Gallatin remained in Congress until 1801, when President Thomas Jefferson appointed him Secretary of the Treasury, which office he held until 1813, and obtained the credit of being one of the best financiers of the age.
The opponents of Jefferson’s Administration complained vehemently in 1808 that the country was threatened with direct taxation at a time when the sources of its wealth, by the orders and decrees of Great Britain and France, were drying up. Gallatin replied to these complaints, as Secretary of the Treasury, by reproducing a flattering but delusive suggestion contained in his annual report the preceding year.
He suggested that as the United States was not likely to be involved in frequent wars, a revenue derived solely from duties on imports, even though liable to diminution during war, would yet amply suffice to pay off, during long intervals of peace, the expenses of such wars as might be undertaken.
Should the United States become involved in war with both France and Great Britain, no internal taxes would be necessary to carry it on, nor any other financial expedient, beyond borrowing money and doubling the duties on import. The scheme, afterwards tried, bore bitter fruit.
His influence was felt in other departments of Government and in the politics of the country. Opposed to going to war against Great Britain in 1812, he exerted all his influence to avert it.
In March, 1813, he was appointed one of the envoys to Russia to negotiate for the mediation of the Czar between the United States and Great Britain. He sailed for St. Petersburg, but the Senate in special sessions, refused to ratify his appointment because he was Secretary of the Treasury. The attempt at mediation was unsuccessful.
When, in January, 1814, Great Britain proposed a direct negotiation for peace, Gallatin, who was still abroad, was appointed one of the United States Commissioners. He resigned his secretaryship. He was one of the signers of the Treaty of Ghent.
In 1815 he was appointed Minister to France, where he remained until 1823. He refused a seat in the Cabinet of President Monroe on his return and also declined to be a candidate for Vice President to which the dominant Democratic Party nominated him.
President Adams appointed him Minister to Great Britain, where he negotiated several important commercial conventions.
Returning to America in 1827, he took up his residence in New York City. There he was engaged in public service in various ways until 1839, when he withdrew from public duties and directed the remainder of his life to literary pursuits.