But Congress passed the Sub-Treasury Bill, by which most of the financial measures of the preceding administrations since 1833, resting on the mere orders of President or Secretary of the Treasury, were legalized. It was in the main the same law which Van Buren had labored so long to secure, but which the Whigs had repealed in 1841. The money of the Government was henceforth to be kept in certain designated sub-treasuries in leading cities like New York, Baltimore, and New Orleans, and drawn upon by the Secretaries of the Treasury when needed. There was thus to be no national bank; and the state banks were to continue issuing their paper, which was to be the money of the people. Gold and silver, coined by the government mint at Philadelphia, were seldom demanded in ordinary business transactions, though coin or bullion still remained the redemption money of the banks and served as the basis of exchange with foreign countries.

The South had preached free trade since 1828. Polk and his Secretary of the Treasury had been prominent exponents of the idea, despite some campaign bargaining with Pennsylvania. In England Richard Cobden, John Bright, and Sir Robert Peel were about to secure the repeal of the age-old protective system, and in both France and Germany the free-trade agitation was daily winning recruits. Polk and his advisers set themselves the task of securing the passage of a “free-trade tariff” for the United States. Walker submitted an able report in December, 1845. A very high rate was recommended on all luxuries, including wines and liquors; an average duty of twenty-five per cent was to be laid on the great bulk of imports which would compete with American cotton, wool, and iron manufactures; and a long list of articles of every day consumption on which no duties should be imposed was submitted. Though the Pennsylvanians denounced the proposed tariff bill as un-Democratic, it became a law in July, 1846, proved to be successful, and remained the corner-stone of the Democratic structure till 1861.

The douceur, in the form of a bill for liberal internal improvements for the Northwest, whose leaders all voted for the tariff reductions, passed both houses of Congress; but the members from the lower South, led by Robert Barnwell Rhett, protested to the last. Polk accepted their view and vetoed the bill. Northwestern men cried out “treachery” so loudly that summer, in a great mass meeting in Chicago, that the President feared the party was seriously endangered. Still, the three problems over which Clay, Calhoun, and Webster had wrestled since 1816 had been solved. The United States was henceforth to manage its finances independently; the free-trade element had won the ascendancy, and there was not to be another high-tariff campaign until after the Civil War; and internal improvements on a large national scale were not to be undertaken until the passage of the Pacific Railway Bill in 1862. The only cloud above the political horizon was the anger of the Northwestern Democrats.

There was more danger in carrying forward the program which was intended to secure to the United States Oregon, California, and New Mexico. But the first step had already been taken. In April, 1846, both House and Senate, in spite of the opposition of the older leaders, authorized the President to give notice to England that joint occupation should cease at the expiration of a year. The English people were much excited, and the idea prevailed that this was only a move on the part of the United States to seize Canada, but the British Government renewed the proposition to compromise on the forty-ninth parallel, Vancouver Island to remain in British possession. A treaty to this effect was accepted by both Governments during the summer of 1846. Polk could boast that the Oregon question had been settled. Again the Northwestern Democrats, who had been promised all of Oregon, were sorely disappointed. One of their most popular leaders declared in the Senate: “James K. Polk has spoken words of falsehood, and with the tongue of a serpent.” Would the Northwestern wing of the party continue loyal? This may, perhaps, best be answered when we come to discuss the Wilmot Proviso.

When the Oregon question was at its acutest stage, in the autumn of 1845, Polk sent John Slidell, an adroit politician of Louisiana, to Mexico, to renew the friendly relations which had been broken off immediately after the passage of the joint resolution by Congress. Slidell was authorized to negotiate a treaty by which European influence, then being exerted in Mexico against the United States, was to be counteracted, the annexation of Texas approved, and all of the claims of American citizens against Mexico were to be definitely satisfied. But as Mexico had no funds in her treasury, Slidell was to assume for the United States all these obligations, and pay the Mexicans $5,000,000 in return for the cession of New Mexico, a part of which was claimed by Texas. Finally Slidell was to purchase California, if that were found to be possible, and raise the cash payment from $5,000,000 to $25,000,000. Slidell's mission was supported by a naval demonstration in Mexican waters, and the meaning of his presence was made very plain to the people of the distressed republic.

The new Minister was rejected, however, and Taylor was ordered to move his troops toward the Rio Grande. Mexico resented this, and near Matamoras on April 24, 1846, came the first pass at arms. Slidell returned to Washington about the time that the news of this encounter reached the President. On May 11, war was declared and Taylor was ordered to cross the border and “conquer a peace.” In August Colonel S. W. Kearny seized New Mexico and set out with a troop of three hundred men to take California. But Commodore John Drake Sloat had been sent to the Pacific with a squadron of the navy to prevent the seizure of Monterey by the English. And to make certainty more certain, Consul Thomas O. Larkin at Monterey had been instructed, about the time of Slidell's appointment to Mexico, to be in readiness for any emergency. Before Kearny could cross the mountains, Larkin and Sloat had taken possession of California, almost unresisted.

In September, 1846, General Taylor won a brilliant victory at Monterey, twenty miles south of the Rio Grande, and his forces were being augmented every day for the march overland to the City of Mexico. Whig politicians hailed at once the new general as their candidate for the Presidency in 1848. Naturally the Administration did not care to aid their opponents in their political plans, and its leaders cast about for a Democratic general. None was to be found; and Thomas H. Benton, willing that Jackson's plan for his elevation to the Presidency should be fulfilled, asked Polk to make him commander-in-chief of all the forces operating in Mexico. Benton had never had any military experience, and Polk was relieved to find that such an appointment would not be confirmed by the Senate. General Winfield Scott, already quarreling with the Secretary of War, and hence out of favor with the Administration, was the only alternative. Scott was also a candidate for the Whig nomination for the Presidency. After much hesitation most of the troops of Taylor were placed under the command of Scott and reinforced with still others, and all set sail for Vera Cruz, then as now the great port of Mexico. The city fell on March 29, 1847, and the march to the City of Mexico was about to begin.

Meanwhile, Santa Anna had been made commander of all the Mexican armies, and he, learning of Taylor's weak and isolated position south of Monterey, hastened with twenty thousand soldiers to surround and capture him. Taylor moved forward and met the enemy at Buena Vista, after receiving some raw recruits, on February 23, 1847, and completely routed him, thus adding to the laurels he had already won and convincing the country that he had been badly treated by the authorities in Washington.

Scott began the march to the Mexican capital on April 8. He met resolute resistance at Cerro Gordo, where on April 17 and 18 a large army of the enemy was attacked and defeated. At this point Nicholas Trist, envoy from the President, with instructions to treat with Mexico on the basis of Slidell's proposals of 1845, arrived. Trist was a clerk in the Department of State, and Scott refused to recognize or have any relations with him. After much unseemly bickering and the conciliatory services of the British Minister to Mexico, the general and the envoy made peace, and negotiations were opened, only to be broken off by Santa Anna upon his arrival from the north. On August 19 and 20, the battle of Cherubusco seemed to convince the Mexicans that further resistance would be futile, and Trist again offered peace on the terms of 1845, except that the United States would reduce the amount of money to be paid by $5,000,000. But the armistice under which the negotiations had been renewed was broken, and on September 8 and 13, the battles of Molino del Rey and Chapultepec were fought, and the capital was occupied on September 14. A revolution in the affairs of Mexico now took place, and the new Government appointed commissioners on November 22, to treat with Trist.

However, the news of these battles and victories had aroused the expansionist instincts of the people of the United States, or at least of the articulate classes, to the point of demanding the annexation of the whole of Mexico. Sober newspapers, like the New York Evening Post, officers of the navy and the army, like Commodore Stockton and Colonel Jefferson Davis, the hero of the battle of Buena Vista, and leading politicians, John A. Dix, Lewis Cass, and Secretary Walker, urged the Government to make an end of Mexico by prompt dismemberment. Although the election of Representatives in 1846 had resulted in giving the Whigs control of the House, Congress seemed disposed to yield to the popular clamor as they came together in December, 1847, when the news of the raising of the American flag over the city of Mexico was fresh in the public mind.