The Life of Albert Gallatin

by Henry Adams

Congress did indeed act; within a very short time it was clear that Mr. Madison had no control over its proceedings. To Mr. Gallatin the action of Congress was merely a sign that, as his influence in the Senate had long since vanished, his influence in the House had now followed it, and that for the future he could expect no friendly co-operation from the Legislature. At first, indeed, the proceedings of both bodies were in outward accord with the Executive recommendations; the reports of committees, and the House bill introduced in pursuance of them, were such as Mr. Madison had suggested; the only warlike measure proposed was that of permitting merchant vessels to arm. The Senate, however, very soon returned to its old tactics. Mr. Madison, as was well understood, asked only for an army of ten thousand men, and his recommendations were referred to a committee, of which Mr. Giles was the chairman, who immediately reported a bill for raising twenty-five thousand men, and in a speech on the 17th December fairly took the ground that his principal motive was to annoy the Secretary of the Treasury. Mr. Giles declared himself a friend of peace; no man more deprecated war; but “if war should now come, it would be in consequence of the fatal rejection of the proposed measures of preparation for war.” The only reason for rejecting them he averred to be “the decrepit state of the Treasury and the financial fame of the gentleman at the head of that Department.” He launched into a bitter attack upon Mr. Gallatin, thoroughly in the spirit of Duane and the Aurora. Considering that he was playing with such tremendous interests, and that the national existence, to say nothing of private life and fortune, was dancing on the edge of this precipice of war at the mercy of Mr. Giles’s personal malignity towards Mr. Gallatin, Mr. Madison, and Mr. Monroe, there is actually something dramatic and almost classic in the taunts he now flung out. “Until now the honorable Secretary has had no scope for the demonstration of his splendid financial talents.” “If, then, reliance can be placed upon his splendid financial talents, only give them scope for action; apply them to the national ability and will.” “All the measures which have dishonored the nation during the last three years are in a great degree attributable to the indisposition of the late and present Administration to press on the Treasury Department and to disturb the popularity and repose of the gentleman at the head of it.” In order to give sufficient occupation to the splendid financial talents of the Secretary of the Treasury, Mr. Giles had done all that was in his power to do; he had thwarted every plan of policy; wasted every dollar of money; struck from the hands of government every resource and every financial instrument he could lay hold on; and all this was not enough. The Secretary still had reputation; he had popularity; he had, if not repose, at least dignity. The Senator from Virginia was equal to the occasion; there are few oratorical taunts on record which echo more harshly than this, that as yet “the Secretary has had no scope for the demonstration of his splendid financial talents;” war alone could do those talents justice, and war the Secretary should have.

Mr. Giles carried his bill through the Senate; Clay and Lowndes carried it through the House. The war spirit meanwhile was rapidly rising; resolutions poured in from the State Legislatures; Congress hurried into further measures. What Mr. Madison thought of these is shown in a letter of his to Mr. Jefferson, dated February 7, 1812: “The newspapers give you a sufficient insight into the measures of Congress. With a view to enable the Executive to step at once into Canada, they have provided, after two months’ delay, for a regular force, requiring twelve to raise it, on terms not likely to raise it at all for that object. The mixture of good and bad, avowed and disguised motives accounting for these things, is curious enough, but not to be explained in the compass of a letter.”

Although Mr. Gallatin had lost his old control in the House, he still preserved his influence with the Committee of Ways and Means and its chairman, Ezekiel Bacon, of Massachusetts. To this committee the annual report of the Secretary of the Treasury was referred, and when it became clear that war was really imminent, the committee, early in December, requested Mr. Gallatin to appear before them to discuss the question of war taxes. Mr. Gallatin at once complied, and gave his opinions explicitly and emphatically: “I do not,” said he, “feel myself particularly responsible for the nation being in the position in which it now finds itself; it might perhaps have been avoided by a somewhat different course of measures, or the ultimate issue longer deferred. But, placed as it is, I see not how we can now recede from our position with honor or safety. We must now go on and maintain that position with all the available means we can bring to bear on the enemy whom we have selected, and we should in my judgment resort immediately to a system of taxation commensurate with the objects stated in my annual report and by the President in his message at the opening of the session.”[110] Very soon afterwards, on December 9, the committee, through its chairman, wrote Mr. Gallatin a letter asking for a written statement of his views, and a month later Mr. Gallatin sent in a paper, which was to all intents and purposes a war budget.

This was a remarkable—for Mr. Gallatin’s calm temper, almost a defiant—document, written, said Mr. Bacon, “to the great disobligement, as we had reason to know, of some of his strong political friends at that time,” and intended to force Congress into an honest performance of its financial duties. This intent was marked by a defence of his own course which could not but read as a severe criticism of the course pursued by Congress.

1812.

“It was stated,” said Mr. Gallatin, “in the annual report of December 10, 1808, that ‘no internal taxes, either direct or indirect, were contemplated even in the case of hostilities carried against the two great belligerent powers;’ an assertion which renders it necessary to show that the prospect then held out was not deceptive, and why it has not been realized.

“The balance in the Treasury amounted at that time to near fourteen millions of dollars; but aware that that surplus would in a short time be expended, and having stated that the revenue was daily decreasing, it was in the same report proposed ‘that all the existing duties should be doubled on importations subsequent to the 1st day of January, 1809.’... If the measure then submitted had been adopted, we should, after making a large deduction for any supposed diminution of consumption arising from the proposed increase, have had at this time about twenty millions of dollars on hand,—a sum greater than the net amount of the proposed internal taxes for four years.

“In proportion as the ability to borrow is diminished, the necessity of resorting to taxation is increased. It is therefore also proper to observe that at that time the subject of the renewal of the charter of the Bank of the United States had been referred by the Senate to the Secretary of the Treasury, nor had any symptom appeared from which its absolute dissolution, without any substitute, could have then been anticipated. The renewal in some shape and on a more extensive scale was confidently relied on; and accordingly, in the report made during the same session to the Senate, the propriety of increasing the capital of the bank to thirty millions of dollars was submitted, with the condition that that institution should, if required, be obliged to lend one-half of its capital to the United States. The amount thus loaned might without any inconvenience have been increased to twenty millions. And with twenty millions of dollars in hand, and loans being secured for twenty millions more, without any increase of the stock of the public debt at market, internal taxation would have been unnecessary for at least four years of war, nor any other resource been wanted than an additional annual loan of five millions, a sum sufficiently moderate to be obtained from individuals and on favorable terms.”

Leaving Congress to reflect at its leisure upon the criticisms implied in these remarks, the Secretary went on to lay down the rules now made necessary by the refusal to follow his previous advice. After doubling the imposts and reimposing the duty on salt, he could promise a net revenue of only $6,000,000 for war times. The committee assumed that annual loans of 110,000,000 would be required during the war, which left an annual deficiency, to be provided for by taxation, amounting to $5,000,000, calculated to cover the interest of the first two loans only, after which additional taxes must be imposed to provide for the interest of future loans.

Five millions a year, therefore, must be raised by internal taxes, and Mr. Gallatin proposed to obtain three millions by a direct tax and two millions by excise, stamps, licenses, and duties on refined sugar and carriages. A few remarks on loans and Treasury notes closed the letter.