Congress was called together in October on account of the Louisiana business. It is curious to notice how, in his comments on this year’s message, Mr. Gallatin gently held the President back from every appearance of hostility to England and of overwarm demonstrations towards Bonaparte, and how he still talked of economies in the Navy Department to supply some of his financial deficiencies, though this resource was already mentioned only as a desirable possibility. In fact, Congress was about to abandon the attempt at further economy in that Department, and in order to relieve the Treasury the Mediterranean fund was now created for naval expenses. Mr. Gallatin had to look for his resources elsewhere.
The financial problem was to provide for the new purchase and its consequent expenditure without imposing new taxes. The point was a delicate one, and was managed by Mr. Gallatin as follows:
The purchase-money for Louisiana was $15,000,000. Of this sum, $11,250,000 was paid in new six per cent. stock. There was specie enough in the Treasury to pay $2,000,000 more; and Mr. Gallatin requested authority to borrow the remaining $1,750,000 at six per cent.
The consequent increase of annual interest on the debt, including commissions and exchange, he estimated at $800,000. To provide this he counted on an increase of revenue from imposts and lands, as indicated by the returns for the past year, equal to $600,000, and an income of $200,000 from Louisiana.
An annual appropriation of $700,000 was to be set aside for the interest on the $11,250,000 new stock, and added to the permanent appropriation of $7,300,000; so that in future $8,000,000 should be annually applied to payment of interest and principal of the debt, thus preserving the ratio of reduction already established.
Perhaps as a matter of fact the success of Mr. Gallatin in avoiding new taxes was rather apparent than real. Had he been able to carry out his economies in the navy, he might indeed have avoided taxation, but this was fairly proved impossible, and the confession of a failure here was only evaded by the fiction of creating a temporary fund for extraordinary naval purposes, which allowed the supposed regular naval expenditure to be estimated at Mr. Gallatin’s figures. This was obviously in the nature of a compromise between the Treasury and the Navy, but it was not the less a real increase of taxation, and, as events proved, a permanent increase. The capture of the frigate Philadelphia by the Tripolitans was, it is true, the immediate occasion for this tax, but not its cause; this lay much deeper, and, as Mr. Gallatin’s letters clearly show, was the result of a failure in the attempt at economy in the navy.
Even at the last hour, however, the Administration was alarmed by the fear that Louisiana might after all be lost; the protest of Spain against the sale gave reason to doubt whether she would consent to surrender the province. Here again Mr. Gallatin of his own accord urged increased expenditure, and actively pressed the collection and movement of troops to take possession by force if the Spanish government should resist. Fortunately, the alarm proved to be unnecessary: Louisiana was promptly handed over to the French official appointed for the purpose, and by him to General Wilkinson and Governor Claiborne; the troops were stopped on their march from Tennessee and ordered home, and all that remained to be done was to incorporate the new territory in the old, and to settle its boundaries with Spain.
The process of incorporation, however, brought into prominence a very serious constitutional question, which had already been elaborately argued in the Cabinet. Had the Constitution given to the President and Congress the right to do an act of this transcendent importance, an act which could not but result in immense and incalculable changes in the relations between the States who were the original parties to the constitutional compact; an act which could only rest on a prodigious extension of the treaty-making power, such as would legalize the annexation of Mexico or of Europe itself? Mr. Jefferson was very strongly of opinion that an amendment to the Constitution could alone legalize the act, and this opinion seems to have been shared by Mr. Madison and by the Attorney-General. The tenor of Mr. Gallatin’s reasoning as a member of Congress in opposition certainly leads to the inference that he would take the same side. His speeches on the alien bill had carried the doctrine of strict construction to the verge of extravagance. Nevertheless, Mr. Gallatin did not properly belong to the Virginia school of strict constructionists, and although, as a member of Congress, he earnestly resisted the growth of Executive power, he assumed with difficulty and with a certain awkwardness the tone of States’ rights. In this Louisiana case he wrote on the 13th January, 1803, a letter to Mr. Jefferson, which might have been written, without a syllable of change, by Alexander Hamilton to General Washington ten years before:
“To me it would appear, 1st. That the United States as a nation have an inherent right to acquire territory.
“2d. That whenever that acquisition is by treaty, the same constituted authorities in whom the treaty-making power is vested have a constitutional right to sanction the acquisition.