The 1876 presidential race was one of the most controversial races in American history. The Republicans nominated Rutherford B. Hayes, while the Democrats nominated Samuel Tilden. Garfield gave a rousing speech in the House questioning whether the Democrats were fit for office and arguing that only the Republicans could hold the government together through Reconstruction. Outgoing President Ulysses S. Grant sent Garfield to Louisiana to monitor the elections and ensure a fair election. Several southern states yielded conflicting vote tallies and Hayes eked out a victory by only a single vote in the Electoral College–despite the fact that he lost the popular vote by more than a quarter of a million votes. Garfield sat on a special commission that oversaw the certification of the election results. Friends accompanied Garfield everywhere to ensure that he was not killed, as it was rumored that if the Democrats could eliminate Garfield they could tip the election results in favor of Tilden. Briefly, it even seemed that civil war would erupt again. Eventually, however, cooler heads prevailed and Hayes was inaugurated without incident on March 5, 1877.
When Congress reconvened, Garfield was nominated by the Republican minority for speaker, but the post went to a Democrat, Samuel S. Cox. When Hayes blocked Garfield's attempt to move to the Senate, Garfield reluctantly took up the post of House minority leader. There, he continued his fight for "hard money," devoting his energies to preventing the Democrats from dismantling the treasury's fiscal foundation. Garfield was largely successful in blocking the Democrats and carefully orchestrated a presidential veto of one Democratic bill that would have loosened fiscal policies. Garfield backed more protective tariffs, hoping that they would encourage American manufacturing and keep the treasury safe in an economy that was worsening.
Over the next four years, Garfield fought a running battle over fiscal policy with a group called the "Greenbacks," a loosely organized party made up of people frustrated by the nation's finances. Labor reformers, fed up with inflation, flocked to the Greenback Party. Garfield became the Republican's lead man for refuting the arguments of the Greenbacks and in 1878 he campaigned throughout the country to try to halt their advance. Garfield saw "hard money" as the main issue of the 1878 campaign and argued persuasively for Republican policies at rallies throughout the year.
President Hayes spent much of his administration trying to continue civil service reform, although he found that some of his strongest opponents on this issue were members his own Republican party. Hayes's Secretary of the Interior, Carl Schurz, instituted sweeping reforms in his department, which had long been a favorite place of patronage for politicians. Schurz mandated that tests be developed to ensure hiring and promotion based on merit rather than favoritism. On June 22, 1877, Hayes issued an executive order banning federal officials from considering political parties when making hiring decisions. Garfield realized the issue would become troublesome, particularly since he doubted Hayes's commitment to reform. Hayes remained a controversial president, and many Democrats continued to allege that he had ascended to the presidency illegally.
The election issue continued to dog American politics. The Democrats made various attempts to prevent the use of troops to police the polls in upcoming elections, which prevented appropriations bills from passing in the Forty-Fifth Congress before it adjourned on March 4 and forced it to meet for a special session. Garfield again was nominated for speaker, but this time narrowly lost the post. He led the Republican opposition and made explicit the fact that the special session was the fault of the Democrats. Garfield became the Hayes administration's strongest voice in the House. Over the course of three months, the Democrats softened their stance enough to cause Garfield and his backers to declare victory. Congress adjourned on July 1, and Garfield later said his speeches in this period were the best of his career.