The probable annual expenses which must be incurred in a war with England, and the resources for defraying them, are the next objects of inquiry.

It is extremely difficult to draw any correct inference from the expenses of the last war with England: the amount of the arrearages due on account of the military services at the time when the peace was ratified, is not stated with precision in any of the public documents which I have seen. Although the laws show the number of men voted, that of those actually raised has never to my knowledge been officially stated. There can be no doubt that the want of a proper organization increased the amount of expenditure much beyond that which would have been sufficient under a regular and efficient system. This has undoubtedly been much improved; yet the expenses incurred in the Seminole war, compared with the number of men employed and that of the hostile Indians, show that either there are still some defects in the organization, or that there were great abuses in the execution.

The payments from the Treasury for the military department, embracing only those for the army proper, militia and volunteers, and exclusive of those for fortifications and the Indian department, amounted for the year 1813 to 18,936,000 dollars, and for the year 1814 to 20,508,000 dollars. The disbursements for the navy are stated at 6,446,000 and 7,311,000 dollars for these two years respectively. By comparing the reports of the Secretaries of the Treasury of December 1815, 1816, 1817, it would appear that the arrearages due on 1st January, 1815, exceeded ten millions of dollars: and it seems certain that the actual war expenses of 1814 could not have fallen short of 35 to 40 millions of dollars. It has been asserted that the regular force during that year amounted to 35,000 men.

The population of the United States has nearly trebled during the thirty-four years which have elapsed since that in which the last war against England was declared. Their wealth and resources have increased in the same ratio; and that, in case of war, these should be brought into action as promptly as possible, admits of no doubt. Once engaged in the conflict, to make the war as efficient as possible will shorten its duration, and can alone secure honorable terms of peace. I have not the documents necessary for making an approximate estimate of the annual expenses of a war with Great Britain; and if I had, I could not at this time perform that amount of labor which is absolutely necessary in order to draw correct inferences. Taking only a general view of the subject, and considering the great difference of expense in keeping a navy in active service, between one of eight frigates and one of ten ships of the line, fourteen frigates and a competent number of steamers; that Texas and Oregon are additional objects of defence; that the extensive system of fortifications which has been adopted will require about fifteen thousand additional men; and that, in order to carry a successful and decisive war against the most vulnerable portion of the British dominions, a great disposable regular force is absolutely necessary; I am very sure that I fall below the mark in saying that, after the first year of the war, and when the resources of the country shall be fully brought into action, the annual military and naval expenses will amount to sixty or seventy millions of dollars. To this must be added the expenses for all other objects, which, for the year ending on the 30th of June, 1845, amounted to near fifteen millions, but which the Secretary of the Treasury hopes may be reduced to eleven millions and a half. The gross annual expenses for all objects will be estimated at seventy-seven millions; to be increased annually by the annual interest on each successive loan.

In order to ascertain the amount of new revenue and loans required to defray that expense, the first question which arises, is the diminution of the revenue derived from customs, which will be the necessary consequence of the war.

The actual receipts into the Treasury, arising from that source of revenue, were in round numbers for the years 1812, 1813, 1814, respectively 8,960,000, 13,225,000, and 6,000,000 of dollars; and the nett revenue which accrued during those three years respectively amounted to 13,142,000, 6,708,000, and 4,250,000 dollars. From the 1st of July, 1812, the rate of duties on importations was doubled; and in order to compare these receipts with those collected in peace time, they must be reduced for those three years respectively, to 7,470,000,[3] 6,600,000 and 3,000,000; or, if the revenue accrued be compared (which is the correct mode), to 9,850,000,[3] 3,354,000, and 2,125,000 dollars. At that time the duties accrued were, on account of the credit allowed, collected on an average only six or eight months later; and the unexpected importations in the latter half of the year 1812 in American vessels which arrived with British licenses, subsequent to the declaration of war and to the act which doubled the rate of duties, swelled considerably the receipts of the year 1813. It was only in 1814 that the full effect of the war on the revenue derived from that source was felt.

The diminution in the amount of American and foreign tonnage employed in the foreign trade of the United States is strongly exhibited by the following statement:

Tonnage in foreign trade, U. S. American ves. Foreign ves. Total.
Year 1811948,207 33,203981,450
" 1812667,999 47,099715,098
" 1813237,348113,827351,175
" 1814 59,626 48,302107,928

And it must be recollected that during the last nine months of 1814, Great Britain was at peace with all the other Powers of Europe, and that these were therefore neutrals. Yet they hardly ventured to trade with us.

The amount of receipts into the Treasury derived from customs, as well as that of the revenue accrued, exceeded, during the eleven years 1801 to 1811, 132,700,000 dollars, being an annual average of about 12,000,000 dollars. During the same eleven years the average amount of tonnage employed in the foreign trade of the United States was 943,670 tons, of which 844,170 were in American, and 99,500 foreign vessels.