The Life of Albert Gallatin

This circular had one immediate effect: it developed the force and character of the opposition; it brought out the fact that the real point of resistance was to be in Pennsylvania, and that of this resistance the old Bank of the United States was to be the main stay; it showed that politics had been dragged into alliance with the less solvent banking institutions, and that the party opposed to President Van Buren’s Administration had hopes of forcing the re-establishment of a national bank by making this the condition of resumption. Mr. Gallatin had no great sympathy with the Administration and no favors to ask from it, but he was not at all disposed to allow his ideas of public duty to be subordinated to the political purposes of the opposition.

On the expiration of the bank charter in March, 1836, the old Bank of the United States had accepted a new charter from the State of Pennsylvania, and had attempted to carry on its business. Bad management, want of confidence, and the universal financial pressure soon reduced it to such a condition that the general suspension of specie payments alone concealed its insolvency; yet its controlling influence over the other Pennsylvania banks was such that they still followed its lead, and all united in replying to Mr. Gallatin’s circular, that they deemed it inexpedient to appoint delegates to the proposed meeting of bank officers, for the reason that general resumption depended mainly, if not exclusively, on the action of Congress; thereby implying that no permanent resumption was possible without the adoption of their policy of renewing the charter of the United States Bank. The Baltimore banks followed their example, and those of Boston returned no positive answer.

Unsatisfactory as this result was, the New York banks, with Mr. Gallatin at their head, resolutely pursued their object. On the 20th October the committee issued another circular, in pursuance of a resolution passed at a general meeting on the 10th, and formally invited the other State banks over the whole Union to meet in convention at New York on November 27. This step compelled both Philadelphia and Boston to accede, for fear of the consequences in case New York should act alone. The convention met, and Mr. Gallatin acted in it the prominent part which naturally fell to his share as chairman of the New York committee. His opponents did not, however, press the political argument, but rested their case principally on the injury that would be caused by a premature resumption. Mr. Gallatin met this objection with that direct assertion of moral obligation always so fatal as an argument, raising disputes, as it does, above the ordinary level of expediency, and throwing opposition into an apologetic defensive. He said it was monstrous to suppose that, if the banks were able to resume and to sustain specie payments, they should have any discretionary right to discuss the question whether a more or less protracted suspension was consistent with their views of “the condition and circumstances of the country.” There would be no limit to such supposed discretion. The evidence was irresistible that the banks were able to resume. Exchange was favorable. No known cause existed which could prevent a general resumption. The arguments and objections of the United States Bank of Pennsylvania were neither more nor less than excuses for an intended protracted suspension for an indefinite period of time, which was shown by the fact that this bank had actually put in circulation, since the suspension, a large amount of the notes of the dead and irresponsible Bank of the United States.

1838.

The situation was thus narrowed down to a local contest between the New York banks, represented by Mr. Gallatin, and the United States Bank of Pennsylvania, directed by Mr. Biddle. The influence of party sympathy led the Boston banks to sustain Mr. Biddle to the last against Mr. Gallatin; Baltimore followed the same course; outside of New York Mr. Gallatin found support only in the North-West and South. Yet, although the convention was nearly equally divided and nothing more than general professions could be obtained from it, the contest was really unequal, and there could be no question that Mr. Gallatin was master of the situation. The New York banks, actively supported by the comptroller and the State government, proceeded to take such measures as would enable them to resume at almost any moment, but they waited still some length of time in the hope of obtaining co-operation. The convention had adjourned to meet again on the 11th April, 1838. Mr. Gallatin and his colleagues, who represented the New York banks in the convention, made a report on the 15th December, 1837, representing in strong language the evils of the situation and pressing for combined action. On the 28th February the same gentlemen made another report on measures, “in contemplation of the resumption of specie payments by the banks of the city of New York, on or before the 10th day of May next.” Nothing was omitted that could tend to secure the banks from accident or designed attack, and even the popular feeling was enlisted on their side.

When the adjourned convention met on the 11th April, a letter was presented from the Philadelphia banks declining to attend, on the ground that the banks and citizens of New York had already acted independently in announcing their intention to resume on the 10th May, and that the banks of Philadelphia “do not wish to give any advice in regard to the course which the banks of the city of New York have resolved to pursue; they do not wish to receive any from those banks touching their own course.” One might have supposed that after this defection of Pennsylvania there would have been no difficulty in controlling the action of the adjourned convention when it met on the 11th April; but this proved no easier matter than before. Mr. Gallatin’s object was to fix the earliest possible day for general resumption, since New York placed herself in a very critical position so long as she stood alone. But the convention could not even be persuaded to fix the first Monday in October for the day. The utmost that could be got from New England was to name the 1st January, 1839.

1839.

Left thus isolated, Mr. Gallatin and his associates went directly on their course alone. The New York banks resumed specie payments on the 10th May, as they had pledged themselves to do. They resumed in good faith and in full; the resumption was effected without the slightest difficulty; and it is but just to add that the other banks made no attempt to impede it. Then came the inevitable struggle between the solvent and the insolvent institutions. Boston acted better than she talked, and all New England resumed in July. Public opinion, operating first on the Governor of Pennsylvania, compelled the United States Bank to resume in the course of the same month. The South and West followed the example. For something more than a year the insolvent banks managed to crawl on, and then at last, in October, 1839, the United States Bank went to pieces in one tremendous ruin, and carried the South and West with it to the ground. A long and miserable period of liquidation generally followed, but New England and New York maintained payments, and Mr. Gallatin had once more, almost by the sheer force of his own will and character, guided the country back to safe and solid ground.

In the year following, on June 7, 1839, he at length resigned his post as president of the National Bank of New York, and retired from all forms of business. His last considerable effort as a financier and economist was the publication of a pamphlet supplementary to his “Considerations on Currency.” This essay of one hundred pages, entitled “Suggestions on the Banks and Currency of the several United States,” was printed in 1841. Its value is principally that of continuing the history of our financial condition, more particularly as respects currency and banks; and, taken in connection with the earlier essay, it forms a hand-book of American finance down to the year 1840.169

Doubtless the students of to-day, who turn their attention to these papers upon which the reputation of Mr. Gallatin, as an author and theorist in finance, principally rests, will find that the point of view has considerably changed, and that a wider treatment of the subject has become necessary. Not less the circumstances than the thought of that generation naturally tended to attribute peculiar and intrinsic powers to currency; a tendency quite as prominent among the English as among the American economists. Mr. Gallatin’s writings dealt mainly and avowedly with the currency, because he believed that the condition of the currency was the responsible cause of much if not most of the moral degradation of his time, and that a return to a sound metallic medium of exchange was a means of purifying society. The later school of economists would perhaps lay somewhat less stress upon currency as in itself an active cause, and they would rather treat it as a symptom, an instrument operating mechanically and incapable in itself of producing either all the evil or all the good then attributed to it. The following letter, at all events, shows Mr. Gallatin’s opinions on the subject:

1841.GALLATIN TO JONATHAN ROBERTSNew York, 3d June, 1841.

Respected Friend, – I received your welcome letter of the 27th May, and return in answer my essay on currency.

I sometimes flatter myself that we old men labor under the disease incident to our age, and that we think that the world has grown worse than it was in former days, because, when young, the vices of the times had become familiar to us, and that we are shocked by those of new growth. Thus, for instance, though you and I were temperate, we were less severe towards drunkards than the present generation.

Yet so far at least as respects political corruption, it is impossible that we should be mistaken. I was twelve years a member either of the Legislature of Pennsylvania or of Congress, the greater part of those in hot party times and conflicts. And I may safely affirm that, without distinction of party, a purer assemblage, in both bodies, of men honest, honorable, and inaccessible to corruption could not be found. I never was tempted; for during my forty years of public life a corrupt offer never approached me.

Now, although I am not so happy as Mr. Calhoun in always finding a cause for every effect, I will venture to assign two reasons for the deterioration we lament.

The American Independence was an event of immense magnitude, and, though not altogether irreproachable in that respect, yet comparatively unsullied by those convulsions, excesses, and crimes which have almost always attended similar revolutions. The greater part of the men employed in the public service during the thirty following years had taken an active part in that event. The objects to which our faculties are applied have a necessary influence over our minds. How diminutive, nay, pitiful, those appear which now engross public attention and for which parties contend, when compared with those for which the founders of the republic staked their fortunes and their lives! – the creation of a great independent nation and the organization of a national yet restricted government. I do believe that the minds, the moral feeling of those thus engaged, were raised above the ordinary standard and elevated to one somewhat proportionate to the magnitude of the objects which they did accomplish.

And those men had been educated at a time when the American people, blessed with an abundant supply of all the necessaries of life, were still frugal and had preserved a great simplicity of manners. Here is the other cause which may be assigned for the present depraved state of public opinion and feeling. We have rioted in liberty and revel in luxury. As we have increased in wealth and power the sense of integrity and justice has been weakened. The love of power, for the sake of its petty present enjoyments, has been substituted for that of country and of permanent fame, and the thirst of gold for the honest endeavors to acquire by industry and frugality a modest independence.

Where is the remedy? We cannot and ought not to restrain by legislative enactments the marvellous energy of this nation and the natural course of things; but we ought not to administer an artificial stimulus. This stimulus is the paper currency; and you will perceive by my letter of 1830 to Mr. Walsh, which I have published for that purpose in the Appendix, that my ultimate object has been, as [it] still is, to annihilate almost altogether that dangerous instrument. I admit its utility and convenience when used with great sobriety. But its irresistible tendency to degenerate into a depreciated and irredeemable currency, and the lamentable effect this produces, not as a mere matter of dollars and cents, but on the moral feeling and habits of the whole community, are such that I am quite convinced that it is far preferable to do without it.

But we must take men and things as they are; a sudden transition would cause great injury and is impracticable. And without ever losing sight of the ultimate object, I formerly proposed, and now suggest, that only such measures [be adopted] as may, it seems to me, be easily carried into effect; as would greatly lessen present evils; and as have a tendency to improve and elevate public opinion, and may assist in gradually preparing a better state of things. With that explanation you will understand more clearly the object of my essay.

In the mean while, as individuals and each in our sphere, we have only to perform our appropriate duties and sustain our precepts by our example. You may be annoyed in your new office;170 but there is this advantage in an executive office: that it imposes certain specific and clearly-defined duties, to be performed day after day, with unremitted industry and constant respect for law and justice; and this honestly done affords the consciousness of being a useful member of society.

We would indeed be much gratified by your contemplated visit to New York. Left almost alone of my contemporaries, the meeting with an old friend is highly refreshing to me. And you may see, by the general tenor of this letter, that I consider you as one, and one of those I most respect. Mrs. G. requests to be kindly remembered to you, and I pray you to rely on my constant attachment I am altogether unacquainted with our new President. He has made some sad appointments in this city. That of marshal is too bad.

Respectfully, your friend and servant.GALLATIN TO JOHN M. BOTTS, M.CNew York, 14th June, 1841.

Sir, – I had duly received the letter you addressed to me last winter, and had hoped that my declining to answer it would satisfy you that I had an insurmountable objection to any use whatever being made of any conversation that may have taken place between Mr. Jefferson and myself on the subject of the Bank of the United States. I will only say that the report which reached you was imperfect and incorrect, and that he lived and died a decided enemy to our banking system generally, and specially to a bank of the United States.

1843.

My last essay, the receipt of which you do me the honor to acknowledge, was written without reference not only to parties, but even to any general political views, other than the restoration and maintenance of a sound currency. Except in its character of fiscal agent of the general government, I attach much less importance to a national bank than several of those who are in favor of it; and perhaps on that account it is a matter of regret to me that it should continue to be, as it has been since General Jackson’s accession to the Presidency and not before, a subject of warm contention and the pivot on which the politics of the country are to turn. I am quite sure that if this take place and the issue before the people be bank or no bank, those who shall have succeeded in establishing that institution will be crushed. I do not doubt your sincerity and bravery, but the cause is really not worth dying for. Did I believe that a bank of the United States would effectually secure us a sound currency, I would think it a duty at all hazards to promote the object. As the question now stands, I would at least wait till the wishes of the people were better ascertained. So far as I know, the opponents are most active, virulent, and extremely desirous that the great contest should turn on that point: the friends, speculators and bankrupts excepted, are disinterested and not over-zealous.

I have the honor, &c.

Before dismissing the subject of finance, the following curious correspondence may properly find a place here. Albert Davy was United States consul at Leeds, England, and happened to be now in Washington obtaining a renewal of his commission:

ALBERT DAVY TO JAMES GALLATIN

Very confidential.

Washington, 25th December, 1843.

My dear Sir, – I am induced to write you a few lines this evening very confidentially to state that Mr. Robert Tyler has just called on me to ask if I thought Mr. Gallatin would accept the Secretaryship of the Treasury for the remaining Presidential term, or, rather, whether his health would permit him to change his residence. He told me the President mentioned Mr. Gallatin’s name the first to fill that important post, which, I dare say, would be made very easy to him. This movement is of course in anticipation of Mr. Spencer’s leaving. As no one as yet is aware of it out of the President’s immediate circle but myself, I am sure you will see the necessity of not communicating this to any one but to Mr. Gallatin…

1844.GALLATIN TO ALBERT DAVYNew York, 28th December, 1843.

Dear Sir, – My son James has shown to me your letter to him of 25th of this month, received yesterday. It seems hardly necessary to make a serious answer to it. Yet, as silence might be misconstrued, I have only to say that I want no office, and that to accept at my age that of Secretary of the Treasury would be an act of insanity. I cannot indeed believe that this has been seriously contemplated by anybody: you must have misunderstood the person who spoke to you. I might give conclusive reasons why, even if I was young and able, I would not at this time be fit for the office, nor the office at all suit me; but this is not called for.

I remain, with great regard, dear sir,

Your obedient servant.JOHN BARNEY TO ALBERT GALLATINWashington, January 24, 1844.

My dear Sir, – I have been applied to by one of the President’s family to know if you would accept the Treasury Department. If you would, I am assured that it will be tendered to you so soon as vacated by the confirmation of Mr. Spencer.

This last letter is tersely endorsed by Mr. Gallatin: “Folly, of which no notice taken.”

1842.

Finance was, however, only one of the numerous subjects in which Mr. Gallatin took an active interest. Diplomacy was another. Our relations with Great Britain, though in some respects better, were in others worse than before; the postponed questions of boundary became serious, and especially that of the North-Eastern or Maine boundary assumed a very threatening aspect. The arbitration of the King of the Netherlands had proved a failure, owing perhaps to the fact that our government failed to take proper measures for supporting its case diplomatically. Had Mr. Gallatin been on the spot he would probably have brought about a different result; but Mr. Van Buren’s diplomacy was not so successful in Europe as in the United States, and he had more need of it in Washington than elsewhere. The question between England and America was thus kept open until both countries became seriously anxious. In 1840, Mr. Gallatin revised and reprinted his statement of the North-Eastern boundary argument as laid before the King of the Netherlands in 1830. In 1842 the British ministry sent Lord Ashburton to negotiate a treaty at Washington, and thus Alexander Baring came again to interpose his ever-friendly and ever-generous temper between the fretful jarring of the two great nations. The time had been when the British government and people treated Mr. Baring’s warning advice with such contempt as only George Canning could fully embody and express; but that time was now long passed. They had learned to lean upon him, and the American government readily met him in the same spirit

LORD ASHBURTON TO ALBERT GALLATINWashington, 12th April, 1842.

Dear Mr. Gallatin, – My first destination was to approach America through New York, but the winds decided otherwise, and I was landed at Annapolis. In one respect only this was a disappointment, and a serious one. I should have much wished to seek you out in your retreat to renew an old and highly-valued acquaintance and, I believe and hope I may add, friendship; to talk over with you the Old and the New World, their follies and their wisdom, their present and by-gone actors, all which nobody understands so well as you do, and, what is more rare, nobody that has crossed my passage in life has appeared to me to judge with the same candid impartiality. This pleasure of meeting you is, I trust, only deferred. I shall, if I live to accomplish my work here, certainly not leave the country without an attempt to find you out and to draw a little wisdom from the best well, though it may be too late for my use in the work I have in hand and very much at heart.

You will probably be surprised at my undertaking this task at my period of life, and when I am left to my own thoughts I am sometimes surprised myself at my rashness. People here stare when I tell them that I listened to the debates in Congress on Mr. Jay’s treaty in 1795, and seem to think that some antediluvian has come among them out of his grave. The truth is that I was tempted by my great anxiety in the cause, and the extreme importance which I have always attached to the maintenance of peace between our countries. The latter circumstance induced my political friends to press this appointment upon me, and with much hesitation, founded solely upon my health and age, I yielded. In short, here I am. My reception has been everything I could expect or wish; but your experience will tell you that little can be inferred from this until real business is entered upon. I can only say that it shall not be my fault if we do not continue to live on better terms than we have lately done, and, if I do not misunderstand the present very anomalous state of parties here, or misinterpret public opinion generally, there appears to be no class of politicians of any respectable character indisposed to peace with us on reasonable terms. I expect and desire to obtain no other, and my present character of a diplomatist is so new to me that I know no other course but candor and plain-dealing. The most inexpert protocolist would beat me hollow at such work. I rely on your good wishes, my dear sir, though I can have nothing else, and that you will believe me unfeignedly yours.

GALLATIN TO LORD ASHBURTONNew York, 20th April, 1842.

Dear Lord Ashburton, – Your not landing here was as great disappointment to me as to you. I have survived all my early friends, all my political associates; and out of my own family no one remains for whom I have a higher regard or feel a more sincere attachment than yourself. If you cannot come here, I will make an effort and see you at Washington. Your mission is in every respect a most auspicious event. To all those who know you it affords a decisive proof of the sincere wish on the part of your government to attempt a settlement of our differences as far as practicable; at all events, to prevent an unnatural, and on both sides absurd and disgraceful, war. There are but few intrinsic difficulties of any magnitude in the way. Incautious commitments, pride, prejudices, selfish or party feelings present more serious obstacles. You have one of a peculiar kind to encounter. Our President is supported by neither of the two great political parties of the country, and is hated by that which elected him, and which has gained a temporary ascendency. He must, in fact, negotiate with the Senate before he can agree with you on any subject. It is the first time that we have been in that situation, which is somewhat similar to that of France; witness your late treaty, which the French Administration concluded and dared not ratify. It may be that under those circumstances our government may think it more eligible to make separate conventions for each of the subjects on which you may agree than to blend them in one instrument.

The greatest difficulties may be found in settling the two questions in which both parties have in my humble opinion the least personal or separate interest, viz., the right of visitation on the African seas for the purpose only of ascertaining the nationality of the vessel; and the North-Western boundary. I have no reason, however, to believe that the Administration, left to itself, will be intractable on any subject whatever; I hope that higher motives will prevail over too sensitive or local feelings, and I place the greatest reliance on your sound judgment, thorough knowledge of the subject, straightforwardness, and ardent desire to preserve peace and cement friendship between the two kindred nations. You cannot apply your faculties to a more useful or nobler purpose. I am now in my 82d year, and on taking a retrospective view of my long career I derive the greatest consolation for my many faults and errors from the consciousness that I ever was a minister of peace, from the fact that the twenty last years of my political life were almost exclusively employed in preventing the war as long as I could, in assisting in a speedy restoration of peace, and in settling subsequently as many of the points of difference as was at the time practicable. May God prosper your efforts and enable you to consummate the holy work!