The Life of Albert Gallatin

This letter was written towards the end of October, 1812. Already on the 11th of that month, as appears from a brief note written by Mr. Gallatin to the President,117 some exchange of places had been suggested by Mr. Madison, perhaps between Eustis and Monroe, but the suggestion was condemned by Gallatin as more open to criticism than almost any other course that could be adopted. So far as can now be guessed, it is probable that Mr. Gallatin and Mr. Monroe wished to reorganize the Cabinet throughout; Mr. Monroe would then have become Secretary of War, Mr. Gallatin would have succeeded him as Secretary of State, and possibly William H. Crawford would have taken the Treasury; an arrangement which would have given great strength to the government and eliminated many causes of weakness. To this, however, Mr. Madison would not consent, probably from the belief that it would infallibly be defeated in the Senate. In this state of suspense the Administration stumbled on until the end of the year; then Dr. Eustis resigned of his own accord, and Mr. Monroe assumed temporarily the duties of his office, as he easily might, since the war had made the Department of State a sinecure. Governor Hamilton also resigned of his own accord, and immediate action by the President thus became necessary.

GALLATIN TO JEFFERSONWashington, 18th December, 1812.

… The series of misfortunes experienced this year in our military land operations exceeds all anticipations made even by those who had least confidence in our inexperienced officers and undisciplined men. I believe that General Dearborn has done all that was in his power. The conduct of Hull, Rensselaer, and Smyth cannot be accounted for on any rational principle. It is to be hoped that Mr. Eustis’s resignation will open brighter prospects. For, although those three disasters cannot with justice be ascribed to him, yet his incapacity and the total want of confidence in him were felt through every ramification of the public service. To find a successor qualified, popular, and willing to accept, is extremely difficult.

It was just this moment that Mr. Josiah Quincy, hottest of all Federalists, chose for his once celebrated attack on the Administration: “It is a curious fact,” he said, in his speech of 5th January, 1813, “but no less true than curious, that for these twelve years past the whole affairs of this country have been managed, and its fortunes reversed, under the influence of a Cabinet little less than despotic, composed, to all efficient purposes, of two Virginians and a foreigner… I might have said, perhaps with more strict propriety, that it was a Cabinet composed of three Virginians and a foreigner, because once in the course of the twelve years there has been a change in one of the characters… I said that these three men constituted to all efficient purposes the whole Cabinet. This also is notorious. It is true that during this period other individuals have been called into the Cabinet; but they were all of them comparatively minor men, such as had no great weight either of personal talents or of personal influence to support them. They were kept as instruments of the master spirits; and when they failed to answer the purpose, or became restive, they were sacrificed and provided for; the shades were made to play upon the curtain; they entered; they bowed to the audience; they did what they were bidden; they said what was set down for them; when those who pulled the wires saw fit, they passed away. No man knew why they entered; no man knew why they departed; no man could tell whence they came; no man asked whither they were gone.”

In this description there was truth as well as oratory; but Mr. Quincy did not add that this despotism had been tempered by faction to an extent which had left in it very little of the despotic. Even while Mr. Quincy was charging the mysterious three with the design of making Mr. Monroe “generalissimo” in order to perpetuate their power, the three were in a quandary, as much perplexed as any of their neighbors, and actually deciding to accept General Armstrong as the least of their evils. Not one of them had any confidence in General Armstrong; they knew him to be no friend of theirs; to belong to a family – the Clintons – which had for twenty years or thereabouts acted without reference to them; one of whose chiefs, George Clinton, had, as Vice-President, given infinite annoyance to the Administration, while another, De Witt Clinton, had, within three months, run a mad race to get himself elected President by the Federalists in opposition to Mr. Madison; they knew that Armstrong had been through life a master of intrigue, and that his ambition was only checked by his indolence; but they knew that he had ability and that he had loyally supported the government. General Armstrong, therefore, became Secretary of War, while the Navy Department was given to William Jones, of Philadelphia, an active merchant and politician, who, in other days, had served as lieutenant under Commodore Truxton.

Meanwhile, Mr. Gallatin had in his own department cares enough to occupy all his energies. When Congress met in November, 1812, the House was still less disposed to support the Secretary than it had been in the spring. Langdon Cheves, of South Carolina, was now chairman of the Committee of Ways and Means. The Presidential election was over and Mr. Madison was secure in his seat, but the House had less appetite for taxation than before; it refused even to support the Secretary in other money measures. The first trial of strength, in which Mr. Gallatin was worsted, came in an embarrassing form. When the British government on June 23, 1812, revoked its orders in council, the declaration of war being then unknown in England, great quantities of British merchandise were at once shipped to America on the faith of the Act of Congress of March 2, 1811, which promised a renewal of intercourse whenever the British orders should be revoked. Even after the declaration of war became known, these shipments continued, protected by British licenses from British cruisers. All these vessels and cargoes were of course seized on arriving in American ports. The next step was to release such property as was owned in good faith by Americans, the Treasury taking bonds to the value of the cargoes, and, owing to the great rise in prices consequent on the war, the owners made very large profits, in some cases even to the whole amount of the bonds. Mr. Gallatin, unwilling to assume the responsibility of remitting or exacting the forfeitures, referred the subject to Congress, and in doing so expressed the opinion that in the peculiar circumstances of the case a reasonable compromise would authorize the remission of one-half the forfeitures, due to the collectors, and the exaction of the other half, or its equivalent, due to the government. The amount of property involved was about $40,000,000, including the importers’ profit. Mr. Gallatin’s proposition would have assumed a forfeiture to the amount of about $9,000,000. The regular duties, if the forfeitures were wholly remitted, would amount to about $5,000,000.

On this question there arose a sharp battle in the House, and Mr. Cheves led the Federalists in a vigorous assault upon the Secretary. Perhaps this attack was more honest and less spiteful than the attacks of Mr. Giles, but it was hardly less mischievous: “I would rather see the objects of the war fail; I would rather see the seamen of the country impressed on the ocean and our commerce swept from its bosom, than see the long arm of the Treasury indirectly thrust into the pocket of the citizen through the medium of a penal law. We might suffer all these disasters and our civil liberties would yet be safe. That principle of our government would still be preserved which subjects the purse of the citizen to no authority but a law so plain that he who runs may read. How are the exigencies of the government for the next year to be supplied? That portion of them which is provided is rather the result of accident than forecast. Is the deficiency to be derived from taxes? No! I will tell gentlemen who are opposed to them, for their comfort, that there will be no taxes imposed for the next year. It was said last session that you would have time to lay them at this session, but I then said it was a mistake. You now find this to be the fact. By your indecision then, when the country was convinced they were necessary, you have set the minds of the people against taxes. But were it otherwise, you have not time now to lay them for the next year.”

Jonathan Roberts, of Pennsylvania, a member of the Committee of Ways and Means, led the debate in defence of Mr. Gallatin, but in the end Mr. Cheves, aided by the Federalists and by Calhoun, Lowndes, Macon, and other very honest men, carried his point, and the forfeitures were entirely remitted, by a very close vote of 63 to 61. Mr. Gallatin’s hold even on the Committee of Ways and Means was now lost.

At this point of the war, within four months of its declaration, the Treasury was threatened with a collapse more fatal than that which had overwhelmed the War Department. The circulating capital of the United States was concentrated in the large cities chiefly north of the Potomac, and more than one-fourth of this capital belonged to New England. Not only did New England lend no aid to the Treasury, but her whole influence was thrown to embarrass it. Of loans to the amount of $41,000,000 paid into the Treasury during the war, she contributed less than three millions. This was not all. A large importation of foreign goods into the Eastern States, and an extensive trade in British government bills of exchange, caused a drain of specie through New England to Great Britain. The specie in the vaults of the Massachusetts banks rose from $1,700,000 in June, 1811, to $3,900,000 in June, 1812, and to $7,300,000 in June, 1814, all of which was lost to the government and the Treasury. Even the most prejudiced and meanest intelligence could now understand why the destruction of the United States Bank threatened to decide the fate of the war and of the Union itself. The mere property in the bank, important as this was, counted for comparatively little in the calculation, although seven millions of foreign capital, invested in its stock, were lost to the country by its dissolution and had been remitted to Europe shortly before the war. This was the “British gold” of which Mr. Giles and Mr. Duane were so jealous, and which, had it been allowed to remain, would have probably doubled the resources of the government in fighting British armies and navies, for, setting aside the useless wealth of New England, it is doubtful whether the country contained $7,000,000 in specie in 1812 as the basis of its entire currency system. This, however, was not the most serious loss. The State banks, with a capital of something more than $40,000,000, took up the paper previously discounted by the United States Bank, to the amount of more than $15,000,000. Then came the war, and Mr. Gallatin applied every possible inducement to borrow for government the means of the State banks. Those of New York, Philadelphia, and Baltimore responded to the call; they subscribed directly to the loans, and they enlarged their discounts to such of their customers as subscribed; in doing so they necessarily exceeded their resources and were obliged to enlarge their issues of bank paper. Meanwhile, in order to fill the chasm made by the dissolution of the United States Bank, new banks were created in the States; a bank mania broke out; in four years one hundred and twenty new banks were chartered, doubling the banking capital at a time when commerce was annihilated and banks were less needed than ever. They created no new capital and withdrew what would otherwise have been lent to the government. Governor Snyder, in Pennsylvania, was forced to veto a bill making a wholesale creation of new banks. Finally, since, in the absence of a national bank, the government had no means of controlling the issues, these rapidly increased to an amount greatly in excess of the requirements, until a suspension of specie payments and hopeless confusion of the currency became inevitable. This took place in 1814, and it was Mr. Gallatin’s opinion, as it must be the opinion of every financier, that if the United States Bank had been in existence the suspension might have been delayed for a considerable time, while the terrible disorganization of the whole system of internal exchanges, by which the government was very nearly brought to a stand-still, need not have taken place at all.118

Had Congress been more tractable, something might perhaps have been done to alleviate the situation; but the Senate was utterly beyond control, and the House was becoming almost equally perverse. The expedient adopted by government fifty years later in the face of similar difficulties, even had it been now thought of, would have had little chance of general acceptance. Mr. Gallatin could get no action from Congress. His tax bills of the preceding session had been postponed on the understanding that they should be adopted before the 1st January, 1813; but, meanwhile, experience proved that these bills, violent as they had at first been thought, were quite unequal to the occasion, and that much stronger measures were needed. The five millions which had luckily fallen in, owing to the enormous British shipments after war was declared, helped to tide the Treasury over its immediate difficulties, but it helped also to encourage the inaction of Congress. Mr. Cheves did not contribute to smooth the path of the Treasury. He wished to force Congress to raise revenue by abandoning the non-importation system, which was still maintained as a coercive measure against Great Britain; this was also Mr. Gallatin’s wish, but Congress refused its consent. Meanwhile, the tax bills were untouched. Month after month passed, and still nothing was done until the session closed on March 3, 1813, when, since it was universally conceded that these bills must be taken up, an extra session in May for this express purpose became necessary. All Congress would do, meanwhile, was to authorize loans, the favorite resource of incompetent financiers.

Many years later, Mr. Jonathan Roberts, who had been a member of this Congress, writing to Mr. Gallatin in the garrulity of age, recalled his recollections of the war. The letter is dated December 17, 1847, and seems to have been merely a spontaneous expression of old feelings. “When it was first my fortune to have met you,” he wrote, “I found you to be a ripe and experienced statesman, possessed of the affectionate confidence of the most eminent and wisest among your compeers. You were only about ten years my senior, but immeasurably advanced above me in capacity for usefulness for that small disparity in years. In a very early period of our intercourse you gave me proofs of your confidence, of which I felt myself not unworthy, but which I had not been taught to look for from one who had so long mixed in state affairs… While I witnessed an admiration of your character among enlightened and liberal minds, abundant evidences were not wanting of envy, jealousy, and even hatred. My sympathies were enlisted in your favor, and my indignation was roused in witnessing ebullitions of these detestable passions. You stood the friend of peace in the crisis pending the last war, – an attitude that called for the exercise of higher moral nerve than the opposite position; while our friends Madison and Macon, feeling with you, each in your places, fulfilled every duty with the honest purpose to seek for peace as the object they most desired.

“You can hardly fail to remember how Mr. Cheves acted towards you as chairman of Ways and Means, and how Colonel Johnson baffled every effort to report the tax bills. These men, too, gave their votes for an extravagant loan bill, which probably [no] man could have raised, even on the predicate of adequate taxes. At your suggestion I hastened to visit Governor Snyder, to give him your views of what would be the effect of the measure of the forty-one new banks on the prospects of raising loans. On meeting him I found he had negatived the bank bill, and it only remained for me to leave with him the views you had charged me with.”

1813.

Mr. Gallatin’s annual report in November, 1812, had been reticent in tone, perhaps because he was unwilling to discourage, and yet had nothing encouraging to say. He simply gave the condition of the Treasury and announced that a loan of twenty millions would be required. Congress authorized a loan of sixteen millions and the issue of five millions in Treasury notes; it would do no more; every other plan or suggestion of Mr. Gallatin or of the President was defeated or ignored.

Such was the situation when Congress adjourned on the 4th March, 1813. Mr. Gallatin then opened his loan. The Treasury was nearly exhausted; so nearly that on the 1st April it was absolutely empty, and must have ceased to meet the requisitions of the War and Navy Departments; the Federalists were in high hope that the loan would fail and government fall to pieces, and they made the most active efforts to force this result. The crisis was serious, and it was in this emergency that Mr. John Jacob Astor rendered to Mr. Gallatin and to the country essential aid; by his assistance Mr. Gallatin was enabled to make his terms with Mr. Parish and Mr. Girard, and thus three foreigners by birth, Mr. Gallatin himself being of foreign birth, saved the United States government for the time from bankruptcy, and perhaps from evils far more fatal; so, at least, the Federalists thought, and they long vented their wrath against these foreigners, as they called them, for an act which was certainly a somewhat bitter satire upon American patriotism.

Just at this moment the Russian minister, Daschkoff, communicated to the Secretary of State an offer of mediation on the part of the Emperor. His note bore date the 8th March, and in the situation of our government not only towards that of Russia, but towards the peace party at home, it had the gravest significance. There could be no hesitation in accepting the offered mediation, but there might be a question whether it were best to accept it before hearing from England. To show over-eagerness for peace would weaken our position abroad; but the position abroad was of less consequence than union at home, and sluggishness in meeting peace propositions would stimulate every domestic faction. The President decided not to wait, but to send commissioners at once. Mr. Gallatin had now, by the end of March, disposed of his loan; he could easily arrange the affairs of his Department so as to admit of his absence, and he requested the President to let him go to Russia.

So many and so complicated are the influences which must have acted upon Mr. Gallatin’s mind to produce this decision, that they are hardly to be set forth with any certainty of measuring their precise relative weight; yet there can be little possibility of error in assuming, as the most powerful, the conviction which had long weighed upon his mind that his usefulness in his present position was exhausted, and that Congress would do better, at least for a time, without him. So accustomed had Congress become to throwing upon him the burden and the blame of every measure, that nothing short of his retirement would break the spell which bound them, and so ineradicable were the enmities which neutralized all his efforts, that only his self-effacement could extinguish them. This he had long known, but the President’s wishes had tied his hands. He could not desert the President or the country if his services were needed; but the situation had now become such as to create a serious doubt whether his services were not really more necessary abroad than at home. A year not yet quite elapsed had already brought the country into a position grave in the extreme; financial collapse and domestic treason were becoming mere questions of time; another campaign was inevitable, and it might fairly be reckoned that, if this were not successful, success was out of our power; diplomacy, therefore, had become the most important point of action next to service in the field, and in diplomacy Mr. Gallatin naturally felt that he had a brilliant future before him. Here he would escape from all his old difficulties and enmities; to Europe the Smiths, Duanes, Gileses, and Leibs would hardly care to follow him. The past was a failure; he might fling it away, and still rescue his country and himself by this change of career.

Mr. Gallatin grew more and more silent with age and experience; he never complained, and never said what was calculated to wound; but he had now stood for five years in a position inconsistent with his principles and grating to his feelings. In deciding to go to St. Petersburg he was well aware that he would be charged with having deserted his post, and charged by the same men who for four years had made it impossible for him to perform the duties of that post, and who still presented an impenetrable barrier to every attempt on his part at efficient administration. It is probably true that Mr. Gallatin himself hoped not to return to the Treasury; if he returned at all, he would have preferred the dignified ease of the State Department; but these points he did not and would not attempt to settle in advance; he left it absolutely in the hands of Mr. Madison to decide for the public interest what disposition to make of his services. There were two obvious contingencies; the one, in case the Senate should insist upon his resignation as Secretary, and, to obtain this, reject his nomination as commissioner; the other, the case of diplomatic delays that might prevent his return and compel the President to fill his vacant place: “Mr. Bayard asked me,” wrote Mr. Dallas in the following February, “whether you had reflected upon the first event as a probable one, and you merely smiled when I repeated his question to you.” Mr. Dallas seems to have felt a little irritation at this reticence, but a sadder smile than Gallatin’s can hardly be imagined even among the Administration in these trying times, although it may have been brightened by a touch of humor at the thought how readily the Senate would fall into that agreeable occupation, and how willingly he would throw upon them that responsibility. In any case it was not for him to direct the President’s action; Mr. Madison himself could alone be the judge of what the occasion required.

Of course it was fully in Mr. Madison’s power to retain Mr. Gallatin at his post. He too seems, however, to have been impressed with the advantages of sending him to Russia, and the act was carefully considered and was his own. In the case of negotiations taking place, America afforded no negotiator comparable to Gallatin; if he were willing to go, his presence would be invaluable.

With Mr. Gallatin it was at last decided to associate Mr. Bayard, of Delaware, so that the mission finally consisted of Gallatin, J. Q. Adams, then Minister to St. Petersburg, and James A. Bayard. Of course the most rapid action was necessary; Mr. Bayard’s appointment was only decided on the 5th April, and Mr. Monroe then expected the vessel to sail with Mr. Gallatin within a fortnight. Fortunately, the necessary business of the Treasury was well in hand. On the 17th April, Mr. Gallatin wrote a letter to the Secretaries of War and of the Navy, giving a general view of the fiscal situation for the year and regulating the drafts which these two Departments might make upon the Treasury, to the amount, namely, of $17,820,000, to January 1, 1814. The tax bills were ready for Congress to act upon; a draft for a new bank charter was prepared and left behind; every contingency, as far as possible, was provided for. Mrs. Gallatin and the younger children were to pass their summer as usual in New York, while the eldest son, James, accompanied his father as private secretary.

Before closing this part of Mr. Gallatin’s history and turning to the new career which was to occupy nearly all his thoughts for sixteen years to come, the results of his sudden departure upon Congress and upon the Treasury shall be briefly told. Another extract from the letter of Jonathan Roberts already quoted will furnish an idea of the immediate effect of Mr. Gallatin’s absence. He sailed on May 9, and Congress met on May 23. Mr. Roberts proceeds:

“At the called session in May following you had left the seat of government on the mission of peace. I soon found, however, that you left nothing undone that made your presence necessary to forward the vital measure of adequate taxation. You promptly responded to a call early made for a scheme of revenue that you deemed to embrace every item that could justify a levy and collection. This was abundantly confirmed by Mr. Eppes’s subsequent trial of watch-tax, &c. Mr. E. was now made chairman of Ways and Means, but could not attend the committee from ill health, which both Dr. Bibb and myself thought fortunate for the early attainment of the object of the session. To almost every item in your reported list objections were felt in the committee. Bibb himself disrelished a direct tax, but could not deny its indispensable necessity. It was soon found there was no alternative. No new project could be devised, and you were not present to be worried by calls for a modification. The bills were reported; no opening speech was made, and no debate provoked. Dr. Bibb conducted the deliberations with successful address, but I then felt that your absence placed the tourniquet on Congress. Having finished your duties at home, you accepted the place in which you hoped to be most useful… Your real friends felt the vacancy made by your absence, and hoped for and would have hailed your return to our home councils as a joyful event. Your place never has been, nor, I believe, never will be filled.”