CHAPTER XV.
Congress assembled Dec. 6, 1813, at a time of general perplexity. The victories of Perry and Harrison, September 10 and October 5, had recovered Detroit and even conquered a part of West Canada, but their successes were already dimmed by the failures of Wilkinson and Hampton before Montreal, and the retreat of both generals November 13 within United States territory. In the Creek country the Georgians had failed to advance from the east, and Jackson was stopped at Fort Strother by want of supplies and men. At sea the navy was doing little, while the British blockade from New London southward was becoming more and more ruinous to the Southern and Middle States, and through them to the government. Abroad the situation was not yet desperate. The latest news from Europe left Napoleon at Dresden, victorious for the moment, before the great battles of October. From the American commissioners at St. Petersburg no news had arrived, but England’s refusal to accept mediation was unofficially known. With this material the President was obliged to content himself in framing his Annual Message.
The Message sent to Congress December 7 began by expressing regret that the British government had disappointed the reasonable anticipation of discussing and, if possible, adjusting the rights and pretensions in dispute. From France nothing had been received on the subjects of negotiation. Madison congratulated Congress on the success of the navy upon the ocean and the Lakes, and the victory won by Harrison and R. M. Johnson in Canada. He mentioned briefly the failure of the armies on the St. Lawrence, and at greater length the success of Jackson on the Coosa; and he entered in detail into the retaliatory measures taken on either side in regard to naturalized soldiers. The finances were treated with more show of confidence than was warranted by the prospects of the Treasury; and the Message closed by a succession of paragraphs which seemed written in a spirit of panegyric upon war:—
“The war has proved moreover that our free government like other free governments, though slow in its early movements, acquires in its progress a force proportioned to its freedom; and that the Union of these States, the guardian of the freedom and safety of all and of each, is strengthened by every occasion that puts it to the test. In fine, the war with its vicissitudes is illustrating the capacity and the destiny of the United States to be a great, a flourishing, and a powerful nation.”
The rule that feeble and incompetent governments acquire strength by exercise, and especially in war, had been as well understood in 1798 as it was in 1813, and had been the chief cause of Republican antipathy to war; but had Madison publicly expressed the same sentiment in 1798 as in 1813, he would have found himself in a better position to enforce the rights for which he was struggling when the extreme discontent of nearly one third of the States contradicted his congratulations on “the daily testimony of increasing harmony throughout the Union.” Whatever the ultimate result of the war might be, it had certainly not thus far strengthened the Union. On the contrary, public opinion seemed to be rapidly taking the shape that usually preceded a rupture of friendly relations between political societies. Elections in the Middle States showed that the war, if not actually popular, had obliged the people there to support the government for fear of worse evils. New Jersey by a small majority returned to its allegiance, and the city of New York elected a Republican to represent it in Congress; but the steady drift of opinion in the Middle States toward the war was simultaneous with an equally steady drift in the Eastern States against it.
The evidences of chronic discontent in the Eastern States were notorious. Less than a month before Madison wrote his Annual Message, Governor Chittenden of Vermont, by proclamation November 10, recalled the State militia from national service:[465]
“He cannot conscientiously discharge the trust reposed in him by the voice of his fellow-citizens, and by the Constitution of this and the United States, without an unequivocal declaration that in his opinion the military strength and resources of this State must be reserved for its own defence and protection exclusively, excepting in cases provided for by the Constitution of the United States, and then under orders derived only from the commander-in-chief.”
The intercourse between the Eastern States and the enemy was notorious. The Federalist press of Massachusetts, encouraged by Russian and English success in Europe, discussed the idea of withdrawing the State from all share in the war, and making a separate arrangement with England. The President’s first act, after sending to Congress his Annual Message, was to send a special Message incidentally calling attention to the want of harmony that paralyzed the energy of the government.
The special and secret Message of December 9 asked Congress once more to impose an embargo. Considering the notorious antipathy of the Eastern States to the system of embargo, the new experiment was so hazardous as to require proof of its necessity. That it was directed against the commerce of the New England States was evident, for the blockade answered the purposes of embargo elsewhere. The Message seemed to propose that all commerce should cease because any commerce must favor the enemy; in effect, it urged that New England should be forbidden to sell or buy so long as the rest of the country was prevented from doing so.
“The tendency of our commercial and navigation laws in their present state to favor the enemy,” said Madison,[466] “and thereby prolong the war, is more and more developed by experience. Supplies of the most essential kinds find their way not only to British ports and British armies at a distance, but the armies in our neighborhood with which our own are contending derive from our ports and outlets a subsistence attainable with difficulty if at all from other sources. Even the fleets and troops infesting our coasts and waters are by like supplies accommodated and encouraged in their predatory and incursive warfare. Abuses having a like tendency take place in our import trade. British fabrics and products find their way into our ports under the name and from the ports of other countries, and often in British vessels disguised as neutrals by false colors and papers.... To shorten as much as possible the duration of the war, it is indispensable that the enemy should feel all the pressure that can be given to it.”
Although Madison pointed to the notorious supply of food for the British forces in Canada as one of the motives for imposing an embargo, no one supposed that motive to be decisive. Other laws already forbade and punished such communication with the enemy; and experience proved that a general embargo would be no more effective than any special prohibition. The idea that England could be distressed by an embargo seemed still less likely to influence Government. Congress knew that Russia, Prussia, Denmark, Sweden and Norway, Spain, and South America were already open to English commerce, and that a few days must decide whether Napoleon could much longer prevent Great Britain from trading with France. The possibility of distressing England by closing Boston and Salem, New Bedford and Newport to neutral ships was not to be seriously treated.
Whatever was the true motive of the President’s recommendation, Congress instantly approved it. The next day, December 10, the House went into secret session, and after two days of debate passed an Embargo Act by a vote of eighty-five to fifty-seven, which quickly passed the Senate by a vote of twenty to fourteen, and received the President’s approval December 17, being the first legislation adopted at the second session of the Thirteenth Congress.[467] The Act was at once enforced with so much severity that within a month Congress was obliged to consider and quickly adopted another Act[468] relieving from its operation the people of Nantucket, who were in a state of starvation, all communication with the main land having been forbidden by the law; but nothing proved that the illicit communication with Canada ceased.
This beginning of legislation at a time when the crisis of the war could be plainly seen approaching suggested much besides want of harmony. The embargo strengthened the antipathy of New England to the war,—a result sufficiently unfortunate; but it also led to a number of other consequences that were doubtless foreseen by the Administration, since they were prophesied by the Federalists. The Act was approved December 17. Hardly had it gone into operation when the British schooner “Bramble” arrived at Annapolis, December 30, bringing a letter from Castlereagh to Monroe offering to negotiate directly, though declining mediation. Important as this news was, it did not compare with that in the newspapers brought by the “Bramble.” These contained official reports from Germany of great battles fought at Leipzig October 16, 18, and 19, in which the allies had overwhelmed Napoleon in defeat so disastrous that any hope of his continuing to make head against them in Germany was at an end. Except France, the whole continent of Europe already was open to British commerce, or soon must admit it. From that moment the New England Federalists no longer doubted their own power. Their tone rose; their opposition to the war became more threatening; their schemes ceased to be negative, and began to include plans for positive interference; and the embargo added strength to their hatred of Madison and the Union.
Madison was seldom quick in changing his views, but the battle of Leipzig was an event so portentous that optimism could not face it. Other depressing news poured in. Fort George was evacuated; Fort Niagara was disgracefully lost; Lewiston, Black Rock, and Buffalo were burned, and the region about Niagara was laid waste; blue lights were seen at New London. Every prospect was dark, but the battle of Leipzig was fatal to the last glimmer of hope that England could be brought to reason, or that New England could be kept quiet. A change of policy could not safely be delayed.
Castlereagh’s offer was instantly accepted. January 5 Monroe replied, with some complaint at the refusal of mediation, that the President acceded to the offer of negotiating at Gothenburg. The next day Madison sent the correspondence to Congress, with a warning not to relax “vigorous preparations for carrying on the war.” A week afterward, January 14, he nominated J. Q. Adams, J. A. Bayard, Henry Clay, and Jonathan Russell as commissioners to negotiate directly with Great Britain, and the Senate confirmed the nominations, January 18, with little opposition except to Jonathan Russell’s further nomination as Minister to Sweden, which was confirmed by the narrow vote of sixteen to fourteen. Three weeks later, February 8, Albert Gallatin was added to the commission, George W. Campbell being nominated to the Treasury.
The prompt acceptance of Castlereagh’s offer, the addition of Henry Clay to the negotiators, and the removal of Gallatin from the Treasury showed that diplomacy had resumed more than its old importance. The hope of peace might serve to quiet New England for a time, but mere hope with so little to nourish it could not long pacify any one, if the embargo was to remain in force. Several signs indicated there also a change of policy. Besides the embargo, and in support of its restrictions, Madison had recommended the passage of bills prohibiting collusive captures, ransoming vessels captured by the enemy, and interference by the courts, as well as the introduction of British woollens, cottons, and spirits. The bill prohibiting woollens and other articles was reported to the Senate December 30, the day when the “Bramble” reached Annapolis. The Senate waited nearly a month, till January 27, and then passed the bill, January 31, by a vote of sixteen to twelve. The House referred it to the Committee on Foreign Relations February 3, where it remained. On the other hand, the bill prohibiting ransoms was introduced in the House December 30, and passed January 26 by a vote of eighty to fifty-seven. The Senate referred it January 28 to the Committee on Foreign Relations, which never reported it. The fate of these measures foreshadowed the destiny of the embargo.
Yet the President clung to his favorite measure with a degree of obstinacy that resembled desperation. Congress showed by its indifference to the two supplementary bills that it had abandoned the President’s system as early as January, but the embargo continued throughout the winter, and the month of March passed without its removal. The news from Europe at the close of that month left no doubt that Napoleon could offer little effectual resistance even in France to the allies, whose armies were known to have crossed the Rhine, while Wellington advanced on Bordeaux. Holland was restored to her ancient independence, and Napoleon was understood to have accepted in principle, for a proposed Congress at Mannheim, the old boundaries of France as a basis of negotiation. In theory, the overthrow of Napoleon should have not essentially affected the embargo or the Non-importation Acts, which were expected to press upon England independently of Napoleon’s Continental system; but in practice the embargo having produced no apparent effect on Europe during the war, could not be expected to produce an effect after England had succeeded in conquering France, and had abandoned her blockades as France had abandoned her decrees. For that reason avowedly Madison at last yielded, and sent a Message to Congress March 31, recommending that the system of commercial restriction should cease:—
“Taking into view the mutual interests which the United States and the foreign nations in amity with her have in a liberal commercial intercourse, and the extensive changes favorable thereto which have recently taken place; taking into view also the important advantages which may otherwise result from adapting the state of our commercial laws to the circumstances now existing,”—
Taking into view only these influences, Madison seemed to ignore the supposed chief motive of the embargo in stopping supplies for Canada, and to admit that embargo was an adjunct of Napoleon’s Continental system; but in truth Madison’s motives, both political and financial, were deeper and more decisive than any he alleged. His retreat was absolute. He recommended that Congress should throw open the ports, and should abandon all restriction on commerce beyond a guaranty of war duties for two years after peace as a measure of protection to American manufactures. The failure of the restrictive system was not disguised.
The House received the Message with a mixed sense of relief and consternation, and referred it to Calhoun’s committee, which reported April 4 a bill for repealing the Embargo and Non-importation Acts, together with the reasons which led the committee to unite with the Executive in abandoning the restrictive system.
Calhoun had always opposed the commercial policy of Jefferson and Madison. For him the sudden Executive change was a conspicuous triumph; but he showed remarkable caution in dealing with the House. Instead of attempting to coerce the majority, according to his habit, by the force of abstract principles, he adopted Madison’s reasoning and softened his own tone, seeming disposed to coax his Southern and Western friends from making a display of useless ill-temper. “Men cannot go straight forward,” he said, “but must regard the obstacles which impede their course. Inconsistency consists in a change of conduct when there is no change of circumstances which justify it.” The changes in the world’s circumstances required a return to free trade; but the manufactures would not be left unprotected,—on the contrary, “he hoped at all times and under every policy they would be protected with due care.”[469]
As an example of political inconsistency, as Calhoun defined it, his pledge to protect American manufactures deserved to be remembered; but hardly had Calhoun’s words died on the echoes of the House when another distinguished statesman offered a prospective example even more striking of what Calhoun excused. Daniel Webster rose, and in the measured and sonorous tones which impressed above all the idea of steadfastness in character, he pronounced a funeral oration over the restrictive system:—
“It was originally offered to the people of this country as a kind of political faith; it was to be believed, not examined; ... it was to be our political salvation, nobody knew exactly how; and any departure from it would lead to political ruin, nobody could tell exactly why.”
Its opponents had uniformly contended that it was auxiliary to Napoleon’s Continental system, in co-operation with Napoleon’s government; and its abandonment with the fall of Napoleon showed the truth. While thus exulting in the overthrow of the first “American system,” Webster qualified his triumph by adding that he was, “generally speaking,” not the enemy of manufactures; he disliked only the rearing them in hot-beds:—
“I am not in haste to see Sheffields and Birminghams in America.... I am not anxious to accelerate the approach of the period when the great mass of American labor shall not find its employment in the field; when the young men of the country shall be obliged to shut their eyes upon external Nature,—upon the heavens and the earth,—and immerse themselves in close and unwholesome workshops; when they shall be obliged to shut their ears to the bleatings of their own flocks upon their own hills, and to the voice of the lark that cheers them at the plough, that they may open them in dust and smoke and steam, to the perpetual whirl of spools and spindles and the grating of rasps and saws.”
Potter of Rhode Island, where the new manufactures centred, spoke hotly against the change. Much Federalist capital had been drawn into the manufacturing business as well as into speculation in all articles of necessity which the blockade and the embargo made scarce. At heart the Federalists were not unanimous in wishing for a repeal of the restrictive system, and Potter represented a considerable class whose interests were involved in maintaining high prices. He admitted that the average duties would still give American manufactures an advantage of thirty-six per cent, without including freight and marine risks, but he insisted that the bill was intended to encourage importations of British goods “that we do not want and can do very well without, in order to raise a revenue from the people in an indirect way.”
Probably Potter’s explanation of the change in system was correct. The necessities of the Treasury were doubtless a decisive cause of Madison’s step; but these necessities were foreseen by the Federalists when Madison recommended the embargo, and the neglect to give them due weight exposed the Administration to grave reproach. “A government which cannot administer the affairs of a nation,” said Webster, “without producing so frequent and such violent alterations in the ordinary occupations and pursuits of private life, has in my opinion little claim to the regard of the community.”
The Republicans made no attempt to defend themselves from such criticisms. Among the small number who refused to follow Calhoun was Macon, who sat in his seat during the debate writing to his friend Judge Nicholson.
“Those who voted the embargo so very lately,” he said,[470] “and those or him who recommended it must, I think, feel a little sore under Webster’s rubs.... I have not for a long time seen the Feds look in so good humor. They have all a smile on their countenances, and look at each other as if they were the men which had brought this great and good work about.... The Republicans have not the most pleasing countenances. Those who support the bill do not look gay or very much delighted with their majority, and those who expect to be in the minority have a melancholy gloom over their faces.”
That the system of commercial restrictions had failed was admitted, but the failure carried no conviction of error to its friends. Physical force had also apparently failed. The Southern Republicans had no choice but to adopt strong measures, giving to the government powers which in their opinion they had no constitutional right to confer; but they remained unshaken in their opinions.
“I confess to you,” wrote Macon, “that the parties seem by their acts to be approaching each other, and I fear that tough times is a strong argument with many of us to stretch the Constitution; and the difference between expediency and constitutionality becomes every day less. Notwithstanding this, I do not despair of the republic, because my dependence has always been on the people; and their influence was felt in laying the embargo, and probably that of the Executive in repealing it.”
No one understood or represented so well as Macon the instincts and ideas of the Southern people at that time, and he never represented them more truly than in the matter of the embargo. Virginia and the Carolinas were with him at heart. Macon’s hopes for the republic depended on his confidence in the people; and that confidence in its turn depended on his belief that the people were still true to a dogma which the Government had abandoned as impracticable. The belief was well founded, as the course of events proved. The House, April 7, by a vote of one hundred and fifteen to thirty-seven, passed the bill repealing the Embargo and Non-importation Acts; the Senate also passed it, April 12, by a vote of twenty-six to four; the President, April 14, approved it; and from that day the restrictive system, which had been the cardinal point of Jefferson’s and Madison’s statesmanship, seemed to vanish from the public mind and the party politics of the country. Yet so deeply riveted was the idea of its efficacy among the Southern people, that at the next great crisis of their history they staked their lives and fortunes on the same belief of their necessity to Europe which had led them into the experiment of coercing Napoleon and Canning by commercial deprivations; and their second experiment had results still more striking than those which attended their first.
The explanation of this curious popular trait certainly lay in the nature of Southern society; but the experience was common to the whole Union. When the restrictive system was abandoned of necessity in April, 1814, it had brought the country to the verge of dissolution. The Government could neither make war nor peace; the public seemed indifferent or hostile; and the same traits which characterized the restrictive system continued to paralyze the efforts of Congress to adopt more energetic methods.
“I will yet hope we may have no more war,” wrote Mrs. Madison to Mrs. Gallatin Jan. 7, 1814.[471] “If we do, alas! alas! we are not making ready as we ought to do. Congress trifle away the most precious of their days,—days that ought to be devoted to the defence of their divided country.”
Mrs. Madison doubtless echoed the language she heard used at the White House; yet the leaders of Congress were neither triflers nor idlers, and they did all that public opinion permitted. Within a week after Mrs. Madison’s complaint, the military committee of the House reported a bill for encouraging enlistments. Viewed as a means of embodying the whole military strength of the republic to resist the whole military strength of Great Britain, about to be released from service in Europe, Troup’s bill[472] was not an efficient measure; but it terrified Congress.
During the campaign of 1813, as the story has shown, the Government never succeeded in placing more than ten or eleven thousand effective rank-and-file in the field in a single body. About as many more were in garrison, and the sick-list was always large. Armstrong reported to the Ways and Means Committee that the aggregate strength of the army in February, 1813, was 18,945; in June, 27,609; in December, 34,325; and Jan. 17, 1814, it was 33,822.[473] Discouraging as this report was, it concealed the worst part of the situation. In truth, the abstract furnished by the adjutant-general’s office gave the number of regular troops in service for January, 1814, not as 33,822, but as 23,614; and to the return a note was appended, explaining that “although the numerical force in January, 1814, was 23,614, the actual strength of the army at that time was less than half that number, arising from the expiration of the term of service of the troops raised in 1809 and enlisted for five years, and of the twelve and eighteen-months men enlisted in 1812–1813.”[474] The establishment consisted of 58,254 men authorized by law; but the legal establishment was not half filled. The European news showed that England would soon be able to reinforce her army in Canada and take the offensive. Instead of sixty thousand men, Armstrong needed twice that number for a moderately safe defence, since every part of the sea-coast stood at the enemy’s mercy, and no adequate defence was possible which did not include an offensive return somewhere on the Canadian frontier. Needing more than one hundred thousand,—authorized by law to enlist sixty thousand,—he could depend on less than thirty thousand men. Yet so far from attempting to increase the establishment, Armstrong hoped only to fill the ranks.
Troup’s bill aimed at that object, purporting to be “A Bill making further provision for filling of the ranks of the regular army.” No system of draft was suggested. Troup’s committee proposed to treble the bounty rather than raise the pay,—a system which might be economical in a long war; but if the war should last only one year, the soldier must gain four fifths of his bounty without return. Troup first suggested one hundred dollars as bounty, which Congress raised to one hundred and twenty-four dollars, together with three hundred and twenty acres of land as already fixed. The pay of privates remained at ten dollars. Twenty-four dollars of the bounty was to be paid only on the soldier’s discharge. Recruiting-agents were to receive eight dollars for each recruit.
Such a provision for filling the ranks could not be called excessive. Even if the whole bounty were added to the pay, and the soldier were to serve but twelve months, he would receive only twenty dollars a month and his land-certificate. If he served his whole term of five years, he received little more than twelve dollars a month. The inducement was not great in such a community as the United States. The chance that such a measure would fill the ranks was small; yet the measure seemed extravagant to a party that had formerly pledged itself against mercenary armies.
If the bill showed the timidity of the Republicans, it called out worse qualities in the Federalists. The speeches of the opposition were for the most part general in their criticisms and denunciations, and deserved little attention; but that of Daniel Webster was doubly interesting, because Webster was not only the ablest but among the most cautious of his party. His speech[475] suggested much of the famous eloquence of his later oratory, but dwelt on ideas to which his later life was opposed, and followed lines of argument surprising in a statesman of his great intellectual powers. His chief theme was the duty of government to wage only a defensive war, except on the ocean. “Give up your futile projects of invasion. Extinguish the fires that blaze on your inland frontiers.” He wished the government to use its forces only to repel invasion.
“The enemy, as we have seen, can make no permanent stand in any populous part of the country. Its citizens will drive back his forces to the line; but at that line where defence ceases and invasion begins, they stop. They do not pass it because they do not choose to pass it. Offering no serious obstacle to their actual power, it rises like a Chinese wall against their sentiments and their feelings.”
This advice, which echoed a Federalist idea reasonable or excusable in 1812, was out of place in January, 1814. The battles of Leipzig and Vittoria had settled the question of offensive and defensive in Canada. The offensive had passed into British hands, and a successful defence was all that the United States could hope. The interests of New England as well as of New York and of the whole Union required that the defensive campaign should, if possible, be fought on Canadian soil rather than at Plattsburg, Washington, or New Orleans; and even the most extreme Federalist could scarcely be believed blind to an idea so obvious.
Moderate as the bill was, fifty-eight members voted against it, while ninety-seven voted in its favor. In the Senate the bill passed without a division, and received, January 27, the President’s approval. Meanwhile the Senate passed bills for converting the twelve-months regiments into regiments enlisted for the war, as well as for raising three rifle regiments for the same term, and any number of volunteers that in the President’s opinion the public service required, offering to all recruits for these corps the same inducements as to the regular regiments. These bills produced another and a longer debate, but were passed without serious opposition. No further addition was made to the regular army, and no other effort to obtain recruits.
Thus organized, the army consisted of forty-six regiments of infantry enlisted for five years,—four rifle regiments; an artillery corps and a regiment of light artillery; a regiment of dragoons; the engineer corps, the rangers, and sea-fencibles,—an aggregate of 62,773 men authorized by law, an increase of only five thousand men over that of the previous year.
The appropriations for the military establishment amounted to nearly twenty-five million dollars, the Federalists alone voting against them. The naval appropriations amounted to seven millions, and were voted without opposition. The Secretary of the Navy discouraged the building of more cruisers, owing to want of timber and seamen; but Congress showed more than ordinary sagacity by appropriating half a million dollars for the construction of floating batteries with steam-power.
Such provision for the coming campaign offered little evidence of increasing energy to make head against the vastly increased military and naval power of England; but the financial outlook was much worse than the military, and Congress dared not face it. The acting Secretary of the Treasury, William Jones, sent his annual report to the House January 8, and so far as his balance-sheet went, no difficulties were apparent. He had disbursed thirty million dollars during the past fiscal year, and needed nearly forty millions for the current year. These sums were not excessive when compared with the wealth of the country or its exertions at other periods of national danger. Half a century afterward the people of the Southern States, not much more numerous than the people of the Union in 1812, and with a far larger proportion of slaves, supported during four years the burden of an army numbering nearly five hundred thousand men. For the same period the Northern people, not much exceeding twenty millions in number, lent their government more than five hundred million dollars a year. The efforts of 1864, proportioned to the population, were nearly ten times as great as those of 1814, when Secretary Jones looked with well-founded alarm at the prospect of borrowing thirty millions for the year, and of maintaining an army which could scarcely be expected to number forty thousand rank-and-file.
The United States, with a proper currency and untouched resources, should have found no serious difficulty in borrowing thirty or even fifty millions a year in 1814; but they were in reality on the verge of bankruptcy, although the national resources were probably ample. The amount of private capital available for loans was uncertain, and the amount of circulating medium was equally doubtful. Timothy Pitkin of Connecticut, perhaps the best authority in Congress, thought that the paid bank capital of the United States did not much exceed sixty millions,[476] and that the notes of these banks in circulation did not reach thirty millions. His estimate of paid bank capital was probably liberal, but his estimate of the circulation was eight or ten millions too small. Had the Treasury been able to count on the use of these resources, they might have answered all necessary purposes; but between the mistakes of the government and the divisions of the people, the Treasury was left with no sound resources whatever.
The first and fatal blow to the Treasury was the loss of the Bank of the United States, which left the government without financial machinery or a sound bank-note circulation. The next blow, almost equally severe, was the loss of the Massachusetts and Connecticut banks, which were the strongest in the Union. Whether the responsibility for the loss rested on the Executive, Congress, or the two States might be a subject for dispute; but whoever was responsible, the effect was ruinous. The New England banks were financial agents of the enemy. The bank capital of Massachusetts including Maine was about twelve and a quarter million dollars; that of Connecticut exceeded three millions. The whole bank capital of New England reached eighteen millions,[477] or nearly one third of the paid bank capital of the whole country, if Pitkin’s estimate was correct. That nearly one third of the national resources should be withdrawn from the aid of government was serious enough; but in reality the loss was much greater, for New England held a still larger proportion of the specie on which the bank circulation of other States depended.
The system of commercial restrictions was responsible for thus, at the most critical moment of the war, throwing the control of the national finances into the hands of the Boston Federalists. Against the protests of the Federalists, manufactures had been forced upon them by national legislation until New England supplied the Union with articles of necessary use at prices practically fixed by her own manufacturers. From the whole country specie began to flow toward Boston as early as the year 1810, and with astonishing rapidity after the war was declared. The British blockade stimulated the movement, and the embargo of December, 1813, which lasted till April, 1814, cut off every other resource from the Southern and Western States. Unable longer to send their crops even to New England for a market, they were obliged to send specie, and they soon came to the end of their supply. The Massachusetts banks, which reported about $820,000 in specie in 1809, returned more than $3,680,000 in June, 1812; which rose to $5,780,000 in June, 1813, and reached nearly $7,000,000 in June, 1814. In five years the Massachusetts banks alone drew more than six million dollars in specie from the Southern and Middle States,[478] besides what they sent to Canada in payment for British bills.
No one knew how much specie the country contained. Gallatin afterward estimated it at seventeen million dollars,[479] and of that amount the banks of New England in 1814 probably held nearly ten millions. The Massachusetts banks, with seven millions in specie, had a bank-note circulation of less than three millions. The Middle, Southern, and Western States must have had a bank-note circulation approaching forty millions in paper, with seven or eight millions in specie to support it,[480] while the paper was constantly increasing in quantity and the specie constantly diminishing. Bank paper, as was believed, could not with safety exceed the proportion of three paper dollars to every specie dollar in the bank vaults; but the banks in 1814 beyond New England were circulating at least four paper dollars to every silver or gold dollar, and in many cases were issuing paper without specie in their possession.
Already the banks of New England were pressing their demands on those of New York, which in their turn called on Philadelphia and Baltimore. The specie drained to New England could find its way back only by means of government loans, which New England refused to make in any large amount. On the other hand, Boston bought freely British Treasury notes at liberal discount, and sent coin to Canada in payment of them.[481] Probably New England lent to the British government during the war more money than she lent to her own. The total amount subscribed in New England to the United States loans was less than three millions.
This situation was well understood by Congress. In the debate of February, 1814, the approaching dangers were repeatedly pointed out. The alarm was then so great that the Committee of Ways and Means reported a bill to incorporate a new national bank with a capital of thirty million dollars, while Macon openly advocated the issue of government paper,[482] declaring that “paper money never was beat.” Congress after a diffuse debate passed only a loan bill for twenty-five millions, and an Act for the issue of five million interest-bearing Treasury notes, leaving with the President the option to issue five millions more in case he could not borrow it. The legislation was evidently insufficient, and satisfied no one. “You have authorized a loan for twenty-five millions,” said Grundy in the debate of April 2, “and have provided for the expenditure of so much money. Where is the money?”
Without attempting to answer this question, April 18 Congress adjourned.