The Life of Albert Gallatin

In the middle of this state of affairs, while the Treasury was wrestling with the problems of Indian wars and domestic revolt, came the ominous signs of foreign aggression. War was thought to be imminent, either with France or England, from 1795 to 1800, and the government was in great straits to provide for it. The time now came when the Federalists would probably have been delighted to recover the ten millions which had been unnecessarily assumed, and the theory of a national debt must have taken a different aspect in their eyes. Mr. Hamilton had not calculated on this emergency; his system had rested on the assumption that the old situation was to be permanent. The question was forced upon the country whether it should increase its debt or neglect its defences.

Here was the point where the theories of Mr. Hamilton and of Mr. Gallatin sharply diverged. The Federalists in a body demanded an army and navy, with an indefinite increase of debt. Mr. Gallatin and his party demanded that both army and navy should be postponed until they could be created without increase of debt. The question as a matter of statesmanship was extremely difficult. In a country like America any really efficient defence, either by land or sea, was out of the question except at an appalling cost, yet to be quite defenceless was to tempt aggression. Deeper feelings, too, were involved in the dispute. An army and a navy might be used for domestic as well as foreign purposes; to use the words of Fisher Ames in private consultation with the Secretary of the Treasury in 1800, when the situation was most critical: “a few thousand, or even a few hundred, regular troops, well officered, would give the first advantages to government in every contest;”33 and this idea was always foremost in the minds of the extreme Federalists as it was among the extreme Republicans. To crush democracy by force was the ultimate resource of Hamilton. To crush that force was the determined intention of Jefferson.

Mr. Gallatin’s policy was early, openly, and vigorously avowed and persistently maintained. In this session of 1795-96, when appropriations for finishing three frigates were demanded, he said in a few words what he continued to say to the end of his service: “I am sensible that an opinion of our strength will operate to a certain degree on other nations; but I think a real addition of strength will go farther in defending us than mere opinion. If the sums to be expended to build and maintain the frigates were applied to paying a part of our national debt, the payment would make us more respectable in the eyes of foreign nations than all the frigates we can build. To spend money unnecessarily at present will diminish our future resources, and instead of enabling us will perhaps render it more difficult for us to build a navy some years hence.” “Perhaps I may be asked if we are then to be left without protection. I think there are means of protection which arise from our peculiar situation, and that we ought not to borrow institutions from other nations, for which we are not fit. If our commerce has increased, notwithstanding its want of protection; if we have a greater number of seamen than any other nation except England, this, I think, points out the way in which commerce ought to be protected. The fact is, that our only mode of warfare against European nations at sea is by putting our seamen on board privateers and covering the sea with them; these would annoy their trade and distress them more than any other mode of defence we can adopt.”34

Yet government has to deal with beings ruled not only by reason but by feeling, and its success depends on the degree to which it can satisfy or at least compromise between the double standard of criticism. Mr. Gallatin habitually made too little allowance for the force and complexity of human passions and instincts. Self-contained and self-reliant himself, and, like most close reasoners, distrustful of everything that had a mere feeling for its justification, he held government down to an exact observance of rules that made no allowance for national pride. The three frigates whose construction he so pertinaciously resisted were the Constitution, the Constellation, and the United States. The time came, after Mr. Gallatin and his party had for nearly twelve years carried out their own theories with almost absolute power, when the American people, bankrupt and disgraced on land, turned with a frenzy of enthusiasm towards the three flags which these frigates were carrying on the ocean, and, with little regard to party differences, would have seen the national debt and no small part of the national life expunged rather than have parted with the glories of these ships; when the broadsides of the Constitution and United States, to use the words of George Canning in the British Parliament, “produced a sensation in England scarcely to be equalled by the most violent convulsion of nature;” and when Mr. Gallatin himself, exhausting every resource of diplomacy in half the courts of Europe, found that his country had no national dignity abroad except what these frigates had conquered.

Notwithstanding all this, and with every motive to recognize in the fullest extent the honors won by the American navy, the cool and candid decision of history should be that Mr. Gallatin was essentially in the right. A few years of care and economy were alone necessary in order to secure the certainty of national power, and that power would be so safe in its isolation as to be able to dispense with great armies and navies. The real injury suffered by Great Britain in the war of 1812 was not in the loss of half a dozen vessels of war out of her eight hundred in commission, but in the ravages of our privateers on her commercial marine. As a matter of fact the United States have continued to act on Mr. Gallatin’s theory; government has never pretended to protect the national commerce by a powerful navy; no navy, not even that of Great Britain, could protect it in case of war. That commerce has continued to flourish without such protection. Every one concedes that it would be the wildest folly even now, with forty millions of people and a continent to protect, for America to establish a proportionate navy. Every smatterer in finance knows that, inefficient as the existing navy is, hundreds of millions have been uselessly expended upon it. There could be no more instructive thesis proposed to future Secretaries of the Treasury than to ask themselves on entering into office, “What would Mr. Gallatin wish to do with the navy were he now in my place?”

But opposition to a navy was only a detail in Mr. Gallatin’s theory of American finance, and his plans extended over a far wider range than could be comprehended within the limits of one or many speeches. The debate on the British treaty had, no doubt, won him a large share of attention, but the essentials of power in a deliberative body are only to be secured by labor and activity and by mastery of the business in hand. Mr. Gallatin knew perfectly well what was to be done, and lost no time in acting. Before the House had been ten days in session, on the 17th December, 1795, he brought forward a resolution for the appointment of “a committee to superintend the general operations of finance. No subject,” said he, “more requires a system, and great advantages will be derived from it.” This is the origin of the standing Committee of Ways and Means, the want of which hitherto he ascribed, it seems, to Mr. Hamilton’s jealousy of legislative supervision. On the 21st December the resolution was adopted and a committee of fourteen appointed, Mr. William Smith, of South Carolina, being chairman, supported by Theodore Sedgwick, Madison, Gallatin, and other important members of the House.

The British treaty consumed most of this session, and until that question was settled the regular business was much neglected; but Mr. Gallatin did not wait till then in order to begin his attack. As early as April 12, 1796, a somewhat warm debate arose in the House on the subject of the debt, and he undertook, with an elaborate comparison of receipts and expenditures, to analyze the financial situation and to show that the revenue was steadily running behindhand. The true situation of the government was a point not altogether easy to ascertain. One of several English ideas adopted by Mr. Hamilton from Mr. Pitt was a sinking fund apparatus. Even at that time of Mr. Pitt’s supreme authority it can hardly be conceived that any one really believed a sinking fund to be effective so long as the government’s expenditure exceeded its income; it was, however, certainly the fashion to affect a belief in its efficacy at all times, and although, if Mr. Pitt and Mr. Hamilton had been pressed on the subject, they might perhaps have agreed that a sinking fund was always expensive and never efficient except when there was a surplus, they would in the end have fallen back on the theory that it inspired confidence in ultimate payment of the debt. Their opponents would not unnaturally consider it to be a mere fraud designed to cover and conceal the true situation.

Apart, however, from every question of the operation of the sinking fund, there were intrinsic difficulties in ascertaining the facts. The question was, as in such cases it is apt to be, in a great degree one of accounts. The immediate matter in dispute was a sum of $3,800,000 advanced by the bank in anticipation of revenue. Mr. Sedgwick and the Administration wished to fund it, and made considerable effort to prove that the debt would not only be unaffected thereby, but that, as a matter of fact, the debt had been diminished. Mr. Gallatin opposed the funding, and insisted that provision should be made for its payment, and he undertook to prove by a comparison of receipts and expenditures that the debt had been increased $2,800,000 down to the 1st January, 1796. It was felt to be a crucial point, and Mr. Gallatin was not allowed to go unanswered. On the last day of the session Mr. William Smith replied to him, elaborately proving that so far from there being a total increase of $5,000,000 in the debt, as he had undertaken to show, there was an actual excess of over $2,000,000 in favor of the government. To this Mr. Gallatin made an immediate reply, Mr. Smith rejoined, and the session ended.

Of course each party adhered to its own view, which was a matter of very little consequence so long as Mr. Gallatin gained his point of fixing public attention upon the subject; his aim was to educate his own party and to plant his own principles deep in popular convictions. After the adjournment he wrote a book for this purpose called “A Sketch of the Finances of the United States,” which was in fact a text-book, and answered its purpose admirably. In two hundred pages, with a few tabular statements appended, he discussed the revenues, expenditures, and debt of the United States with his usual clearness, and, while avoiding all apparent party feeling, he freely criticised the financial measures of the government. The duty of preventing increase of debt, of discharging the principal as soon as possible, was the foundation of the work; criticisms of the cases in which the burden had been unnecessarily increased were interwoven in the statement, which concluded with suggestions of additional sources of revenue.35

Thus already in the first year of his Congressional service Mr. Gallatin had sketched out and begun to infuse into his party those financial schemes and theories that were ultimately to be realized when they came into power. That these ideas, as forming a single complete body of finance, were essentially new, has already been remarked. In theory Mr. Hamilton also was in favor of discharging the debt, and originated the machinery for doing so; that is to say, he originated the sinking fund machinery, or rather borrowed it from Mr. Pitt, although this financial juggle has now become, both in England and America, a monument of folly rather than of wisdom; while a much more effectual step was taken in the last year of his service, when he recommended the conversion of the six per cents. into an eight per cent. annuity for twenty-three years, which was equivalent to an annual appropriation of about $800,000 a year for the payment of the principal. This, however, was not the real point of difference between the systems of Mr. Gallatin and Mr. Hamilton. Laying entirely aside the general proposition that the Hamiltonian Federalists considered a national debt as in itself a desirable institution, and conceding that the Federalists would themselves have ultimately reduced or discharged it, there still remains the fact that the Federalists made the debt a subordinate, Mr. Gallatin made it a paramount, consideration in politics. The one believed that if debt was not a positive good, it was a far smaller evil than the growth of French democracy; the other, that debt was the most potent source of all political evils and the most active centre of every social corruption. The Hamiltonian doctrine was that the United States should be a strong government, ready and able to maintain its dignity abroad and its authority at home by arms. Mr. Gallatin maintained that its dignity would protect itself if its resources were carefully used for self-development, while its domestic authority should rest only on consent.

Which of these views was correct is quite another matter. Certain it is that the system so long and ably maintained by Mr. Gallatin was rudely overthrown by the war of 1812, and overthrew Mr. Gallatin with it. Equally certain it is that the United States naturally and safely gravitated back to Mr. Gallatin’s system after the war of 1812, and has consistently followed it to the present time. The debt has been repeatedly discharged. Neither army nor navy has been increased over the proportions fixed by Mr. Gallatin and Mr. Jefferson. Commerce protects itself not by arms nor even by the fear of arms, but by the interests it creates. America has pursued in fact an American system, – the system of Mr. Gallatin.

True it also is that this result does not settle the question as between Mr. Hamilton and Mr. Gallatin, for there were special circumstances which then made the situation exceptional. As has been said, the war of 1812 was a practical demonstration of at least the momentary failure of Mr. Gallatin’s principle, and the failure occurred in dealing with precisely those difficulties which the Federalists had foreseen and tried to provide for. The question therefore recurs, whether the Federalist policy would have resulted better, and this is one of those inquiries which lose themselves in speculation. There is no answer to so large a problem.

Congress rose on the 1st June, 1796, and Mr. and Mrs. Gallatin passed the summer in New York. Meanwhile, the co-partnership in which he had engaged had resulted in establishing on George’s Creek a little settlement named New Geneva, and here were carried on various kinds of business, the most important and profitable of which was that of glass-making, begun during Mr. Gallatin’s absence in the spring of 1797.

Leaving his wife in New York, Mr. Gallatin went to New Geneva for a few weeks in the autumn of 1796.

GALLATIN TO HIS WIFEPhiladelphia, 26th September, 1796.

… I arrived here last Saturday… I have received pretty positive and certain information that Findley will be re-elected unanimously in our district, my name not being mentioned there, and that I will be superseded in Washington and Alleghany by Thomas Stokeley. This I have from Woods’s friends, who seem to be equally sure that neither he nor myself are to be elected. The Republicans despair to be able to carry me, not, by the by, so much on account of the treaty question as because I do not reside in the district and have not been this summer in the western country, and they hesitate whether they will support Edgar or Brackenridge. At all events, I think I will be gently dropped without the parade of a resignation. The other party will call it a victory, but it will do neither me nor our friends any harm. I think, indeed, it will not be any disadvantage to the Republican interest that my name should be out of the way, at least for a while…

Shippensburg, 3d October, 1796.

… The farther I go from you the more I feel how hateful absence is, and the stronger my resolution is not to be persuaded to continue in public life. Indeed, we must be settled and give up journeying. This design gives me but one regret, it is to part you and to part myself from your family; they are the only beings I will feel sorry to leave behind, but I will feel the want of them more than I can express…

New Geneva, 12th October, 1796.

… I arrived here last Friday without any accident… As to politics, the four or five last newspapers are filled with the most scurrilous and abusive electioneering pieces for and against myself and Thomas Stokeley. This has raised the contention so high in the counties of Alleghany and Washington that my old friends have again taken me up very warmly, and I came too late to prevent it. There is, however, the highest probability that I will not be elected. The election took place yesterday, but we do not know the result. In this and Westmoreland County James Findlay, who was a great admirer of the treaty, has been prevailed upon by Addison & Co. to oppose William Findley, whom we have been supporting, notwithstanding all his weaknesses, because it became a treaty question, and I expect he must be elected by a majority of two to one…

New Geneva, 16th October, 1796.

… No, my Hannah, we shall not, so far as it can depend upon ourselves, – we shall not hereafter put such a distance between us. It is perfectly uncertain whether I am elected in Congress or not; but if I am, that shall not prevent the execution of our plans, and I will undoubtedly resign a seat which in every point of view is perfectly indifferent to me, and which is certainly prejudicial to my interest if it does interfere with the happiness of our lives… Ambition, love of power, I never felt, and if vanity ever made one of the ingredients which impelled me to take an active part in public life, it has for many years altogether vanished away…

New Geneva, November 9, 1796.

… I will not put your patience and good nature to a much longer trial, and I know you will be glad to hear that this is the last letter I mean to write you from this place, and that next Tuesday, the 15th inst., is the day I have fixed for my departure. I have been tolerably industrious since I have been here, settling accounts, arranging some matters relative to the concerns of the copartnership, getting some essential improvements on our farm, getting rid of my tenants, and electioneering for electors of the President. Our endeavors to induce the people to turn out on that day have not been as successful as I might have wished. In this county our ticket got 406 votes, and Adams’s had 66. What the general result will be you will know before I do…

The Presidential election of 1796, which was to decide the succession to Washington, ended in the choice of John Adams over Thomas Jefferson and in a very evenly balanced condition of parties. The constitutional arrangement by which the President was not chosen by the people, but by electors themselves chosen by Legislatures, makes it impossible to decide where the popular majority lay; and the rule that the person having the highest number of electoral votes should be President, without regard to the intentions of the electors, at once began to throw discord into the ranks of both parties. John Adams thought with reason that he had been nearly made the victim of an intrigue to elect Thomas Pinckney; and Aaron Burr, the Republican leader in the North, as Jefferson was in the South, with equal reason believed himself to have been sacrificed as a candidate for the Vice-Presidency by the jealousy of Virginia. Both these suspicions, deeply rooted in sectional feeling, bore fruit during the next few years.

Mr. Gallatin, contrary to his expectation, was re-elected to the House of Representatives by the district which had chosen him two years before, although his long absences from the western country and his opposition to the British treaty threatened to destroy his popularity. After six weeks’ absence at New Geneva during the elections, he returned to Philadelphia to take part in the coming session.

The times were stormy. President Washington, whose personal weight had thus far to a great extent overawed the opposition, was about to leave office, and his successor could hope for little personal consideration. The British treaty and the policy which dictated it had been warmly resented by France. The government of that country was in a state of wild confusion, and its acts were regulated by no steadiness of policy and by little purity of principle. Without actually declaring war, it insulted our agents and plundered our commerce. Its course was damaging in the extreme to the opposition party in America; it strengthened and consolidated the Federalists, and left the Republicans only the alternative of silence or of apology more fatal than silence. Mr. Monroe, our minister to France, recalled by President Washington for too great subservience to French influence, adopted the course of apologizing for France, and was supported by most of his party. Mr. Gallatin wisely preferred silence. The economical condition of the country was equally unsatisfactory. Speculation had exhausted itself and had broken down. Robert Morris was one of the victims, and Mr. Gallatin began to despair of recovering his debt. Things were in this situation when Congress met, and Gallatin, leaving his wife in New York, took his seat; December 5, 1796.

GALLATIN TO HIS WIFEPhiladelphia, 14th December, 1796.

… Every day in this city increases the distress for money, and you may rely upon it that the time is not far when a general and heavy shock will be felt in all the commercial cities of America. This opinion is not grounded upon a slight or partial view of the present situation of affairs. Many will be much injured by it, and frugality is the only remedy I see to the evil. As to ourselves, I look upon Morris’s debt as being in a very precarious situation. He has told me that he could not make any payment to me until he had satisfied the judgments against him. We must do as well as we can, and, although I had rather it was otherwise, it is not one of those circumstances which will make me lose a single hour of rest… As to politics, we are getting to-day upon the answer to the President’s address. The one reported by the committee is as poor a piece of stuff, as full of adulation and void of taste and elegance, as anything I ever saw. The return of Greene County did not come; but Mr. Miles voted for Jefferson and Pinckney, which made the general vote what you have seen…

After remaining a fortnight in Philadelphia he took leave of absence and went to New York, where he remained till the 1st January. His eldest child, James, was born on the 18th December, 1796, a circumstance which not a little contributed to turn his attention away from politics and to disgust him with the annoying interruptions of domestic life then inseparable from a political career. From this time forward his letters to his wife are chiefly about herself and the child, but here and there come glimpses of public characters and affairs. Party feeling was now running extremely high, and Mr. Gallatin was a party leader, thoroughly convinced of the justice of his views, smarting under bitter and often brutal attacks, which he never returned in kind, and imbued with the conviction that the intentions of a large portion of his political opponents were deeply hostile to the welfare of his country and the interests of mankind. In his letters to his wife he sometimes expresses these feelings in a personal form. It will be seen that he felt strongly; but the worst he said was mildness in comparison to what he had daily to hear.

So far as his Congressional work was concerned he confined himself closely to finance, and, although taking a very considerable share in debate, he avoided as much as possible the discussion of foreign affairs. His most strenuous efforts were devoted to cutting down the estimates, preventing an increase, and, if possible, diminishing the force of the army and navy, and insisting upon the rule of specific appropriations. He had begun to apply this rule more stringently in the appropriation bills of the preceding session, and how necessary the application was is shown by a letter now written by the Secretary of the Treasury, saying that “it is well known to have been a rule since the establishment of the government that the appropriations for the military establishment were considered as general grants of money, liable to be issued to any of the objects included under that Department.” It was only with considerable difficulty that he carried this year his restriction of specific appropriations against the resistance of the Administration party.