republican members of Congress universally supported Hayes while the election was in dispute, several party leaders quickly became angered by his independence. In choosing his cabinet, Hayes ignored and offended leading Republican senators. He not only failed to appoint the political lieutenants of Blaine, Simon Cameron, and Roscoe Conkling, but he also named William M. Evarts (who challenged Conkling's control of New York Republicans) as secretary of state, Carl Schurz (who bolted the Republican Party to oppose Grant in 1872) as secretary of the interior, and David M. Key (who had been a Confederate and was a Democrat) as postmaster general. Hayes's appointment of Key was both a gesture of reconciliation and an attempt to attract white southern moderates to the Republican Party—a project that largely failed. Influential Republican Party leaders were enraged, but Hayes's demonstration that he was beholden to no one increased his credibility among reform-minded members of the GOP.

End of Reconstruction

The most difficult problem facing the nation, however, could not be postponed. While in Congress, Hayes had supported the radical Reconstruction of the former Confederate states on the basis of universal male suffrage enforced by the military occupation of the South. As governor of Ohio, he had fought successfully for passage of the 15th Amendment, eliminating race as a qualification for voting. Initially, the Republican Party, supported by blacks and a few whites, dominated southern state governments. 

Gradually, however, the Democratic Party, by playing the race card and resorting to terrorist violence (with the Ku Klux Klan playing a central role), gained control of state governments. By Election Day 1876, only Florida, Louisiana, and South Carolina had Republican governments, and those were hanging on by a thread. But on December 14, 1876, the Florida Supreme Court reversed the work of the state returning board and allowed the Democrats to take control of Florida on January 1, 1877. By the time Hayes took office, Reconstruction had already ended in the entire South except in Louisiana and South Carolina, and in those states, extra-legal Democratic governments challenged the authority of the legitimate Republican governments. The Republican control was limited to small areas surrounding state houses in the capitals of New Orleans and Columbia, protected by small detachments of federal troops.

Reinforcing these Republican enclaves was not a viable option for Hayes even if he were so inclined. The 25,000-man U.S. Army was primarily deployed in the West in campaigns against Native Americans, and few troops were available. The Democratic House of Representatives had already refused to appropriate money to pay the Army as long as detachments protected Republican governments in the South. Hayes's mandate, to say the least, was shaky. All Democrats opposed military occupation, and a large number of Republicans—including Hayes—had come to the conclusion that rule by the bayonet was counterproductive. Most northern whites were preoccupied with the economic problems of unemployment and falling farm prices during the extended depression and were less concerned about violent acts of white southerners against blacks than they had been in the past. " 

The main question that Hayes faced, then, was not whether the troops should be removed but when they would be removed. Hayes continued to be guided by what he said in his acceptance letter and reiterated in his inaugural address. He would be willing to remove the troops upholding Republican governments in Louisiana and South Carolina if leading Democrats in those states pledged to uphold the civil and voting rights of black and white Republicans. The Democratic governments made those pledges, Hayes removed the troops, leading a former attorney general in the Grant administration to to caustically comment that Hayes had rewarded “lawlessness by letting the lawless have their way.”  

And then inevitably, white southerners soon broke their promises. Over the next two decades, southern blacks were systematically disfranchised through poll taxes, literacy tests, intimidation, and violence until virtually none could vote—a situation that persisted well into the 20th century. Hayes did protest—although, in the end ineffectually. He bitterly complained in his diary, for example, about the fraud, intimidation, and “violence of the most atrocious character” that white southerners used to win elections in 1878. And he used his presidential veto multiple times to try to preserve some element of federal oversight over African American voting.  

Still, the Democratic Party was ultimately able to effectively use  racism to appeal to southern whites. Meanwhile, Republican Party hopes of winning moderates quickly evaporated. The color line prevailed, with racism keeping virtually all southern whites in the Democratic Party for decades (with a brief challenge from the Populists toward the end of the century).

The Great Strike of 1877

The depressed economy stagnated business, cut farm income, and had a devastating effect on labor. Less than three months after Hayes removed the troops in New Orleans, a general strike (the most widespread in American history) broke out in mid-July on trunk-line railroads between the northeastern seaboard and the Midwest. Wage cuts, on top of earlier reductions, led to the Great Strike of 1877, which began spontaneously on the Baltimore & Ohio (B&O) and quickly spread to other lines. Virtually none of the strikers were organized in any labor union, and the strike grew without any leaders or organizations in control. Unemployed men and boys joined the strikers, and rioting broke out at many locales, especially in Baltimore and Pittsburgh. 

In Baltimore, men and boys stoned the Maryland militia, which opened fire, killing ten. An angry crowd of 15,000 gathered outside the B&O depot where the militia, police, the mayor, the governor, and railroad officials were inside. The rebellious workers proceeded to burn passenger cars and part of the depot. In Pittsburgh, state officials called in the First Division of the Pennsylvania National Guard from Philadelphia to disperse the thousands blocking the departure of Pennsylvania Railroad freight trains. (The strikers allowed passenger trains with mail cars attached to depart on schedule.) The militia from Philadelphia dispersed the masses temporarily by killing ten to twenty people and then retired to a nearby locomotive roundhouse. Outraged strikers besieged the Philadelphia guardsmen and burned them out, killing five as they fled Pittsburgh. The crowd then destroyed 104 locomotives, 2,152 railroad cars, and innumerable buildings.

Tom Scott, president of the Pennsylvania Railroad, and many other business owners urged Hayes to use federal troops to suppress the strike. Federal troops had never before been deployed in states in a labor dispute, and Hayes and his cabinet rejected Scott's plea to intervene directly on the side of railroad management, but Hayes sent troops to, he claimed, preserve order. To be sure, Hayes played only the most minor of roles in breaking the Great Strike of 1877. He used the Army not to operate trains but to put down “insurrectionary proceedings.” Furthermore, even though as governor he had become accustomed to sending in troops on the side of business owners during strikes, in 1877 he did so only when state and local authorities who claimed that they could no longer cope with riots legally requested help. When, for example, railroad management said that they were unable to transport the mail, Hayes refused to intervene to get it through. 

The huge disorganized strike was over by the end of the month, but the railroads had won a Pyrrhic victory. Workers gained more than they lost by fighting the wage cuts. The public tended to blame the railroads for the appalling conditions that caused the strike. The railroads attempted no further cuts, and although severe labor conflict would continue through the Gilded Age, by early 1880 they had restored the cuts that precipitated the strike. That said: even though Hayes clear intent was to preserve order, and not to break the strike, he ended up setting a strong precedent for using federal soldiers to intervene on the side of business during mass strikes—a precedent that Gilded Age Presidents would invoke consistently over the next two decades. 

Money and the Economy

During the Civil War, the national debt had increased by a staggering 4,000 percent. Much of the conflict had been financed by long-term bonds that committed the government to repay investors the principal with substantial interest. When money could not be raised, the government paid for the war by printing "greenbacks," fiat paper money not directly backed by specie (gold or silver). Reflecting the perceived willingness or capacity of the federal government, at some future date, to redeem greenbacks in gold, their value dropped below par and fluctuated, bringing gold out of circulation and the United States off the gold standard.

Advocates of inflation (usually midwestern and southern farmers and businessmen who were in debt) wished to increase the number of greenbacks in circulation while creditors (often northeasterners whose banks provided them with an adequate money supply and who would profit from deflation) wished to return to the stability of the gold standard and redeem greenbacks at face value. The hard money (gold) advocates tended to see this conflict in moral rather than in economic terms, as a struggle between honest and dishonest money. Those who favored soft money spoke in terms of justice for the so-called producing classes. 

Hayes, although a debtor himself (thanks to large investments in real estate) advocated hard money and believed the depression following the Panic of 1873 was aggravated by the threat of inflation that greenbacks represented. He wholeheartedly supported the 1875 Specie Resumption Act and, along with Secretary of the Treasury John Sherman, carefully built up the federal government's gold supply to redeem greenbacks by January 1, 1879. Because of Hayes's resolution and preparation, greenbacks circulated at face value in gold by mid-December 1878. As a sign of the success of his policy, by January 1879, more gold was exchanged for the convenient paper greenbacks than greenbacks were redeemed for heavy gold coins.

While Hayes and Sherman were preparing to return the United States to the gold standard, inflationists were shifting their support from the printing of greenbacks to the free (unlimited) coinage of silver at the ratio of 16 parts of silver to one part of gold. Since one part of gold was worth more than sixteen parts of silver, the silver coins would drive gold coins out of circulation and keep the United States off the gold standard. Under great pressure from soft money proponents and western silver miners, in 1878 Congress passed, with votes from both parties, the compromise Bland-Allison Act over Hayes's veto. This act required the secretary of the treasury to purchase at the market price $2 to $4 million of silver each month and mint that silver into dollars. 

Hayes saw to it that the Bland-Allison Act did not have an inflationary effect. Sherman purchased the minimum $2 million of silver and redeemed silver dollars in gold coin upon request, and the United States went on the gold standard as scheduled. As Hayes predicted, prosperity returned with the return to the gold standard. Indeed, an impressive revival of business marked the last two years of Hayes's presidency. No doubt, Hayes was lucky that the business cycle swung upward while he was President. Yet the stability and the predictability his policies provided enabled businessmen to calculate the costs of their future moves with a greater degree of accuracy, contributing to the economic recovery.

Fighting for Civil Service Reform

Hayes substantially ruffled the feathers of Republican Party leaders by attempting to reform the nation's civil service. Government employees, especially those in the field service outside Washington, were appointed as much or more for their competence as political operatives than for their capacity as postmasters or revenue collectors. Civil servants were efficient political organizers but often neglected their official duties; they had an incentive to engage in corruption for the sake of party or personal financial gain. 

Local, state, and federal politicians assessed from 2 to 7 percent of all civil servants' yearly salaries to finance election campaign. These assessments of civil servants’ salaries were actually more important than corruption as a source of party revenues. Those in lucrative positions (the legitimate fees collected by some officers exceeded Hayes's salary) paid more. Some chose to recoup their assessment—and even more—by accepting unlawful gratuities and bribes.

Moderate by nature, Hayes moved with caution and annoyed reformers who wanted sweeping changes while also infuriating spoilsmen who wanted no reform. On June 22, 1877, Hayes issued an executive order prohibiting political assessments and forbidding civil servants to manage political parties, conventions, and campaigns. Hayes wanted to depoliticize the civil service, but at the same time, he did not want to destroy Republican Party organizations. Several Republican Party leaders in Congress, however, believed he was destroying their organizations and ignored his order.

The lieutenants of Senator Roscoe Conkling of New York were the most conspicuous in flouting Hayes's order. Chester A. Arthur, the collector of the Port of New York, ran the New York Customhouse, which collected 70 percent of the nation's revenue and was the largest federal office in the land. With Conkling's approval, Arthur (who was a reasonably efficient administrator and would later become the twenty-first President of the United States) kept the customhouse in politics. 

Hayes wanted his order obeyed and decided to remove Arthur and his second in command. Hayes also wanted to reduce Conkling's political power; Conkling had been a rival for the nomination in 1876 and opposed Hayes's appointment of his political enemy, Evarts, to the cabinet. In addition, since the New York customhouse was so conspicuous, striking a blow there for reform would be an important symbolic act and, if reform had any merit, would have a practical effect on government service.

Hayes confronted Conkling in an era when the legislative branch wielded more power than the executive branch, and Congressmen routinely decided on civil service appointments in their home states and districts. He tried to replace Arthur with Theodore Roosevelt, Sr., but Conkling rallied spoils-minded senators and blocked Roosevelt's confirmation by invoking "the courtesy of the Senate" (the notion that senators could dictate field appointments). Hayes bided his time, and seven months later, on July 11, 1878, with Congress not in session, he suspended Arthur and replaced him with Edwin A. Merritt (Roosevelt had died) and named Silas W. Burt (an ardent reformer) as the second in command at the customhouse. 

When the Senate reconvened in January 1879, Conkling again attempted to block Hayes's nominees. Hayes attacked, stating that the customhouse should be conducted on business principles and that Arthur and his men made it "a center of partisan political management." Although most Republican senators sided with Conkling, enough joined the Democrats (who were delighted by Republican divisiveness) to make Hayes victorious. Hayes insisted that the New York customhouse become a showplace for reform, giving Burt that responsibility. The customhouse was removed from politics, and appointments were made based on merit, following open competitive examinations. The success of this initiative was a major factor in the passage of the Pendleton Civil Service Reform Act of 1883, two years following Hayes's departure from office and a major triumph for those pushing for the reform of the notorious corruption of Gilded Age politics.

Enhancing the Power of the President

In further struggle with Conkling and his cohorts in the Senate, Hayes regained the President's constitutional power over appointments. By the end of his administration, congressmen and senators could suggest whom they thought should be nominated for federal jobs at home, but they could not dictate appointments to the President. 

A more significant constitutional struggle occurred during the second half of Hayes's term in office. The Democrats won control of both houses of Congress in the 1878 elections. With the capacity to pass whatever appropriations bills they desired, the Democrats moved to force unwanted laws on Hayes by attaching legislation (called riders) to necessary money bills. With these riders, Democrats attacked the Enforcement Acts that allowed federal troops to protect polls and voters. These laws were passed to protect the civil and voting rights of blacks in the South and to prevent fraud in northern cities. 

More fundamentally, the Democrats sought to use those riders to destroy the veto power of the President. They wanted to be able to intimidate black voters and to enable their city machines to cheat with no interference from the federal government in local, state, congressional, and presidential elections. They believed that repealing the election laws would bring them the presidency in 1880. In the ensuing "Battle of the Riders," Hayes relished the thought of combat once again, eagerly confronting the Democratic Congress.

Outraged by the rider tactic, Hayes called it "unconstitutional and revolutionary." Congress had used riders since the days of Andrew Jackson, but they seldom affected major issues. Hayes believed that the federal government had a duty to protect the rights of citizens at national elections and that as President, he had a duty to prevent Congress from usurping his power to share in legislation. In April, May, and June, Congress passed appropriations bills with riders attached that Hayes promptly vetoed on two grounds: one, that every citizen has the right "to cast one unintimidated ballot and to have his ballot honestly counted," and two, that the riders were an unconstitutional attempt to force legislation on the President. 

The Democrats did not have the strength to muster a two-thirds majority to override the vetoes, and Hayes's stirring veto messages (all of which he wrote himself) rallied public opinion and Republicans of all stripes to his side. The Democratic threat to shut down the government if they did not get their way failed miserably, and so they gave up and passed the necessary money bills. Rather than pave the way for Democrats winning the White House, these tactics instead united Republicans, who moved on to victory in 1880.

Treatment of Native Americans

Hayes's Native American policy fell within the overall spectrum of dominant white views but flowed out of assimilationist paternalism rather than the common impulse of extermination. In the late 19th century, the thrust of American policy and practice continued to be the removal of Native Americans from their lands. As Hayes himself declared in 1880 in front of an Oregon Indian school: “We have displaced them and are now completing that work.” Another Hayes quotation is, however, also quite telling: “many, if not most, of our Indian wars have had their origins in broken promises and acts of injustice on our part.”

Under Hayes, the federal government did appropriate several million dollars annually to support Native Americans who had been forced off their lands and on to unsustainable reservations,. And in line with Hayes’s spirit of clean government, his secretary of the interior, Carl Schurz, sought limited reforms in the Indian Bureau, the agency in his department that administered policies affecting Native Americans. In particular, Schurz cleaned out a ring within the bureau that had received gifts from contractors and was defrauding both the Native Americans and the government.

Despite that beginning, the removal of both the Nez Perce from their ancestral lands in eastern Oregon and of the Ponca from their reserve along the Missouri River in the Dakota Territory had tragic consequences. Both of these removals had been decided upon during the Grant administration and were carried out during the first three months of Hayes's term. The eviction of the Nez Perce from the Wallowa Valley led to a war that lasted from June to October 1877, during which time the Nez Perce out-maneuvered and out-fought the U.S. Army on a 1,700-mile retreat before they were forced to surrender in Montana just south of the Canadian border. The federal government sent the surviving Nez Perce to the Indian Territory (present day Oklahoma).

The Ponca, who did not resist, were also sent to the Indian Territory and would have been largely forgotten by whites had not one of their chiefs, Standing Bear, tried to return to Dakota on foot in the winter with the corpse of his son, in hope of burying him with his forebears. Standing Bear was arrested in Nebraska, but his plight aroused enormous sympathy in the Northeast and sparked an Indian-rights movement that opposed removals of Native Americans. Responding to pressure but also recognizing  injustice as well as the high cost of the removal policy, a government commission authorized the return of the Poncas to their homeland—although without their previously held communal property.

Hayes, Schurz, and the Indian Rights Association were sincere in their paternalism but, at the same time, were not in any way interested in preserving the culture of Native Americans. Indeed, Hayes believed acculturation—such as stripping Native Americans of their indigenous languages—was the best policy, and that mainstream education, coupled with learning to be a farmer, herder, or unskilled laborer, was in their best interest. Native American communal property would be forcibly divided so that they would learn the virtues of modern “civilized” private property.