Meanwhile attention was given to the more substantial resource of a loan. At the end of September the secretary of the treasury disappeared mysteriously from his accustomed haunts, and to Polk’s acute distress of mind wandered for more than two weeks in the perilous jungle of Wall Street. His experiences there were in fact rather hard. The capitalists looked with favor on the project of a loan and had plenty of money, but—believing the government would require a large amount, and therefore that a loan made now would be likely to depreciate, as well as actuated by their characteristic spirit of thrift—they stood out for six per cent. The New York and Boston banks, it was thought at the White House, were in league against the administration. Besides, the public had little information about the way money was being spent, and felt apprehensive of extravagance and a huge debt. Many believed the war had cost half a million each day. Not a few distrusted Walker. He had engineered Mississippi into bankruptcy, and had become insolvent personally. In the Senate his reputation had been that of a needy adventurer, intensely ambitious, clever in debate and intrigue, but not of solid ability, and especially not a financier. At present nobody denied his real talents or his extreme devotion to work, but he was charged with inaccuracy and with sophistical reasoning.[13]
Apparently five and two fifths per cent was all he felt ready to offer, and special reasons could be given for halting there, since it was feared that issuing a six per cent loan at par would injure the United States sixes, now held at 106, and also the credit of the government. But finally, with the approval of the President and the Cabinet, he advertised, October 30, for bids on a five million loan for ten years at six per cent. November 12 the tenders were opened. For a small fraction of the amount a slight premium was offered, and for the rest par. No doubt the rate, in comparison with European standards, had to be regarded as high, but on the other hand this was our first specie loan, and was said to be the only war loan ever taken without a discount.[13]
Plainly, however, more needed to be done. It was already extraordinarily difficult to pay the comparatively small expenses of the war, wrote the British minister at this time. Congress had not fully provided for even the minimum needs recognized by the sanguine, if not sophistical, Walker; and early in December, 1846, his annual report intimated that on July 1, 1848, with a due allowance for the working capital of the treasury, there would be a deficit of twenty-three millions. Apparently a loan was requisite, and he advised making the term twenty years. Then, with no little anxiety, the administration waited. At the end of December Bancroft wrote privately, “If we can raise the ways and means,” we can surmount the other difficulties. On the eleventh of January, 1847, a bill virtually embodying Walker’s recommendations was thrown into the House, and a long, acrimonious debate ensued. The treasury “languishes,” announced the organ of the government; needed volunteers could not be called out; but the legislators had irrepressible things to say. At length, however, on January 28 the bill providing $23,000,000 became a law. Though it primarily contemplated treasury notes, it permitted the Executive liberty of action; and a large amount of six per cent bonds were sold.[14]
But Polk was by no means out of trouble now. Walker’s estimate made no mention of great outstanding purchases, for which the contractors had not yet sent in their accounts. Not only the customs duties but the sales of public lands were coming far short of his expectations. No allowance appeared to be made for the effect of bounty land scrip that was likely to reduce them still more. The Vera Cruz expedition and a possible march to the enemy’s capital were in view. Indeed, the real war had only begun. Besides, the temper of Congress had already threatened trouble and made it. Not only to ensure additional revenue in general, but in particular—it would seem—to strengthen the credit of the government by showing how the interest on its obligations would be taken care of, the Secretary brought up again the suggestion of his annual report, that a duty of twenty-five per cent should be placed on tea and coffee, which—although the free list had been restricted in the tariff of 1846—had been left untaxed. In fact it had been intimated by him at New York, even if not actually promised, that such a step would be taken; and a few days before Christmas, 1846, he notified the committee on ways and means that probably without this assistance a satisfactory loan could not be made. Yet Congress rejected the proposition by a great majority.[15]
A plan of Benton’s also—to grade the public lands on the basis of their attractiveness, and reduce prices accordingly—which would have increased the income of the government, failed to pass, though endorsed by Polk, Walker and the general land commissioner. Pessimists were happy. With Polk, the war, the weather, the sub-treasuries “and perhaps the Devil” to struggle against, wrote a correspondent of Martin Van Buren, soon not an ingot would be “left standing,” and there was “no calculating, no prophesying” what would become of the nation.[15]
A TARIFF FOR MEXICAN PORTS
Apparently to offset the failure of the tea and coffee tax, Walker’s active brain produced another scheme, designed not only to bring in revenue and reassure the capitalists, but also to please the shipping men of the United States and neutral countries. This was to open the Mexican ports controlled by us, and permit merchandise to enter there under a moderate scale of duties. During March, 1847, assisted by Senator Benton and the attorney general, Polk satisfied himself that under his powers as commander-in-chief he could impose and collect the duties as military contributions, for by the right of conquest he could either exclude commerce or admit it on his own terms, and contributions were legitimate under the laws of war. Said Vattel, “A nation [at war] on every opportunity lays its hands on the enemy’s goods, appropriates them to itself, and thereby, besides weakening the adversary, strengthens itself, and at least in part, procures an indemnification, an equivalent, either for the very cause of the war, or for the expences and losses resulting from it”; and a low scale of duties was an extremely mild application of this principle.[16]
Moreover, it was quite as legitimate under our Constitution also, though not expressly mentioned, as to blockade or bombard Vera Cruz, respecting which the organic law was equally silent. Indeed, to have left the ports wide open or allowed the high Mexican tariff to remain in force would, in addition to being harmful to us, have required as great an exercise of authority. Finally, Scott and some of our naval commanders, moved by the evident proprieties of the situation, fixed duties and used the proceeds at their discretion, and it was manifestly better to arrange the business in a uniform, well-considered manner.[16]
It might have been expected that substantially either our own or the Mexican tariff would be applied, but neither would have answered. Mexican imports were very different from ours; specific, not ad valorem, duties had been customary there; and competent appraisers could not be found. On the other hand the unreasonable Mexican duties, besides preventing commerce to a large extent, encouraged fraud and smuggling. In March, 1847, therefore, a special tariff was prepared by Walker, lowering the Mexican duties on imports more than one half, and substituting for all port dues and charges a uniform tax of one dollar per ton; and on March 31 Polk ordered the system to be put in force. Mexico retorted that goods paying the American duties—especially goods prohibited by her laws—would be confiscated, and this attitude caused some uneasiness in France; but it seemed fairly evident that the United States would protect neutrals accepting our policy, and not only the foreign merchants in Mexico but the neutral governments felt highly pleased with our course.[17]
The authorities at Washington, however, did not rejoice as much. The real difficulty lay, not in landing merchandise at the ports, but in placing it before Mexican customers, and comparatively few of the latter could be reached. Persevering efforts were made to solve the problem on both coasts. Sometimes, for reasons not fully understood, the Mexican government issued licenses for the passage of goods to the interior, and for a consideration local authorities in the northeast did the same; but even these documents were not always valid against officials and military men whose “patriotism” had not been “sweetened.” European merchants could see this difficulty. Up to October 20, 1847, only one small cargo from that direction entered the harbor of Vera Cruz, and Walker admitted privately that a very small part of the few imports was disposed of for consumption beyond the coast. In a word, this vaunted plan gave no substantial help on the problem of supporting the war.[18]