1800.
It is unfortunate, too, that the debates of the Sixth Congress, from December, 1799, to March, 1801, should have been very poorly reported; indeed, hardly reported at all. Yet the winter of 1799-1800 was so much less important than those which preceded and followed it, that the loss may not be very serious. The death of General Washington a few days after Congress met had a certain momentary effect in diverting the current of public thought. The attitude of the President occupied the attention of his own party, and the probability, which approached a certainty, of peace with France, paralyzed the armaments. Mr. Gallatin himself was not disposed to press his economies too strongly. “I was averse,” he said in debate, “to the general system of hostility adopted by this country; but once adopted, it is my duty to support it until negotiation shall have restored us to our former situation or some cogent circumstances shall compel a change. At present I think it proper that the system of hostility and resistance should continue, and I would vote against any motion to change that system. At the same time I am of opinion that a naval establishment is too expensive for this country, but, as we have assumed an attitude of resistance, it would be wrong to change it at present.” His opinion was that a reduction should be made in the army to the extent of $2,500,000, which would, he thought, still leave a deficiency of an equal amount to be provided for by a loan.
It was in connection with this motion to reduce the army that Mr. Harper made a speech, of which the following passage is a portion:
... “Sir, we never need be, and I am persuaded never shall be, taxed as the English are. A very great portion of their permanent burdens arises from the interest of a debt which the government most unwisely suffered to accumulate almost a century, without one serious effort or systematic plan for its reduction. Her present minister, at the commencement of his administration in 1783, established a permanent sinking fund, which now produces very great effects; he also introduced a maxim of infinite importance in finance which he has steadily adhered to, that whenever a new loan is made the means shall be provided not only of paying the interest but of effecting a gradual extinction of the principal. Had these two ideas been adopted and practised upon at the beginning of the century which we have just seen close, England might have expended as much money as she has expended and not owed at this moment a shilling of debt, except that contracted in the present war. These ideas, profiting by the example of England, we have adopted and are now practising on. We have provided a fund which is now in constant operation for the extinguishment of our debt. This fund will extinguish the foreign debt in nine years from now, and the six per cent., a large part of our domestic debt, in eighteen years. I trust we shall adhere to this plan, and whenever we are compelled by the exigency of our affairs to make a loan, by providing also for its timely extinguishment, we may always avoid an inconvenient or burdensome accumulation of debt. We may gather all the roses of the funding system without its thorns.”
This was the theory of the English financiers, of William Pitt and his scholars, which held possession of the English exchequer throughout the French war and was only exploded in 1813 by a pamphlet written by a Scotchman named Hamilton.[47] Mr. Gallatin, however, was never its dupe. He answered Mr. Harper on the spot; and short as his reply was, it gave in perfectly clear language the substance of all that fourteen years later was supposed to be a new discovery in English finance:
... “I know but one way that a nation has of paying her debts, and that is precisely the same which individuals practise. ‘Spend less than you receive, and you may then apply the surplus of your receipts to the discharge of your debts. But if you spend more than you receive, you may have recourse to sinking funds, you may modify them as you please, you may render your accounts extremely complex, you may give a scientific appearance to additions and subtractions, you must still necessarily increase your debt. If you spend more than you receive, the difference must be supplied by loans; and if out of these receipts you have set a sum apart to pay your debts, if you have so mortgaged or disposed of that sum that you cannot apply it to your useful expenditure, you must borrow so much more in order to meet your expenditure. If your revenue is nine millions of dollars and your expenditure fourteen, you must borrow, you must create a new debt of five millions. But if two millions of that revenue are, under the name of sinking fund, applicable to the payment of the principal of an old debt, and pledged for it, then the portion of your revenue applicable to discharging your current expenditures of fourteen millions is reduced to seven millions; and instead of borrowing five millions you must borrow seven; you create a new debt of seven millions, and you pay an old debt of two. It is still the same increase of five millions of debt. The only difference that is produced arises from the relative price you give for the old debt and rate of interest you pay for the new. At present we pay yearly a part of a domestic debt bearing six per cent. interest, and of a foreign debt bearing four or five per cent. interest; and we may pay both of them at par. At the same time we are obliged to borrow at the rate of eight per cent. At present, therefore, that nominal sinking fund increases our debt, or at least the annual interest payable on our debt.” ...
The two speeches made by Mr. Harper and Mr. Gallatin on this occasion, the 10th January, 1800, were very able, and are even now interesting reading; but they find their proper place in the Annals of Congress, and the question of the reduction of the army was to be settled by other events. A matter of a very different nature absorbed the attention of Congress during the months of February and March. This was the once famous case of Jonathan Bobbins, a British sailor claiming to be an American citizen, who, having committed a murder on board the British ship-of-war Hermione, on the high seas, had escaped to Charleston, and under the 27th article of the British treaty had been delivered up by the United States government. At that time extradition was a novelty in our international relations. The President was violently attacked for the surrender, and a long debate ensued in Congress. Mr. Gallatin spoke at considerable length, but his speech is not reported, and although voluminous notes, made by him in preparing it, are among his papers, it is impossible to say what portion of these notes was actually used in the speech. The triumphs of the contest, however, did not fall to him or to his associates, but to John Marshall, who followed him, and who, in a speech that still stands without a parallel in our Congressional debates, replied to him and to them. There is a tradition in Virginia that after Marshall concluded his speech, the Republican members pressed round Gallatin, urging with great earnestness that it should be answered at once, and that Gallatin replied in his foreign accent, “Gentlemen, answer it yourselves; for my part I think it unanswerable,” laying the stress on the antepenultimate syllable. The story is probably true. At all events, Mr. Gallatin made no answer, and Mr. Marshall’s argument settled the dispute by an overwhelming vote.
But the coming Presidential election, one of the most interesting in our history, now cast its shadow in advance over the whole political field. The two parties were so equally divided that the vote of New York City would probably decide the result, and for this reason the city election of May, 1800, was the turning-point of American political history in that generation. There the two party champions, Hamilton and Burr, were pitted against each other. Commodore Nicholson was hotly engaged, and Edward Livingston, Matthew L. Davis, and the other Republican politicians of New York became persons of uncommon interest. Mr. Gallatin, as leader of the Republican party in Congress and as closely connected by marriage with the Republican interests of New York City, was kept accurately informed of every step in the political campaign. He himself was in constant communication with Matthew L. Davis, who was Burr’s most active friend then and ever afterwards. Davis’s letters are now of historical importance, and may be compared with the narrative in his subsequent Life of Burr:
MATTHEW L. DAVIS TO GALLATIN.
New York, March 29, 1800.