GOOD FORTUNE HELPS US
But by this time the good luck which has been supposed to keep an eye on the United States of America had intervened. In 1846 came the great Irish famine. British provision laws were suspended. Faced with starvation people cared little what they paid, if they could obtain food. Our agricultural products, which had fallen heavily in market value since October 1, 1845, rose with astonishing buoyancy. Western grain that had scarcely been worth transporting—frequently not worth it—became precious. A ship could earn thirty per cent of her cost in one round trip, yet hardly enough vessels could be found. So abrupt was the turn that a financial editor who had predicted on December 17, 1846, a speedy return to the distress of 1837, declared on January 30, 1847, “We are on the high road to an unprecedented prosperity.” The abolition of the British corn laws ensured our farmers not only temporary relief but a permanent market. Cotton, too, and even cotton goods were in active demand abroad; and a famine in Germany gave us additional support.[19]
Every vessel from the other side brought more of the specie that had been expected to disappear from circulation here. Between the first of January and the middle of July, 1847, approximately twenty-four millions came in, besides about five millions in the pockets of immigrants. Everybody who did anything or had anything shared in the general increase of wealth. Hoarding went out of fashion. All were spenders. In particular, a craze for dress demanded great quantities of European fabrics. The warehousing plan also stimulated importation. For the quarter ending with September, 1847, the customs duties amounted to more than eleven millions—almost half the total of the preceding year—and for the week ending with October 1 they were nearly double those of the corresponding week in 1846. In a word, gold rained upon us; the languishing treasury revived; and the credit of the government revived with it. Later, in the autumn of 1847, to be sure, the financial downpour abated, but it had already done its work. The ship of state rode now beyond the bar.[19]
Yet Polk still had to cope with difficulties. Early in December, 1847, when Congress assembled, he found it necessary to present large estimates and to admit that a deficit of nearly sixteen millions was to be expected by July 1, 1848; and there seemed to be little hope that Congress would provide additional revenue. Borrowing was inevitable, and Walker’s report of December 8 proposed a loan of $18,500,000. Nothing was done, however. The banks of New York and Boston endeavored to force upon the government a fiscal policy more acceptable to them, and a strong element in Congress, of which more will be heard in the next chapter, not only entertained a similar desire, but seemed willing to impair the credit of the administration. At length, on the nineteenth of January, 1848, a bill was introduced, and after a further delay another long debate opened. “How is the loan bill getting on, Sir?” inquired a newspaper correspondent of a Representative of the People after it had been on the tapis for about a month. “Oh, they are spouting away, spouting away, Sir,” was the careless reply. But on the last day of March a six per cent loan of $16,000,000 was authorized on substantially the same basis as the previous loans. The treaty of peace had been signed on February 2, and the new bonds brought a premium rising in some instances to $4.05 on a hundred.[20]
THE MEXICANS TAXED
In the same report (December, 1847) Walker announced, though evidently a little chastened in spirit, that relief would soon come from Mexico. What he chiefly counted upon at this time, however, was not customs duties. As early as the nineteenth of September, 1846, Polk, justly offended by the enemy’s disdainful treatment of our olive branch, decided that instead of endeavoring longer to conciliate the Mexicans by paying liberally for supplies, we should bring them to terms by levying contributions or taking needed articles without compensation, and this course was promptly recommended to General Taylor; but he replied, as we have seen, that such a policy was impracticable. Shortly after the capture of Vera Cruz General Scott received instructions of the same tenor, and he made a similar reply. Early in the autumn of 1847, however, as Mexico had again rejected the olive branch, this change of system was pressed upon Scott with fresh urgency, and before long explicit orders to make all the revenues and resources of Mexico available, as far as they could be, followed.[21]
Scott, however, knowing the laws of war and the wishes of his government, began operations without waiting for these later instructions. Almost immediately after entering the capital he laid upon it an assessment of $150,000, and set on foot an examination into the general question of drawing revenues from the country, which eventually showed that nearly twenty-three millions a year could theoretically be collected, should we take possession of the whole territory. November 25, he directed that no rent should be paid for houses and quarters except so far as contracts existed. About three weeks later, notice was given that in the districts held by the Americans all the taxes and dues previously paid to the Mexican government would be required of the authorities for the support of our army; and at the end of December an assessment equal to four times the direct taxes paid in 1843 was laid upon the states. Scott’s action was of course taken by Wool, now commanding in the northeast, as a pattern.[22]
But again Walker’s hopes were disappointed. The most important of the monopolies, tobacco, had to be given up because the American product could not be excluded, and for administrative reasons the other monopolies also were surrendered. Owing to the dangers of waste, corruption, extortion and resentment, the business of collecting taxes had to be entrusted to the state authorities, and they possessed wonderful dexterity in the arts of evasion. State assessments were actually made on México and Vera Cruz only. The owners of occupied buildings were in many cases friends, and could not well be deprived of their rents. Contracts or agreements that stood in the way had to be respected. Gold and silver were clandestinely exported. Smuggling across the northern border could not be stopped. Brigands exacted their toll. The time required for investigation and planning, and in certain instances for correspondence with our government, militated against prompt action. We strongly desired to settle with Mexico and evacuate the country, and hence—especially after the peace negotiations began—it would not have been wise to run the risk of exasperating the nation for the sake of a few dollars. In short the net proceeds, including $106,928 turned in by naval officers, were only $3,935,676.[23]
Some of this money went directly to supply needs of the army and navy, but by far the greater part of those needs had to be met in other ways. During the first nine months of 1847, it was figured that the United States exported more than $12,000,000 in specie to Mexico. Many drafts on the principal American cities were sold there, and those on the quartermasters at New Orleans, Philadelphia, Washington and New York amounted to nearly $8,000,000 before December, 1847. Payments were also made in the United States on the certificates of officers acting in the field; and about the first of August, 1847, Belmont, the New York agent of the Rothschilds, arranged with our administration to place funds in the hands of any paymaster or quartermaster named by Scott. In general the large financial operations made necessary by the transfers of money were skilfully, honestly and safely conducted. Some $24,000,000 were distributed by the pay department through its thirty-five officers, for instance, and nothing was lost by accident, robbery, theft or capture.[24]
THE COST OF THE WAR